United States Court of Appeals
For the Eighth Circuit
___________________________
No. 19-2072
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John C. Kitchin; North West Auto Body; Mary Menke, on behalf of themselves
and all others similarly situated
Plaintiffs - Appellees
v.
Bridgeton Landfill, LLC; Republic Services, Inc.; Allied Services; Rock Road
Industries, Inc.
Defendants - Appellants
____________
Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
____________
Submitted: January 14, 2021
Filed: July 8, 2021
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Before GRUENDER, BENTON, and STRAS, Circuit Judges.
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GRUENDER, Circuit Judge.
Bridgeton Landfill, LLC; Republic Services, Inc.; and Allied Services, LLC
(“Appellants”) challenge the district court’s decision to remand this removed action
to state court under the local-controversy exception to the Class Action Fairness Act
of 2005 (“CAFA”). See 28 U.S.C. § 1332(d)(4)(A). We reverse.
I.
At first in connection with the Manhattan Project during World War II and
then for the federal government after the war, a government contractor refined
uranium at a facility in downtown St. Louis, Missouri in the 1940s and 1950s.1
Unsurprisingly, this activity created radioactive waste. Accordingly, the Manhattan
Project acquired a tract of land near the present-day St. Louis Lambert International
Airport in St. Louis County to store the waste. The Cotter Corporation (which is not
a party in this action) later acquired some of this waste, and in 1973 it dumped more
than 46,000 tons of a soil-and-radioactive-waste mixture at the West Lake Landfill
in Bridgeton, Missouri. That soil-waste mixture was then used as cover for
municipal refuse dumped in the landfill. In 1990, the Environmental Protection
Agency (“EPA”) placed the West Lake Landfill on the Superfund National Priorities
List for site investigation and cleanup. See 42 U.S.C. § 9605.
Since 1995, John C. Kitchin, Jr., has owned property in Bridgeton, Missouri
adjacent to the West Lake Landfill, where his family owns and operates the North
West Auto Body Company. Mary Menke also owns property in Bridgeton, Missouri
near the landfill. After learning in 2017 and 2018 that their properties were
contaminated with radioactive material, Kitchin, North West Auto Body Company,
and Menke (“Plaintiffs”) filed a class-action complaint in Missouri state court
against Bridgeton Landfill, LLC; Republic Services, Inc.; Allied Services, LLC; and
Rock Road Industries, Inc. (“Defendants”). In their complaint, Plaintiffs alleged that
Defendants “owned and/or operated” the West Lake Landfill and were responsible
for the contamination of Plaintiffs’ property, which Plaintiffs claimed occurred due
to Defendants’ allegedly improper acceptance and handling of radioactive waste at
the landfill. Plaintiffs sought to represent two different subclasses consisting of
Missouri citizens who either owned or resided on property within an eleven-square-
mile region around the West Lake Landfill. The complaint asserted seven state-law
1
The factual background in the first two paragraphs here is taken from the
complaint and, where the complaint is vague, from Appellants’ notice of removal.
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tort claims and sought compensatory damages, punitive damages, and injunctive
relief.
It is undisputed here that, of the Defendants, only Rock Road Industries was
a citizen of Missouri at the time Plaintiffs filed their complaint. Shortly after
Plaintiffs filed their complaint, however, Rock Road Industries merged into
Bridgeton Landfill, with Bridgeton Landfill being the surviving entity.
Appellants then removed the action to federal court. As grounds for removal,
Appellants claimed that federal-question jurisdiction existed under the Price-
Anderson Act (“PAA”), 42 U.S.C. § 2011 et seq., as well as the Comprehensive
Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C.
§ 9601 et seq., and they asserted that diversity jurisdiction existed under CAFA, 28
U.S.C. § 1332(d)(2). Plaintiffs moved to remand, arguing that their complaint did
not trigger federal-question jurisdiction under either the PAA or CERCLA and that
the district court had to “decline to exercise [CAFA] jurisdiction” because CAFA’s
local-controversy exception applied. See 28 U.S.C. § 1332(d)(4). The district court
agreed, concluding that federal-question jurisdiction did not exist and that the local-
controversy exception applied, so it granted Plaintiffs’ motion to remand. On
appeal, Appellants challenge the district court’s application of the local-controversy
exception.
II.
Before proceeding to the merits, first we must address Plaintiffs’ claim that
we lack jurisdiction over this appeal. See, e.g., Arnold Crossroads, L.L.C. v. Gander
Mountain Co., 751 F.3d 935, 938 (8th Cir. 2014) (“Our first consideration on review
is whether we have appellate jurisdiction over [the defendant’s] appeal of the district
court’s remand order.”). Under 28 U.S.C. § 1291, we typically have appellate
jurisdiction over final decisions and certain collateral orders of the district courts.
See Dig. Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 867 (1994). Apparently
presuming that the district court’s remand order is not a final decision, Plaintiffs
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argue that we lack appellate jurisdiction under § 1291 because the remand order is
not an appealable collateral order. See Quackenbush v. Allstate Ins., 517 U.S. 706,
712 (1996) (discussing the collateral-order doctrine). Seemingly in the alternative,
they also contend that 28 U.S.C. § 1453(c), a CAFA-specific grant of permissive
appellate jurisdiction over remand orders, was Appellants’ “only . . . pathway for
appellate review” of the district court’s remand order, which we closed off when we
previously denied Appellants permission to appeal under § 1453(c).
Our precedent forecloses these arguments. In Jacks v. Meridian Resource
Co., we held that a remand order was both “final and appealable as a collateral order
under § 1291” insofar as it was based on the district court’s determination that the
local-controversy exception applied. 701 F.3d 1224, 1229 (8th Cir. 2012) (citing
Quackenbush, 517 U.S. at 711-14). And, after recognizing that we had previously
denied the appellants permission to appeal under § 1453(c), we nevertheless
proceeded to address their separately filed § 1291 appeal, concluding that we had
jurisdiction under § 1291 to review the district court’s application of the local-
controversy exception. Id. at 1128 n.2, 1229; see also Hunter v. City of Montgomery,
859 F.3d 1329, 1334 & n.3 (11th Cir. 2017) (explaining that § 1291 provides “an
alternative basis for appellate jurisdiction” in addition to § 1453(c) to review remand
orders based on CAFA’s exceptions). Therefore, Jacks provides that we have
jurisdiction under § 1291 over this appeal.
Accordingly, we proceed to the merits.
III.
The sole issue on appeal is whether CAFA’s local-controversy exception
requires remand in this case, as the district court found. We review this issue de
novo. Graphic Commc’ns Local 1B Health & Welfare Fund A v. CVS Caremark
Corp., 636 F.3d 971, 973 (8th Cir. 2011); Opelousas Gen. Hosp. Auth. v. FairPay
Sols., Inc., 655 F.3d 358, 360 (5th Cir. 2011).
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CAFA gives federal district courts subject-matter jurisdiction over class
actions like this one, where the parties are minimally diverse (meaning any class
member and any defendant are citizens of different states), all proposed plaintiff
classes include at least 100 members in total, and the amount in controversy exceeds
$5,000,000. See Westerfeld v. Indep. Processing, LLC, 621 F.3d 819, 822 (8th Cir.
2010) (citing 28 U.S.C. § 1332(d)). Under CAFA’s local-controversy exception,
however, a federal district court “shall decline to exercise jurisdiction”:
(i) over a class action in which—
(I) greater than two-thirds of the members of all proposed
plaintiff classes in the aggregate are citizens of the State in which
the action was originally filed;
(II) at least 1 defendant is a defendant—
(aa) from whom significant relief is sought by members of
the plaintiff class;
(bb) whose alleged conduct forms a significant basis for
the claims asserted by the proposed plaintiff class; and
(cc) who is a citizen of the State in which the action was
originally filed; and
(III) principal injuries resulting from the alleged conduct or any
related conduct of each defendant were incurred in the State in
which the action was originally filed; and
(ii) during the 3-year period preceding the filing of that class action, no
other class action has been filed asserting the same or similar factual
allegations against any of the defendants on behalf of the same or other
persons . . . .
28 U.S.C. § 1332(d)(4)(A).
Although the exception is an abstention doctrine rather than a jurisdictional
rule, Graphic Commc’ns, 636 F.3d at 973, it is mandatory, Westerfeld, 621 F.3d at
822. The party seeking remand on this basis has the burden to establish that the
exception applies. Westerfeld, 621 F.3d at 822. And, given that the exception’s
provisions are listed in the conjunctive, see Erdahl v. Comm’r, 930 F.2d 585, 591
n.8 (8th Cir. 1991), the proponent of remand must show that each provision is met
in order to trigger mandatory abstention, see, e.g., Atwood v. Peterson, 936 F.3d 835,
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841 & n.5 (8th Cir. 2019) (per curiam); Opelousas, 655 F.3d at 361; Coleman v.
Estes Express Lines, Inc., 631 F.3d 1010, 1013 (9th Cir. 2011). In considering
whether the party seeking remand has met this burden, we must bear in mind that
the “language and structure of CAFA” indicate that Congress contemplated broad
federal court jurisdiction, see Westerfeld, 621 F.3d at 822, and that the local-
controversy exception is a “narrow,” nonjurisdictional exception to CAFA’s grant
of jurisdiction, see Hargett v. RevClaims, LLC, 854 F.3d 962, 965 (8th Cir. 2017);
Graphic Commc’ns, 636 F.3d at 973. Thus, “any doubt about the applicability of
CAFA’s local-controversy exception” must be resolved against the party seeking
remand and in favor of retaining jurisdiction over the case. Westerfeld, 621 F.3d at
823. After all, “federal courts ‘have a strict duty to exercise the jurisdiction that is
conferred upon them by Congress,’” abstention is an “‘extraordinary and narrow
exception’ to that duty,” and thus “only the ‘clearest of justifications’ will justify
abstention.” Mason v. Lockwood, Andrews & Newnam, P.C., 842 F.3d 383, 397 (6th
Cir. 2016) (Kethledge, J., dissenting) (quoting first Quackenbush, 517 U.S. at 716,
then Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813
(1976), then Rouse v. DaimlerChrysler Corp., 300 F.3d 711, 715 (6th Cir. 2002))
(discussing the local-controversy exception).
Appellants argue that Plaintiffs failed to show that any subpart of
§ 1332(d)(4)(A)(i)(II)—the significant-relief requirement (subpart (aa)), the
significant-basis requirement (subpart (bb)), or the local-defendant requirement
(subpart (cc))—is met in this case. For the following reasons, we agree that Plaintiffs
failed to carry their burden to show that the conduct of Rock Road Industries—the
only Missouri-citizen defendant and thus the only possible “local defendant” for
purposes of these requirements—“forms a significant basis for the claims asserted”
in the complaint. See § 1332(d)(4)(A)(i)(II)(bb). 2
2
As this conclusion suffices to reverse, we do not address whether Plaintiffs
established that they sought significant relief from Rock Road Industries or that the
now-nonexistent Rock Road Industries “is” a Missouri citizen for purposes of the
exception. See, e.g., Atwood, 936 F.3d at 841 & n.5.
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A.
Under the significant-basis requirement, the party seeking remand must show
that a local defendant’s “alleged conduct forms a significant basis for the claims
asserted by the proposed plaintiff class.” § 1332(d)(4)(A)(i)(II)(bb). The district
court observed that Plaintiffs alleged in their complaint that Defendants “all engaged
in the same conduct” that caused Plaintiffs’ claimed injuries, and it concluded that
these allegations demonstrated that Rock Road Industries’ conduct forms a
significant basis for Plaintiffs’ claims. We agree that, with rare exception, see infra
Section III.B., Plaintiffs simply alleged that “Defendants” engaged in conduct
causing Plaintiffs’ injuries without identifying specific acts of each defendant or
otherwise parsing out in any meaningful way Rock Road Industries’ particular,
injury-causing conduct. But we disagree that these collective allegations against
Defendants suffice to show that Rock Road Industries’ conduct meets the
significant-basis requirement.
“CAFA itself does not describe the type or character of conduct that would
form a ‘significant basis’ of plaintiffs’ claims . . . .” Woods v. Standard Ins., 771
F.3d 1257, 1265 (10th Cir. 2014). That said, in Westerfeld, we adopted the Third
Circuit’s comparative approach to analyzing this issue. 621 F.3d at 825 (following
Kaufman v. Allstate N.J. Ins., 561 F.3d 144 (3d Cir. 2009)). In Kaufman, the Third
Circuit reasoned that, “[i]n relating the local defendant’s alleged conduct to all the
claims asserted in the action, the significant basis provision effectively calls for
comparing the local defendant’s alleged conduct to the alleged conduct of all the
Defendants.” 561 F.3d at 156. Thus, deciding whether the significant-basis
requirement is met “requires a substantive analysis comparing the local defendant’s
alleged conduct to the alleged conduct of all the Defendants.” Id. Given the plain
meaning of “significant,” this comparative approach requires that the party seeking
remand show that the local defendant’s conduct is “an important ground for the
asserted claims in view of the alleged conduct of all the Defendants.” Id. at 157; see
also “Significant,” Black’s Law Dictionary (11th ed. 2019) (defining “significant”
to mean “[o]f special importance; momentous”).
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Since the time we followed Kaufman in Westerfeld, other circuits have done
the same. E.g., Mason, 842 F.3d at 395-96 (majority opinion); Benko v. Quality
Loan Serv. Corp., 789 F.3d 1111, 1118 (9th Cir. 2015); Woods, 771 F.3d at 1266;
Opelousas, 655 F.3d at 361. Even so, courts applying this approach have split
regarding what it requires. Some courts, like the district court here, have adopted
the view that allegations that the local and nonlocal defendants “all engaged in the
same conduct” suffice to show that the local defendant’s conduct meets the
significant-basis requirement. See, e.g., City of O’Fallon v. CenturyLink, Inc., 930
F. Supp. 2d 1035, 1049-51 (E.D. Mo. 2013) (citing Coleman, 631 F.3d at 1020).
In Atwood, however, we joined a number of courts taking the opposite view
and found that a complaint that did “not allege any substantive distinctions between
the conduct” of the local and nonlocal defendants failed to “indicate whether the
local defendants’ alleged conduct is ‘an important ground for the asserted claims in
view of the alleged conduct of all the Defendants.’” 936 F.3d at 840 (quoting
Westerfeld, 621 F.3d at 825); see also Opelousas, 655 F.3d at 359, 362-63 (finding
that the significant-basis requirement was not met where “nothing in the complaint
distinguishe[d] the conduct of [the local defendant] from the conduct of the other
defendants” and requiring “more detailed allegations or extrinsic evidence detailing
the local defendant’s conduct in relation to the out-of-state defendants” to meet the
requirement); accord White Knight Diner, LLC v. Arb. Forums, Inc., No. 4:17-CV-
02406 JAR, 2018 WL 398401, at *5 (E.D. Mo. Jan. 12, 2018); Johnson v. Courtyard
Rehab. & Health Ctr., LLC, No. 17-CV-01053, 2018 WL 4183246, at *4-5 (W.D.
Ark. Jan. 8, 2018); Green v. Skyline Highland Holdings LLC, No. 4:17-CV-00534
BSM, 2017 WL 6001498, at *3 (E.D. Ark. Dec. 4, 2017); cf. Mason, 842 F.3d at
399-400 (Kethledge, J., dissenting) (asserting that the plaintiffs’ allegations, in
which the local and nonlocal defendant were referred to jointly by a collective noun
that was “the subject of every verb describing conduct allegedly forming the basis
of the plaintiffs’ claims,” did not satisfy the significant-basis requirement); Evans v.
Walter Indus., Inc., 449 F.3d 1159, 1167 (11th Cir. 2006) (finding that the
significant-basis requirement was not met because the evidence proffered to make
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this showing gave “no insight” into the local defendant’s comparative “role in the
alleged contamination”). Under Atwood, “CAFA removal is not foreclosed by [a]
complaint’s conclusory allegations that the local defendants engaged in the same
conduct as the [nonlocal] defendant.” 936 F.3d at 840-41 (disagreeing with the
“rulings to the contrary” in Coleman, 631 F.3d 1010).
Thus, following Atwood, the district court’s reasoning—that Plaintiffs’
allegations of how Defendants “all engaged in the same conduct” suffice to satisfy
the significant-basis requirement—contravenes the law of this circuit. If “nothing
in the complaint distinguishes the conduct of [Rock Road Industries] from the
conduct of the other defendants,” Opelousas, 655 F.3d at 362, then the allegations
in the complaint do not satisfy the significant-basis requirement. Such collective
allegations leave “doubt” about the comparative significance of Rock Road
Industries’ conduct, preventing remand under the local-controversy exception. See
Westerfeld, 621 F.3d at 823.
B.
Besides defending the district court’s reasoning, Plaintiffs also point out that
they “do make different allegations” about Rock Road Industries’ conduct compared
to the other defendants’ conduct. They call our attention to four sentences in three
paragraphs of their 199-paragraph complaint that specifically mention Rock Road
Industries, and they contend that these allegations suffice to establish that Rock Road
Industries’ conduct is “significant” for CAFA purposes. We disagree.
The first allegation is that “Rock Road Industries, Inc. . . . owned or owns the
West Lake Landfill.” But in corresponding allegations about the other defendants,
Plaintiffs alleged that Bridgeton Landfill also owns the West Lake Landfill; that
Allied Services “operates . . . [the] West Lake Landfill[]”; and that Republic
Services “owns, oversees, and directs the environmental decisions and conduct” of
the other three defendants “and operates the . . . West Lake Landfill[].” Particularly
because Plaintiffs’ claims largely are predicated on how Defendants have managed
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and operated the landfill, we fail to see how this allegation shows that Rock Road
Industries’ conduct is “an important ground for the asserted claims in view of the
alleged conduct of all the Defendants.” See Westerfeld, 621 F.3d at 825. If anything,
the allegation that Republic Services “owns, oversees, and directs the environmental
decisions and conduct” of Rock Road Industries as well as the other two defendants
suggests the opposite. See Atwood, 936 F.3d at 838, 840-41 (concluding that a local
defendant’s conduct was not “significant” because extrinsic evidence showed that
the local defendant’s injury-causing conduct was mandated by the nonlocal
defendant); Mason, 842 F.3d at 400 (Kethledge, J., dissenting) (concluding the same
in light of similar allegations in the complaint at issue there).
The second allegation is that “[t]his lawsuit arises out of damages that resulted
from Rock Road Industries, Inc.’s acts and omissions within the State of Missouri.”
But the complaint contains verbatim allegations about the other three defendants.
Nothing about this allegation “distinguishes the conduct of [Rock Road Industries]
from the conduct of the other defendants.” See Opelousas, 655 F.3d at 362. To the
contrary, this cut-and-paste approach illustrates how Plaintiffs’ complaint fails to
differentiate meaningfully between Rock Road Industries’ conduct and the other
defendants’ conduct.
The third allegation is that “Rock Road Industries has maintained daily
operational and managerial control over the management and environmental
decisions of the West Lake Landfill, decisions which gave rise to the violations of
law and damage to property alleged in this [complaint].” But in corresponding
allegations about the other three defendants, the complaint includes materially
identical allegations about their conduct. To the extent these parallel allegations
differ, they do so because Plaintiffs alleged more about the other defendants’
conduct than they did about Rock Road Industries’ conduct. Thus, any “substantive
distinctions” revealed by these allegations undermine rather than support the
conclusion that Rock Road Industries’ conduct “forms a significant basis for
[Plaintiffs’] claim[s].” See Atwood, 936 F.3d at 840.
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The fourth allegation is that Rock Road Industries is a Missouri citizen “whose
conduct forms a significant basis” for Plaintiffs’ claims. This allegation, parroting
the language of the significant-basis requirement, is a legal conclusion. See
§ 1332(d)(4)(A)(i)(II)(bb). Ordinarily, in determining the sufficiency of a pleading,
“we need not accept as true a plaintiff’s conclusory allegations or legal conclusions
drawn from the facts.” Glick v. W. Power Sports, Inc., 944 F.3d 714, 717 (8th Cir.
2019). We see no reason to depart from that rule in this context, particularly because
we already have rejected the idea that “conclusory allegations” can suffice to satisfy
the significant-basis requirement, Atwood, 936 F.3d at 841, and because the Supreme
Court has admonished against adopting rules in the CAFA context that would “exalt
form over substance,” Standard Fire Ins. v. Knowles, 568 U.S. 588, 595 (2013); cf.
Woods, 771 F.3d at 1265 (“[W]e interpret the significant local defendant
requirement strictly so that plaintiffs and their attorneys may not defeat CAFA
jurisdiction by routinely naming at least one state citizen as a defendant, irrespective
of whether that defendant is actually a primary focus of the litigation.”). Thus, this
pleaded legal conclusion does not establish that Rock Road Industries’ conduct
forms a significant basis for Plaintiffs’ claims. See Atwood, 936 F.3d at 840.
C.
Finally, going beyond the allegations in their complaint, Plaintiffs invite us to
take judicial notice of the EPA’s 2018 Amended Record of Decision concerning the
West Lake Landfill and a 1993 Consent Order referred to in that document. They
argue that these materials, showing that the EPA deemed Rock Road Industries
(along with three other entities) a “potentially responsible party” (“PRP”) for
cleaning up the landfill under CERCLA, demonstrate that Rock Road Industries’
conduct meets the significant-basis requirement. See Atwood, 936 F.3d at 840
(holding that extrinsic evidence may be considered in determining whether the
significant-basis requirement is met). Even assuming that we may take judicial
notice of and consider this factual material seemingly presented for the first time on
appeal, but see Kohley v. United States, 784 F.2d 332, 334 (8th Cir. 1986) (per
curiam), we do not find that these materials carry Plaintiffs’ burden.
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Under CERCLA, “even parties not responsible for contamination may fall
within the broad definitions of PRPs” in 42 U.S.C. § 9607(a)(1)-(4), United States
v. Atl. Rsch. Corp., 551 U.S. 128, 136 (2007), and “a party that falls within any of
the four PRP categories of [§ 9607(a)] may be held jointly and severally liable by
the government for the entire cost of a cleanup, even if the party is ‘innocent’ in the
sense that it did not contribute to the pollution at the site,” Solutia, Inc. v. McWane,
Inc., 726 F. Supp. 2d 1316, 1331 (N.D. Ala. 2010). The four PRP categories in
§ 9607(a) are (1) current owners or operators of a waste facility, (2) any previous
owner or operator of a waste facility during any time in which hazardous substances
were disposed of at the waste facility, (3) any person who arranged for disposal or
treatment of hazardous substances at a waste facility, and (4) any person who
transported hazardous substances to a waste facility.
The 2018 Amended Record of Decision simply indicates that Rock Road
Industries was designated a PRP; it does not explain why. In light of the fact that
even an “innocent” party can be designated a PRP, Solutia, 726 F. Supp. 2d at 1331,
this designation without more does not demonstrate, and certainly not beyond
“doubt,” that Rock Road Industries’ conduct forms a significant basis for Plaintiffs’
claims, see Westerfeld, 621 F.3d at 823.
In contrast, the 1993 Consent Order does suggest why the EPA designated
Rock Road Industries a PRP, but the information it contains on this point does not
carry Plaintiffs’ burden. In that order, the EPA designated four entities as PRPs:
Rock Road Industries; Laidlaw Waste Systems (Bridgeton), Inc., which later merged
into Bridgeton Landfill; Cotter Corporation; and the Department of Energy.
Notably, while the EPA indicated that Cotter Corporation and the Department of
Energy were designated PRPs because they arranged for the disposal of the
radioactive waste at the landfill, see § 9607(a)(3), and it indicated that Bridgeton
Landfill’s predecessor was designated a PRP because it was an owner or operator of
the landfill at the time of the disposal, see § 9607(a)(2), all it said about Rock Road
Industries’ PRP designation was that Rock Road Industries was “a current owner”
of the landfill, see § 9607(a)(1). But a “current owner” can be designated a PRP
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under § 9607(a)(1) “without regard to causation.” New York v. Shore Realty Corp.,
759 F.2d 1032, 1044 (2d Cir. 1985); see also Canadyne-Ga. Corp. v. NationsBank,
N.A. (S.), 183 F.3d 1269, 1275 (11th Cir. 1999) (“[T]he owner of land is directly
liable under CERCLA, regardless of whether he or she caused or contributed to the
release of hazardous substances there.”). Thus, the reason for Rock Road Industries’
designation as a PRP leaves open the possibility, particularly when contrasted with
the reasons provided for the other entities’ designations as PRPs, that the EPA
deemed Rock Road Industries a PRP even though its conduct ostensibly giving rise
to Plaintiffs’ claims was not “significant” for purposes of the local-controversy
exception. Thus, the 1993 Consent Order also does not demonstrate, and again
certainly not beyond “doubt,” that Rock Road Industries’ conduct forms a significant
basis for Plaintiffs’ claims. See Westerfeld, 621 F.3d at 823.
* * *
In sum, Plaintiffs’ allegations that Defendants all engaged in the same conduct
giving rise to Plaintiffs’ claims do not satisfy the significant-basis requirement. The
few allegations in Plaintiffs’ complaint that refer specifically to Rock Road
Industries and its conduct also fail to satisfy this requirement. And the extrinsic
evidence Plaintiffs call our attention to does not carry their burden to show this
requirement is satisfied. Accordingly, the local-controversy exception does not
apply in this case, and the district court erred in concluding otherwise.
IV.
For the foregoing reasons, we reverse the district court’s order remanding this
action back to state court, and we remand for further proceedings.
STRAS, Circuit Judge, concurring in the judgment.
The court’s conclusion is the right one, but I would follow a simpler route to
get there. Under the local-controversy exception, “[a] district court shall decline to
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exercise jurisdiction” if, among other requirements, “at least 1 defendant is a
defendant . . . who is a citizen of the State in which the action was originally filed.”
28 U.S.C. § 1332(d)(4)(A)(i)(II)(cc). The only Missouri citizen that has ever been
a defendant is Rock Road Industries, Inc. But between the time this case was filed
and when it was removed to federal court, Rock Road merged with another company
and ceased to exist as a separate entity. This unusual set of facts leads to a
straightforward question: when must there be a local defendant, at the time of initial
filing or at the time of removal?
The text provides the answer. It twice uses the present-tense verb “is,” id.,
and “the present tense generally does not include the past,” Carr v. United States,
560 U.S. 438, 448 (2010). So what matters is whether a local defendant exists when
the district court “exercise[s] jurisdiction,” which happens at the time of removal in
cases like this one, not at initial filing. 28 U.S.C. § 1332(d)(4)(A); see Kaufman v.
Allstate N.J. Ins., 561 F.3d 144, 153 (3d Cir. 2009) (“[T]he local controversy
exception requires consideration of the defendants presently in the action.”). Indeed,
when filing is the focus, the statute drives that point home, either explicitly or by
using the past tense. See, e.g., 28 U.S.C. § 1332(d)(4)(A)(i)(II)(cc), (4)(A)(ii), (7)
(referring to “the State in which the action was originally filed,” requiring that no
overlapping class actions have been filed “during the 3-year period preceding the
filing of th[is] class action,” and specifying that plaintiffs’ citizenship generally
“shall be determined . . . as of the date of filing of the complaint or amended
complaint” (emphasis added)).
All signs, in other words, point to evaluating the defendants’ citizenship under
the local-controversy exception at the time of removal. Cf. Mansfield, Coldwater &
Lake Mich. Ry. v. Swan, 111 U.S. 379, 381–82 (1884) (stating that “the difference
of citizenship on which the right of removal depends must have existed . . . at the
time of the removal” (emphasis added)). By then, Rock Road was gone and there
was no one left to fill the role of “a defendant . . . who is a citizen of the State in
which the action was originally filed.” 28 U.S.C. § 1332(d)(4)(A)(i)(II)(cc).
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Without a local defendant, there is no local controversy, so I agree that this case must
remain in federal court.
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