Waste-d Chance: The Risk of Ignoring Judicial Federalism in Local Controversies: Kitchin v. Bridgeton Landfill, LLC.

• Author: Smith, Betsy

1. INTRODUCTION

   The Manhattan Project caused death and destruction in Hiroshima and Nagasaki and sparked a nuclear arms race around the world. (1) The Project's legacy is most closely associated with Los Alamos, New Mexico, the site of the primary research laboratory. (2) But, the primary research site, smaller project sites, and disposal sites throughout the country have been plagued by environmental consequences. (3) Its effects are still being felt today, even in the world of civil procedure. (4) One landfill in St. Louis, in particular, holds significant amounts of nuclear waste from the program and has recently sparked major class-action litigation. (5)

   Class-action lawsuits, like the litigation involving the Manhattan Project nuclear waste in St. Louis, are governed by the Class Action Fairness Act of 2005 ("CAFA"). (6) CAFA grants federal jurisdiction for class actions that fit its requirements, such as an amount in controversy in excess of $5,000,000 and minimal diversity. (7) Even where those requirements are met, however, CAFA has certain exceptions that require remand back to state court. (8) The local controversy exception requires a federal court to remand a case to state court where the case has a sufficiently parochial character--i.e., where a local defendant's conduct forms a significant basis of the claim. (9) This exception, like the larger statute of which it is a part, is rife with legal ambiguity. (10)

   In Kitchin v. Bridgeton Landfill, LLC, the Eighth Circuit settled an important question about the local controversy exception: what does it mean for a defendant's conduct to form a "significant basis" of the plaintiffs' claims? (11) The Kitchin court adopted an approach that favors retaining federal jurisdiction for class action lawsuits, even when the controversies are local and therefore might more appropriately be decided by a state court. (12) It held that a local defendant's conduct must be substantively distinct from other defendants' conduct to satisfy CAFA's "significant basis" test. (13) To do so, the court relied on statutory interpretation and legislative purpose justifications and ultimately avoided answering a question about judicial federalism. Part II of this Note explains the relevant facts and procedural background of Kitchin. Part III explores the history of the local controversy exception and its various applications. Part IV discusses the Eighth Circuit's decision and rationale. Finally, Part V analyzes the Kitchin holding and argues that the Eighth Circuit ultimately failed to consider the substantial implications of creating more hurdles for class action plaintiffs to litigate their claims in local state forums.

2. FACTS AND HOLDING

   John C. Kitchin, Jr., and Mary Menke ("Plaintiffs") own property in Bridgeton, Missouri, near the West Lake Landfill. (14) Plaintiffs filed a complaint on behalf of a putative class against Bridgeton Landfill, LLC; Republic Services, Inc.; Allied Services, LLC; and Rock Road Industries, Inc. ("Defendants"), the owners and operators of the landfill. (15) Of the Defendants, only Rock Road Industries was a Missouri citizen when the complaint was filed. (16) The Plaintiffs sought to represent subclasses comprised of Missouri citizens who owned property or resided within an eleven square-mile area around the landfill. (17)

   The basis of these suits stems back to the mid-1900s. In the 1940s and 1950s, a government contractor refined uranium in St. Louis in connection with the Manhattan Project, which created radioactive waste. (18) In 1973, a corporation not involved in this action expelled over 46,000 tons of a soil-and-radioactive-waste mixture in West Lake Landfill. (19) The nuclear waste mixture covered the municipal waste that was dumped in the landfill. (20) The Environmental Protection Agency placed the landfill on the Superfund National Priorities List for investigation and cleanup in 1990. (21) In 2017 and 2018, after learning that their properties were contaminated with radioactive waste from the landfill, Plaintiffs brought suit. (22)

   Plaintiffs alleged that Defendants were responsible for the contamination of their property due to Defendants' "improper acceptance and handling of radioactive waste at the landfill." (23) Plaintiffs filed their complaint in state court. (24) Defendants removed the action to federal court, (25) claiming there was federal-question jurisdiction under the Price-Anderson Act and the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), (26) as well as diversity jurisdiction under CAFA. (27) Plaintiffs moved to remand, arguing that the Price-Anderson Act and CERCLA did not give federal courts jurisdiction and CAFA's local controversy exception applied. (28)

   The United States District Court for the Eastern District of Missouri remanded the case to state court, finding that the local controversy exception to CAFA applied. (29) Defendants appealed the court's decision to remand and challenged the district court's application of the local controversy exception. (30)

   The Eighth Circuit concluded that the local defendant's conduct did not form a "significant basis" for Plaintiffs' claims because the complaint also leveled essentially identical claims against several out-of-state defendants. (31) And thus, the court held that the local controversy exception did not apply. (32)

3. LEGAL BACKGROUND

   Before CAFA, the complete diversity rule required that, in cases where more than one plaintiff sued more than one defendant, each plaintiff be diverse from each defendant to sue in federal court. (33) This complete-diversity requirement, in turn, kept most state law class actions in state court. (34)

   In 2005, Congress enacted CAFA, granting federal courts original jurisdiction over class actions where: (1) the amount in controversy exceeds $5,000,000, and (2) there is minimal diversity. (35) CAFA is subject to certain exceptions, including the local controversy exception at issue in Kitchin. (36)

   Congress enacted CAFA because state courts were "keeping cases of national importance out of federal court," and some legislators believed state courts demonstrated bias against out-of-state defendants and inappropriately bound residents of other states. (37) One legislative goal of CAFA was to resolve all doubts in favor of retaining federal jurisdiction over the case. (38) The purpose of increased federal jurisdiction was to create uniformity in how class action lawsuits would be processed and handled. (39) Records also suggest that another reason Congress enacted CAFA was to streamline class actions and avoid the "straw man" problem. (40) The straw man problem occurs when a plaintiff includes a local defendant in the complaint merely to avoid federal jurisdiction, on the theory that state courts are more plaintiff-friendly with class actions. (41) However, arguments over whether federal or state courts should decide major class action suits implicate competing federal and state interests due to judicial federalism. (42) Although CAFA generally extends jurisdiction of federal courts over class-action suits, the local controversy exception reflects a concern for local interests as it requires federal courts to decline jurisdiction over local disputes. (43)

   The local controversy exception's roots predate the enactment of CAFA. (44) Before CAFA, if a plaintiff included a local defendant in its claim, the case was not removable to federal court. (45) Practically, however, defendants often removed the case to federal court and made the plaintiff seek remand to state court. (46)

   The local controversy exception requires federal courts to decline jurisdiction on two occasions--when:

   (A)(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; or

   (B) two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed. (47)

   Parties may immediately appeal grants and denials of motions to remand cases removed under CAFA as a collateral order under 28 U.S.C. [section] 1291. (48)

   Courts review this issue de novo. (49) Plaintiff - typically the party seeking to remand the case to state court - has the burden to prove that an exception to CAFA, like the local controversy exception, applies and thus that the case should be remanded. (50) As a conjunctive test, the requesting party must prove that all of the elements of the local controversy exception are met. (51) Courts determine whether or not the local controversy exception test is satisfied by looking at the claims alleged in the complaint. (52) While it is typically straightforward to show that the two-thirds requirement is met for the plaintiffs and that a defendant is a citizen of the relevant state, the success of many local controversy pleadings turn on whether a defendant's conduct formed a "significant basis" or where the "principal injuries" occurred. (53)

   1. "Significant Basis" Under the Local Controversy Exception

      The local controversy exception applies if an in-state defendant's conduct formed a "significant basis" of the...