Reece v. AES Corporation

FILED
United States Court of Appeals
Tenth Circuit
February 9, 2016
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
WILLIAM REECE; DIANE REECE;
HERMAN TOLBERT; BENNETT
TANKSLEY; SUSAN HOLMES;
CHARLES TACKETT, as individuals
and as representatives for those
seeking redress for damages,
Plaintiffs - Appellants,
v. No. 14-7010
(D.C. No. 6:12-CV-00457-JH)
AES CORPORATION, a Delaware (E.D. Okla.)
corporation; AES SHADY POINT,
INC., a Delaware corporation; AES
SHADY POINT, LLC, a Delaware
limited liability company; MMHF,
LLC, an Oklahoma limited liability
company, a/k/a Making Money Having
Fun, LLC, a/k/a Clean Hydro
Reclamation, a/k/a Clean Hydro
Evacuation, LLC; THUMBS UP
RANCH, LLC, an Oklahoma limited
liability company; DARYL J.
JACKSON, individually, d/b/a Daryl
Jackson Trucking; KEVIN J.
JACKSON, an individual; KENNETH
JACKSON, an individual; CHAD
JACKSON, an individual;
MOUNTAIN MINERALS, INC., a
Delaware corporation; BRAZIL
CREEK MINERALS, INC., an
Oklahoma corporation; GCI MINING,
an Oklahoma corporation, d/b/a
George Colliers, Inc.; ASH GROVE
RESOURCES, LLC, a Kansas limited
liability company;
FARRELL-COOPER MINING
COMPANY, an Arkansas corporation;
COAL CREEK MINERALS, LLC, a
Delaware limited liability company;
MCCORKLE TRUCK LINE, INC., an
Oklahoma corporation; STAR BULK,
a Texas corporation, a/k/a PX
Transportation, Inc.; SEECO, INC., an
Arkansas corporation, a/k/a SWN
Production Company, a/k/a Southwest
Energy Production Company, Inc.,
a/k/a Southwest Oil & Gas Company;
XTO ENERGY, INC., a Delaware
corporation; R&J TRUCKING, INC.,
an Oklahoma corporation;
CHESAPEAKE OPERATING, INC.,
an Oklahoma corporation;
PETROHAWK OPERATING
COMPANY, a Texas corporation;
STEPHENS PRODUCTION
COMPANY, an Arkansas corporation;
HIGHLAND OIL & GAS, LLC, a
Delaware limited liability company;
CHOLLA PETROLEUM, INC., a
Texas corporation; HANNA OIL &
GAS COMPANY, an Arkansas
corporation; ROSS PRODUCTION
COMPANY, an Arkansas corporation,
a/k/a Ross Production Co., a/k/a
McCord Oil Company, a/k/a Ross
Explorations, Inc.; SHIELDS
OPERATING, INC., an Arkansas
corporation; BP AMERICA
PRODUCTION COMPANY, a
Delaware corporation; HOGBACK
EXPLORATION, INC., an Arkansas
corporation; SEDNA ENERGY, INC.,
an Arkansas corporation; GRACO
FISHING & RENTAL TOOLS, INC.,
an Oklahoma corporation; TXD
TRANSPORT, LP, a foreign limited
partnership; BEAR PRODUCTIONS,
2
INC., an Oklahoma corporation; BIG
MAC TANK TRUCKS, LLC, a
Delaware limited liability company,
a/k/a Oklahoma Big Mac Tank Trucks,
LLC; B&B GAS WELL SERVICES,
LLC, an Oklahoma limited liability
company; MIKE KREBBS
CONSTRUCTIONS, INC., an
Oklahoma corporation; BEAR
TRANSPORTS, LLC, an Oklahoma
limited liability company,
Defendants - Appellees,
and
BISHOP TRUCKING, an Oklahoma
corporation,
Defendant.
ORDER AND JUDGMENT *
Before HOLMES, MATHESON, and McHUGH, Circuit Judges.
Plaintiffs-Appellants William and Diane Reece, Herman Tolbert, Bennett
Tanksley, Susan Holmes, and Charles Tackett (collectively, “Plaintiffs”) filed a
petition in the District Court for LeFlore County, Oklahoma, asserting a putative
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Federal Rule of Appellate
Procedure 32.1 and Tenth Circuit Rule 32.1.
3
class action. 1 They alleged that several companies (collectively, “Defendants”)
were responsible for environmental pollution stemming from the generation and
disposal of coal-combustion waste (“CCW”) and fluid waste from oil and gas
drilling (“produced fluid waste” or “PFW”). Defendants removed the case to the
United States District Court for the Eastern District of Oklahoma under the Class
Action Fairness Act (“CAFA”). Plaintiffs filed two motions to remand, and the
district court denied them both. Furthermore, after affording Plaintiffs two
opportunities to cure factual deficiencies in their complaint, the district court
dismissed their complaint for failure to state plausible claims for strict liability,
negligence per se, and negligence.
On appeal, Plaintiffs challenge the district court’s denial of their two
motions for remand and also its dismissal of their amended complaint. Because
we agree with the district court’s disposition of the remand motions and conclude
that Plaintiffs failed to adequately allege the element of injury in their amended
complaint, we affirm the district court’s judgment.
1
In Oklahoma, the initial pleading that commences a lawsuit is called
a “petition,” Okla. Stat. tit. 12, § 2003; whereas, the initial pleading in federal
practice is of course called a “complaint,” Fed. R. Civ. P. 3. When used herein,
the terms “petition” and “complaint” refer to the same document and amendments
thereto—that is, Plaintiffs’ initial pleading commencing this action and any
subsequent amendments thereto.
4
I
A
This case involves a putative class action alleging a variety of tort claims
against several companies involved in the generation, transportation, and disposal
of CCW and PFW near Bokoshe, Oklahoma.
Plaintiffs, the putative class representatives, filed their lawsuit in the
District Court for LeFlore County, Oklahoma in October 2011. The petition
alleged that “the transport, storage and disposal of waste materials from a coal-
burning power plant and oil and gas drilling operations ha[d] resulted in millions
of tons of waste material being transported and deposited in a huge pile at [a
waste disposal facility] which present[ed] serious public health and environmental
risks.” Aplee. Supp. App. at 460–61 (Petition, dated Oct. 6, 2011). The petition
included claims for strict liability, nuisance, trespass, negligence, negligence per
se, and unjust enrichment against four groups:
1. “AES Entities”: AES allegedly owns and operates the Shady Point coal-
fired power plant in LeFlore County; 2
2. “MMHF Entities”: Making Money Having Fun, LLC (“MMHF”) and its
associated entities allegedly own and operate a commercial waste-disposal
2
The AES Entities are the following: AES Corporation, a Delaware
corporation; AES Shady Point, Inc., a Delaware corporation; and AES Shady
Point, LLC, a Delaware limited liability company.
5
facility in LeFlore County; 3
3. “Fly Ash Truckers”: these entities are allegedly involved in the
transportation of CCW generated by the Shady Point plant to the MMHF
waste-disposal facility; 4 and
4. “Fluid Waste Truckers”: these entities are allegedly involved in the
transportation of PFW generated by various oil and gas drilling operations
to the MMHF facility. 5
Approximately one year later, on October 4, 2012, Plaintiffs filed a First
Amended Petition; it asserted essentially the same causes of action, but also
added as defendants various “Oil Producers” who were involved in the generation
3
The MMHF Entities are the following: Making Money Having Fun,
LLC (“MMHF”), an Oklahoma limited liability company; Thumbs Up Ranch,
LLC (“TUR”), an Oklahoma limited liability company; Daryl J. Jackson; Kevin J.
Jackson; Kenneth Jackson; and Chad Jackson.
4
The Fly Ash Truckers are the following: GCI Mining, an Oklahoma
corporation; Mountain Minerals, Inc., a Delaware corporation; Brazil Creek
Minerals, Inc., an Oklahoma corporation; Farrell-Cooper Mining Co., an Arkansas
corporation; Ash Grove Resources, LLC, a Kansas limited liability company;
Marine Coal Sales Company, a Delaware corporation; Hunter Ridge Coal
Company, a Delaware corporation; International Coal Group, LLC, a Delaware
limited liability company; Coal Creek Minerals, LLC, a Delaware limited liability
company; McCorkle Truck Line, Inc., an Oklahoma corporation; Star Bulk, Inc., a
Texas corporation; and R&J Trucking, Inc., an Oklahoma corporation.
5
The Fluid Waste Truckers are the following: Big Mac Tank Trucks,
LLC, a Delaware limited liability company; B&B Gas Well Services, LLC, an
Oklahoma limited liability company; Bishop Trucking, an Oklahoma corporation;
Bear Productions, Inc., an Oklahoma corporation; Graco Fishing & Rental Tools,
Inc., an Oklahoma corporation; TXD Transport, LP, a foreign limited partnership;
and Mike Krebbs Construction, Inc., an Oklahoma corporation.
6
of the PFW disposed of at the MMHF facility. 6 In their amended petition,
Plaintiffs defined the putative class as consisting of “all citizens and/or residents
and/or property owners of the State of Oklahoma within”:
a. “a three mile radius or more of” the MMHF disposal facility; 7
b. “a three mile radius of any disposal pit or dump site located within
LeFlore County . . . into which . . . Defendants, or any one of them, have
transported, received, or disposed of Coal Waste and/or Saltwater or
Produced Fluid”;
c. one thousand yards of the Town of Bokoshe or any public or private
roads, streets, and driveways that have been used by vehicles (i) hauling
6
The Oil Producers are the following: SEECO, Inc., an Arkansas
corporation; XTO Energy, Inc., a Delaware corporation; Stephens Production Co.,
an Arkansas corporation; Chesapeake Operating, Inc., an Oklahoma corporation;
Petrohawk Operating Co., a Texas corporation; Hanna Oil & Gas Co., an
Arkansas corporation; Highland Oil & Gas, LLC, a Delaware limited liability
company; Cholla Petroleum, Inc., a Texas corporation; BP America Production
Co., a Delaware corporation; Ross Production Co., an Arkansas corporation;
Shields Operating, Inc., an Arkansas corporation; Sedna Energy, Inc., an
Arkansas corporation; and Hogback Exploration, Inc., an Arkansas corporation.
7
Despite the expansive phrasing of this criterion (e.g., “or
more”)—which remained throughout subsequent amendments to the class
definition—the parties appear to have assumed throughout the litigation that class
members qualifying on this basis must live within three miles of the disposal
facility. See Aplt. App. at 450, 491, 493 (map showing Class Area). No party
has ever challenged the class definition on the basis that it extends to an unlimited
geographic definition of “a three-mile radius or more” of the MMHF facility.
Because we will ultimately find that the class definition does not entitle Plaintiffs
to remand for other reasons, we will assume, along with the parties, that class
members who qualify based on proximity to the MMHF disposal facility must live
within three miles of that facility.
7
CCW from the Shady Point coal-fired plant to the MMHF facility; (ii)
hauling CCW from the Shady Point coal-fired plant to any other disposal
pit or dump site in LeFlore County; or (iii) hauling PFW from oil and gas
well drill sites to the MMHF disposal pit.
Aplt. App. at 94–95 (First Am. Petition, filed Oct. 4, 2012).
B
Defendants removed the case to the United States District Court for the
Eastern District of Oklahoma pursuant to CAFA, 28 U.S.C. § 1332(d)(2).
Plaintiffs subsequently filed a motion for remand, claiming that their case fell
within the “local controversy” and “home state” exceptions articulated in 28
U.S.C. § 1332(d)(4), which require the court to refrain from exercising
jurisdiction. Plaintiffs also argued that the court should decline to exercise
jurisdiction under the permissive “interests of justice” exception of 28 U.S.C.
§ 1332(d)(3). Under all three of these exceptions, Plaintiffs were obliged to
demonstrate, inter alia, that a certain portion of the class members are Oklahoma
citizens. See 28 U.S.C. § 1332(d)(3) (requiring a showing under the interest of
justice exception that “greater than one-third but less than two-thirds of the
members of all proposed plaintiff classes” are citizens of the state where the
action was filed); id. § 1332(d)(4)(A)(i)(I) (requiring a demonstration under the
local-controversy exception that “greater than two-thirds of the members of all
proposed plaintiff classes” are citizens of the forum state); id. § 1332(d)(4)(B)
8
(requiring under the home-state exception that “two-thirds or more of the
members of all proposed plaintiff classes” be citizens of the forum state).
The court held an evidentiary hearing on the motion, but Plaintiffs did not
introduce substantive evidence or witness testimony regarding citizenship of the
proposed class members, instead relying on their amended petition’s class
definition and “summary exhibits . . . based upon data that[] [had] been collected”
from various local and federal sources that purported to compare—as to the class
area—the percentage of Oklahoma class members against the percentage of non-
Oklahoma class members in that same area. Aplt. App. at 339–40, 369–78 (Tr. of
Mot. to Remand Hr’g, dated Mar. 21, 2013). Plaintiffs did not introduce the
underlying records or other data that formed the basis of the proffered charts.
The district court denied the motion for remand, finding that Plaintiffs had
not met their burden of proving by a preponderance of the evidence that any of
the exceptions applied. The court faulted Plaintiffs for failing to introduce any
substantive evidence and instead relying on demonstrative exhibits that
represented “a conclusion by counsel . . . as to what certain other public
documents purportedly show” without any testimony “as to what specific records
were inspected, how the calculations were made, or the like.” Id. at 460–61
(Order, dated Apr. 2, 2013). The court also concluded that, with respect to the
class definition itself, there were “simply too many variables . . . to assume” that
the class met the citizenship threshold for any of the exceptions. Id. at 465. In
9
particular, the court noted that the class definition included Oklahoma residents
and property owners—two groups that could include people who were not
Oklahoma citizens. The court also observed that the absence of limitations on the
temporal period that encompassed the proposed class complicated the citizenship
calculus and interjected an additional element of uncertainty into it. Specifically,
the court reasoned:
The difficulty in assuming citizenship based on residence or
property ownership becomes significantly greater here because
the proposed class is not limited in time. The amended petition
does not explicitly limit class membership to any particular time
or period of time, and plaintiffs’ counsel made clear at the
hearing that plaintiffs viewed the proposed class as embracing
persons who had been residents in the mid-1990’s, the time when
the coal-related activities began, and those impacted as early as
2003 by the disposal of produced oil and gas fluids. Inclusion in
the class definition of people who lived in, or owned property in,
the class area within the last twenty years injects an additional
and substantial amount of uncertainty into the citizenship
determination. Some portion of former residents and/or owners
will have since moved and become citizens of states other than
Oklahoma. Even a relatively low annual rate of such “turnover”
for an area could, over twenty years, substantially impact the
citizenship composition of the proposed class.
Id. at 464–65 (footnote omitted). Accordingly, the court concluded that Plaintiffs
had not shouldered their burden concerning CAFA’s exceptions and denied relief.
Over forty days after the hearing, Plaintiffs filed what they styled a
“[r]enewed” motion for remand. Id. at 470 (Renewed Mot. to Remand, dated May
13, 2013). In this document, Plaintiffs reiterated their position that they did not
need to present evidence and that their well-pleaded allegations in the amended
10
petition were sufficient to demonstrate that the case was a local controversy. 8
Plaintiffs also provided additional evidence in the form of an affidavit from Dr.
Clifford Lipscomb, the Director of Economic Research at Greenfield Advisors,
LLC, who analyzed property records within the class area and concluded that “at
least two-thirds” of proposed class members were Oklahoma residents. Id. at 496
(Aff. of Clifford Lipscomb, Ph.D., dated May 13, 2013). Plaintiffs, however, did
not submit to the court the records underlying Dr. Lipscomb’s analysis. In
connection with the motion, Plaintiffs also offered to amend their class definition
by limiting the class to “residents and/or property owners that are citizens of the
State of Oklahoma.” Id. at 480.
The district court viewed the renewed motion for remand as “essentially
asking the court to reconsider its prior decision.” Id. at 548 (Order, dated May
23, 2013). It concluded that Plaintiffs could not amend their complaint to divest
the court of jurisdiction after a proper removal. The court also declined to
consider the additional evidentiary support that Plaintiffs offered because it was
not presented at the hearing on the initial motion for remand. Accordingly, the
court denied the renewed motion as well. Plaintiffs sought permission from our
court to appeal from the denial of their renewed motion for remand under 28
U.S.C. § 1453(c), which allows appellate courts to consider interlocutory appeals
8
The renewed motion did not seek remand based on the home-state or
interests-of-justice exceptions.
11
filed within ten days of a grant or denial of a motion for remand. Defendant XTO
Energy, Inc. filed a motion to dismiss Plaintiffs’ petition for permission, and a
panel of this court granted it, concluding that Plaintiffs’ petition was untimely.
C
Defendants then filed individual motions to dismiss the First Amended
Petition, and the district court held a hearing on these motions. The court
sustained the motions to dismiss, but gave Plaintiffs fifteen days to amend. It
specifically instructed that “in addition to asserting a factual basis for the various
liability claims that are asserted . . . there should also be some clarification
relating to . . . the injuries for which relief is sought.” Aplt. App. at 698 (Tr. of
Mot. Hr’g, dated Aug. 2, 2013). Plaintiffs then filed a document styled a First
Amended Complaint, providing additional details regarding their claims.
According to the amended complaint, AES has operated the Shady Point coal-
burning power plant since 1990 and has generated CCW, a corrosive and toxic
substance that can be harmful to individuals who come in contact with it. CCW is
stored in concrete silos at the plant and subsequently transported off-site by truck
or rail. The amended complaint averred that CCW generated at the plant escapes
into the class area. In addition, the amended complaint alleged that Fly Ash
Truckers hauling CCW to the disposal site release CCW when traveling on the
“Haul Route”—a particular route through LaFlore County that passes close to
properties owned by putative class members. Id. at 770 (First Amended
12
Complaint, dated Aug. 20, 2013). The Fly Ash Truckers allegedly deposit the
CCW at the MMHF facility.
In addition to CCW, the MMHF facility allegedly accepted “waste fluids
and solids which are generated . . . during the course of oil and gas drilling and
completion operations” conducted by the Oil Producers. Id. at 787. In this
regard, MMHF allegedly accepted approximately 240 million gallons of PFW
between 2003 and 2009, which it mixed with CCW in its disposal pits. MMHF’s
disposal pits allegedly lie over two abandoned strip mines, and Plaintiffs alleged
that the geological features of the site provide pathways for waste to migrate from
the pit into the groundwater. Nevertheless, MMHF allegedly did not place any
lining in the pit to prevent waste from escaping. Further, Plaintiffs alleged that
the “toxic cocktail [of CCW and PFW] was allowed to . . . regularly overflow the
pit into Doe Creek and other creeks,” and, in support, referenced EPA inspections
in 2009 that found MMHF had unlawfully discharged waste into the waters of the
United States in violation of the Clean Water Act. Id. at 796–97. Plaintiffs also
alleged that fine particulate CCW deposited at the MMHF site is carried by the
winds and deposited in the class area.
The amended complaint supported these allegations by listing several
instances of regulatory noncompliance where state and federal authorities found
that MMHF released CCW or PFW into the air and water. The amended
complaint also alleged complicity by the other parties in MMHF’s violations: it
13
noted that AES is the only source of CCW in MMHF’s disposal pit, alleged that
CCW is blown into the air when ash-bearing trucks unload at the pit, and asserted
that MMHF’s regulatory failures were a matter of public record such that the Oil
Producers knew or should have known that the waste they disposed of at the
facility would not be in compliance with waste-disposal regulations.
The amended complaint claimed that proposed class members live, work,
and engage in various recreational activities in the class area and it generally
alleged that the release of harmful waste “cause[s] injury to [their] health and
their aesthetic, recreational, environmental, economic, and educational interests.”
Id. at 798. Plaintiffs averred that they are “reasonably concerned” about the
health effects of the released waste and its impact on “the safety of the creeks for
swimming” and the consumption of nearby fish, game, and crops. Id. The
amended complaint also generally alleged that “Plaintiffs and Putative Class
Members additionally suffer physical ailments consistent with disclosures and
warnings set forth on [Material Safety Data Sheets (‘MSDS’)],” 9 including
“respiratory conditions, . . . and skin and eye irritations” and that there “continue
to be significant concentrations of cancer victims” in the area. Id. at 799. On the
basis of these allegations, the amended complaint asserted causes of action for
strict liability, negligence per se, negligence, trespass, nuisance, and unjust
9
Plaintiffs averred that MSDS “disclose the hazardous and dangerous
properties of CCW/Fly Ash, and provide direction in the event that persons come
in contact with, ingest or inhale CCW/Fly Ash.” Aplt. App. at 776.
14
enrichment.
D
Defendants individually moved for dismissal of the amended complaint
under Federal Rule of Civil Procedure 12(b)(6). To begin, the district court
dismissed the negligence-per se claims with prejudice against all Defendants
because it found that by failing to address Defendants’ argument that the
“environmental statutes and regulations relied upon were intended to protect the
public welfare, not support private actions,” the plaintiffs “confess[ed]
defendants’ motions as to this issue” pursuant to Local Rule 7.1(c). Id. at 1514
(Order, dated Jan. 8, 2014). The court also dismissed the strict-liability claims
with prejudice against all Defendants, except the MMHF Defendants, because it
found that Oklahoma law does not “impose strict liability on any party that
generated or transported materials to a disposal site from which the materials then
escaped” and that Plaintiffs had only offered “bald assertions” that the other
defendants were complicit in MMHF’s allegedly improper disposal. Id. at 1503.
The court then dismissed all remaining claims against the Fly Ash Truckers
and Fluid Waste Truckers because it concluded that the amended complaint did
not allege “what they specifically did that was wrong” apart from acts solely
attributable to MMHF. Id. at 1506–09. The court concluded that the Oil
Producers had a duty to properly dispose of their waste fluids and breached this
duty by “sen[ding] drilling waste to a disposal facility that was not authorized to
15
receive at least some of the fluids,” id. at 1510; nevertheless, the court dismissed
the claims against the Oil Producers because it found that the amended complaint
lacked sufficiently specific allegations of harm. The amended complaint did not
contain any allegation that any specific class member had come into contact with
any of the fluids or suffered any specific injury, and it did not claim any loss in
property values or other property damage.
The district court also dismissed all claims against the AES Defendants
after it found that the element of injury was not adequately pleaded. The court
found that the amended complaint did not adequately plead facts to show any
connection between the AES Defendants and any injuries resulting from the
transport of CCW to, or disposal of CCW at, the MMHF pit. Finally, with respect
to MMHF, the court concluded that the plaintiffs had satisfied their pleading
burden regarding all elements except for injury.
The district court did not dismiss at that time the remaining claims against
MMHF, AES, or the Oil Producers, but rather gave the plaintiffs fifteen days to
amend their complaint a second time to adequately allege injury. Plaintiffs did
not submit any further evidence or supplement their amended complaint within
the fifteen days permitted. Consequently, the district court entered judgment
dismissing all remaining claims without prejudice. 10 Plaintiffs now appeal. 11
10
In dismissing all claims against all Defendants, the district court
(continued...)
16
II
Plaintiffs first challenge the district court’s denial of their motion to
remand and renewed motion to remand, and second challenge the dismissal of
their claims on the merits. At the outset, we sua sponte address whether we have
jurisdiction to review after final judgment the district court’s denial of the
motions for remand. See, e.g., Amazon, Inc. v. Dirt Camp, Inc., 273 F.3d 1271,
1274 (10th Cir. 2001) (“Although neither party challenges our appellate
jurisdiction, we have an independent duty to examine our own jurisdiction.”).
Concluding that we do have jurisdiction, we affirm the district court’s rejection of
Plaintiffs’ remand motions. Finally, we address the dismissal of all claims on the
merits and affirm the district court’s dismissal.
10
(...continued)
effectively dismissed, sua sponte, claims against R&J Trucking, Inc. and Bishop
Trucking; these entities had not filed motions to dismiss. A district court has the
inherent power to dismiss cases sua sponte, regardless of whether the parties
move to dismiss. See McKinney v. Okla. Dep’t of Human Servs., 925 F.2d 363,
365 (10th Cir. 1991); 5B Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1357 (3d ed. 2004) (“Even if a party does not make a
formal motion under Rule 12(b)(6), the district judge on his or her own initiative
may note the inadequacy of the complaint and dismiss it for failure to state a
claim as long as the procedure employed is fair to the parties.”). In any event, the
district court’s action as to these two companies is not challenged here.
11
Three of the companies that are Defendants-Appellees—Marine Coal
Sales Company, Hunter Ridge Coal Company, and International Coal Company,
Inc.—filed for bankruptcy on January 11, 2016, after briefing and oral argument
had concluded in this appeal. In response, on January 15, 2016, our court entered
an order abating this appeal only as it pertains to these three debtor Defendants.
Consequently, our disposition here does not directly relate to them and is not
binding on them.
17
A
Based upon the colloquy between the court and counsel at oral argument,
we take notice of a colorable question regarding whether we have jurisdiction to
review the district court’s denial of Plaintiffs’ remand motions as part of our
review of the court’s final judgment. By statute, “a court of appeals may accept
an appeal from an order of a district court granting or denying a motion to remand
a class action to the State court from which it was removed if application is made
to the court of appeals not more than 10 days after entry of the order.” 28 U.S.C.
§ 1453(c)(1) (emphasis added). The question before us is whether § 1453
provides an exclusive ten-day window for the appeal of such orders or whether it
merely provides an optional one, such that a litigant may subsequently appeal
from the court’s order to deny remand in the ordinary course of things after entry
of final judgment.
More specifically, is the statutory ten-day window for an interlocutory
appeal from an order denying a motion to remand a class action the only way that
a court of appeals may consider the denial, or is it just one optional way? If it is
the former, then we lack jurisdiction to address the denial of Plaintiffs’ remand
motions because their appeal is outside of the ten-day window. But if it is the
latter, then we may review the district court’s denial of the remand motions as
part of our review of the court’s final judgment; Plaintiffs timely appealed from
that judgment pursuant to 28 U.S.C. § 1291. Because we conclude that § 1453
18
creates an optional window to appeal from the denial of a motion to remand, we
conclude that we have jurisdiction to review the district court’s denial of
Plaintiffs’ remand motions. 12
At first blush, our decision in Weber v. Mobil Oil Corp., 506 F.3d 1311
(10th Cir. 2007), could conceivably be read to indicate that we lack jurisdiction
over Plaintiffs’ post-judgment appeal from the court’s denial of their remand
motions. Weber involved a class action that was filed in 2001 and then removed
to federal court after CAFA was enacted in 2005. Id. at 1313. The plaintiffs
there submitted a motion in the district court to remand the case to Oklahoma
state court on the basis that CAFA did not apply because the action was
commenced prior to its enactment. Id. The district court agreed and remanded
the case to state court. Id.
Our court accepted the appeal from that ruling under 28 U.S.C.
§ 1453(c)(1). Id. We observed that “[g]enerally, an order remanding a case to
the state court from which it originated is not reviewable on appeal.” Id. (citing
28 U.S.C. § 1447(d)). But we noted that jurisdiction was founded on
12
Recall that Plaintiffs did seek permission to appeal from the district
court’s denial of their second motion to remand, pursuant to 28 U.S.C. § 1453(c),
but a panel of our court deemed that petition for permission to be untimely. The
issue now is whether we have jurisdiction following entry of final judgment to
review the court’s denial of this motion and the first one under 28 U.S.C. § 1291.
19
§ 1453(c)(1)’s limited exception. Reviewing Weber’s reasoning, one might
conceivably be tempted to reach the conclusion that § 1453—with its ten-day
window to appeal—provided the only means for us to consider the district court’s
denial of Plaintiffs’ motions for remand, and that ten-day window has long since
expired. However, there is an important distinction between Weber and this case.
Weber involved the district court’s grant of a motion to remand, while this case
involves the district court’s denial of a motion to remand. This is a distinction
with a major difference; indeed, it is dispositive.
An order granting remand to the state court from which a case was removed
“is not reviewable on appeal or otherwise,” unless it is a suit against a federal
agency or official under 28 U.S.C. § 1442, or a civil rights suit under 28 U.S.C.
§ 1443. 28 U.S.C. § 1447(d). But § 1447(d) only addresses an order granting
remand, not an order denying remand. In contrast, “notwithstanding section
1447(d),” § 1453 provides a window of appeal from both orders granting remand
and orders denying remand. 13 In other words, in the absence of § 1453, we would
be specifically prohibited by § 1447(d) from considering appeals from orders
granting remand motions, but not from considering appeals relative to orders
13
For ease of reference, we note again that, under § 1453,
“notwithstanding section 1447(d), a court of appeals may accept an appeal from
an order of a district court granting or denying a motion to remand a class action
to the State court from which it was removed if application is made to the court of
appeals not more than 10 days after entry of the order.” 28 U.S.C. § 1453(c)(1).
20
denying remand motions. That is why, as Weber implies, all appeals from orders
granting remand motions must come within the ten-day window of § 1453.
However, there is no provision comparable to § 1447(d) that (absent
exceptions) bars appeals from orders denying motions to remand. Consequently,
quite apart from the interlocutory avenue to appeal from such orders that § 1453
provides, we may also take jurisdiction over appeals relative to the denial of a
motion to remand after entry of final judgment pursuant to 28 U.S.C. § 1291. Put
another way, we do not depend on § 1453 as the only avenue to hear an appeal
from a denial of a motion to remand, as opposed to the grant of a such a motion.
Though § 1453 establishes an interlocutory route to appeal, it in no way
diminishes our power to hear a challenge to a denial of a motion to remand as part
of our ordinary review of a district court’s final judgment under 28 U.S.C.
§ 1291. In sum, a district court’s denial of a motion to remand is reviewable in
an appellate court after entry of final judgment, even if no interlocutory appeal
from the denial was filed.
Other circuit courts, and panels thereof, have identified no jurisdictional
defect in the review after final judgment of denials of motions to remand in
CAFA cases. See Berera v. Mesa Med. Grp., PLLC, 779 F.3d 352 (6th Cir. 2015)
(reviewing a district court’s denial of a motion to remand after entry of final
judgment, where the court conducted further proceeding after the denial and
dismissed the case on the merits); Brown v. Mortg. Elec. Registration Sys., Inc.,
21
738 F.3d 926, 930–34 (8th Cir. 2013) (reviewing orders twice denying remand
motions as part of review of the final judgment); Hargis v. Access Capital
Funding, LLC, 674 F.3d 783, 789–90 (8th Cir. 2012) (reviewing order denying
motion to remand in district court as part of review of final judgment of a CAFA
action); Roe v. Michelin N. Am., Inc., 613 F.3d 1058 (11th Cir. 2010) (same); see
also Hoffman v. Nutraceutical Corp., 563 F. App’x 183, 184–85 & n.2 (3d Cir.
2014) (reviewing order denying a motion to remand in a CAFA case outside of
the ten-day window as part of the review of the final judgment, and explaining
that the court has jurisdiction under 28 U.S.C. § 1291 because “[a] denial of a
motion to remand is properly reviewable on appeal from a final judgment”
(quoting Albright v. R.J. Reynolds Tobacco Co., 531 F.2d 132, 134 (3d Cir.
1976))); Lemy v. Direct Gen. Fin. Co., 559 F. App’x 796, 798 (11th Cir. 2014)
(per curiam) (reviewing order denying motion to remand in district court as part
of review of final judgment of a CAFA action); Law Offices of K.C. Okoli, P.C. v.
BNB Bank, N.A., 481 F. App’x 622, 624–26 (2d Cir. 2012) (same).
And although we have not previously considered our post-judgment
appellate jurisdiction to review orders denying motions to remand in the CAFA
context, we have regularly exercised jurisdiction over such orders post-judgment
in other contexts. See Albert v. Smith’s Food & Drug Ctrs., Inc., 356 F.3d 1242,
1247 (10th Cir. 2004) (“This court has jurisdiction over a denial of a motion to
remand to state court when coupled with the appeal of a final judgment.” (quoting
22
Huffman v. Saul Holdings Ltd. P’ship, 194 F.3d 1072, 1076 (10th Cir. 1999)));
Martin v. Franklin Capital Corp., 251 F.3d 1284, 1288–89 (10th Cir. 2001)
(taking jurisdiction to address the district court’s denial of a motion to remand
when appealing the court’s final judgment), abrogated on other grounds by Dart
Cherokee Basin Operating Co. v. Owens, --- U.S. ----, 135 S. Ct. 547 (2014);
accord Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202, 1204 (11th Cir.
2008) (“We have jurisdiction to consider denial of a motion to remand upon the
entry of a final order . . . .”); Fakouri v. Pizza Hut of Am., Inc., 824 F.2d 470, 472
(6th Cir. 1987) (“An appellate court has jurisdiction to consider the denial of a
motion to remand a case to state court when coupled with an appeal of a final
judgment.”).
Moreover, we note that the Supreme Court, in Caterpillar Inc. v. Lewis,
519 U.S. 61 (1996), ruled that an appellate court could consider post-judgment a
district court’s order denying a motion to remand in a diversity-jurisdiction case,
despite the availability of an interlocutory appeal from such a denial under 28
U.S.C. § 1292(b). In Caterpillar, the Supreme Court considered, inter alia,
whether an appellate court could properly consider a district court’s order denying
a motion to remand a case to state court, and what the proper remedy was for the
erroneous denial after the parties fully litigated the case, including a six-day trial.
Id. at 67. The Supreme Court found that “by timely moving for remand, [the
plaintiff] did all that was required to preserve his objection to removal” for
23
appellate review. Id. at 74. And the Court held that a party was not required to
attempt an interlocutory appeal when its motion to remand is denied. Id. (“Nor is
a plaintiff required to seek permission to take an interlocutory appeal pursuant to
28 U.S.C. § 1292(b) in order to avoid waiving whatever ultimate appeal right he
may have.” (footnote omitted)). Instead, the Court found that the appellate court
could properly consider after final judgment whether the order denying the
motion to remand was proper. Id.
Of course, in Caterpillar, the Supreme Court was interpreting 28 U.S.C.
§ 1292(b), rather than 28 U.S.C. § 1453. Nevertheless, we view its reasoning as
persuasive, given the similarities between § 1292(b) and § 1453. Notably,
§ 1292(b) states that we “may . . . , in [our] discretion, permit an appeal to be
taken from” an interlocutory order. Similarly, § 1453(c)(1) states that we “may
accept an appeal from an order of a district court granting or denying a motion to
remand a class action.” Both statutes use permissive language (i.e., “may”) and
other circuits have recognized that “in enacting § 1453(c)(1) Congress intended to
mirror the procedures for taking an appeal pursuant to [28 U.S.C.] § 1292(b).”
Patterson v. Dean Morris, L.L.P., 444 F.3d 365, 369 (5th Cir. 2006) (quoting
Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc.,
435 F.3d 1140, 1145 (9th Cir. 2006)). This suggests to us that an appellant does
enough to preserve its right to appeal post-judgment from an order denying
remand by moving for the remand—irrespective of whether the party could have
24
sought an interlocutory appeal under § 1292(b) or § 1453(c)(1).
Accordingly, considering the matter sua sponte, we conclude that we have
jurisdiction under 28 U.S.C. § 1291 to consider the district court’s orders denying
Plaintiffs’ remand motions following entry of final judgment.
B
Exercising our jurisdiction to review the district court’s orders denying
remand, we uphold its decisions. “We review the district court’s ruling on the
propriety of removal de novo.” Parson v. Johnson & Johnson, 749 F.3d 879, 886
(10th Cir. 2014) (quoting Frederick v. Hartford Underwriters Ins. Co., 683 F.3d
1242, 1245 (10th Cir. 2012)) (reviewing a district court’s grant of a motion for
remand). We address the court’s orders with respect to both Plaintiffs’ initial
motion for remand and their second motion for remand, and conclude that it
properly denied them.
1
Under CAFA, a federal district court has subject matter jurisdiction “over
class actions involving [1] at least 100 members and [2] over $5 million in
controversy when [3] minimal diversity is met (between at least one defendant
and one plaintiff-class member).” Coffey v. Freeport McMoran Copper & Gold,
581 F.3d 1240, 1243 (10th Cir. 2009) (per curiam); see 28 U.S.C. § 1332(a). The
parties agree that these three conditions are satisfied. Nevertheless, CAFA
contains certain mandatory jurisdictional exceptions; where the requirements of
25
those exceptions are met, the district court must eschew jurisdiction and remand
the case. Notably, Plaintiffs argue that one such exception applies here—the
local-controversy exception, 28 U.S.C. § 1332(d)(4)(A). 14
The local-controversy exception requires plaintiffs seeking remand to show
that “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”—here, Oklahoma. See 28 U.S.C. § 1332(d)(4)(A)(i)(I); see, e.g., Coffey,
581 F.3d at 1243 (describing the citizenship requirement as one of the “three main
requirements for plaintiffs to meet in order to satisfy the ‘local controversy
exception’”). Rather than divesting a court of jurisdiction, the local-controversy
exception “operates as an abstention doctrine.” Graphic Commc’ns Local 1B
Health & Welfare Fund “A” v. CVS Caremark Corp., 636 F.3d 971, 973 (8th Cir.
2011). The local-controversy provision is “a narrow exception that was carefully
drafted to ensure that it does not become a jurisdictional loophole” and “all
doubts [are] resolved ‘in favor of exercising jurisdiction over the case.’” Evans v.
14
In the district court, Plaintiffs also argued that the district court
lacked jurisdiction under the home-state exception to CAFA, 28 U.S.C.
§ 1332(d)(4)(B), and that the district court should have declined to exercise
jurisdiction under the discretionary interests-of-justice exception, 28 U.S.C.
§ 1332(d)(3). Because Plaintiffs have only argued on appeal that jurisdiction was
improper under the local-controversy exception, we deem any remand arguments
under the other exceptions to be abandoned and thus waived. See, e.g., Elliott
Indus. Ltd. P’ship v. BP Am. Prod. Co., 407 F.3d 1091, 1116 n.21 (10th Cir.
2005) (“Failure to raise an issue in an opening appellate brief waives the issue.”).
26
Walter Indus., Inc., 449 F.3d 1159, 1163 (11th Cir. 2006) (quoting S. Rep. No.
109-14, at 42 (2005)); see also Woods v. Standard Ins. Co., 771 F.3d 1257, 1262
(10th Cir. 2014) (“[CAFA]’s provisions should be read broadly, with a strong
preference that interstate class actions should be heard in a federal court if
properly removed by any defendant.” (quoting S. Rep. No. 109-14, at 43 (2005))).
2
Plaintiffs defined the class as consisting of all “‘citizens and/or residents
and/or property owners’ whose injuries occurred within LeFlore County.” Aplt.
App. at 116 (Mot. to Remand, dated Dec. 5, 2012) (quoting Aplt. App. at 94). In
denying the first remand motion, the district court found that Plaintiffs’ inclusion
of residents and property owners in the class created considerable uncertainty
regarding the satisfaction of the citizenship criterion, and reasoned that “[t]he
difficulty in assuming citizenship based on residence or property ownership
becomes significantly greater here because the proposed class is not limited in
time,” but rather embraces “people who lived in, or owned property in, the class
area within the last twenty years.” Id. at 464. The court was unwilling to resolve
the citizenship question relative to, inter alia, the local-controversy exception in
Plaintiffs’ favor based on conjecture or speculation. See id. Thus, in the absence
of any substantive evidence, the court concluded that it was not required to
decline jurisdiction pursuant to § 1332(d)(4)(A). Id. at 465–66.
27
a
Plaintiffs argue that the district court erred in denying their initial motion
for remand: specifically, they maintain that based on the averments of their
amended petition and the materials they submitted at the hearing, the district
court could have determined that the citizenship criterion for the local-
controversy exception was satisfied. We disagree.
i
It cannot be disputed that Plaintiffs here bear the burden of establishing the
applicability of the local-controversy exception. See, e.g., Woods, 771 F.3d at
1262 (noting that “a party seeking remand to the state court bears the burden of
showing jurisdiction in federal court is improper under one of CAFA’s
exclusionary provisions”); see also Serrano v. 180 Connect, Inc., 478 F.3d 1018,
1019 (9th Cir. 2007) (“The structure of the statute and the long-standing rule on
proof of exceptions to removal dictate that the party seeking remand bears the
burden of proof as to any exception under CAFA.”). Several of our sister circuits
have required plaintiffs to establish the elements of a CAFA jurisdictional
exception by a preponderance of the evidence. See, e.g., Mondragon v. Capital
One Auto Fin., 736 F.3d 880, 884 (9th Cir. 2013); Vodenichar v. Halcon Energy
Props., Inc., 733 F.3d 497, 503 (3d Cir. 2013); Hollinger v. Home State Mut. Ins.
Co., 654 F.3d 564, 570 (5th Cir. 2011); In re Sprint Nextel Corp., 593 F.3d 669,
673 (7th Cir. 2010). Some district courts, however, have required less proof,
28
embracing a reasonable-probability standard or something akin to it. See, e.g.,
Dunham v. Coffeyville Res., LLC, No. 07–1186–JTM, 2007 WL 3283774, at *3
(D. Kan. Nov. 6, 2007) (requiring a “reasonable probability” that the citizenship
threshold is satisfied); Fiore v. First Am. Title Ins. Co., No. 05–CV–474–DRH,
2005 WL 3434074, at *2 (S.D. Ill. Dec. 13, 2005) (same); see also Mattera v.
Clear Channel Commc’ns, Inc., 239 F.R.D. 70, 80 (S.D.N.Y. 2006) (asking
whether it was “reasonably likely” that two-thirds of class members were citizens
of the forum state). Under either approach, “the movant must make some
minimal showing of the citizenship of the proposed class at the time that suit was
filed.” Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 793, 802
(5th Cir. 2007).
“A pure inference regarding the citizenship of prospective class members
may be sufficient if the class is defined as limited to citizens of the state in
question.” Mondragon, 736 F.3d at 881–82; see also Coffey, 581 F.3d at 1243
(considering a putative class limited to Oklahoma citizens). However, Plaintiffs’
class here was not restricted to citizens; instead, it included “citizens and/or
residents and/or property owners.” See Aplt. App. at 116 (quoting Aplt. App. at
94). This definition encompasses groups who may not necessarily be Oklahoma
citizens. “[A] person is a citizen of a state if the person is domiciled in that
state.” Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014). “[A]
person acquires domicile in a state when the person resides there and intends to
29
remain there indefinitely,” which is established by the “totality of the
circumstances.” Id. at 1200–01 (emphasis added).
To be sure, “the place of residence is prima facie the domicile.” State
Farm Mut. Auto. Ins. Co. v. Dyer, 19 F.3d 514, 520 (10th Cir. 1994). But
“allegations of mere ‘residence’ may not be equated with ‘citizenship.’”
Whitelock v. Leatherman, 460 F.2d 507, 514 (10th Cir. 1972); see also Miss. Band
of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989) (“‘Domicile’ is not
necessarily synonymous with ‘residence,’ and one can reside in one place but be
domiciled in another.” (citation omitted)); Preston, 485 F.3d at 798 (“A party’s
residence in a state alone does not establish domicile. Domicile requires
residence in the state and an intent to remain in the state.” (emphasis added)
(citation omitted)); Meyerson v. Harrah’s E. Chi. Casino, 299 F.3d 616, 617 (7th
Cir. 2002) (“[The plaintiff’s] complaint alleged that he ‘resides in the State of
Michigan,’ but residence and citizenship are not synonyms and it is the latter that
matters for purposes of the diversity jurisdiction.”); cf. Sprint Nextel, 593 F.3d at
674 (“[A] court may not draw conclusions about the citizenship of class members
based on things like their phone numbers and mailing addresses.”). And it is even
more obvious that mere property ownership in a state does not necessarily equate
to citizenship in that state; a person may own property in a state without either
being a state resident or intending to remain there. See, e.g., Evans, 449 F.3d at
1165–66 (concluding that a class defined to include “property owners, lessees,
30
[and] licensees of properties” who came in contact with defendants’ waste
substances was not necessarily limited to Alabama citizens); see also
Gerstenecker v. Terminix Int’l, Inc., No. 07-CV-0164-MJR, 2007 WL 2746847 at
*2 (S.D. Ill. Sept. 19, 2007) (ruling that a class composed of property owners in
Illinois did not qualify for remand because owners of real property are not
necessarily residents, and residents are not necessarily citizens).
Because Plaintiffs did not include in their amended petition an
unambiguous limitation confining the class definition to Oklahoma citizens, they
were obliged to do more: they, perforce, had to marshal and present some
persuasive substantive evidence (extrinsic to the amended petition) to establish
the Oklahoma citizenship of the class members. See, e.g., Lafalier v. Cinnabar
Serv. Co., No. 10–CV–0005–CVE–TLW, 2010 WL 1486900, at *5 (N.D. Okla.
Apr. 13, 2010) (“Mere allegations that plaintiffs are citizens of Oklahoma will not
suffice, and plaintiffs must come forward with some evidence establishing their
citizenship.”). Indeed, courts have required evidentiary proof even for
“propositions that appear likely on their face.” Mondragon, 736 F.3d at 884.
To this point, the Seventh Circuit’s decision in Sprint Nextel is both
apposite and persuasive. In Sprint Nextel, the plaintiffs defined a class limited to
“those who (1) had a Kansas cell phone number, (2) received their cell phone bill
at a Kansas mailing address, and (3) paid a Kansas ‘USF fee,’ which is applied to
all long-distance calls within Kansas.” 593 F.3d at 671. The district court
31
granted the plaintiffs’ motion for remand on the grounds that the home-state
exception was applicable, but the Seventh Circuit reversed because it could not
conclude from the class definition averred in the state court complaint that two-
thirds of the proposed plaintiff class were Kansas citizens. Id. at 673–76. The
court did consider it likely that the vast majority of the proposed class members
were Kansas residents because “[p]eople with Kansas cell phones presumably
have them because they lived or worked in the state at some time, and the current
Kansas mailing addresses suggest that they still do.” Id. at 673. The court also
thought it likely that few of these residents were nondomiciliaries (i.e., non-
citizens). Id. at 673–74. But the court dismissed such “[s]ensible” inferences as
“guesswork,” and was unwilling to presume that more than two-thirds of the class
were domiciled in Kansas based on this chain of inferences. Id. at 674–75. In the
absence of evidence that confirmed that two-thirds of the class members were
indeed Kansas citizens, or a class definition that restricted class members to
Kansas citizens, the court was unwilling to assume that the class definition met
the citizen requirement, even if the assumption had an “intuitive appeal.” Id. at
675–76 (quoting Phillips v. Severn Trent Envtl. Servs., Inc., No 07-3889, 2007
WL 2757131 at *3 (E.D. La. Sept. 19, 2007)). Here, Plaintiffs called upon the
district court to engage in similar guesswork; it properly declined to do so.
In sum, the district court here did not err in insisting that Plaintiffs
demonstrate, through more than their broad pleading averments, that over two-
32
thirds of the proposed class were Oklahoma citizens. And Plaintiffs did not rise
to meet the court’s demand.
ii
In this regard, the district court correctly determined that Plaintiffs’
summary exhibits were inadequate. To begin with, Plaintiffs did not validate the
conclusions contained in the summary exhibits by, for example, presenting to the
court the records upon which the exhibits were ostensibly based or offering sworn
testimony regarding the analysis underlying the conclusions. The court was well
within its discretion under these circumstances to decline to accept as evidence
the summary exhibit stating that ninety-two percent of property owners “are
known to reside . . . within the class area,” Aplt. App. at 372. See Fed. R. Evid.
1006 (requiring the proponent of a summary or chart to make the originals of
records summarized therein available for examination or copying); United States
v. Lewis, 594 F.3d 1270, 1282 (10th Cir. 2010) (discussing the requirement that a
party offering a summary must make the underlying records available to permit
the accuracy of the summary to be independently checked); see also United States
v. Anderson, 105 F.3d 670 at *2 (10th Cir. Dec. 27, 1996) (unpublished table
decision) (“Prior to the introduction of a summary exhibit, the party offering the
exhibit must lay a proper foundation for the admission of the original materials
upon which the exhibit is based and make those originals available to the
opposing party for review.”).
33
Even if the district court had accepted the summary exhibits as substantive
evidence—that is, as proof of the conclusions contained therein—the exhibits
would not have provided the district court with a sound legal basis to rule in
Plaintiffs’ favor on the local-controversy question. As the district court noted,
stripped to their “essence,” the exhibits ostensibly demonstrated that “8% of
owners of record have addresses outside of Oklahoma.” Aplt. App. at 461. That
is, they purported to show that over two-thirds (i.e., ninety-two percent) of
property owners in the class area actually resided in that area. However, even if
this were true, as we have seen, this fact would not have been determinative,
because residence does not necessarily equate with citizenship. In other words,
the fact that more than two-thirds of property owners were residents did not mean
that more than two-thirds of property owners were citizens.
Moreover, even if the district court could have assumed that the current
property owners are residents and citizens, that would not have ended the inquiry
because, as the district court noted, the proposed class was not temporally limited
to the current period. It extended back in time at least twenty years. And, for
those past periods, Plaintiffs’ exhibits were silent: that is, they did not reveal
what percentage of property owners resided in the class area—and thus were
ostensible citizens—say, ten, fifteen, or twenty years ago. Of course if there
could be some assurance that the current property owners were substantially the
same as the property owners of the past, one might be able to reasonably infer
34
that the current property-owner/residence percentages were at least roughly the
same as those of the past. However, on this record, the district court could not
have gained such assurance.
As the district court observed, “Some portion of former residents and/or
owners will have since moved and become citizens of states other than Oklahoma.
Even a relatively low annual rate of such ‘turnover’ for an area could, over
twenty years, substantially impact the citizenship composition of the proposed
class.” Id. at 464–65. The ill-defined temporal limits of Plaintiffs’ proposed
class, in the district court’s words, “interject[ed] an additional and substantial
amount of uncertainty into the citizenship determination.” Id. at 464. In our
view, the district court would have been engaging in sheer speculation on this
record to infer past property-owner/residence percentages from current ones, and
the court wisely declined to consider the exhibits and embark on such speculation.
Consequently, the summary exhibits would not have meaningfully assisted the
court in determining what percentage of the total proposed class—viewed in the
aggregate and spanning at least twenty years—were Oklahoma residents, much
less citizens.
In sum, the district court did not err in declining to treat Plaintiffs’
summary exhibits as substantive evidence. Moreover, they would not have
availed Plaintiffs in any event. Plaintiffs were not entitled to relief.
35
iii
The cases that Plaintiffs cite in support of an obverse conclusion are
unavailing. For example, Plaintiffs argue that our decision in Dyer supports their
position that residence is sufficient to demonstrate domicile in the absence of a
contrary showing. In Dyer, a defendant could not be located and a codefendant
argued that there was not complete diversity because the plaintiff was domiciled
in Illinois and the missing defendant could, theoretically, be domiciled anywhere,
including Illinois. Dyer, 19 F.3d at 518. We concluded that the district court’s
rejection of the codefendant’s argument was not clearly erroneous after the
plaintiff showed that the missing defendant’s last known domicile was in Oregon;
he had an Oregon driver’s license and had been in Wyoming when the accident
occurred; and the missing defendant had been a resident of Wyoming “[a]t all
times material to this Complaint.” Id. at 518–19.
Dyer, however, is distinguishable and offers little guidance on these facts.
Dyer did not involve an inquiry into the place of citizenship of the missing
defendant, much less that of a class of persons, as here; rather, Dyer’s probe was
focused on whether Illinois could be negated as a place of citizenship, that is, at
the very least could the court properly say that the missing defendant was not a
citizen of Illinois. Evidence that is sufficient to prove that a defendant is not a
citizen of a given state is not necessarily sufficient to affirmatively prove that he
is a citizen of a particular state. Indeed, in Dyer, neither the district court nor our
36
court definitively determined in which state the defendant was domiciled (i.e.,
could be deemed a citizen), despite evidence of his residence. Id. Moreover, we
cautioned there that “[r]esidence alone is not the equivalent of citizenship.” Id. at
520. And Plaintiffs’ analysis repeatedly elides this important legal proposition.
Accordingly, we think Plaintiffs’ reliance on Dyer is misplaced.
Plaintiffs’ authority, therefore, does not give us pause or alter our
conclusion. To briefly recap, the party moving for remand under the local-
controversy exception bears the burden of demonstrating that more than two-
thirds of its proposed class members are citizens of the state from whose courts
the case was removed. A demonstration that the proposed class members are
property owners or residents of that state will not suffice in the absence of further
evidence demonstrating citizenship. Because Plaintiffs’ proposed class included
citizens, residents, and property owners, and they did not introduce evidence
sufficient to show that the residents and property owners were also citizens,
Plaintiffs did not meet their burden. Accordingly, the district court properly
denied the first motion to remand.
b
We also discern no error in the district court’s denial of Plaintiffs’ self-
styled “renewed” motion for remand. The parties dispute whether this motion
should be treated as a free-standing, new motion for remand (Plaintiffs’ view) or
as a motion to reconsider the previous denial of the first motion for remand
37
(Defendants’ view). We would review the former motion de novo, Parson, 749
F.3d at 886, and the latter for abuse of discretion, Walters v. Wal-Mart Stores,
Inc., 703 F.3d 1167, 1172 (10th Cir. 2013). We need not resolve this dispute,
however. Even proceeding on the assumption that the motion was a new one that
we review under the more searching de novo standard, we conclude that
Plaintiffs’ motion did not satisfy the standards for remand under the local-
controversy exception. 15
Plaintiffs’ second motion reiterated their position that they did not need to
present evidence and that the well-pleaded allegations in the amended petition
were sufficient to show that the case was a local controversy. As we have
demonstrated above, however, the amended petition’s averments were actually
inadequate to show that over two-thirds of the proposed class were citizens of
Oklahoma, as opposed to merely Oklahoma residents or property owners.
Ostensibly to address the district court’s concern about the factual holes in
its presentation, in its renewed motion, Plaintiffs did present substantive evidence
in the form of an affidavit from Dr. Clifford Lipscomb, the Director of Economic
Research at Greenfield Advisors, LLC. Dr. Lipscomb was asked to determine (1)
whether “two-thirds or more of the putative class plaintiffs in the proposed class
area (as of 2009) [were] still residents of the State of Oklahoma as of 2012”; and
15
The renewed motion did not seek remand based on the home-state or
interests-of-justice exceptions.
38
(2) whether “two-thirds or more of the residents in the proposed class area (as of
1998) [were] still residents of the State of Oklahoma as of 2012.” Aplt. App. at
490 (Lipscomb Affidavit, dated May 13, 2013). Though they were not supplied to
the district court, Dr. Lipscomb purported to rely on a variety of records and other
data sources, including “publically available data from the U.S. Census Bureau
for Le Flore County,” “data from the proposed class area related to sales
transactions between 2009 and 2012,” and “geographic information system (GIS)
data, which includes the physical address of properties in the proposed class
area.” Id. at 492, 494. He averred that these sources helped him to reach
conclusions, inter alia, about “the rate of migration of the proposed class
plaintiffs at two different time periods (late 1990s and from 2009–2012)” and
about “the percentage of properties that had an ownership change between 2009
and 2012.” Id. Dr. Lipscomb’s ultimate conclusion was that “the class area is
comprised of at least two-thirds Oklahoma residents” and that “[t]he outmigration
of residents in the proposed class area does not occur in sufficient numbers to
have an appreciable impact on [his] conclusion.” Id. at 496 (emphases added).
The district court refused to consider Dr. Lipscomb’s affidavit because it
could have been presented at the hearing on the first motion; prior to that hearing,
the court had admonished the plaintiffs “if there is some additional evidence you
feel a need to offer this is the hearing to do it at, not a post-hearing submission.”
Aplt. App. at 407. Whether the court erred in failing to consider this additional
39
evidence turns in part on whether the renewed motion is properly viewed as a
motion for reconsideration. Certainly, if it was such a motion, the court would
have had considerable discretion to decline to entertain this evidence—which
could have been presented at the first hearing. See Bryson v. City of Okla. City,
627 F.3d 784, 788 (10th Cir. 2010) (discerning no abuse of discretion where the
district court declined to consider two affidavits submitted with a motion to
reconsider that should have been presented in prior briefing); Price v. Philpot,
420 F.3d 1158, 1167–68 (10th Cir. 2005) (holding that the district court did not
abuse its discretion in declining to consider a belatedly filed affidavit submitted
as an attachment to a motion to reconsider). However, as noted, we need not
dwell here on the proper characterization of this motion. We are content to
assume that it was not one for reconsideration. Even under this view, we
conclude that if the district court erred in not considering Dr. Lipscomb’s
affidavit, such error was harmless. We are confident that the affidavit would not
have altered the outcome—viz., the district court properly denied the second
motion for remand.
Though Defendants do not argue the point, we note at the outset that the
ultimate conclusion of Dr. Lipscomb’s affidavit falls numerically short of the
statutory standard for the local-controversy exception and, thus, could never be
sufficient evidence, standing alone, to establish the exception’s applicability.
Specifically, unlike the home-state exception (i.e., “two-thirds or more”), 28
40
U.S.C. § 1332(d)(4)(B), the numerical showing under the local-controversy
exception is “greater than two-thirds,” id. § 1332(d)(4)(a)(i)(I). Yet, Dr.
Lipscomb’s ultimate conclusion was framed in terms less than that, specifically,
“at least two-thirds,” though he was explicitly authorized to comment on whether
“more” than two-thirds were present. Aplt. App. at 490, 496. In other words,
even if we could construe Dr. Lipscomb’s conclusion as directly implicating
citizenship rather than residency (which, as noted below, we cannot), it would not
definitively tell us whether “greater than two-thirds” of the proposed class are
Oklahoma citizens; it would only tell us that “two-thirds” of them are. And that
is numerically inadequate under the local-controversy exception.
Be that as it may, Dr. Lipscomb’s affidavit fails to cure a fundamental
defect of Plaintiffs’ first try at establishing the applicability of the local-
controversy exception because it is framed in terms of residency, not citizenship.
In other words, Dr. Lipscomb’s affidavit only opines that “the class area is
comprised of at least two-thirds Oklahoma residents,” id. at 496 (emphasis
added); it is silent regarding how many of those residents are actually Oklahoma
citizens. Yet, as we have seen, proof of residency is not enough: the standard for
remand under the local-controversy exception is that more than two-thirds of class
members are citizens, and citizenship requires both residency and intent to remain
indefinitely. Because Dr. Lipscomb’s affidavit (i.e., Plaintiffs’ evidence) does
not speak to the intent-to-remain component, it was ineffective in demonstrating
41
that two-thirds of the proposed class were Oklahoma citizens.
In contemplating Plaintiffs’ failure of proof, we are reminded of the
Eleventh Circuit’s observations in Evans, where the court discounted the
probative value of the expert of the plaintiff class:
[P]laintiffs have not carried their burden of demonstrating that
more than two-thirds of the plaintiff class are Alabama citizens.
We understand that evidence of class citizenship might be
difficult to produce in this case. That difficulty, however, is to a
considerable degree a function of the composition of the class
designed by plaintiffs. The local controversy exception is
designed to ensure that state courts hear cases of a truly local
nature. We have no way of knowing what percentage of the
plaintiff class are Alabama citizens. We conclude that the
evidence adduced by the plaintiffs wholly fails to present a
credible estimate of the percentage of the plaintiff class who are
citizens of Alabama. Accordingly, we hold that Plaintiffs have
failed to prove that more than two-thirds of the plaintiff class are
Alabama citizens.
449 F.3d at 1166; see Preston, 485 F.3d at 803–04 (“[T]he key feature of any
judicial inquiry under this CAFA exception must focus on the two-thirds fraction
. . . . The medical records only provide the court with residency information for
the proposed class and fail to demonstrate their intent to be domiciled in New
Orleans.”); see also Mondragon, 736 F.3d at 884 (“That a purchaser may have a
residential address in California does not mean that person is a citizen of
California. In addition, the proposed class reaches back to cover purchases made
as long as four years before the filing of the complaint . . . . There is simply no
evidence in the record to support a finding that the group of citizens outnumbers
42
the group of non-citizens by more than two to one.”). The words of Evans and
like cases resonate here.
Plaintiffs remind us, however, that they offered—albeit only after the court
had denied the first motion for remand—to modify the class definition to limit the
class to “residents and/or property owners that are citizens of the State of
Oklahoma.” Aplt. App. at 480. Although this class definition might have been
effective if employed when the case was first filed, post-removal amendments are
ineffective to divest a federal court of jurisdiction. See Salzer v. SSM Health
Care of Okla., Inc., 762 F.3d 1130, 1133 (10th Cir. 2014) (“[T]he propriety of
removal is judged on the complaint as it stands at the time of the removal . . . .”
(quoting Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484, 1488 (10th Cir.
1991))); see also In re Burlington N. Santa Fe Ry. Co., 606 F.3d 379, 380–81 (7th
Cir. 2010) (noting that the “general rule” in a case removed under CAFA is that
“nothing filed after a notice of removal affects jurisdiction”; therefore, a plaintiff
may not require remand to state court by amending its complaint to eliminate
class allegations); cf. Rockwell Int’l Corp. v. United States, 549 U.S. 457, 474 n.6
(2007) (“[W]hen a defendant removes a case to federal court based on the
presence of a federal claim, an amendment eliminating the original basis for
federal jurisdiction generally does not defeat jurisdiction.”). Accordingly, the
district court properly decided to decline Plaintiffs’ amendment proposal.
In sum, we uphold the district court’s denial of Plaintiffs’ “renewed”
43
motion for remand. Therefore, having properly denied remand twice, the district
court correctly took jurisdiction and reached the merits of this case. We turn now
to Plaintiffs’ challenges to the court’s merits rulings.
C
Regarding the adequacy of Plaintiffs’ amended complaint, we conclude that
it fails to state a plausible claim for strict liability, negligence, and negligence per
se because it does not contain adequate factual allegations that Plaintiffs have
been injured by Defendants’ alleged wrongdoing.
We review de novo the district court’s grant of a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6). Burnett v. Mortg. Elec. Registration
Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013). In doing so, “[w]e accept as
true all well-pleaded factual allegations in the complaint and view them in the
light most favorable to the plaintiff.” Id. The complaint must contain sufficient
“factual content that allows the court to draw the reasonable inference that the
defendant is liable,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); that is, it must
“raise a right to relief above the speculative level,” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007). We have clarified that the Twombly/Iqbal standard is
“a middle ground between ‘heightened fact pleading,’ which is expressly rejected,
and allowing complaints that are no more than ‘labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action,’ which the [Supreme]
Court stated ‘will not do.’” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir.
44
2008) (citations omitted) (quoting Twombly, 550 U.S. at 555, 570). The focus of
our inquiry is the “scope of the allegations in a complaint: if they are so general
that they encompass a wide swath of conduct, much of it innocent, then the
plaintiffs ‘have not nudged their claims across the line from conceivable to
plausible.’” Id. (quoting Twombly, 550 U.S. at 570). This inquiry is “a
context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S. at 679; accord Kan. Penn
Gaming, LLC v. Collins, 656 F.3d 1210, 1215 (10th Cir. 2011) (“The nature and
specificity of the allegations required to state a plausible claim will vary based on
context.”).
Plaintiffs dispute the district court’s dismissal of their strict-liability,
negligence-per se, and negligence claims. 16 Under Oklahoma law, all three of
these claims require a specific allegation that the actions taken by the defendants
caused an injury. See, e.g., Howard v. Zimmer, 299 P.3d 463, 474 (Okla. 2013)
(“[T]o prevail on a claim for negligence per se, the [plaintiff] must not only
demonstrate violation of the regulation but also that the violation caused his
injury along with the extent to which the injury may support an award of
16
The appellants do not argue that the district court erred in dismissing
their trespass, nuisance, and unjust-enrichment claims; any challenge to the
dismissal of these claims is therefore deemed waived. See, e.g., Elliott Indus.
Ltd. P’ship, 407 F.3d at 1116 n.21 (“Failure to raise an issue in an opening
appellate brief waives the issue.”).
45
damages.”); Copeland v. Lodge Enters., Inc., 4 P.3d 695, 699–700 (Okla. 2000)
(Negligence requires “an injury to plaintiff proximately caused by the defendant’s
breach of [a] duty” owed to plaintiff); City of Mangum v. Brownlee, 75 P.2d 174,
175–176 (Okla. 1938) (noting, in a case establishing strict liability for the
possession of wild animals, that “[t]he plaintiff was invited on the premises[] and
. . . was injured . . . . These facts establish liability.”). We have also stated that
“a plaintiff in a toxic tort case must prove that he or she was exposed to and
injured by a harmful substance manufactured by the defendant.” See Mitchell v.
Gencorp, Inc., 165 F.3d 778, 781 (10th Cir. 1999) (emphasis added); see also
Norris v. Baxter Healthcare Corp., 397 F.3d 878, 881 (10th Cir. 2005) (stating
that in toxic tort litigation, “plaintiffs must show both general and specific
causation. General causation is whether a substance is capable of causing a
particular injury or condition in the general population and specific causation is
whether a substance caused a particular individual’s injury.” (citations omitted)).
Plaintiffs’ amended complaint (generously read) lists two conceivable
categories of injury. The first are expressions of “reasonabl[e] concern[].” Aplt.
App. at 798. The amended complaint states that Plaintiffs are “reasonably
concerned” about several risks: “breathing air contaminated with particulates
from . . . CCW/Fly Ash and PFW,” “the threat to their health caused by needing
to shutter themselves indoors,” “CCW/Fly Ash and PFW contamination of . . .
water sources . . . impair[ing] the safety of the creeks for swimming and for
46
consuming fish caught from the creeks, or game shot nearby,” “the safety of
handling and using crops harvested along the banks of these water sources,” and
that “CCW/Fly Ash and PFW renders their soil and vegetables unsafe or
otherwise impairs its quality.” Id. at 798–99. The second category of alleged
injury is statements of present harm. The plaintiffs allege that they “suffer
physical ailments consistent with disclosures and warnings set forth on MSDS
[i.e., Material Safety Data Sheets]. These include, but are not limited to,
respiratory conditions, such as asthma and bronchial and nasal infections, and
skin and eye irritations.” Id. at 799. Neither of these categories of alleged injury
adequately support, as a matter of law, claims for relief.
Alleging reasonable concern about an injury occurring in the future is not
sufficient to allege an actual injury in fact. Oklahoma law is clear that a cause of
action does not accrue until an injury in fact occurs. See Consol. Grain & Barge
Co. v. Structural Sys., Inc., 212 P.3d 1168, 1171 & n.8 (Okla. 2009) (stating that
an action accrues when a litigant can first successfully maintain the action, which
requires demonstrating all elements of the claim, including an injury proximately
resulting from the violation of an existing duty). Indeed, “[i]t is well established
that a plaintiff in a toxic tort case must prove that he or she was exposed to and
injured by a harmful substance manufactured by the defendant.” Mitchell, 165
F.3d at 781. We have held that in such cases, “risk of potential future harm is not
cognizable” to demonstrate injury. Adams-Arapahoe Sch. Dist. No. 28-J v. GAF
47
Corp., 959 F.2d 868, 872–73 (10th Cir. 1992) (holding that the plaintiffs had not
adequately alleged injury under Colorado tort law by pleading the “mere risk of
harm” from the use of floor tiles containing asbestos); see Consol. Grain & Barge
Co., 212 P.3d at 1171 n.8 (“[I]n order to maintain a negligence action to a
successful conclusion, the litigant must allege injury or damages that are certain
and not speculative.”); see also City of Wichita v. U.S. Gypsum Co., 72 F.3d 1491,
1498 (10th Cir. 1996) (stating, in applying Kansas law, “Actual physical injury is
an essential element of any negligence claim and tort liability may not be
premised on mere risk of potential future harm not yet suffered.”). However,
Plaintiffs’ allegations of reasonable concern merely allege that Plaintiffs are
concerned about the risk of future injury; that is not enough. The alleged future
injuries occupying Plaintiffs’ present concerns might form the basis for an action
if they were to become manifest; but, until they do, there is no basis for relief.
Thus, these averments of concern about possible future injuries are not sufficient
to plausibly satisfy the injury component of the claims at issue.
And, second, as to the allegations of present physical harm, they likewise
do not satisfy the Twombly/Iqbal plausibility standard. The general statement that
plaintiffs suffer ailments consistent with exposure to CCW is nothing more than a
“formulaic recitation”; as such, we do not give it much credence. See Khalik v.
United Air Lines, 671 F.3d 1188, 1193 (10th Cir. 2012) (stating that conclusory
allegations in a complaint are “not entitled to the assumption of truth”). While
48
Plaintiffs list conditions including “asthma and bronchial and nasal infections,
and skin and eye irritations,” Aplt. App. at 799, its list is just “a litany of diverse
and vague alleged [harms] . . . with zero details or concrete examples,” see
Burnett, 706 F.3d at 1240 (concluding that an allegation that defendants made
false representations by “emails, faxes, correspondence, telephone calls, and/or
meetings, and the like” to be insufficient). Indeed, the generality of the alleged
harms significantly undercuts the desired plausibilty of Plaintiffs’ claims because
those harms might “encompass a wide swath of” innocent sources. See Robbins,
519 F.3d at 1247. There are no specific allegations of individual Plaintiffs
contracting the alleged ailments after coming into contact with CCW or PFW,
from which a court might “draw the reasonable inference that the defendant[s]
[are] liable.” Iqbal, 556 U.S. at 678; see Ridge at Red Hawk, L.L.C. v.
Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (“[T]he mere metaphysical
possibility that some plaintiff could prove some set of facts in support of the
pleaded claims is insufficient.”).
Despite being twice warned by the court of the need to identify “plaintiffs
[who] individually sustained personal injuries or property damage as [a] result of
the allegedly contaminated water,” Aplt. App. at 1511, Plaintiffs did not point to
a single individual class member who had suffered these effects or point to any
specific patient whose symptoms might plausibly be linked to the actions of
Defendants. Nor did Plaintiffs allege that these health effects exceed the
49
statistically typical natural occurrence of these symptoms. Their summary
statement of health effects is nothing more than a rote recitation of general harms
derived from MSDS, untethered to the experience of any particular person
exposed to CCW or PFW. Accordingly, we cannot afford these averments any
weight. See Khalik, 671 F.3d at 1193.
While we have recognized that the “nature and specificity of the allegations
required to state a plausible claim will vary based on context,” Kan. Penn
Gaming, 656 F.3d at 1215, individual instances of concrete injuries related to
exposure to CCW and PFW are the kinds of “details the Plaintiff[s] should know
and could properly plead,” Khalik, 671 F.3d at 1194. Plaintiffs’ pleading failure
in this regard defeats all of their claims.
III
The district court properly denied both motions to remand and dismissed
the amended complaint against Defendants. For the foregoing reasons, we
AFFIRM the judgment of the district court.
ENTERED FOR THE COURT
Jerome A. Holmes
Circuit Judge
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