Abraham v. St. Croix: Third Circuit Ponders Meaning of “Single Event or Occurrence” under CAFA

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The Third Circuit is currently considering whether, under the Class Action Fairness Act (CAFA), removal of a toxic tort class action from state to federal court is proper where it is undisputed that all of the sites alleged to be toxic are within one state or territory. See Abraham v. St. Croix Renaissance Group, L.L.L.P., No. 12-0011 (Dist. V.I. Dec. 7, 2012) (remand order under appeal in Third Circuit, available here).

CAFA expressly provides for “local controversies” to be heard in state, not federal court. The plaintiffs based their remand motion on CAFA’s provision that removal is improper when all claims arise from “an event or occurrence” within a single state (or its territorial equivalent). See order at 4 (“The question presented is whether the allegations as pleaded concerning the continual release of red mud, red dust, and coal dust as well as the friable asbestos over a period of years fit within the meaning of ‘an event or occurrence’ as set forth in [CAFA].”).

The district court found the “event or occurrence” requirement satisfied and ordered the action to be remanded to the Virgin Islands court it was filed in, reasoning as follows: “We think that an event, as used in CAFA, encompasses a continuing tort which results in a regular or continuous release of toxic or hazardous chemicals” and, therefore, “[w]e see no reason to distinguish between a discrete happening, such as a chemical spill causing immediate environmental damage, and one of a continuing nature, such as is at issue here.” Order at 8 (footnote omitted).

Whether the Third Circuit will affirm the district court’s remand order remains to be seen. Last week’s oral argument revealed that there is an apparent consensus on the panel that all pertinent events happened on St. Croix; thus, like the district court, the Third Circuit must determine whether that constitutes a “single event or occurrence.” In addition to the issue of statutory interpretation, the plaintiffs’ counsel argued on appeal that remand is consistent with CAFA’s motivating purpose, which is to send interstate disputes to federal court, but keep genuinely local controversies in state court. The Third Circuit’s ruling is likely to indicate whether CAFA’s primary function is to provide a rational means of dividing complex litigation labor between federal and state courts, or to serve as a device (like arbitration) deployed mainly to frustrate class and representative actions.

The Third Circuit’s decision is expected to issue shortly, possibly by mid-May.