Aarstad v. BNSF Railway Company et al

Filing 120

ORDER ADOPTING FINDINGS AND RECOMMENDATIONS: IT IS ORDERED that: Magistrate Judge Johnston's 112 Findings and Recommendations are ADOPTED IN PART, including Magistrate Judge Johnston's recommendation that the principal injuries element h as been met; Plaintiffs' 13 Motion to Remand is GRANTED and this case is to be remanded to the Montana Eighth Judicial District Court, Cascade County; Magistrate Judge Johnston's 113 Findings and Recommendations are ADOPTED IN FULL; Defendant Maryland Casualty's 86 96 Motions to Dismiss are DENIED, without prejudice, as moot. Signed by Judge Brian Morris on 4/6/2020. (SLR)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION
KOREY L. AARSTAD, et al.,

CV-17-72-GF-BMM-JTJ

Plaintiffs,
vs.
ORDER ADOPTING FINDINGS AND
RECOMMENDATIONS

BNSF RAILWAY COMPANY, et al.,
Defendants.

BACKGROUND
Plaintiff Korey L. Aarstad, along with 191 other named plaintiffs
(collectively “Plaintiffs”), sought an order remanding this case to Montana state
court on the basis that the case had been improperly removed from Montana state
court based on the local controversy exception to the Class Action Fairness Act, 28
U.S.C. § 1332(d)(4)(A). (Doc. 13.) Defendants BNSF Railway Company and John
Swing (“Swing”) (collectively “BNSF”) objected on the grounds that they properly
had removed the case as a mass action. United States Magistrate Judge John
Johnston entered Findings and Recommendations in this matter on January 23,
2018. (Doc. 60.) The Court adopted the Findings and Recommendations in full on
October 15, 2018 (Doc. 64.)
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The Ninth Circuit vacated the Court’s order and remanded for further
proceedings due to the Court’s failure to address the third element of the local
controversy exception of the Class Action Fairness Act of 2005 (“CAFA”), 28
U.S.C. § 1332(d)(11)(B). (Docs. 80 and 81.) Specifically, the Ninth Circuit stated
that the Court failed to make any finding whether the “principal injuries resulting
from the alleged conduct or any related conduct of each defendant were incurred”
in Montana. (Doc. 80 at 1.)
On remand, Magistrate Judge Johnston provided the parties with the
opportunity to develop the record on CAFA’s local controversy exception. (Doc.
112 at 3.) Magistrate Judge Johnston issued Findings and Recommendations on
January 21, 2020, in which he found that “all or almost all of the injuries”
allegedly caused by BNSF had occurred in Montana. (Id. at 9-10.)
BNSF filed objections to this finding on February 2, 2020. (Doc. 114.)
BNSF also renewed its objections that John Swing is a local defendant from whom
significant relief is sought by Plaintiffs, and that John Swing is a local defendant
whose alleged conduct forms a significant basis for the claims asserted by
Plaintiffs. (Id. at 24-28.) Plaintiffs responded on February 12, 2020. (Doc. 115.)
The Court reviews de novo Findings and Recommendations to which a party
timely objects. 28 U.S.C. § 636(b)(1). The Court reviews for clear error portions of
Magistrate Judge Johnston’s Findings and Recommendations to which no parties
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specifically objected. McDonnell Douglas Corp. v. Commodore Bus. Mach., Inc.,
656 F.2d 1309, 1313 (9th Cir. 1981).
ANALYSIS
I.

All or Almost All of the Injuries Occurred in Montana

BNSF objects on a number of fronts to Magistrate Judge Johnston’s finding
that “all or almost all” of the injuries resulting from the alleged conduct occurred
in Montana. (See Doc. 114.) To start, they object that Magistrate Judge Johnston
“improperly focused his analysis on where Plaintiffs were injured.” (Doc. 14 at
13.) They argue that Magistrate Judge Johnston should have considered whether
the conduct in the complaint “could be alleged to have caused other injuries
outside Montana.” (Id. (emphasis removed).) BNSF further objects on the basis
that Magistrate Judge Johnston should have considered extrinsic evidence outside
the pleadings. (Id. at 14.) Third, BNSF claims that extrinsic evidence shows that its
alleged conduct has injured non-Montanans. (Id. at 18.) Finally, BNSF claims that
even the allegations of the complaint standing alone show that the alleged conduct
occurred outside Montana. (Id. at 22.) The Court agrees, in part, with BNSF’s
objections, but ultimately adopts Magistrate Judge Johnston’s recommendation that
“all or almost all” of the injuries resulting from the alleged conduct occurred in
Montana.

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a.

The Court should consider the principal injuries of all victims
regardless of class membership.

The Ninth Circuit has yet to interpret CAFA’s principal injuries requirement.
This element of CAFA’s local controversy exception requires that the “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.” 28
U.S.C. § 1332(d)(4)(A)(i)(III). Putative class actions may allege conduct that injured
class members and those who are not in the class. Courts stand divided about
whether “principal injuries resulting the alleged conduct” requires a court to look
solely at the principal injuries of the class resulting from the alleged conduct or at
the principal injuries of all people resulting from the alleged conduct.
Other federal district courts in the Ninth Circuit seem to follow something
closer to the latter approach. Specifically, they consider whether the conduct
alleged in the complaint plausibly could have caused harm to people or places
nationwide. See Marino v Countrywide Financial Corp., 26 F. Supp. 3d 949, 954955 (C.D. Cal. 2014); Waller v. Hewlett-Packard Co., No. 11-cv-454, 2011 WL
8601207, at *4-5 (S.D. Cal. May 10, 2011); Kearns v. Ford Motor Co., No. 05-cv5644, 2005 WL 3967998, at *12 (C.D. Cal. Nov. 21, 2005). The district courts in
those cases rejected the notion that the location of the class determined the
outcome. Those courts instead focused on whether the alleged harm plausibly
could have been national in scope.
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For instance, in Marino, plaintiffs sought to define the proposed class as
composed solely of Californians. The district court determined that the defendants’
alleged conduct of having issued illegal loans had not been restricted to California
and was therefore national in scope. Marino, 26 F. Supp. 3d at 954-955. Plaintiffs
had not alleged injuries that occurred outside California, but they had failed to
allege that the injuries occurred solely in California. Id. at 955. Thus, plaintiffs
failed to satisfy the principal injuries element of CAFA’s local controversy
exception.
The Senate Report on CAFA seems to back this approach. The report
instructs that the principal injuries requirement means “that all or almost all of the
damage caused by defendants’ alleged conduct occurred in the state where the suit
was brought . . . [the] provision looks at where the principal injuries were suffered
by everyone who was affected by the alleged conduct—not just where the
proposed class members were injured.” S. Rep. 109-14 at 38-39. The Senate
Report provides the example of an automobile manufacturer that sells a defective
vehicle in all fifty states, but plaintiffs bring a class action on behalf of Floridians.
Id. at 39. The Court agrees with BNSF that it must consider where all, or almost
all, of the damage caused by the Defendants’ conduct occurred, rather than strictly
the location of the proposed class.

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b.

BNSF’s extrinsic evidence proves irrelevant to the Court’s analysis.
BNSF further objects to Magistrate Judge Johnston’s findings that he need

not consider extrinsic evidence. (See Doc. 114 at 14.) BNSF also claims that
extrinsic evidence shows that the alleged conduct caused injuries outside Montana.
(See id. at 18.) BNSF’s argument as to the extrinsic evidence boils down as
follows: the asbestos shipped from Libby, Montana crossed state lines and injured
people in other states. Thus, the “principal injuries resulting from the alleged
misconduct” did not occur solely in Montana.
This argument fails because it focuses on “principal injuries” without
accounting for the “alleged misconduct.” The “alleged conduct” in the complaint
encompasses conduct that occurred exclusively, and resulted in asbestos injuries
solely, in Montana. As Magistrate Judge Johnston noted in his findings and
recommendations, this case “involves BNSF’s alleged mishandling of asbestos
contaminated vermiculite at BNSF’s Libby loading facility and railyard, and
BNSF’s alleged negligent transportation of the vermiculite on its Libby Logger rail
line between the loading facility and the railyard.” (Doc. 112 at 10 n.1) Thus,
BNSF allegedly injured people in Montana through conduct that did not injure
those in other states. Whether the asbestos that left Libby, Montana and crossed
state lines ultimately harmed people in other states proves largely irrelevant.

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The Environmental Protection Agency’s (“EPA”) actions underscore that
BNSF’s conduct in Montana uniquely injured Montanans. Libby has been
designated “the nation’s only CERCLA public health emergency.” (Doc. 115 at
15.) The EPA declared a Public Health Emergency for Libby on June 17, 2009,
based on its recognition of “the serious impact on public health from the
contamination at Libby.” (Doc. 108-2.) As the EPA’s report discusses, Libby’s
unique topographical features in the form of the narrow mountain valley in which
it sits made it and its residents particularly vulnerable to the combined efforts of
W.R. Grace in mining the asbestos-laced vermiculite near Libby, of BNSF in
transporting the vermiculite to Libby, and of other actors in processing the
vermiculite in Libby. These combined efforts at this unique location contributed to
the distribution of the asbestos-laced vermiculite throughout the community in
quantities toxic to humans. (Id.). Thousands of residents of Libby have been
diagnosed with asbestos-related diseases over the course of several decades as a
result of these particular circumstances. (Id.; Doc. 8 at 2.)
With these considerations in mind, the Court may dispense quickly with
BNSF’s remaining arguments. BNSF’s reliance on district court decisions, (see
Doc. 114 at 16-19 (citing Coll. of Dental Surgeons v. Triple S Mgmt., Inc., No. 09cv-1209, 2011 WL 414991, at*4 (D.P.R. Feb. 8, 2011); Villalpando v. Excel Direct
Inc., No. 12-4137, 2012 WL 5464620, at *1 (N.D. Cal. Nov. 8, 2012)), fails
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because those cases involved nationwide conduct that injured people nationwide.
Here, by contrast, we have local conduct that allegedly injured people solely in this
locality. BNSF’s reliance on an Illinois state court case alleging negligent
transportation of asbestos-contaminated vermiculite from Libby, Montana to a
processing plant in Minnesota proves irrelevant. (Doc. 114 at 19.) The “alleged
conduct” in the Illinois state court case differs from the alleged conduct in this
case.
Alternatively, the Court could have relied on the unique extent of injuries to
Montanans as other courts have done. For example, in Talen Montana Retirement
Plan v. PPL Corporation, No. 18-cv-174, 2019 WL 4410347, *6-7 (D. Mont. Sept.
16, 2019), the district court determined that the principal injury component of
CAFA’s local controversy exception had been satisfied on just such a basis. The
district court contrasted the alleged harm to cases like Marino, Waller, and Kearns,
where the local controversy exception had not been satisfied. Id. at *6. The alleged
harm suffered by state residents in those cases “proved more or less equal” to the
harm suffered by any other consumer throughout the nation. Id. at *7. By contrast,
the bulk of the harm suffered in Talen occurred to a single class member – the
Montana Department of Environmental Quality – related to the cost of the massive
clean-up project at coal-fired power plants in Montana. Id. The proposed class in
Talen also contained a significant number of active employees and retirees who
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live or work in Rosebud County, Montana, the location of the coal-fired power
plants, far more than any other county in Montana or the nation. Id.
The district court in Talen noted that “some other states each have a
smattering of Talen Montana creditors, the sheer amount of damage caused to
Montana citizens, particularly the hundreds of employees and retirees residing in
Rosebud County, and to the Montana Department of Environmental Quality”
rendered the controversy one that “uniquely affects” Montana. Id. The district
court declined to retain jurisdiction when it “would cause a distinctly local issue to
be transformed into a national issue, which is the opposite of CAFA’s intent” and
remanded the case back to Montana state court. Id.; cf. Wellons v. PNS Stores, Inc.,
No. 18-cv-2913, 2019 WL 2099922 at *4 (S.D. Cal. May 14, 2019) (rejecting
California as location of principal injuries due to the “operationally-standardized
uniform policies and practices” employed by defendants in California and at their
out-of-state locations that allegedly misclassified class members as exempt
employees).
Retention of jurisdiction by this Court would transform a distinctly local
issue focused on the vermiculite mine and the transportation of the asbestos-laced
vermiculite from the mine on the four and one-half mile Libby Logger rail line into
a national issue. The nature of the harm alleged here differs distinctly from the
harm suffered in Marino, Waller, Kearns, and the example in the Senate Report.
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The harms in those case stemmed from the selling of defective or falsely advertised
products on a nationwide basis: loans in Marino, hard drives in Waller, and
vehicles in Kearns and in the Senate Report.
The harm here derives from BNSF’s alleged negligent transportation of
asbestos-laced vermiculite from a mine near Libby to the loading facility four and
one-half miles away in Libby. (Doc. 82-1 at 6.) Plaintiffs allege to have suffered
injuries from this conduct along the Libby Logger rail line between the mine and
the loading facility and at the railyard and from asbestos laced products sold in
Libby. (Id.) The fact that asbestos shipped from Libby may have injured people
outside Montana proves irrelevant as long as the alleged conduct in the complaint
resulted in asbestos injuries that injured solely Montanans.
c.

The Complaint does not allege that the conduct causing injury to the
class could have injured those outside Montana.
BNSF’s last objection to Magistrate Judge Johnston’s finding that “all or

almost all” injuries occurred in Montana fails for the same reason that BNSF’s
previous objection fails—it misconstrues the “alleged conduct.” BNSF’s objection
comes in two parts. First, according to BNSF, the Complaint states that Libby
vermiculite was “inextricably” contaminated with asbestos, that asbestos injured
Montanans, and that asbestos was then shipped across state lines. BNSF argues
that the Complaint demonstrates that BNSF’s alleged conduct injured people
outside Montana unless Plaintiffs show that the asbestos stopped being hazardous
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when it crossed state lines. (Doc. 114 at 22-23.) Second, BNSF claims that
Magistrate Judge Johnston’s analysis “improperly impose[d] the burden of” proof
on BNSF, when it should be on Plaintiffs. (Id. at 23-24.)
Both objections fail. The first objection fails because it assumes that the
shipping of asbestos constituted the “alleged conduct.” As covered above, shipping
asbestos does not constitute the “alleged conduct” in the Complaint. The second
objection fails because it mischaracterizes Magistrate Judge Johnston’s analysis.
His analysis on its own shows how Plaintiffs have satisfied their burden. The
statement that BNSF cites from Doc. 112 at 11 merely shows that in addition to
Plaintiffs satisfying their burden, BNSF had done nothing to give Magistrate Judge
Johnston pause to rule in favor of Plaintiffs.
II.
John Swing is a local defendant from whom Plaintiffs seek significant
relief and whose alleged conduct forms a significant basis for the claims
asserted by Plaintiffs.
BNSF also renews its objection to Magistrate Judge Johnston’s conclusion
that John Swing is a local defendant from whom the class members seek
significant relief. (Doc. 114 at 24.) They further renew their objection to
Magistrate Judge Johnston’s conclusion that John Swing is a local defendant
whose alleged conduct forms a significant basis for the claims asserted by the
plaintiff class. (Id. at 26.) The Court previously determined that John Swing is a
citizen of Montana from whom Plaintiffs seek “significant relief” and that his
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conduct formed a “significant basis” for the claims asserted. (Doc. 64 at 8-10.) The
Court incorporates its adoption of those same findings and conclusions.
III. The Court adopts Magistrate Judge Johnston’s Findings and
Recommendations as to Maryland Casualty’s Motions to Dismiss. (Doc. 113).
No party objected to Magistrate Judge Johnston’s findings and
recommendations that Maryland Casualty’s Motions to Dismiss (Docs. 86, 96)
were moot in light of Magistrate Judge Johnston’s findings and recommendations
that this case should be remanded. (See Doc. 113) Because no party objected, the
Court reviews for clear error. Finding no clear error and having adopted Magistrate
Judge Johnston’s ultimate recommendation that this case should be remanded, the
Court adopts Magistrate Judge Johnston’s findings and recommendations in full.
CONCLUSION
The Court has reviewed de novo Magistrate Judge Johnston’s Findings and
Recommendations regarding the principal injury component of CAFA’s local
controversy exception (Doc. 112). The Court finds no error in Magistrate Judge
Johnston’s Findings and Recommendations and adopts them in part. The Court
reviewed Magistrate Judge Johnston’s Findings and Recommendations regarding
Maryland Casualty’s Motions to Dismiss for clear error and found none (Doc.
113). The Court adopts Magistrate Judge Johnston’s Findings and
Recommendations in full.
Accordingly, IT IS ORDERED that:
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 Magistrate Judge Johnston’s Findings and Recommendations (Doc. 112) are
ADOPTED, IN PART, including Magistrate Judge Johnston’s
recommendation that the principal injuries element has been met;
 Plaintiffs’ Motion to Remand (Doc. 13) is GRANTED and this case is to be
remanded to the Montana 8th Judicial District Court, Cascade County;
 Magistrate Judge Johnston’s Findings and Recommendations (Doc. 113) are
ADOPTED, IN FULL;
 Defendant Maryland Casualty’s Motions to Dismiss (Docs. 86, 96) are
DENIED, without prejudice, as moot.
DATED this 6th day of April, 2020.

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