Aarstad v. BNSF Railway Company et al

Filing 64

ORDER: IT IS ORDERED that Judge Johnston's 60 Findings and Recommendations, are ADOPTED IN FULL. IT IS ORDERED that the Plaintiffs' 13 Motion to Remand is GRANTED and this case is to be remanded to the Montana 8th Judicial Court, Cascade County. Signed by Judge Brian Morris on 10/15/2018. (ACC)

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.
BNSF RAILWAY COMPANY, et al.,

Order Adopting Findings and
Recommendations  

Defendants.

Plaintiff Korey L. Aarstad, along with 191 other named plaintiffs
(collectively “Plaintiffs”), sought an order remanding this case to state court on the
basis that the case was improperly removed from Montana state court based on
defendant John Swing’s (“Mr. Swing”) Montana citizenship. Defendants BNSF
Railway Company and Mr. Swing (collectively “BNSF”) objected, stating the case
was properly removed as a mass action. United States Magistrate Judge John
Johnston entered Findings and Recommendations in this matter on January 23,
2018. Id.
Defendants timely filed an objection on February 6, 2018. (Doc. 61).
Defendants claim Judge Johnston incorrectly applied the local controversy
exception. (Doc. 61 at 2). The Plaintiffs timely filed an objection to preserve

arguments in regard to Judge Johnston’s remand recommendation on February 6,
2018. (Doc. 62).
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 Judge Johnston’s Findings and Recommendations to which the parties
specifically objected. McDonnell Douglas Corp. v. Commodore Bus. Mach., Inc.,
656 F.2d 1309, 1313 (9th Cir. 1981).
Background
In 1963, the W.R. Grace & Co. (“WRG”) purchased a vermiculite mill in
Libby, Montana, from the Zolonite Company. WRG operated the mill until 1990.
(Doc. 8 at 2). Plaintiffs were all workers of WRG or Zolonite Company. As a
result of toxic asbestos present in the vermiculite ore, thousands of residents of
Libby have been diagnosed with mesothelioma, asbestosis, or other asbestosrelated diseases over the course of several decades. Id. As a result, there are
hundreds of asbestos related cases adjudicated or pending in Montana state courts.
(Doc. 14 at 5).
Defendant BNSF is a railway company incorporated in Delaware, with its
headquarters in Texas. (Doc. 8 at 1). At all times pertinent to this case, BNSF
commenced railway operations in the town of Libby, Montana. Mr. Swing served

as a managing agent for BNSF and is a resident of Lincoln County, Montana. (Id.)
Mr. Swing worked for BNSF from roughly 1970 to 1984. (Doc. 14-3 at 2).
As a result of the bankruptcy of WRG, many Plaintiffs have had their cases
stayed pending the bankruptcy process. Cases against BNSF have been subject to
an injunction since 2007. (Doc. 14 at 5). Due to the disjunctive nature of the
underlying claims, as well as the varying exposure events and dates of diagnosis,
Plaintiffs’ claims normally would be subject to several different statutes of
limitations. The tolling period for Plaintiffs’ claims ended in September of 2016,
however, due to various tolling agreements between the parties and the pending
bankruptcy action. (Id. at 7-8).
Standard of Review
A defendant may remove an action from state court to a federal court if the
federal court would have possessed original subject matter jurisdiction over the
matter. 28 U.S.C. § 1441. A federal court possesses original jurisdiction if the
parties are completely diverse and the amount in controversy exceeds $75,000. 28
U.S.C. § 1332(a). Complete diversity means that no defendant is a citizen of the
same state as any plaintiff. The party seeking to remove an action to federal court
holds the burden to show federal jurisdiction exists and that removal is proper. De
Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995).

A federal court possesses original jurisdiction over certain class actions
which have minimum diversity and an amount in controversy exceeding five
million dollars, exclusive of costs and interests. 28 U.S.C. § 1332(d)(2). For the
purposes of federal subject matter jurisdiction, a class action also includes a “mass
action,” which is defined as “any civil action . . . in which monetary relief claims
of 100 or more persons are proposed to be tried jointly on the ground that the
plaintiffs’ claims involve a common questions of law or fact[.]” 28 U.S.C. § 1332
(d)(11)(B)(i). According to subsection (d)(11)(A) of the same statute, “a mass
action shall be deemed to be a class action,” and is removable pursuant to
subsections (d)(2)-(d)(10).
Discussion
• Mass Action
A “mass action” is a class action which can be removed to federal court if it
meets the following elements: (1) numerosity: the action must involve the
monetary claims of 100 plaintiffs or more; (2) amount in controversy: $5,000,000
or more in the aggregate (excluding interests and costs); (3) diversity: minimal
diversity must be met, and; (4) commonality: plaintiffs’ claims involve common
questions of law and fact. (Doc. 41 at 9) (citing Lowery v. Ala. Power Co., 483
F.3d 1184, 1202-03 (11th Cir. 2007)).

Plaintiffs argue that their Complaint served as a “place marker filing” to
preserve the statute of limitations and not to assert a joint claim. (Doc. 13 at 2).
BNSF argues that nothing in the Plaintiffs’ pleadings pre-removal indicated their
intent to try the claims separately. (Doc. 41 at 5). Judge Johnston correctly notes
that the Plaintiffs are the “masters of their complaints” and can structure their
actions and pleadings in a manner to avoid federal jurisdiction. Corber v.
Xanodyne Pharmaceuticals, Inc., 771 F.3d 1218, 1223 (9th Cir. 2014).
Accordingly, the Court must look to the four corners of Plaintiffs’ Complaint.
Judge Johnston determined that this action constitutes a mass action. (Doc.
60 at 9). It is undisputed that this action sets out monetary claims of 100 or more
plaintiffs and that the amount in controversy exceeds five million dollars exclusive
of costs and interest. Judge Johnston also found that Plaintiffs’ claims all involve
common questions of law or fact. In the Complaint, every single Plaintiff alleges a
negligence claim and a strict liability claim against BNSF, which shows a common
question of law. (Doc. 8 at ¶¶ 66-79). Judge Johnston found that the common
answer to the question of whether BNSF was negligent would produce a common
answer to “drive the resolution of the litigation.” All the elements of a mass tort
exist on the face of the Complaint.

Judge Johnston found that this action constitutes a mass action under 28
U.S.C § 1332 (d)(11), and, therefore, the Court possesses original jurisdiction and
removal was proper. 28 U.S.C § 1332 (d)(2).
• Local Controversy Exception
The Local Controversy Exception states that if two-thirds of the plaintiffs
are citizens of the State in which the action was filed, the district court shall
decline jurisdiction if: (1) “at least one defendant . . . from whom significant relief
is sought” and “whose alleged conduct forms a significant basis for the claims
asserted” by the plaintiffs is a citizen of the State in which the action was originally
filed, and the alleged conduct of that one defendant also occurred in the State, or
(2) the “primary defendants” are citizens in the State in which the action was
originally filed. 28 U.S.C. § 1332(d)(4).
“A plaintiff seeking remand has the burden of showing that the local
controversy exception applies.” Coleman v. Estes Express Lines, Inc., 631 F.3d
1010, 1013 (9th Cir. 2011). Moreover, the language of the statute “favors federal
jurisdiction over class actions,” and the legislative history also “suggests that
Congress intended the local controversy exception to be a narrow one, with all
doubts resolved ‘in favor of exercising jurisdiction over the case.’” Evans v. Walter
Industries, Inc., 449 F.3d 1159, 1163 (11th Cir. 2006).
•

Two-thirds requirement

Plaintiffs must show that at least two-thirds of the members of the class are
citizens of the State in which the action was originally filed. (Doc. 60 at 12). The
Court may look to extrinsic evidence to determine a party’s citizenship. Benko v.
Quality Loan Service Corp., 789 F.3d 1111, 1121 (9th Cir. 2015). Judge Johnston
found that Plaintiffs met their burden of proving citizenship from the affidavit
provided by Plaintiffs that alleged that over two-thirds of the class members are
Montana citizens. (Doc. 60 at 14).
•

Local Controversy

Plaintiffs must show that the Complaint meets the elements of the local
controversy exception. Coleman, 631 F.3d at 1013. Plaintiffs must demonstrate
that at least one of the defendants, who is a citizen of Montana, is a defendant: (1)
“from whom significant relief is sought,” and (2) “whose alleged conduct [in
Montana] forms a significant basis for the claims asserted.” 28 U.S.C. §
1332(d)(4)(A)(II)(aa)-(bb). Judge Johnston found, and it was not contested, that
Mr. Swing is a Montana citizen for the purposes of the analysis. (Doc. 60 at 16).
For significant relief sought, BNSF argued that the relief sought was not
significant, and that any relief sought from Mr. Swing is a “small change”
compared to the relief sought from BNSF. (Doc. 60 at 18). BNSF also argued that
the Plaintiffs’ counsel knows Mr. Swing cannot satisfy the judgement, therefore,
the relief sought will not be significant. (Doc. 60 at 19). Judge Johnston

determined that the Court is not permitted to assume that Mr. Swing is indigent and
cannot satisfy Plaintiffs’ claim of damages. Accordingly, Judge Johnston
determined that Plaintiffs had met their burden to show that they are seeking
significant relief from Mr. Swing.
For the significant basis of claims analysis, Judge Johnston found that a
significant basis hinges on whether the complaint “contains information about the
conduct of [the local defendant] relative to the conduct of the other defendants. .
.as it relate[s] to the claims of the putative class.” Opelousas Gen. Hosp. Auth. v.
FairPay Sols., Inc., 655 F.3d 358, 361 (5th Cir. 2011). Additionally, the local
defendant’s alleged conduct must affect “all or a significant portion of the putative
class.” Id. at 362. This does not mean, however, “that the local defendant's
alleged conduct form[s] a basis of each claim asserted; it requires the alleged
conduct to form a significant basis of all the claims asserted.” Id. at 361 (quoting
Kaufman v. Allstate New Jersey Ins. Co., 561 F.3d 144, 156 (3d Cir. 2009)).
Judge Johnston acknowledged that the Complaint set forth allegations that
distinguish Mr. Swing’s individual wrongful acts from those of BNSF. (Doc. 8 at
¶67). Judge Johnston looked to the Complaint which alleges that Mr. Swing
personally knew of the danger of asbestos and personally failed to warn the
Plaintiffs. Accordingly, based on the allegations set forth in the Complaint, Judge

Johnston found that Plaintiffs met their burden to show that their claims against
Mr. Swing form a significant basis for the claims. (Doc. 60 at 22).
• Other Class Actions
Plaintiffs have met the first three elements of the local controversy
exception. CAFA requires that the Plaintiffs clear one final hurdle. “[D]uring the
3-year period preceding the filing of that class action, no other class action has
been filed asserting the same or similar factual allegations against any of the
defendants on behalf of the same or other persons.” 28 U.S.C.A. §
1332(d)(4)(A)(III). Subsection (A)(III) represents a jurisdictional fact, and the
Court may look to extrinsic evidence. Coleman, 631 F.3d at 1016.
Judge Johnston found no evidence that a similar class action has been filed
against any of the defendants “asserting the same or similar factual allegations”
within three years of the filing of this action. Judge Johnston determined that
Plaintiffs have met their burden as to proving the local controversy exception, 28
U.S.C. § 1332(d)(4), applies in this case. As such, the Court agrees that the action
be remanded to state court
Conclusion
The Court has reviewed Judge Johnston’s Findings and Recommendations
regarding this matter de novo. The Court has reviewed the remaining portions of
Judge Johnston’s Findings and Recommendations for clear error. The Court finds

no error in Judge Johnston’s Findings and Recommendations and adopts them in
full.
IT IS ORDERED that Judge Johnston’s Findings and Recommendations
(Doc. 60), are ADOPTED IN FULL.
IT IS ORDERED that the Plaintiffs’ Motion to Remand (Doc. 13) is
GRANTED and this case is to be remanded to the Montana 8th Judicial Court,
Cascade County.
DATED this 15th day of October, 2018.