Products Liability Law Daily CAFA’s local event exception incorrectly applied to foundry worker’s class action lawsuit
Wednesday, March 18, 2020

CAFA’s local event exception incorrectly applied to foundry worker’s class action lawsuit

By Pamela C. Maloney, J.D.

An Alabama federal district court’s finding that the local event exception to the Class Action Fairness Act justified federal jurisdiction over a products liability action brought by foundry workers against companies that had supplied products to their employer was vacated.

A products liability action brought by foundry workers against 10 companies that had supplied various products to their employer was remanded to state court by the U.S. Court of Appeals for the Eleventh Circuit because the complaint failed to allege a continuous, related course of conduct culminating in one harm-causing event or concurrence, as required for the application of the local event exception to the Class Action Fairness Act (Spencer v. Specialty Foundry Products, Inc., March 17, 2020, Martin, B.).

Three hundred thirty former workers at the now defunct Grede Foundry filed a products liability class action arising under the Alabama Extended Manufacturers Liability Doctrine in Alabama state court against ten entities that had marketed, manufactured, distributed, and sold products used at the foundry for the casting and finishing of metal parts, alleging that the normal and foreseeable use of the defendants’ products at the foundry resulted in the formation and release of hazardous carcinogenic chemical substances that were toxic to the workers.

The complaint also alleged that the defendants gave unsafe directions for use of their products; failed to report pertinent adverse scientific data regarding the safety of their products; and failed to warn about or disclose known dangers from the products. These actions caused the workers physical injuries and harm, adverse medical symptoms, mental anguish, and emotional distress, all of which supposedly manifested within two years of the filing of the complaint. Additionally, the workers alleged that these wrongful actions occurred "separately and repetitively, on a continuing basis," until the foundry was closed in 2016 or 2017.

One of the named defendants removed the case to federal court, citing the Class Action Fairness Act (CAFA). The district court granted the motion, finding that the action fell within the CAFA’s local event exception because the foundry was located in Alabama, the plaintiffs worked in Alabama, the alleged injuries occurred in Alabama, and the sole purchaser of the defendants’ products was the foundry, making the case truly local. The defendants sought and were granted permission for an interlocutory appeal.

Local event exception. Explaining that the appeal turned on the meaning of the local event exception and, in particular, on the phrase "an event or occurrence," the Eleventh Circuit rejected the definition offered by both the workers and the defendants. The workers had argued that the local event exception applied to any continuing set of circumstances in a single location, regardless of when and how the harm came about. In contrast, the defendants’ viewed the exception as applicable only to events or occurrences that took place at a singular moment in time.

Instead, the appeals court concluded that "an event or occurrence," as used in CAFA, refers to a series of connected, harm-causing incidents that culminate in one event or occurrence that gave rise to the plaintiffs’ claims. In reaching this conclusion, the appellate panel rejected the district court’s reliance on the Act’s legislative history in crafting its definition, opining that the courts should not and could not use legislative history to navigate around the meaning of the plain text of a statute. Based on the dictionary definitions of the words "event" and "occurrence," the Eleventh Circuit determined that the phrase is broad enough to encompass a singular harm-causing moment in time, as well as a contextually connected series of incidents that culminate in that harm-causing event or occurrence. Furthermore, the use of the word "an" does not restrict the exception to events or occurrences that are concentrated at a single point in time.

Applying this definition to the case at bar, the Eleventh Circuit ruled that the allegations in the complaint did not fall within the local event exception for three reasons: (1) the complaint lacked allegations regarding a connection among the defendants; (2) there was no allegation of a single culminating event; and (3) there were no allegations of how the defendants’ conduct came together to create one event or occurrence. In addition, the district court mistakenly focused too narrowly on the location and character of the harm to the exclusion of these other factors.

Noting that although the fact that a large number of defendants had acted separately to generate the alleged harm was not dispositive of the local event exception, the Eleventh Circuit found that in order for the exception to apply, the acts leading to the allegedly harm-causing event or occurrence must have been collective and related. In this case, the workers had alleged that the defendants’ products ranged in type from shell core sand to foundry sand and from chemical resins to triethylamine liquid or gas and a release agent, all of which were used in different ways, in different areas of the foundry, and caused different harms. Without additional allegations that the defendants’ products and actions were related in triggering one harm-causing event or occurrence, the complaint failed to satisfy the local event exception.

Furthermore, the complaint did not allege a single culminating event or occurrence that caused the workers’ harm or injuries. Instead, it outlined a series of discrete incidents that both separately and in combination caused the complained-of harm. This was not enough for the district or the appellate court to apply the local event exception. Finally, the complaint failed to allege with sufficiency how the defendants’ conduct came together to create a single event or occurrence. Although the foundry had been open for decades, the complaint failed to allege when the defendants had committed the alleged torts or how and when the workers had been injured. Although the complaint stated that the workers’ symptoms had manifested within two years of the complaint’s filing, it was not clear that those two years were the only period of time in which the workers were injured.

According to the Eleventh Circuit, when taken together, those deficiencies were sufficient to negate federal jurisdiction over the case. In addition, the case did not, on its face, have substantial interstate effects. Therefore, the district court’s decision was vacated and the case was remanded to state court.

The case is No. 19-14427.

Attorneys: Robert Franklin Prince (Prince Glover & Hayes, PC) for Kelvin Spencer. Patrick Patronas (Lloyd Gray Whitehead & Monroe, PC) for Specialty Foundry Products Inc.

Companies: Specialty Foundry Products Inc.

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