Argued: November 7, 2016
from the United States District Court for the Eastern
District of Michigan at Ann Arbor. No. 5:16-cv-10663-John
Corbett O'Meara, District Judge.
Vance Wittie, SEDGWICK LLP, Dallas, Texas, for Appellants.
L. McAlpine, MCALPINE PC, Auburn Hills, Michigan, for
Vance Wittie, SEDGWICK LLP, Dallas, Texas, Robert G. Kamenec,
PLUNKETT COONEY, Bloomfield Hills, Michigan, for Appellants.
L. McAlpine, Jayson E. Blake, Adam T. Schnatz, MCALPINE PC,
Auburn Hills, Michigan, for Appellees.
Before: GRIFFIN, KETHLEDGE, and DONALD, Circuit Judges.
GRIFFIN, Circuit Judge.
state-law professional negligence proposed class action suit
arises out of the Flint Water Crisis, a public health
disaster that drew national media coverage when the City of
Flint decided to supply water to its residents using the
Flint River without implementing necessary anti-corrosion
measures. The series of events precipitating the tragedy have
little to do with the issue before us on appeal. We deal,
instead, with a question of procedure: must plaintiffs
litigate their claim in state or federal court? In 2005,
Congress revised the contours of federal diversity
jurisdiction, making it easier to remove class actions to
federal court, while at the same time providing an exception
for cases that are "truly local in nature, "
commonly called the "local controversy" exception.
The parties dispute whether plaintiffs' claim against
defendants (civil engineering companies responsible for
upgrading Flint's municipal water system) belongs in
state court under this exception. Though the Flint Water
Crisis captured the attention of the nation, its infamy does
not make it any less local. Because plaintiffs' suit
consists of a proposed class of more than two-thirds Michigan
citizens, a significant local defendant, and injuries limited
to the reach of Flint's water system, it satisfies the
statutory requirements of the local controversy exception. We
therefore affirm the district court's decision to remand
this case to state court.
2005, Congress enacted the Class Action Fairness Act (CAFA)
in response to "perceived abusive practices by
plaintiffs and their attorneys in litigating major class
actions with interstate features in state courts."
Coffey v. Freeport McMoran Copper & Gold, 581
F.3d 1240, 1243 (10th Cir. 2009). CAFA "loosened the
requirements for diversity jurisdiction, "
Mississippi ex rel. Hood v. AU Optronics Corp., 134
S.Ct. 736, 739 (2014), authorizing federal district courts to
"hear a 'class action' if the class has more
than 100 members, the parties are minimally diverse, and the
'matter in controversy exceeds the sum or value of $5,
000, 000.'" Standard Fire Ins. Co. v.
Knowles, 133 S.Ct. 1345, 1348 (2013) (quoting 28 U.S.C.
§ 1332(d)(2), (d)(5)(B)). That expansion of diversity
jurisdiction was with exceptions. See 28 U.S.C.
§ 1332(d)(3), (d)(4)(A), (d)(4)(B). One, which Congress
called the "Local Controversy Exception, " S. Rep.
No. 109-14 (2005), reprinted in 2005 U.S.C.C.A.N. 3,
28, is codified at § 1332(d)(4)(A). Under this
exception, "[a] district court shall decline to exercise
jurisdiction . . . over a class action" if:
(I) 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;
(II) at least 1 defendant is a defendant--
(aa) from whom significant relief is sought by members of the
(bb) whose alleged conduct forms a significant basis for the
claims asserted by the proposed plaintiff class; and
(cc) who is a citizen of the State in which the action was
originally filed; and
(III) 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; and
(ii) during 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[.]
§ 1332(d)(4)(A). If these four elements are present, the
district court must abstain from hearing the case, despite
having jurisdiction under § 1332(d)(2).
all statutes, the text of CAFA controls. Caminetti v.
United States, 242 U.S. 470, 485 (1917); Vander
Boegh v. Energy Solutions, Inc., 772 F.3d 1056, 1060
(6th Cir. 2014). In this regard, its text must be read as a
whole, not in isolation. United States v. Morton,
467 U.S. 822, 828 (1984). The relaxation of normal diversity
requirements is coupled with an exception for local
controversies. The terms of the statute balance
considerations of federalism-a balance defined by Congress,
but implemented and respected by the federal courts.
April 2013, the City of Flint, Michigan, decided to switch
its primary drinking water provider from the Detroit Water
and Sewerage Department ("DWSD") to the newly
formed Karegnondi Water Authority ("KWA"). The KWA
would not be operational for another three years, however, so
Flint needed an interim source of drinking water. It decided
to draw from the Flint River, which had previously supplied
back-up water services to the City. Relying on the Flint
River, however, posed a few problems. According to several
reports, the river was a highly sensitive drinking water
source that required anti-corrosive treatment in order to
prevent heavy metals from leaching into the water. On top of
that, these issues needed to be remedied quickly, as the
City's contract with DWSD was set to expire a year later
in April 2014.
City turned to Lockwood, Andrews & Newnam, Inc., a
Texas-based corporation that touted itself as a
"national leader in the heavy civil infrastructure
engineering industry, " and its Michigan-based
affiliate, Lockwood, Andrews & Newnam, P.C.
(collectively, "defendants") for assistance. On
June 26, 2013, the City entered into a contract with
defendants for design engineering services in connection with
rehabilitating Flint's Water Treatment Plant ("the
Plant"). After confirming with City officials that they
could make the necessary improvements and provide the
necessary "quality control" in time for the April
2014 switch, defendants proceeded to develop rehabilitation
plans for the Plant. In April 2014, the Michigan Department
of Environmental Quality approved defendants'
rehabilitation plans. Notably, the plan did not include
necessary upgrades for anti-corrosive treatment measures.
Indeed, earlier that month, defendants and ...