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June 3, 2002


The opinion of the court was delivered by: David G. Larimer, Chief Judge.


This action is before the Court on remand from the Court of Appeals for the Second Circuit, for further proceedings on the issue of whether the requirements of the diversity jurisdiction statute, 28 U.S.C. § 1332(a), have been satisfied so as to bring this case within the subject matter jurisdiction of this Court. See Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291 (2d Cir. 2000). Having heard further argument and received further submissions from the parties concerning the issues relating to the existence of diversity jurisdiction, the Court makes the following findings and conclusions in that regard.


The facts of this case have been set out at some length in prior decisions both of this Court, Mehlenbacher v. Akzo Nobel Salt, Inc., 71 F. Supp.2d 179 (W.D.N.Y. 1999), and of the Court of Appeals, familiarity with which is assumed. In short, the case arose out of the collapse of a salt mine owned by defendant Akzo Nobel Salt, Inc. ("Akzo") in March 1994. It is undisputed that the collapse caused some physical damage (e.g., subsidence and sinkholes) to the land above the mine, at least in the immediate vicinity of the collapse.

Plaintiffs, who at all relevant times owned property in the area surrounding the mine, brought an action in New York state court, seeking to represent a class composed of all individuals and businesses who reside, work, or own property within a ten-mile radius of the mine and who suffered damages due to the collapse of the mine. Plaintiffs sought compensatory and punitive damages and injunctive relief, under theories of negligence, strict liability due to an abnormally dangerous activity, nuisance, and gross negligence. Plaintiffs did not specify the amount of damages sought in the state court action.

Akzo timely removed the case to this Court, premising subject matter jurisdiction on diversity of citizenship under 28 U.S.C. § 1332(a). Akzo (a New Jersey corporation) alleged that complete diversity existed between it and all the named plaintiffs, and that the jurisdictional amount*fn1 requirement was satisfied "given the multiplicity of plaintiffs and their claim for punitive damages." Notice of Removal at 2. Little else was alleged concerning damages in the Notice of Removal or in the original complaint. Plaintiffs did not contest the propriety of removal.

Following removal, plaintiffs filed an amended class action complaint, asserting the same causes of action as in their state complaint, but seeking to represent a broader class of all individuals and businesses who reside, work, or own property within a thirteen-mile radius of the mine and who suffered damages due to the mine collapse. The types of damage allegedly sustained by the class members included actual physical damage to property, diminution in property values, loss of use and enjoyment of property, personal injury, and other damages.

Akzo subsequently moved for partial summary judgment dismissing, inter alia, all the plaintiffs' claims for "stigma" damages, i.e., damages for diminution in the value of plaintiffs' property (mostly due to public fear of the consequences of the mine collapse). On September 28, 1999, I granted Akzo's motion in part and denied it in part. Specifically, I dismissed plaintiffs' claims for damages for diminution in the value of their property, not associated with any actual physical damage to the property. 71 F. Supp.2d at 193. I declined, however, to grant summary judgment as to the plaintiffs who sought to recover both for physical damage and for diminution in the market value of their property. I also denied summary judgment as to certain other claims, including claims for ultrahazardous activity and nuisance. Id. at 191-92.

Plaintiffs then moved for an order pursuant to Rule 54(b) of the Federal Rules of Civil Procedure entering a final judgment, so that they could immediately appeal the dismissal of the stigma claims. I granted that motion, based on my finding that allowing all of plaintiffs' claims to be tried together would further the interests of judicial economy, in the event that the Court of Appeals were to reinstate the stigma damage claims.

The plaintiffs whose claims for stigma damages were dismissed then appealed to the Second Circuit, arguing that New York law does allow them to recover such damages. The Court of Appeals did not address the merits, but sua sponte raised the issue of whether the case had been properly removed from state court to the federal district court in the first place, and in particular whether the requirements establishing diversity jurisdiction had been met.

Ultimately, the Second Circuit was unable to determine, on the record before it, whether jurisdiction existed under § 1332(a). The court did hold that if the individual plaintiffs each sought less than $50,000 in damages, plaintiffs' damage claims could not be aggregated to satisfy the statutory figure. 216 F.3d at 296 (citing Snyder v. Harris, 394 U.S. 332, 336 (1969)). The court added, though, that the question became "more complicated" if at least one, but not all, of the named plaintiffs met the jurisdictional threshold of $50,000. 216 F.3d at 297. The issue in that situation would be whether the district court could, or should, exercise supplemental jurisdiction over the rest of the plaintiffs under 28 U.S.C. § 1367, which grants district courts that have original jurisdiction over an action the power to exercise supplemental jurisdiction over all claims that are part of the same case and controversy.*fn2

Because this issue had not been briefed or argued by the parties, and because the relevant facts had not been established, the Second Circuit elected to remand the entire case to the district court to give Akzo (the party bearing the burden of showing that removal was proper) an opportunity to show whether any or all of the plaintiffs met the required $50,000 amount in controversy. The court also gave the following guidance to the district court, based on three possible sets of facts:

If, on remand, Akzo can show to a reasonable probability that each of the plaintiffs' claims — including those of absent class members — met or exceeded $50,000 when the case was brought, then diversity jurisdiction was proper. Conversely, if, on remand, Akzo can show that one or more, but not all, of the plaintiffs have claims that exceeded $50,000, then the district court should consider whether the exercise of supplemental jurisdiction over the remaining plaintiffs' claims would be proper, or whether, instead, the claims of these remaining plaintiffs should be dismissed. Finally, if Akzo is unable to show to a reasonable probability that the claims of any of the plaintiffs met the statutory requirement, then the district court must send the lawsuit back to state court.

Id. at 298-99 (footnotes omitted).

Following remand, defendant submitted a declaration (Docket #44) of its attorney, Kenneth A. Payment, Esq., setting forth Akzo's reasons for believing that each of the individual plaintiffs' claims exceeded $50,000 when the case was brought. Plaintiffs have not opposed that showing and they too urge the Court to retain jurisdiction. Plaintiffs have submitted copies of their responses to defendant's interrogatories, as well as an affidavit (Docket #45) and an affirmation (Docket #48) of their attorney, Theodore J. Burns, Esq., purportedly showing that each of their claims exceeds $50,000. Plaintiffs also contend that even if only some ...

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