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
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
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
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
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 ...