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Evans v. Enterprise Products Partners, LP

United States District Court, S.D. Texas, Houston Division

December 12, 2019

MARY EVANS and DON WESTON DORRELL, Individually and as Representatives of a Class, Plaintiffs,



         Plaintiffs Mary Evans and Don Weston Dorrell, individually and as representatives of a class (collectively, "Plaintiffs") sued defendants Enterprise Products Partners, LP ("Enterprise"), Oil tanking Partners, LP ("Oil tanking"), and CenterPoint Energy Houston Electric, LLC ("CenterPoint") (collectively, "Defendants") in the 165th District Court of Harris County, Texas.[1] Enterprise timely removed based on the Class Action Fairness Act of 2005 ("CAFA").[2] Pending before the court are Plaintiffs Mary Evans and Don Weston Dorrell's, Individually and as Representatives of a Class, Motion to Remand (Docket Entry No. 20) ("Plaintiffs' Motion to Remand"); Defendant CenterPoint Energy Houston Electric, LLC's FRCP 12 (b) (6) Motion to Dismiss ("CenterPoint's MTD") (Docket Entry No. 2); and Defendants Enterprise Products Partners, LP and Oiltanking Partners, LP's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12 (b) (6) ("Enterprise and Oil tanking's MTD") (Docket Entry No. 3). For the reasons stated below, Plaintiffs' Motion to Remand will be granted, and Defendants' motions to dismiss will be denied as moot.

         I. Alleged Facts and Procedural Background

         Enterprise and Oiltanking are partnerships involved in the oil logistics and storage business.[3] In 2014 Oiltanking began constructing oil pipelines in Channelview, Texas, on a pipeline easement owned by CenterPoint.[4] Enterprise purchased a controlling interest in Oiltanking in October of 2014 and became partial owner of the pipelines, the first of which was completed in 2015.[5]During construction Enterprise and Oiltanking compacted excavated soil on top of the pipeline, creating a topsoil with a large amount of hardened clay that did not match the site's original, permeable topsoil.[6] Plaintiffs allege that the new topsoil diverts surface water and has caused significant flooding in the areas on either side of the pipeline easement. [7] Plaintiffs allege that this flooding has caused direct damage to some properties and reduced the value of other properties in the area.[8]

         On August 19, 2019, Plaintiffs brought a class action against Defendants in state court alleging negligence, trespass, nuisance, and a violation of the Texas Water Code.[9] Plaintiffs defined the class as those who within two years prior to the filing owned property that suffered flood damage or diminution of value in an area in or around Channelview, Texas, bounded by Interstate 10, Texas State Highway Beltway 8, Moore Road, and Sheldon Road.[10]Enterprise removed the case to this court on the basis of diversity jurisdiction under CAFA on September 20, 2019.[11] Defendants filed motions to dismiss the action for failure to state a claim under Rule 12 (b) (6) on September 27, 2019.[12] Plaintiffs filed their Motion to Remand on October 18, 2019, seeking remand of the action to state court under CAFA's mandatory and discretionary remand provisions for class actions that are genuinely local in nature.[13]Defendants filed responses to the Motion to Remand on November 8, 2019.[14] Plaintiffs filed their reply on November 15, 2019 .[15]Enterprise and Oiltanking filed a surreply on November 22, 2019.[16]

         II. Law and Analysis

         CAFA allows defendants to remove class actions to federal court that involve (1) a class of over one hundred members, (2) an amount in controversy exceeding $5, 000, 000, (3) primary defendants other than states, state officials, or other government entities, and (4) diversity of state citizenship between at least one class plaintiff and at least one defendant. 28 u.s.c. §§ 1332 (d) (2), (d) (5). But the court's jurisdiction under CAFA is subject to three exceptions. If greater than two-thirds of plaintiff class members are citizens of the state in which the action was originally filed, the mandatory local controversy or home-state exceptions may apply. Id. § 1332 (d) (4); Preston v. Tenet Healthsystem Memorial Medical Center, Inc., 485 F.3d 804, 810 (5th Cir. 2007) ("Preston II"). If greater than one-third but less than two-thirds of class plaintiffs are citizens of the state where the action was filed, the court has discretion to decline to exercise jurisdiction in the interest of justice. Id. § 1332 (d) (3).

         Plaintiffs contend that remand is appropriate under the mandatory or discretionary remand provisions. Defendants oppose remand and primarily argue that Plaintiffs have not provided sufficient evidence to prove any proposed class members are citizens of Texas. To prove citizenship, Plaintiffs provide evidence in the form of property ownership, address lists, census statistics, driver's license data, and public corporate entity data. Defendants argue that (1) Plaintiffs cannot now present evidence of the citizenship of the class members because their Original Complaint does not allege any facts as to citizenship, and (2) the evidence provided by Plaintiffs does not suffice to prove the citizenship of the class members.

         A. Relevance of Original Pleadings

         Defendants argue the court must disregard Plaintiffs' extrinsic evidence because Plaintiffs failed to plead the citizenship of the class members in their Original Complaint .[17] Plaintiffs argue that the court is not limited to the Complaint and may rely on extrinsic evidence.[18]

         Defendants rely on Coleman v. Estes Express Lines, Inc., 631 F.3d 1010, 1015 (9th Cir. 2011), to support their argument. Coleman involved CAFA's local controversy exception, three elements of which are that (1) the plaintiffs sought significant relief from a defendant (2) who is a citizen of the state where the suit is filed and (3) whose alleged conduct forms a significant basis for the class's claims. Id. at 1013. The Ninth Circuit held that CAFA's text for first and third elements-in particular, the words "sought" and "alleged"-meant they could only be satisfied from the face of the plaintiffs' complaint and were not facts for the district court to find. Id. at 1015-16. But critically the Ninth Circuit distinguished these elements from the element of the defendant's citizenship. For citizenship, the statute states the element as "[the defendant] is a citizen," using the word "is." 28 U.S.C. § 1332 (d) (4) (A) (i) (II) (cc) . Coleman held that this word choice "indicates that an actual fact must be established." 631 F.3d at 1015. Coleman therefore teaches that some elements to CAFA exceptions must appear on the face of the complaint while others are facts the district court must find.

         Like the element of defendant citizenship in Coleman, all three exceptions to CAFA have as an element that enough class members "are citizens of the State in which the action was originally filed." 28 U.S.C. §§ 1332 (d) (3); (d) (4) (A) (i) (I); (d) (4) (B). The statute's use of the verb "are" means the citizenship of class members is a fact that must be established rather than an allegation that must be pled. See Coleman, 631 F.3d at 1015. Because prospective class members' citizenship is a fact the court must find to determine the applicability of CAFA's exceptions, it may consider evidence submitted by the parties and is not limited to the pleadings. See In re Sprint Nextel Corp., 593 F.3d 669, 676 (7th Cir. 2010) (vacating a remand order pursuant to a CAFA exception but ordering the district court to permit the plaintiffs to present additional evidence to prove the proposed class members' citizenship). There is no basis in the text and Defendants cite no authority supporting their argument that facts to be proven under CAFA are limited to what the plaintiffs alleged in their Original Complaint.

         B. Evidence of Class Memer Citizenship

         Plaintiffs have presented evidence that they contend establishes that more than two-thirds or at least more than one-third of the proposed class members are Texas citizens. That evidence includes:

• Information from the local property tax authority, the Harris County Appraisal District ("HCAD"), showing that 97.53% of the 10, 271 parcels in the class area had Texas mailing addresses used for receipt of property tax bills;[19]
• HCAD information that 1, 707 of the parcels had been bought in the two years prior to the filing of the lawsuits, indicated that there are 1, 707 former owners in the class;[20]
• A random sample of 5% of the current HCAD parcel owners of which 87.16% hold Texas driver's licenses matching the HCAD listing or are Texas government or business entities;[21]
• Affidavits from the Plaintiff representatives and five other potential class members stating that they are residents of Texas and intend to remain in Texas;[22]
• U.S . Census data showing that the Houston metropolitan area and Harris County grew by 1. 3% and 0.7% respectively between July of 2017 and July of 2018 despite the widespread flooding caused by Hurricane Harvey in August of 2017;[23] and
• Survey data published by the Kaiser Family Foundation showing that only 8% of Texas residents who had evacuated due to Hurricane Harvey had not returned to their homes by August of 2018.[24]

         Defendants argue this evidence does not suffice to establish class member citizenship for the purposes of CAFA.

         1. Evidentiary Standard for Class Citizenship Under CAFA Federal courts generally must make jurisdictional determinations based on readily available information. Hollinger v. Home State Mutual Insurance Co.,654 F.3d 564, 570 (5th Cir. 2011). The standard for establishing the domicile of a large class of plaintiffs to determine CAFA jurisdiction requires practicality and reasonableness. Preston II, 485 F.3d at 816. "The court has wide, but not unfettered, ...

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