NOT FOR PUBLICATION

D.C. No. 2:15-cv-04113-PSG-JEM MEMORANDUM Appeal from the United States District Court for the Central District of California
Philip S. Gutierrez, District Judge, Presiding Argued and Submitted June 11, 2019 Pasadena, California Before: FERNANDEZ, WARDLAW, and BYBEE, Circuit Judges.

Plains All American Pipeline, L.P. and Plains Pipeline, L.P. (Plains) appeal the district court's certification of the Oil Industry subclass, which seeks recovery for economic injury suffered as a result of the shutdown of Plains' crude oil pipeline (the Pipeline) after the May 2015 Santa Barbara oil spill. Plains challenges the district court's predominance determination under Federal Rule of Civil Procedure 23(b)(3). We have jurisdiction under 28 U.S.C § 1292(e) and Federal Rule of Civil Procedure 23(f). We review the district court's decision to certify the class for an abuse of discretion. Just Film, Inc. v. Buono, 847 F.3d 1108, 1115 (9th Cir. 2017). We reverse.

The district court abused its discretion by concluding that common issues predominate over individual questions for the class as currently defined. The district court acknowledged that the class includes "a diverse collection of parties potentially scattered across the globe," that some class members were not injured as a result of the shutdown, and that some of the "myriad businesses" potentially "were subject to varying factors other than the oil spill that might affect their success and profitability." However, the district court did not address how the scope of the class and the nature of the negligence claims at issue give rise to "non-common, aggregation-defeating, individual issues" that will predominate over the common issues regarding Plains' alleged negligence. Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016).

The class includes "[i]ndividuals and entities who were employed, or contracted, to work on or to provide supplies, personnel, or services for the operations of" the facilities reliant on the Pipeline. Therefore the class embraces both members who provided core services or supplies to the facilities, as well as members who provided incidental, subcontracted services to the facilities, such as a pest control company or telecommunications provider. The disparity in class members' connection to the facilities and to Plains will require individuals to present varying evidence as to whether they suffered any economic injury, whether Plains was liable for that injury, and whether the economic loss doctrine bars recovery. These individualized inquiries go to key elements of the class's claims, and the district court abused its discretion by concluding that this disparity would affect only damage calculations.

Contrary to the district court's conclusion, that class members have a contractual relationship with the facilities and were "exposed" to the Pipeline shutdown is not common proof that the class was impacted by Plains' alleged misconduct. See Just Film, 847 F.3d at 1120 ("To gain class certification, Plaintiffs need to be able to allege that their damages arise from a course of conduct that impacted the class."). The district court relied on inapposite cases in which exposure to the alleged misconduct was itself the injury or was the sole cause of the injury. See, e.g., Torres v. Mercer Canyons Inc., 835 F.3d 1125 (9th Cir. 2016); Vaquero v. Ashley Furniture Indus., Inc., 824 F.3d 1150 (9th Cir. 2016). Here, causation and injury are necessary elements of the class's claims, see Baptist v. Robinson, 49 Cal. Rptr. 3d 153, 167 (Ct. App. 2006); Redfearn v. Trader Joe's Co., 230 Cal. Rptr. 3d 98, 111 (Ct. App. 2018), and, as the district court acknowledged, class members were subject to varying economic factors that could have caused their economic injury, to the extent they suffered an injury at all.

Nor did Peter Rupert's economic loss model provide common proof of causation and injury. Rupert's model showed the Pipeline shutdown's general impact: a 34 percent decrease in employment in the local oil and gas industry due to the shutdown. Accordingly, Rupert's model indicates that many employees within the class likely were not injured. See Mazza v. Am. Honda Motor Co., 666 F.3d 581, 595-96 (9th Cir. 2012) (concluding that predominance was defeated because many class members were not injured). Moreover, Rupert's model does not address whether businesses within the class suffered any economic injury or whether the shutdown caused that injury. See Just Film, 847 F.3d at 1120. Because individual class members will need to present varying evidence to demonstrate causation and injury in order to fill the gaps in Rupert's model, common issues of fact do not predominate.

The same individualized inquiries that predominate regarding causation and injury will predominate as to whether the economic loss doctrine bars the class's negligence claims. To prevail on their claims for economic injury, class members will be required to establish that they have a "special relationship" with Plains that gives rise to a duty of care to prevent economic harm. See J'Aire Corp. v. Gregory, 598 P.2d 60, 63 (Cal. 1979). California courts employ a multi-factor test to determine whether a special relationship exists which turns on, among other considerations, the degree of connection between the defendant and the alleged economic harm. See S. Cal. Gas Leak Cases, 441 P.3d 881 (Cal. 2019); Quelimane Co. v. Stewart Title Guar. Co., 960 P.2d 513, 532-33 (Cal. 1998). Thus, the class members' varying relationships with Plains and the fact some class members were not injured will require individualized consideration and proof to determine whether a special relationship exists. That class members have "contractual relationships to the oil industry," does not provide common proof of a special relationship because of these differences amongst class members. See Quelimane, 960 P.2d at 532 (concluding that a "special relationship" could not solely be based on the fact that the defendants' alleged misconduct affected the plaintiffs' contracts with third parties).

REVERSED.