Comm. to Protect Our Agric. Water v. Occidental Oil & Gas Corp.

235 F.Supp.3d 1132

COMMITTEE TO PROTECT OUR AGRICULTURAL WATER, et al., Plaintiffs,

v.OCCIDENTAL OIL AND GAS CORPORATION, et al, Defendants.

No. 1:15–cv–01323–DAD–JLT

United States District Court, E.D. California.

Signed January 20, 2017

Patricia K. Oliver, Alexander Russell Wheeler, Patricia Kay Oliver, R. Rex Parris, Parris Law Firm, Bernadette Noelle Manigault, R. Rex Parris Law Firm, Lancaster, CA, Ethan Thomas Litney, Casey Gerry Schenk Francavilla Blatt and Penfield, LLP, San Diego, CA, George Francis Martin, Law Offices of George Martin Inc., Bakersfield, CA, Jennifer Faye Novak, Law Offices of Jennifer F. Novak, Rolling Hills Estates, CA, for Plaintiffs.

Matthew T. Kline, Brittany A. Rogers, Dimitri D. Portnoi, O'Melveny and Myers LLP, Jack S. Yeh, Manatt Phelps and Phillips LLP, Jeffrey David Dintzer, Gibson Dunn and Crutcher, Theodore J. Boutrous, Jr., William E. Thomson, Gibson Dunn and Crutcher LLP, Mitchell Elliott Rishe, Kenneth G. Lake, California Department of Justice, Joel M. Athey, Michael Terrence Boardman, Kristina Starr Azlin, Holland & Knight LLP, Los Angeles, CA, Christopher R. Rodriguez, Lewis Brisbois Bisgaard & Smith LLP, Andrew Daniel Bluth, Pillsbury Winthrop Shaw Pittman LLP, Sacramento, CA, Keli N. Osaki, Costa Mesa, CA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS

Dale A. Drozd, UNITED STATES DISTRICT JUDGE

This matter came before the court on June 22, 2016, for hearing of defendants' motions to dismiss brought pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. Nos. 51, 55, 57, 59, 63, 64.) Attorneys Patricia K. Oliver, R. Rex Parris, and Jennifer F. Novak appeared on behalf of plaintiffs Committee to Protect our Agricultural Water, Mike Hopkins, and John Wedel. Attorneys Matthew T. Kline and Dimitri D. Portnoi appeared on behalf of defendant Occidental Oil and Gas Corporation, and the California Resources Corporation. Attorney Christopher R. Rodriguez appeared on behalf of defendant Western States Petroleum Association. Attorneys William E. Thompson and Zach Hughes appeared on behalf of defendant Chevron U.S.A., Inc. Attorney Keli N. Osaki appeared on behalf of defendant California Independent Petroleum Association. Deputy Attorney General Kenneth G. Lake appeared on behalf of defendant California Division of Oil, Gas, and Geothermal Resources, Governor Edmund G. Brown, Timothy R. Kustic, and Mark Nechodom. Attorneys Joel M. Athey, Kristina Azlin, and Kern County Counsel Theresa A. Goldner appeared on behalf of defendant Lorelei H. Oviatt. Following oral argument, defendants' various motions were taken under submission.

The task of addressing six separate motions to dismiss and all of the arguments raised in support of and in opposition to those motions has proven to be somewhat cumbersome. In the end, the court has concluded that the allegations of the operative complaint are deficient with respect to each of the claims presented. In addition, the court has concluded that some of those deficiencies cannot be cured. For the reasons explained more fully below, the court will grant defendants' motions to dismiss.

FACTUAL BACKGROUND

On August 31, 2015 plaintiffs Committee to Protect our Agricultural Water, Mike Hopkins, and John Wedel, commenced this action in the United States District Court for the Central District of California. (Doc. No. 1.) On August 31, 2015, the case was transferred to the Eastern District of California pursuant to 28 U.S.C. 1404(a). (Doc. No. 95.)

This action now proceeds before the court on plaintiffs' First Amended Complaint ("FAC"), filed June 16, 2015. (Doc. No. 16.) In the FAC, plaintiffs bring claims against various defendants, including California Governor Edmund G. Brown; three California state officials, the former State Oil & Gas Supervisor ("Supervisor") for the Division of Oil, Gas, and Geothermal Resources ("DOGGR") Timothy Kustic, Director of the California Department of Conservation ("CDC") Mark Nechodom, and Kern County official Lorelei Oviatt; three oil companies, Occidental Oil and Gas Corporation ("Occidental"), California Resources Corporation ("CRC"), and Chevron U.S.A., Inc. ("Chevron"); and two trade associations, the Western States Petroleum Association ("WSPA") and California Independent Petroleum Association ("CIPA").

The FAC alleges in relevant part as follows. Oil development in California is subject to both federal and state regulation. The federal Safe Drinking Water Act of 1974 ("SDWA") provides rules for protection of public drinking water supplies. (Id. at 4); see also 42 U.S.C. §§ 300(f)et seq. Under the SDWA, the Environmental Protection Agency ("EPA") is authorized to regulate underground injection of fluid through wells, and to oversee states implementing these federal standards. (Doc. No. 16 at 25); see also 42 U.S.C. §§ 300(h), et seq. The EPA has specifically approved California's underground injection control program. (Doc. No. 16 at 25); see also 40 C.F.R. § 147.250. Pursuant to California's program, companies must obtain permits when they seek to use water disposal injection wells, known as Class II wells, to stimulate oil production. (Doc. No. 16 at 25.); see also Cal. Pub. Res. Code §§ 3000 et seq. The CDC's DOGGR is charged with granting such permits. Id.¹

In 2008, California oil companies began to increase their use of Class II wells in California. (Id. ) Around 2010, oil and gas companies began to require more well-drilling permits than were previously needed. (Id. ) In response to the increased need, the oil and gas companies began contacting government officials in an attempt to streamline the process for DOGGR issuance of well-drilling permits. (Id. )

Plaintiffs allege that as early as September 27, 2011, defendants formed an "enterprise" to illegally increase oil production and maximize profits and tax revenue by allowing oil companies to inject salt water into fresh water in violation of the SDWA. (Id. ) According to plaintiffs, this violated 18 U.S.C. §§ 241, 1341, 1343, 1346.43, 1512(b), and 1513(b), and thus, constitutes racketeering activity. (Id. )

The FAC asserts the following claims against all defendants: (i) claims under the Racketeer Influence and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(c) and (d) ; and (ii) civil rights claims under 42 U.S.C. § 1983 and § 1985(3). (Id. at 48, 51.) Plaintiffs seek injunctive relief and monetary damages. (Id. at 53–54.)

On August 10, 2015, defendants Occidental, CIPA, Chevron, WSPA, and Oviatt filed individual motions to dismiss, (Doc. Nos. 51, 55, 57, 59, 63), and defendants Governor Brown, DOGGR, Kustic, and Nechodom ("state defendants") filed a joint motion to dismiss, (Doc. No. 64). On August 20, 2015 plaintiffs filed opposition papers to defendants' motions to dismiss. (Doc. Nos. 71, 73–77.) Defendants filed their replies on August 27, 2015. (Doc. Nos. 81, 83, 85, 88, 90, 91.)

LEGAL STANDARDS

The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal sufficiency of the complaint. Makaeff v. Trump University, LLC , 736 F.3d 1180, 1182 (9th Cir. 2013). "Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990). A claim for relief must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Though Rule 8(a) does not require detailed factual allegations, a plaintiff is required to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Ashcroft v. Iqbal , 556 U.S. 662, 677–78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

In determining whether a complaint states a claim on which relief may be granted, the court accepts as true the allegations in the complaint and construes the allegations in the light most favorable to the plaintiff. Hishon v. King & Spalding , 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984) ; Novak v. United States , 795 F.3d 1012, 1017 (9th Cir. 2015). It is inappropriate to assume that the plaintiff "can prove facts that it has not alleged or that the defendants have violated the ... laws in ways that have not been alleged." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters , 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).

ANALYSIS

In their various motions to dismiss, defendants collectively advance eight arguments: (i) plaintiffs' claims are entirely barred by the Noerr – Pennington doctrine; (ii) plaintiffs' claims are barred by the Eleventh Amendment; (iii) plaintiffs' claims are barred by absolute immunity; (iv) plaintiffs' claims are barred by qualified immunity; (v) plaintiffs fail to state a cognizable RICO claim, as they lack standing and have not met federal pleading standards; (vi) plaintiffs fail to adequately plead claims under 42 U.S.C. § 1983 or § 1985(3) ; (vii) plaintiffs Hopkins and Wedel have failed to join necessary parties under Federal Rule of Civil Procedure 12(b)(7) ; and (viii) plaintiffs Hopkins' claims are barred by the applicable statute of limitations. Additionally, both plaintiffs and defendants Occidental and CRC, Oviatt, Chevron, and WSPA request that the court take judicial notice of several documents and other items. (Doc. Nos. 53, 58, 61, 63–2, 72.)

Below, the court will first address the parties' requests for judicial notice, and, thereafter, will turn to the arguments advanced by each of the defendants in support of their motions to dismiss.

I. Judicial Notice

When ruling on a motion to dismiss brought pursuant to Rule 12(b)(6), the court is permitted to consider material...