In re Methyl Tertiary Butyl Ether (Mtbe) Products

475 F.Supp.2d 286

In re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION This document relates to: Orange County Water Dist. v. Unocal Corp., et al., 04 Civ. 4968

No. 1:00B1898.

MDL No. 1358(SAS).

No. M 21-88.

United States District Court, S.D. New York.

December 14, 2006.

Michael D. Axline, Tracy O'Reilly, Miller, Axline & Sawyer, Sacramento, CA, for Orange County Water District.

Robin Greenwald, Robert Gordon, Weitz & Luxenberg, P.C., New York, NY, for Plaintiffs.

Peter John Sacripanti, James A. Pardo, McDermott Will & Emery LLP, New York, NY, for Defendants.

OPINION AND ORDER

SCHEINDLIN, District Judge.

I. INTRODUCTION

In this consolidated multi-district litigation ("MDL"), plaintiffs seek relief from contamination, or threatened contamination, of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether ("MTBE") and/or tertiary butyl alcohol ("TBA"), which is a product formed by the natural degradation of MTBE in water. The parties have already engaged in extensive motion practice and familiarity with the Court's previous opinions is assumed.¹ The facts underlying these cases are comprehensively set out in those opinions.²

Defendants now seek summary judgment on plaintiff Orange County Water District's ("OCWD") claims for strict products liability, negligence, permanent trespass, permanent nuisance, violation of the OCWD Act, as well as its claim for declaratory relief, on the ground that all of those claims are time-barred.³

II. BACKGROUND

A. Orange County Water District

OCWD is a "special water agency" created by statute and charged with the responsibility to "maintain, replenish, and manage groundwater resources" within its geographic area.⁴ By its enabling Act, OCWD is statutorily authorized to "prevent interference [with] ... [or] diminution ... [or] pollution or contamination" of the water supply within the district.⁵ The Act also empowers OCWD to "conduct any investigations of the quality of the surface and groundwaters within the district ... to determine whether those waters are contaminated or polluted" and to "expend available funds to perform any cleanup, abatement, or remedial work required under the circumstances."⁶

B. MTBE Contamination Within the District

OCWD became acquainted with MTBE contamination in 1995. Documents from that time show that OCWD's chief hydrogeologist was informed by an employee of the Santa Ana Regional Water Quality Control Board ("RWQCB") that MTBE might become the "next big deal" and that it "seems to not degrade, retard, etc. and is reportedly a known carcinogen."⁷ Soon after, OCWD began systematic testing for MTBE contamination of the groundwater within its district.⁸ Although there was no state or federal requirement to test for MTBE, OCWD believed "proactive monitoring [would] enable[ ] OCWD to predict and prevent potential problems."⁹

At that time, OCWD's knowledge of MTBE as a contaminant was limited.¹⁰ It knew that MTBE posed a potential problem and that it had particular characteristics which might make it an especially troubling contaminant, but had only begun regularly testing for the contaminant since 1995.¹¹ The record suggests that OCWD did not, at that time, consider the presence of low levels of MTBE itself to be a significant problem beyond being an early indicator of further possible contamination and presenting a concern relating to public perception.¹²

Agenda notes from a 1997 OCWD meeting show that by that date it was clearly concerned about the threat of MTBE. The notes state that MTBE had been detected "with increasing frequency in groundwater and municipal supply wells" generally, and that the City of Santa Monica had recently been forced to shut down a majority of its production wells due to MTBE contamination¹³ The agenda notes also state that "[a]lthough an examination of all major production wells in Orange County did not reveal such contamination," MTBE had been detected in "several monitoring and irrigation wells" within the district.¹⁴ Further, the agenda notes indicate that OCWD was aware that state standards for MTBE were not necessarily congruent with taste and odor thresholds: "The current 'action level' for MTBE in California is 35 micrograms/L, but recent studies by OCWD and elsewhere have demonstrated that many people can smell or taste this gasoline compound at concentrations as low as 10-20 micrograms/L."¹⁵

Increasingly, OCWD also became involved in the public movement to ban MTBE as a gasoline additive. In 1998, its Board of Directors passed a resolution calling for a ban within two years.¹⁶ OCWD publicly advocated against the use of MTBE by offering free MTBE "information kits" to the public, and by encouraging community members to petition for the clean-up of MTBE.¹⁷ By 1999, OCWD characterized itself as having taken "a leadership position" in the movement to ban MTBE as a gasoline additive.¹⁸

During these years, OCWD continued to regularly test and analyze groundwater within the district for the presence of MTBE.¹⁹ As a result, OCWD detected the presence of MTBE hundreds of times in a variety of locations across the district.²⁰ Additionally, because OCWD believed that the presence of MTBE largely resulted from leaking underground storage tanks ("USTs"), it sought to track reported leaks within the district.²¹ Ultimately, OCWD brought the instant lawsuit on May 6, 2003, having identified over four hundred release sites which it alleges are now "contaminating and threatening the water supplies" of the district.²²

III. APPLICABLE LAW

A. Legal Standard

Summary judgment is only appropriate where the record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."²³ An issue of fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party,'"²⁴ while a fact will be deemed material where it "`might affect the outcome of the suit under the governing law.'"²⁵ Further, even though plaintiff's allegations are taken as true, the claim may still fail as a matter of law if it appears beyond doubt that plaintiff can prove no set of facts in support of its claims which would entitle it to relief, or if the claim is not legally feasible.²⁶

The moving party bears the burden of demonstrating that there exists no genuine issue of material fact.²⁷ In turn, to defeat a motion for summary judgment, the nonmoving party must raise a genuine issue of material fact that does "'not rely on conclusory allegations or unsubstantiated speculation.'"²⁸ To do so, it must do more than show that there is "'some metaphysical doubt as to the material facts.'"²⁹ In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in that party's favor.³⁰

B. California's Statute of Limitations

Each of OCWD's claims at issue here is governed by the three-year statute of limitation found in section 338 of the California Code of Civil Procedure.³¹ The limitations period begins running when a plaintiff's cause of action accrues.³² In California, a plaintiff will be deemed to have suffered injury sufficient to give rise to a cause of action when it has suffered some "appreciable and actual harm."³³ Although the harm incurred must be more than nominal, a plaintiff need not have ascertained the full scope of its injury and "'neither the speculative nor uncertain character of the damages nor the difficulty of proof will toll the period of limitation.'"³⁴

However, the limitation period may be tolled by the discovery rule, under which a cause of action will not accrue until a plaintiff either actually discovers its injury or should have discovered its injury "through the exercise of reasonable diligence."³⁵ In determining whether a plaintiff has or should have discovered its injury, California courts consider both the plaintiff's "actual knowledge as well as knowledge that could reasonably be discovered through the investigation of sources open to [the plaintiff]."³⁶ Generally, a plaintiff "need not be aware of the specific `facts' necessary to establish the claim,"³⁷ and once a plaintiff "has a suspicion of wrongdoing" it will be deemed to have discovered its injury.³⁸

IV. DISCUSSION

A. Site-by-Site Analysis

Defendants argue that OCWD cannot seek to avoid the application of the statute of limitations "by splintering [its] lawsuit into hundreds (or more) of `site-by-site' causes of action,"³⁹ suggesting that such an approach is prohibited by California law, and that the "resulting factual complexities will prevent any meaningful application" of the statute.⁴⁰ Defendants' argument that California courts do not permit a site-by-site analysis is simply wrong. Indeed, the California Court of Appeals has held that the "factual question of when [asbestos] contamination occurred must be determined on a building-by-building basis."⁴¹

While a site-by-site approach is undoubtedly more complicated, such an analysis is required given that OCWD alleges injuries at "multiple locations, in multiple aquifers, and at different points in time."⁴² The question of when (and whether) each release caused the alleged injury of which OCWD complains will require an analysis of factual circumstances specific to each release site (e.g., the amount and duration of the spill) and the location of the injury (e.g., type of aquifer, level of contamination), and therefore must be determined on a site-by-site basis.

The conduct and harm on which OCWD's claims are based may be grouped as follows: (1) conduct and harm both occurring prior to May 6, 2000; (2) conduct prior to May 6, 2000 but harm occurring after May 6, 2000; and (3) conduct and harm both occurring after May 6, 2000. Claims arising from the first group are barred by the statute of limitations, unless OCWD can...