Niagara Mohawk Power Assn. v. Chevron U.S.A., Inc.

Feb 24: In the U.S. Court of Appeals, Second Circuit, Case No. 08-3843. As explained by the Appeals Court, Niagara Mohawk Power Corporation (NiMo) commenced this action to recover costs pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), and the Superfund Amendments and Reauthorization Act of 1986 (SARA) from the defendants for cleanup of properties previously owned by NiMo and once either owned, leased, or used by the defendants. In the appeal, NiMo challenges orders of the United States District Court for the Northern District of New York which denied NiMo's motion for summary judgment, granting summary judgment in favor of the defendants, and denying NiMo's motion for reconsideration.

 

    We are called upon to determine whether NiMo, as a potentially responsible party under CERCLA, can seek response and cleanup costs under either § 107(a)(4)(B) or § 113(f)(3)(B), after having settled its CERCLA liability with the New York State Department of Environmental Conservation (DEC) but not with the Environmental Protection Agency (EPA), where the EPA has not expressly authorized the DEC to settle CERCLA liability relating to the property at issue.

 

    The Appeals Court said, "We hold that NiMo may seek contribution costs under § 113(f)(3)(B) because NiMo has settled with the DEC, but consequently NiMo may not seek reimbursement for response costs under § 107(a). We hold that the district court erred in granting summary judgment for the defendants because there are genuine issues of material fact with regards to their respective liabilities.

 

    Additionally, the Appeals Court ruled, "We hold that the district court erred by holding that NiMo did not comply with the National Contingency Plan. We hold that the district court erred in part by dismissing NiMo's New York Navigation Law claims. Finally, we hold that the district court erred in dismissing Chevron's third party action against the County of Rensselaer and others. We affirm, however, the district court's dismissal of NiMo's state contribution, indemnity, and unjust enrichment claims because they are preempted by CERCLA."

 

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Gintis v. Bouchard Transportation Co.

Feb 23: In the U.S. Court Appeals, First Circuit, Case No. 09-1717. In this case, a fuel barge owned and operated by defendants discharged a substantial amount of oil into the waters of Buzzards Bay in southeastern Massachusetts. Plaintiffs are owners of residential waterfront property on the bay who brought suit as individuals and as members of a proposed class. The district court denied class certification, but the Appeals Court said, ". . .because the court did not subject the parties' contentions to the plenary analysis that precedent requires, we vacate the judgment and remand."

 

    The  Appeals Court provided more detail and said, "It is enough to say here that Bouchard's arguments in this appeal appear to show that substantial and serious common issues would arise over and over in potential individual cases. Indeed, the only apparent mitigation of this prospect of duplicative litigation lies in the possibility that not many individual actions would be brought if separate actions were the only course, and this implicates the second condition for certification under paragraph (3), that class litigation be

superior to a string of individual plaintiffs going alone. While superiority is a separate base to be touched, it is addressed by many of the considerations that inform a trial court's judgment call about how clearly predominant the common issues must be. . .

 

    Here there is evidence that may well go to the very reason for Rule 23(b)(3), mentioned before (i.e., to make room for claims that plaintiffs could never afford to press one by one), since the record contains one estimate that potential individual recoveries are probably in the $12 to $39 thousand range. Given the elements of injury, causation and compensation on which Bouchard intends to join issue, there is a real question whether the putative class members could sensibly litigate on their own for these amounts of damages, especially with the prospect of expert testimony required. Like predominance, the issue of superiority is thus a serious one in these circumstances and should be addressed thoroughly."

 

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Precision Pine & Timber, Inc. v. US

Feb 19: In the U.S. Court of Appeals, Federal Circuit, Case No. 08-5092. The Appeals Court explains that this is a government contract case, "We must decide whether the federal government's suspension of fourteen contracts breached any express or implied warranties." These fourteen contracts are between the U.S. Forest Service and Precision Pine & Timber, Inc. (Precision Pine), and provide for timber harvesting in Forest Service Region 3, which covers Arizona's national forests. In August 1995, the Forest Service suspended the contracts pursuant to a court order. The order prohibited further timber harvesting in that region until the Forest Service consulted with the U.S Fish and Wildlife Service about the pertinent land resource management plans. The order explained that such consultation was required under § 7 of the Endangered Species Act, due to the recent listing of the Mexican spotted owl as an endangered species. The fourteen contracts remained suspended until completion of the consultation process in December 1996.

    Precision Pine subsequently brought the suit in the U.S. Court of Federal Claims, alleging that suspension of the contracts breached both express and implied warranties. The trial court agreed with Precision Pine. On liability, it granted summary judgment in favor of Precision Pine, concluding that the government breached both an express contractual warranty and the implied duty of good faith and fair dealing. (Precision Pine I or liability decision). Following this decision, the case was transferred to a different judge for the sole purpose of adjudicating damages. After five years of discovery, a twenty-four day bench trial, and extensive supplemental briefing, the trial court awarded $3,343,712 in damages to Precision Pine (Precision Pine V or preliminary damages decision). The United States then appealed the liability determination and damages award. The Appeals Court reversed the lower court decision.

    Although the contract dates and terms differ slightly, the Appeals Court said "for our purposes the issues posed are the same." The Appeals Court said, "Seven of the contracts present the question of whether a particular clause (CT 6.25) created an express warranty and, if so, whether it was breached. If CT 6.25 did create an express warranty, then we must also decide whether the government breached its implied duty to cooperate as to those contracts. For eleven of the contracts, we must also decide whether the United States breached its implied duty not to hinder. We conclude that the answer to each of these questions is no. Clause CT 6.25 of the contracts did not create an express warranty, and the Forest Service's actions did not breach any implied duty to cooperate or not to hinder. Accordingly, we reverse the trial court's liability decision and vacate the damages award for all contracts, except the Hay contract. Because the government concedes it lacked authority to suspend the Hay contract, we remand for further proceedings as to that contract. For the other thirteen contracts, the trial court should enter judgment for the United States."

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WIMS Publishing Notice

Subscribers & Readers Note: We will not be publishing today, February 15, 2010, in observance of the Washington's Birthday/President's Day holiday. We will return on Tuesday, February 16, 2010.

John Dubinsky v. Mermart

Feb 10: In the U.S. Court of Appeals, Eighth Circuit, Case No. 09-2072. John Dubinsky, et al (Subordinate Bondholders) invested in a refinancing venture for a real estate development. They sued the developer of the project, Mermart, L.L.C. (Mermart), alleging breach of contract and demanding equitable accounting for failure to pay interest under the financing documents, as well as alleging unjust enrichment, negligence, and fraudulent misrepresentation based on alleged representations that the project was free from environmental hazards. The district court dismissed the contract claims, finding that the Subordinate Bondholders failed to obtain written consent of UMB Bank, N.A. (UMB Bank), the Senior Mortgagee, as required by the financing documents. The district court also dismissed the negligence, unjust enrichment, and fraudulent misrepresentation claims because the economic loss doctrine precluded recovery. The Appeals Court affirmed the district court ruling.

    The Appeals Court said further, "We agree with the district court that the negligence claim is an enforcement action under the Subordination Agreement. Id. Similarly, we find that, like the negligence claim, the failure to make interest payments due to the characterization of the lead paint remediation as an "upgrade expense," is a matter that arises out of the Financing Documents. . . We affirm the dismissal of the negligence and unjust enrichment claims because the Subordinate Bondholders did not obtain written permission to sue. . .

    "Finally, the Subordinate Bondholders argue that Mermart made fraudulent misrepresentations pertaining to the absence of lead-based paint. Mermart counters that any such alleged statements are also covered solely by contractual duties. . . we find that the claimed fraudulent misrepresentation is also a matter that arises out of the Financing Documents. Again, we affirm the dismissal of this claim because the Subordinate Bondholders did not first obtain the written permission from the Senior Mortgagee to sue."

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Crandall v. Denver

Feb 8: In the U.S. Court of Appeals, Tenth Circuit, Case No. 08-1197. Plaintiffs Terri Crandall and JoAnn Hubbard sued for injunctive relief against the City and County of Denver under the citizen-suit provision of the Resource Conservation and Recovery Act of 1976 (RCRA). Their concern is that aircraft deicing fluid (ADF), which can produce hydrogen-sulfide gas when it decomposes, endangers human health at Concourse B of the Denver International Airport. The gates on Concourse B are used almost exclusively by United Airlines. Crandall is a United employee, and Hubbard is a former employee who now frequently uses Concourse B as a passenger. Plaintiffs seek: (1) to prohibit full-plane deicing at Concourse B gates; and (2) to require other precautionary steps relating to ADF.

 

    Following a five-day bench trial, the United States District Court for the District of Colorado denied Plaintiffs relief. It found that Denver no longer permits full-plane deicing at the gates and held that Plaintiffs had not shown that the current use of ADF "may present an imminent and substantial endangerment to health," which is a prerequisite for RCRA relief. The court also held that RCRA does not govern all the ADF by Concourse B at the Denver Airport, but only the ADF "that flows in storm water into Concourse B and degrades in Concourse B." The ADF that degrades outside the concourse, it said, was governed exclusively by permits issued under the Clean Water Act (CWA).

 

    On appeal Plaintiffs argue that the district court misconstrued RCRA's requirements with respect to injunctive relief. They also contend that the court erred in holding that the CWA, rather than RCRA, governs some of the ADF at the Denver Airport. The Appeals Court ruled, "We affirm the district court's denial of injunctive relief. Plaintiffs failed to demonstrate that ADF at the airport (whether it degrades inside or outside Concourse B) may present an imminent and substantial endangerment to health. Because relief under RCRA would therefore not be available even if RCRA governs the ADF that degrades outside the concourse, we need not address whether such ADF is governed exclusively by the CWA."

 

    The Appeals Court said further, "A RCRA suit cannot be brought because someone may sometime begin disposing of solid waste in a manner that presents an endangerment. The endangering practice -- here, the resumption of gate deicing -- must be imminent. See 42 U.S.C. § 6972(a)(1)(B). Plaintiffs' suit was properly dismissed because the evidence showed that resumption of full-plane gate deicing at Concourse B was not imminent, but merely speculative. If the district court had been persuaded by the evidence that Denver would likely resume full-plane deicing at the gates upon conclusion of this litigation and that such a practice may present an imminent and substantial endangerment to health, we presume that it could properly issue an injunction under RCRA. That, however, is not the case we have before us."

 

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River Runners For Wilderness v. Martin (Interior Dept.)

Feb 1: In the U.S. Court of Appeals, Ninth Circuit, Case No. 08-15112. The case concerns the National Park Service’s decision to permit the continued use of motorized rafts and support equipment in Grand Canyon National Park. Plaintiffs contend that such motorized activities impair the wilderness character of the Canyon and that the Park Service’s decision violates its management policies and various Federal statutes. Plaintiffs asked the District Court to set aside the decision under the Administrative Procedure Act (APA). The Appeals Court indicated that, "For reasons explained in this opinion, Plaintiffs have not satisfied the high threshold required to set aside federal agency actions under the APA." In a footnote, the Appeals Court praised, "The wording of Judge Campbell’s carefully crafted district court opinion with its detailed factual discussion and thorough analysis, with which we agree, has been utilized in this opinion." In its final conclusion, the Appeals Court indicates, "Plaintiffs have failed to establish that the Park Service acted arbitrarily and capriciously when it adopted the 2006 Management Plan."

On one of the primary issues of concern, i.e. noise, or "impairment of the natural soundscape;" the Appeals Court said, "Plaintiffs argue that the Park Service failed to consider 28 previous studies, but they identify no specific studies for the court to consider. Nor do Plaintiffs cite any recent studies that call into question the findings of the 1993 and 2003 studies. Defendants also note that any studies conducted in the 1970s would have concerned louder two-stroke engines rather than the quieter and cleaner four-stroke engines now used in the Corridor. Finally, the 2003 study specifically considered and summarized the earlier studies relied on by Plaintiffs. Given all of these considerations, the court cannot conclude that the Park Service acted arbitrarily and capriciously when it concluded that motorized uses do not impair the soundscape of the Park within the meaning of the Organic Act."

Access the complete opinion (click here).