Aug 2: In the U.S. Court of Appeals, Sixth Circuit, Case Nos. 11-4369; 12-3995. Appealed from the U.S. District Court for the Southern District of Ohio. In this unpublished opinion, the case arises from defendant Chevron's activities at its crude oil refinery near the Village of Hooven in Hamilton County, Ohio. Chevron acknowledges that from 1931 to 1986, the refinery was the source of considerable environmental contamination, including hazardous air emissions and a cumulative release of approximately eight million gallons of gasoline that gravitated through the soil and formed a plume atop the groundwater under the refinery. By 1996, the plume had migrated under a portion of the Village of Hooven.
Plaintiffs are approximately 200 former and current neighbors of the refinery who allege claims for damages arising out of the refinery's air emissions, the groundwater plume, and the "soil vapors" arising from the plume that escape to the surface. Plaintiffs fall into three distinct categories: (1) individuals who claim personal injury because of the air emissions; (2) individuals who seek medical monitoring damages because their exposure to the plume and its soil vapors has given them an increased risk of contracting a serious disease; and (3) individuals who claim property damage because of the plume and its soil vapors.
The district court bifurcated the personal injury plaintiffs from the property damage plaintiffs and selected bellwether plaintiffs from each group to determine the viability of each category of claims. After excluding two of plaintiffs' experts opinions as unreliable, the district court granted summary judgment to Chevron on all claims. The district court also granted Chevron's motion for Rule 11 sanctions, ordering plaintiffs' counsel to pay Chevron $250,000 in defense costs because their positions regarding the legal and evidentiary basis for medical monitoring damages were objectively unreasonable. Plaintiffs appealed the orders excluding their experts and granting summary judgment to Chevron; plaintiffs' counsel appealed the order granting Rule 11 sanctions to Chevron. The district court granted Chevron's motions, holding that "the record fails to show that the hydrocarbon plume caused any damage to Plaintiffs' property or interfered with their property rights or with the use and enjoyment of their properties." The Appeals Court affirmed the district court decision in favor of Chevron.
In part of its conclusion, the Appeals Court said, "After counsel admitted they had no causation proofs, the court suggested a Raceway dismissal so that counsel could challenge the court's legal rulings on appeal; the parties agreed. Later, however, counsel reneged because they wanted to dismiss the claims for medical monitoring and the nonbellwether property damage claims, whereas Chevron wanted to adhere to the compromise struck on the record and dismiss only the medical monitoring claims. In light of counsels' admission regarding their lack of evidence, Chevron subsequently sent counsel a Rule 11 safe-harbor letter advising counsel to voluntarily dismiss or face the possibility of paying defense costs for the medical monitoring claims going forward. Counsel refused to dismiss, believing that they were ethically obligated to preserve the medical monitoring plaintiffs' appellate rights. Counsel was mistaken.
Rule 11 sanctions are appropriate when an attorney refuses to dismiss a claim after becoming aware that it lacks merit. See Merritt, 613 F.3d at 627 ('Rule 11 imposes a continual obligation on attorneys to refrain from pursing meritless or frivolous claims at any stage of the proceedings . . . .') (citation and internal quotation marks omitted); Runfola, 88 F.3d at 373 (affirming Rule 11 sanctions against counsel who failed to dismiss the action after becoming aware of their inability to assert any evidence in support of their claims). Given the history of this case, the district court did not commit a clear error of judgment by sanctioning counsel for continuing to litigate meritless claims. Further, counsel's false dilemma argument -- either dismiss and lose appeal rights or litigate and pay costs -- is unpersuasive. The district court offered counsel a Raceway dismissal that would have allowed counsel to promptly challenge the district court's rulings in this court. Despite this offer, counsel refused to dismiss only the claims of the medical monitoring plaintiffs and continued litigating under the specter of Rule 11 at their own peril. . . we affirm the judgment of the district court.
Access the complete opinion (click here). [#Remed, #CA6]
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