In re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation

980 F. Supp. 2d 417, 2013 WL 3970794
Procedural entryThis page is a short order in In re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation. Read the opinion of the Court — 959 F. Supp. 2d 476
District Court, S.D. New York·Decided August 1, 2013·No. Master File No. 1:00-1898; MDL No. 1358 (SAS); No. M21-88·Published

Opinion

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

1. INTRODUCTION

This is a consolidated multi-district litigation (“MDL”) relating to contamination—actual or threatened—from various defendants’ use of the gasoline additive methyl tertiary butyl ether (“MTBE”) and/or tertiary butyl alcohol, a product formed by the breakdown of MTBE in water. The City of Merced Redevelopment Agency and the Merced Designated Local Authority1 (collectively, the “RDA”) filed the initial complaint in this case in Merced County Superior Court on April 7, 2008.2 The case was subsequently removed to federal court and transferred to [419]*419this MDL Court.3

The RDA alleges that Exxon Mobil Corporation, Chevron U.S.A. Inc., Shell Oil Company, Equilon Enterprises LLC, Tesoro Corporation, and Tesoro Refining and Marketing Company4 (collectively, “Defendants”) sold gasoline, containing MTBE to Merced gasoline stations—identified in this litigation as the 1415 R Street Station and 1455 R Street Station (collectively, the “R Street Stations”)'—and that MTBE was released into the Merced Redevelopment Project Area to the North of the R Street Stations, causing damage. Based on these allegations, the RDA asserts five claims for: (1) cost recovery under California’s Polanco Act;5 (2) products liability; (3) negligence; (4) trespass; and, (5) nuisance.6

Presently before this Court are two motions for partial summary judgment brought by Defendants, seeking to dismiss: (1) the RDA’s claims of products liability, negligence, nuisance, and trespass on the grounds that they are time-barred; and (2) the RDA’s claims of nuisance and trespass, which cannot be supported by the “mere supply” of gasoline. For the reasons stated below, Defendants’ statute of limitations motion is GRANTED. Because the limitations issue also precludes the RDA’s claims of nuisance and trespass, Defendants’ motion on those grounds is MOOT.

II. BACKGROUND

A. The Allegations

The RDA is an agency charged under the California Health and Safety Code with the power to “alter, improve, reconstruct, rehabilitate, modernize and clean up property in the blighted Merced Redevelopment Project Area (“[Pjroject [Ajrea”).”7 The RDA contends that Defendants are “legally responsible for the costs and damages relating to the presence and abatement of gasoline, hydrocarbons, and MTBE located in or around the Project Area which blight the Project Area, adversely impact the use of the Project Area, depreciate or stagnate property values, and adversely affect the interests of health, safety, and welfare of the people.”8 The RDA alleges that Defendants sold gasoline containing MTBE to Merced gasoline stations, which released it into the environment and “contaminated, polluted, and threatened, and continue[ ] to contaminate, pollute, and threaten, [the RDA’s] Project Area.”9

The RDA alleges that:

Gasoline containing MTBE [] was released from gasoline delivery systems in Merced until at least 1997 from gasoline retail stations ... Over time, MTBE [ ] migrated down to groundwater and, after several years elapsed, traveled to the Project Area causing pollution, contamination, and interference with [RDA’s] [420]*420Project Area. This appreciable injury and damage occurred for the first time in July 2006, when ... the [RDA] was asked to manage [the cleanup project].10

The RDA seeks “compensatory damages needed to investigate, remediate, and remove gasoline, hydrocarbons, and MTBE [] contamination, and for past, present, and future remediation and/or investigation costs incurred in or after August 2006.”11

B. Undisputed Facts Relating to the Statute of Limitations12

Between 1991 and 1992, William Cahill, the director of the RDA, negotiated with Costco to build a new store in the City of Merced at a location just North and West of the R Street Stations.13 During these negotiations, Cahill and the RDA learned of a contamination problem within the vicinity of the R Street Stations caused by a gasoline release.14 On October 15, 1992, the RDA received a report from Krazan & Associates15 that confirmed the presence of gasoline contamination in the property area being considered by Costco.16 The reports indicated that the groundwater in the contaminated area flowed from the R Street Stations to the RDA’s property.17 In 1998, the negotiations between Costco and the RDA to build a new store fell through, but the RDA contracted to lease its property to Costco for use as a parking lot.18 As part of the lease agreement, the RDA was obligated to perform “all required remediation of environmental hazards on the [property”19 and “to make its [421]*421best efforts ... to prevent [the contamination] from migrating onto the rest of [Costco’s property].”20 In 1994, the RDA engaged the owners of the 1415 R Street station—the Shackelfords—to clean up the gasoline contamination at that property.21

In 1996, the RDA received a directive from the Department of Public Health for Merced County, the regulator of the cleanup site, to “include MTBE in the chemicals tested for in the next groundwater monitoring event.”22 Tests following this directive detected MTBE at the site,23 and the RDA knew that MTBE was concentrated in a plume near the R Street Stations that was traveling North along R Street in the groundwater towards the Project Area.24 By the time MTBE was discovered at the R Street Stations, the RDA was authorized to proceed with remediation and was incurring costs and expenses supervising the cleanup.25

In January 2002, the California Regional Water Quality Control Board (the “RWQCB”)—the local regulatory agency for the R Street Stations—informed the City of Merced and the RDA that the 1415 R Street Station was a “high priority site because of extremely high concentrations of petroleum hydrocarbons,”26 including MTBE.27 A March follow up letter from the RWQCB to the RDA summarized the extensive contamination history of the site and concluded:

[422]*422The magnitude of the pollution [including MTBE] presently identified in groundwater, the rate of spreading of the pollution, and the threat this poses to the public water supply necessitates the rapid implementation of remedial measures more aggressive and comprehensive than the existing remediation system.28

By March 2002, the director of the RDA admitted that he was concerned about the contamination threat, which included MTBE.29 In August, the RWQCB informed the RDA that there was a release of hydrocarbons from the 1455 R Street Station, and that the plume of polluted groundwater had commingled.30

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In re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation, 980 F. Supp. 2d 417, 2013 WL 3970794 (S.D.N.Y. 2013).

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