Merrick v. Diageo Americas Supply, Inc.

5 F. Supp. 3d 865, 44 Envtl. L. Rep. (Envtl. Law Inst.) 20078, 78 ERC (BNA) 1919, 2014 U.S. Dist. LEXIS 36087, 2014 WL 1056568
CourtDistrict Court, W.D. Kentucky
DecidedMarch 19, 2014
DocketNo. 3:12-CV-334-CRS
StatusPublished
Cited by7 cases

This text of 5 F. Supp. 3d 865 (Merrick v. Diageo Americas Supply, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Merrick v. Diageo Americas Supply, Inc., 5 F. Supp. 3d 865, 44 Envtl. L. Rep. (Envtl. Law Inst.) 20078, 78 ERC (BNA) 1919, 2014 U.S. Dist. LEXIS 36087, 2014 WL 1056568 (W.D. Ky. 2014).

Opinion

MEMORANDUM OPINION

CHARLES R. SIMPSON III, Senior District Judge.

This matter is before the court on the following motions of the defendant, Diageo Americas Supply, Inc. (“Diageo”):

(1) Motion to dismiss Plaintiffs’ First Amended Class Action Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim (DN 18); and
(2) Motion for leave to file supplemental authority (DN 28).

Also before the court is Plaintiffs’ motion to strike Diageo’s notice of supplemental authority. (DN 38). For the reasons set forth herein, Diageo’s motion for leave to file supplemental authority (DN 28) will be granted, and Plaintiffs’ motion to strike (DN 38) will be denied. The court will also grant in part and deny in part Dia-geo’s motion to dismiss the First Amended Class Action Complaint (DN 18).

I. BACKGROUND

Diageo is a New York corporation that operates a whiskey distillery in Louisville, Kentucky. Diageo has aged whiskey in Louisville since 2000, and it contends that whiskey has been aged continuously in its Louisville facilities since at least 1935. In 2008, Diageo leased and converted additional warehouses to be used for aging whiskey. Plaintiffs1 are a class of individuals who allegedly own, lease, or rent real and/or personal property located in the vicinity.

As a natural result of the whiskey aging processes that occur in Diageo’s ware[868]*868houses, ethanol escapes and is emitted into the atmosphere. These ethanol emissions are regulated under the provisions of the. Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., as well as state and local regulations.2 As an ethanol-emitting entity, Diageo is required to comply with the regulations adopted by the Environmental Protection Agency (“EPA”), the Kentucky Department for Environmental Protection, and the Louisville Metro Air Pollution Control District (“LMAPCD”). Diageo contends — and Plaintiffs do not appear to dispute — that its ethanol emissions are within the limits established by these federal, state, and local regulations. Diageo has also obtained a Title V Operating Permit, in addition to permits from the LMAPCD, which authorize its ethanol emissions within the limits prescribed by these federal, state, and local regulations.

Plaintiffs claim that once this ethanol is emitted from Diageo’s facilities, it combines with condensation on Plaintiffs’ real and personal property to “cause an invisible, naturally occurring fungal spore to ‘germinate’ (start growing) and become a living organism, visible to the naked human eye.” According to Plaintiffs, this fungus is Baudoinia compniacensis, colloquially referred to as “whiskey fungus.”3 Plaintiffs argue that whiskey fungus “creates an unsightly condition requiring abnormal and costly cleaning and maintenance, early weathering of surfaces,” and “causes unreasonable and substantial annoyance and unreasonable interference with the use and enjoyment of the property, and, as a result of which, the value ... of [their] property is reduced.” Plaintiffs contend that whiskey fungus can only be removed through extreme cleaning measures, such as high-pressure washing or application of chlorine bleach, and that this cleaning must be frequently repeated to counteract Diageo’s continuous discharge of ethanol.4 Plaintiffs have complained to local and state agencies about the proliferation of whiskey fungus on their properties. In response to these complaints, the LMAPCD issued a Notice of Violation letter to Diageo on September 7, 2012. In the letter, the LMAPCD stated that between June 2011 and May 2012, it received 27 complaints from residents living near Diageo’s warehouses of a “black, sooty substance covering .... everything exposed to the outdoors.”

On June 15, 2012, Plaintiffs filed a Class Action Complaint on the basis of diversity jurisdiction. (Compl., DN 1). Plaintiffs subsequently amended the complaint to include additional factual allegations to support their claims. (First Am. Compl., DN 15). In the First Amended Complaint, Plaintiffs seek to recover compensatory and punitive damages from Diageo under the following common law theories: (1) negligence and gross negligence; (2) temporary nuisance and permanent nuisance; and (3) trespass. Plaintiffs also seek injunctive relief on the theory that Diageo can correct or abate its ethanol emissions by implementing ethanol control technology in its warehouses. Plaintiffs [869]*869allege that this technology has been successfully installed and used by brandy makers in California and, because brandy and whiskey aging allegedly involve “substantially similar” processes, the technology could be implemented by Diageo. For its part, Diageo controverts the feasibility of implementing such emission control technologies. It argues that Plaintiffs have not presented proof that these technologies have been successfully implemented in whiskey distilleries and its effect on Diageo’s processes remains unknown.

Diageo has moved to dismiss Plaintiffs’ First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Mot. to Dismiss, DN 18). Plaintiffs have asked the comí; to deny Diageo’s motion to dismiss or, in the alternative, convert the motion to one for summary judgment. Nearly a year after filing this motion, Dia-geo asked the court for leave to file supplemental authority consisting of two recent cases from the Jefferson and Franklin Circuit Courts. These state trial court decisions also involved claims brought by property owners against whiskey distilleries for property damage that was allegedly caused by whiskey fungus. (DNs 28, 31). In both cases, the Kentucky lower courts addressed the issue of whether the plaintiff property owners’ state common law tort claims were preempted by the Clean Air Act. Plaintiffs subsequently filed a motion to strike Diageo’s notice of supplemental authority. (DN 38). These motions are now before the court.

II. STANDARD

Pursuant to Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a short and plain statement of the claims showing that the pleader is entitled to relief. The pleading standard in Rule 8(a)(2) does not require detailed factual allegations, but “demands more than an unadorned, the defendant-unlawfully-harmed me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

To withstand a Rule 12(b)(6) motion to dismiss for failure to state a claim, it is not enough that the complaint contains “facts that are merely consistent with a defendant’s liability;” rather, a plaintiff must allege “facts — not legal conclusions or bald assertions — supporting a ‘plausible’ claim for relief.” Id. at 687, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct.

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5 F. Supp. 3d 865, 44 Envtl. L. Rep. (Envtl. Law Inst.) 20078, 78 ERC (BNA) 1919, 2014 U.S. Dist. LEXIS 36087, 2014 WL 1056568, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merrick-v-diageo-americas-supply-inc-kywd-2014.