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

Filing 3626

DECLARATION of Connelly in Support re: (157 in 1:04-cv-04973-SAS) MOTION for Summary Judgment for Lack of Evidence Pertaining to Causation.. Document filed by Coastal Eagle Point Company, Coastal Chem, Inc.. (Attachments: #1 Exhibit #01, #2 Exhibit #02, #3 Exhibit #03, #4 Exhibit #04, #5 Exhibit #05, #6 Exhibit #06, #7 Exhibit #07, #8 Exhibit #08, #9 Exhibit #09, #10 Exhibit #10, #11 Exhibit #11, #12 Exhibit #12, #13 Exhibit #13, #14 Exhibit #14)Filed In Associated Cases: 1:00-cv-01898-SAS-DCF, 1:04-cv-04973-SAS(Allen, Brent)

EXHIBIT 1
Correspondence


Letter from Michael Axline to M. Coy Connelly (March 6, 2013).

49963024 
Mar 07 2013 
01:46AM 

M. Coy Connelly, Esq.
March 6, 2013
Page2

particular station. As I am sure you are aware, in/n re MTBE, 591 F.Supp.2d 259 (S.D. N.Y.
2008), Judge Scheindlin, in discussing the commingled product theory, distinguished suppliers of
neat MTBE from refiners and distributors of MTBE gasoline, and also distinguished both neat
MTBE suppliers and MTBE gasoline distributors and refiners from gasoline retailers.
At the January 11, 2013, status conference, in a discussion of Fresno's claims against
Duke Energy, Judge Scheindlin rejected defendants' argument that the City would have to amend
its complaint to allege the commingled product theory, and made clear that use of the theory is
simply "a matter of proof." Tr. at 40:20-21. She also made clear that she was not interested in
re-visiting her prior commingled product rulings. Tr. at 40:11-16 ("I said what I had to say about
that theory, and it's old news.")
After stating that the City did not need to amend its complaint to allege commingled
product theory, Judge Scheindlin asked: "can you also do it with direct product, Tracey [tracing?]
or do you have to rely on the blended, you know, total product and the markets?" Tr. at 41 :4-6.
Ms. O'Reilly stated in the context of the discussion of Duke that "[w]e're not going with
commingled in the pipeline. We're going with direct evidence, is what we explained [with
respect to Duke in the City's pre-conference letter]." Tr. at 41:12-13. Ms. O'Reilly went on to
explain the City has evidence that "Duke Energy mixed several gas station sites, received
delivery, deliveries ofMTBE gasoline from jobbers to whom Duke Energy sold MTBE
gasoline." Tr. at 42:11-13.
This discussion, and Ms. O'Reilly's statements, merely clarified that with respect to some
defendants, including Duke, the City's evidence will allow the jury to conclude that the
defendants' product was delivered directly to some stations. Ms. O'Reilly did not state that the
City would not rely on the commingled product theory for all defendants or even all stations.
Since, as Judge Scheindlin's commingled product opinion makes clear, it is impossible to trace
neat MTBE to individual release sites, such a conclusion would never have been reached in such
an off-hand and indirect way.
As I stated during our face-to-face meet and confer session on March 1, 2013, the City
will be relying on the commingled product theory method of proof for defendants against whom
the City does not have direct evidence of delivery to particular stations. This evidence will show
delivery of a defendant's product to terminals serving the Fresno area during the relevant time
period. This evidence will include (but not be limited to) the deposition of Dickman Lum in the
South Tahoe and Merced cases and the deposition of Fresno terminal manager Robert Kennedy
in City of Dinuba v. Unocal Corp.
The consequence of relying on the commingled product theory with respect to a particular
defendant, of course, is that the City cannot pursue nuisance claims or punitive damage claims

M. Coy Connelly, Esq.
March 6, 2013
Page 3

against that defendant. As you know, the City has already notified you that it will not be
pursuing nuisance claims against Ultramar and Valero at the Smith Tank Lines site. See
February 8, 2012, Eickmeyer letter to Jeff Parker. As discussed infra, the City will also
withdraw certain other claims. Consequently, there is no need to file any summary judgment
motions with respect to the claims being withdrawn.
As Judge Scheindlin made clear in In Re MI'BE, 591 F. Supp.2d 259, 268 (S.D. N.Y.
2008): "even when the jury concludes that plaintiffs have not met their burden to prove that any
particular spill of gasoline caused contamination in a well, plaintiffs may still prove their claims
against gasoline manufacturers under the commingled product theory."
As Judge Scheindlin also recognized, the time that the contamination of groundwater
occurred is an issue of fact for the jury and the jury may estimate, from evidence presented, a
range of time during which the contamination occurred. 591 F. Supp.2d at 275. Judge
Scheindlin's ruling is consistent with expert testimony. As Marcel Moreau explains, during the
time that MTBE gasoline was in use at this station, releases of gasoline were routine, due not
only to the ineffectiveness of underground storage tanks, piping systems to dispenser islands and
dispensers themselves, but also due to vapor leaks and individually small but cumulatively
significant releases that occur during fuel deliveries and customer overfilling and dripping during
fueling. Moreau Report, sections I, II and V. As defendants' own expert Sam Williams
testified: "I don't know, except under certain specific sites, when an individual release occurred.
The release occurred over a certain time period, usually during the period from '92 to '97 or '98
or '99 .... " June 7, 2012, Deposition of Sam Williams, at 101:12-16. For these reasons, the
City declines to dismiss claims on the purported ground that Mr. Moreau did not identify a
release after a particular date.

(1)

Red Trianele (2809 S. Chestnut Ave.)

Our December 11, 2012, e-mail from Evan Eickmeyer to you asserted that Valero
supplied gasoline containing MTBE to Red Triangle between 1997-2002. The cited source for
this information was the Valero Defendants' interrogatory responses, discussed supra. The
Valero Defendants' responses stated that Valero supplied gasoline containing MTBE to Red
Triangle from 1997 through 2002. (See first page of Exhibit A [Red Triangle is listed
alphabetically as "DBA RED TRIANGLE OIL CO."].)
The City will withdraw its nuisance claims against Ultramar and Valero for the Red
Triangle site. There is sufficient evidence, however, for the City to pursue its remaining claims
against the entities that delivered to Red Triangle, Ultramar and/or Valero. Mr. Shehadey
produced bills of lading and highway transportation receipts showing deliveries by Red Triangle
to Fleet Card Fuels at 2809 S. Chestnut Ave. All of the gas delivered by Red Triangle to 2809 S.

M. Coy Connelly, Esq.
March 6, 2013
Page4

Chestnut Ave. came from the Fresno terminal, because they were in such close proximity, only
about 2 miles apart. Mr. Shehadey's testimony and production establish that gasoline containing
MTBE was picked up at the Kinder Morgan terminal by Red Triangle, then delivered to 2809 S.
Chestnut Ave.
In addition, Mr. Shehadey's documents show that Nella Oil was a shipper of gasoline to
Red Triangle. Shehadey Depo., at 30:14-25,31-32, and Exh. 5. The Valero Defendants list
Nella Oil as a jobber from 1997 through 2003. Responses to First Set oflnterrogatories,
Response to Interrogatory No.5.

(2)

Smith Tank Lines (30 E. Divisadero St.)
The City will withdraw all claims against Ultramar and Valero for the Smith Tank Lines

site.

(3)

Beacon-Arco #615 (1625 Chestnut Ave.)

Your letters ask the City to withdraw its claims for this site based on your assertions that
(1) Mr. Moreau did not identify releases after June 1998, and (2) Valero did not do business in
California prior to the year 2000.
First, for the reasons explained by Judge Scheindlin, Mr. Moreau, and Mr. Williams,
discussed supra, the City declines to drop its claims due to the date of the last identified release.
Second, the Valero Defendants' collective discovery responses stated that they leased the
1625 Chestnut Ave. station from July 24, 1998, to the date of the responses. Responses to First
Set oflnterrogatories, Response to Interrogatory No.3. As discussed supra, even if the station
was leased by Ultramar, Valero would have successor liability.

(4)

Valley Gas (2139 S. Elm St.)

Your letters ask the City to withdraw its claims for this site (1) as to Valero, because
MTBE gasoline distributed or manufactured by Valero was not delivered to the site, and (2) as to
Ultramar because "its ownership of the station ended well before MTBE was commonly added to
gasoline in California."
The Valero Defendants' collective discovery responses stated that the Valley Gas site was
formerly Beacon #538. Responses to First Set oflnterrogatories, Response to Interrogatory No.
3. Beacon's lease was terminated November 1, 1991. Id. Whether or not Valero gasoline was
delivered to the site, however, Valero has successor liability for Beacon's lease of the site.

M. Coy Connelly, Esq.
March 6, 2013
Page 5

The Valero Defendants' relationship with the site continued beyond the Fall of 1992,
when MTBE was first required to be present in Fresno County gasoline. Marcel Moreau report.
The Declaration of the Valero Defendants in Anticipation of30(b)(6) Deposition provides that
Ultramar maintained a branded relationship with the station from November 1, 1991, until May
31, 1994, whereby the station purchased Beacon-branded gasoline. After the site was purchased
from Ultramar, Beacon and Ultramar gasoline were delivered to the station. (Ahmad Depo., at p.
139:9-11.) Mr. Ahmad testified there was a brand distribution marketing agreement between
Petro Group II and Beacon that prohibited him or Petro Group from buying gasoline from anyone
other than Ultramar. (Ahmad Depo., at pp. 139:13-25, 140:7-8.) The brand name agreement
ceased in 1995. (Ahmad Depo., at p. 140:7-15.)
While branded Valley Gas, the station received gasoline supplies from Total Energy and
Sabek Oil. (Ahmad Depo., at p. 25:3-6.) The Valero Defendants' collective discovery responses
listed Southern Counties Oil (dba Total Energy) as a jobber from 1997 through 2002. Responses
to First Set oflnterrogatories, Response to Interrogatory No.5. During this time period, a line
leak was discovered in October 1999, and a soil sample taken after a hole in a pipe was
discovered and repaired in November 1999 was found to contain 920,000 ppb MTBE. Marcel
Moreau report.
Mr. Moreau's report explains that MTBE releases likely occurred intermittently between
the Fall of 1992 and 2003. Because these releases occurred during times that Ultramar and
Valero had relationships with the station, the City declines to drop its claims for this site.

(5)

Beacon #519 (4591 E. Belmont)

Your letters ask the City to drop its claims against Valero for this site, because Mr.
Moreau noted that a release was discovered in December 1998, and because Valero "did not do
business in the State of California prior to the year 2000."
The Valero Defendants' collective discovery responses show that this station was leased
by them from 1971 through October 20, 1999. Responses to First Set oflnterrogatories,
Response to Interrogatory No.3. The discovery responses further reveal that Valero had a retail
supply contract with this site, identified as Beacon #4984, from October 20, 1999, to the date of
the responses. Responses to First Set oflnterrogatories, Response to Interrogatory No. 4. The
Declaration of the Valero Defendants in Anticipation of30(b)(6) Deposition establishes that
Arco-branded gasoline was purchased from Ultramar, Inc., and Valero Marketing and Supply
Company from September 22, 1999, through December 31, 2003, for resale at the station.
Because leaks of gasoline were routine at stations, per Mr. Moreau, and because
Ultramar's and Valero's activities continued through the years that MTBE was added to Fresno

M. Coy Connelly, Esq.
March 6, 2013
Page6

gasoline, the City declines to dismiss its claims for this site.
(6)

Beacon #537 (798 West Gettysbur2)

The City will agree to withdraw all claims as to all defendants for the Beacon #537 site
without prejudice.

Counsel for ity of Fresno
cc: All Counsel (via LNFS)