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

Filing 4224

MOTION for Reconsideration of the Court's Order re Design Defect and Negligence. Document filed by Commonwealth of Puerto Rico.Filed In Associated Cases: 1:00-cv-01898-SAS-DCF, 1:07-cv-10470-SAS(Axline, Michael)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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

Master File No. 1:00-1989
MDL 1358 (SAS)

This Document Relates To:

The Honorable Shira A. Scheindlin

Commonwealth ofPuerto Rico, et al. v. Shell
Oil Co., et al., Case No. 07 Civ. 1-470 (SAS)

PLAINTIFF'S MOTION FOR RECONSIDERATION OF THE COURT'S ORDER RE
DESIGN DEFECT AND NEGLIGENCE

SUMMARY OF ARGUMENT
Pursuant to Local Rule 6.3 and Federal Rule of Civil Procedure Rule 52(b), Plaintiff the
Commonwealth of Puerto Rico ("Commonwealth") seeks reconsideration of the Court's June 16,
2015, Opinion on Counts I and IV addressing the Commonwealth's strict products liability
design defect and negligence claims. The Commonwealth does not make this motion lightly, but
believes that two of the criteria in Local Rule 6.3 for granting reconsideration are present in this
instance: "manifest injustice" and "overlooked data." See In re Methyl Tertiary Butyl Ether
(MTBE) Products Liab. Litig., 2013 WL 4008632, at *1 (S.D.N.Y. Aug. 2, 2013) ("A motion for
reconsideration is appropriate where 'the moving party can point to controlling decisions or data
that the court overlooked-matters, in other words, that might reasonably be expected to alter the
conclusion reached by the court."')
With respect to the "manifest injustice" criteria for reconsideration, the Court's opinion
cites to and relies upon excerpts from the reports of defense expert Mr. O'Brien which were not
cited to or submitted by defendants. Rather, the excerpts are from the full report submitted to the
Court, at the Court's request, subsequent to briefing on the motion. The Commonwealth
therefore respectfully requests that the Court consider the discussion of these excerpts in this
motion.
With respect to "overlooked data," the opinion does not reference the extensive evidence
submitted by the Commonwealth that gasoline without MTBE was in widespread commercial
use in Puerto Rico during the relevant time period. See, e.g., Commonwealth's Rule 56.1
Statement, ~~ 12; 66-71. The opinion focuses on defendants' evidence related to the CORE
facility, but the CORE facility was only one of a number of sources of gasoline in Puerto Rico.
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For sources other than CORE, defendants themselves argued that gasoline without MTBE was
the norm, and gasoline with MTBE the exception. See, e.g., O'Brien Report, if 51 ("Evidence
also indicates that, during the Relevant Period, some Defendants routinely supplied gasoline to
the island that contained little or not MTBE whatsoever."); if 52 ("[E]vidence indicates that
[HOVENSA LLC] almost never intentionally employed MTBE in conventional gasoline destined
for Caribbean markets, including Puerto Rico.") (emphasis added). With respect to the CORE
facility, CORE's own employees testified consistently that MTBE was just one of several octaneenhancing options for gasoline production. Rule 56.1 Opp., if 66.
As the Court's opinion notes: "[i]t is not necessary for a plaintiff ... to furnish the Court
with expert witness testimony in order to have its case submitted to a jury." In re Methyl

Tertiary Butyl Ether ("MTBE'') Products Liability Litigation, 2015 WL 3763645, *4 (S.D.N.Y.
2015). This is particularly true where, as here, the evidence establishes that an alternative design
(gasoline without MTBE) was not only theoretically feasible, but was in fact in widespread
commercial use at the time the defectively designed product (gasoline with MTBE) caused
injury. 1 See Restatement (Third) of Torts, Product Liability,§ 2, Comment f ("Furthermore,
other products already available on the market may serve the same or very similar function at
lower risk and at comparable cost. Such products may serve as reasonable alternatives to the
product in question.").

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In fact the Court granted summary judgment to Shell on the basis that there was
insufficient evidence that batches of gasoline shipped to Puerto Rico from Louisiana contained
MTBE. See, In Re MTBE, 2015 WL 1931168, * 11 (S.D.N.Y. 2015) (noting "155 of the 187
batches [of gasoline] documented in the Norco Batch Report contained either de minimus
amounts ofMTBE or none at all").

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DISCUSSION
As the Court's opinion notes, defendants, not the Commonwealth, have the burden "'to
establish, in light of the relevant factors, that, on balance, the benefits of the challenged design
outweigh the risk of danger inherent in such design."' In re MTBE, supra, 2015 WL 3763645 at
*5 (quoting Barker v. Lull Engineering Co., 573 P.2d 443, 455 (Cal. 1978)). The opinion also
recognizes that "[t]he key factual inquiry in determining the existence of a design defect centers
on the availability of feasible alternatives to MTBE for use in gasoline supplied to Puerto Rico."
Id. at * 1. The opinion further states that "[i]t is not necessary for a plaintiff ... to furnish the
Court with expert witness testimony in order to have its case submitted to a jury." Id. at *4. 2
The opinion nevertheless grants defendants' motion for summary judgment on the
Commonwealth's design defect claims, finding that "testimony from experts and industry
insiders plays an important, if not indispensable, role in evaluating the design ofMTBE gasoline
[and] [h]ere, based on defendants' experts' testimony- and the Commonwealth's complete
failure to rebut that testimony- it must be accepted that the utility of MTBE gasoline outweighed
its risks, especially given the lack of viable alternatives." Id. *5. The opinion emphasizes that its
"lack of viable alternatives" conclusion is not based upon a lack of expert testimony on the part
of the Commonwealth:
The factual records in these cases were one-sided because defendants' evidence
uniformly demonstrated that the benefits outweighed the risks, and plaintiffs
submitted insufficient evidence to the contrary to create a factual dispute. For
these reasons - and not because plaintiffs shouldered the burden of proof or were

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The opinion also recognizes: "There is no dispute over the sufficiency of evidence in
the record that MTBE Gasoline could have caused the Commonwealth's harm. See In Re MTBE,
488 F.3d 112, 131 (2d Cir. 2007) (noting that MTBE is 'a highly dangerous compound' that
poses threats to human health)." In Re MTBE, supra, 2015 WL 3763645, *5.
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required to submit expert testimony on risk-benefit questions - defendants met
their burden and prevailed.

Id. (emphasis supplied as to "not"). 3
The Commonwealth respectfully submits that it offered extensive rebuttal evidence
showing gasoline without MTBE was not only a "viable alternative," but was in widespread
commercial use in Puerto Rico. Rule 56.1 Opp.

i!i! 12, 20 ("Puerto Rican refiners made gasoline

that did not contain MTBE with notable exceptions such as CORE"); iii! 66-73.
The only refinery specific discussion ofMTBE benefits submitted by defendants was Mr.
Stem's Report for the CORE facility. With respect to all other sources of gasoline for the Puerto
Rico market the Commonwealth respectfully suggests that the evidence is undisputed that
gasoline without MTBE was a feasible alternative to gasoline with MTBE. At all other facilities
the primary testimony of defendants' own experts was that MTBE was not used in, or was
incidental to, gasoline destined for the Puerto Rico market. At the CORE facility, the
Commonwealth's evidence, including the deposition testimony of CORE's designated witness on
blending operations, Juan Perez, at a minimum establishes disputed issue of material fact as to
the feasibility of alternatives to MTBE.

I.

Manifest Injustice
The Court's design defect opinion cites to the expert reports of John O'Brien at iii! 47, 49,

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The Commonwealth respectfully notes that, as recognized by the Court itself, the
Commonwealth did submit extensive rebuttal evidence regarding the risks ofMTBE. Id. See
also Commonwealth's Rule 56.1 Statement, iii! 20, 58 - 65. This evidence was at a minimum
sufficient to create a triable issue of fact for a jury with respect to the risks of MTBE. The
Commonwealth also pointed out that defendants' air quality expert admitted in his deposition
that he had no data to demonstrate that the use ofMTBE in gasoline in Puerto Rico contributed
to better air quality. Rule 56. l Opp., i! 15.

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and the expert report of Kenneth Stem, at ifif 110, 111 as the basis for its "no viable alternative"
conclusion. Id., fns. 61 and 62. The cited paragraphs from the O'Brien Report, however, were
not cited in defendants' moving papers, and were not included in the excerpted materials
submitted with defendants' moving papers. The Commonwealth therefore respectfully requests
that the Court reconsider its conclusion in light of the following discussion of the cited
paragraphs.
Paragraphs 46, 47, and 49 of Mr. O'Brien's report relate to MTBE's use as an octane
enhancer (if 46-47) and an oxygenate (if 49). As the Commonwealth noted in its Rule 56.1
Statement, at his deposition Mr. O'Brien testified that he did not intend to offer opinions in this
case that MTBE was necessary in gasoline, or as to decision making at specific refineries:
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Q. Do you intend to offer any opinions in
this matter that any of the U.S. Gulf Coast
refineries which supplied Puerto Rico had to use
MTBE as an octane enhancer to manufacture
conventional gasoline exported to Puerto Rico?

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A. I don't intend to offer any opinions
with respect to that and I didn't look at any
individual refineries and how they made their
decisions as to how to make reformulated gasoline
or conventional gasoline.

Plaintiffs Rule 56.1 at if 25 (emphasis supplied). Perhaps this is why the sections of Mr.
O'Brien's Report cited by defendants in their moving papers discuss only the generic history of
gasoline manufacturing in the United States4 •
To the extent that Mr. O'Brien discusses MTBE inPuerto Rico specifically, his testimony

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Defendants cite to Sections III and IV of Mr. O'Brien's report which generically discuss
"How Motor Gasoline is Produced" and the "History of Gasoline Regulation." See Deel. ofM.
Dillon at Ex. 3.

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affirms that gasoline without MTBE was perfectly feasible in Puerto Rico. See O'Brien Report,
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51 ("Evidence also indicates that, during the Relevant Period, some Defendants routinely

supplied gasoline to the island that contained little or not MTBE whatsoever."); ~ 52 ("Even
though CORE at times used MTBE when blending gasoline, it was not used in all gasoline
produced at the facility."); Id. ("[E]vidence indicates that [HOVENSA LLC] almost never
intentionally employed MTBE in conventional gasoline destined for Caribbean markets,
including Puerto Rico.") (emphasis added); Id. ("There is no evidence that MTBE was ever
continuously or regularly used by all gasoline suppliers to Puerto Rico during the Relevant
Period."). 5
Mr. Stem's opinions were limited to evaluation of the specific gasoline manufacturing
decisions undertaken at the CORE facility. Stem Expert Report at~ 29. The Court's opinion
cites~

110 of Mr. Stem's Report for the proposition that "it would be infeasible for refiners to

use alternatives because they were not available in sufficient quantities in Puerto Rico." In re

Methyl Tertiary Butyl Ether ("MTBE'') Products Liability Litigation, supra, 2015 WL 3763645,
*5. Mr. Stem's testimony in the cited paragraph, however, was not that it was not feasible to use
alternatives to MTBE in gasoline in Puerto Rico generally, but rather that the use ofMTBE was

''preferable to increased use of internally produced aromatics in terms of optimizing the
production of the Core facility." Id. (emphasis added).
Mr. Stem did state that "[i]fMTBE was not available for use at the Core facility,

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Mr. O"Brien also did not address or weigh any of the environmental risks ofMTBE.
At most, Mr. O'Brien makes passing remarks about the potential health risks of alternatives.
0 'Brien Expert Report at ~ 49.

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diverting an increased amount of aromatics from petrochemical production to replace the volume
and octane supplied by MTBE would have essentially abandoned the very purpose of the
facility." Id. (emphasis added). Mr. Stem also stated, however, that: "The Core facility was a
petrochemical facility and only produced gasoline as an efficient and economical method to

dispose of material that it could not convert into its slate of higher value petrochemical
products." Stem Report, if 14 (emphasis added). See also Stem Report, if 135. Surely a jury
should be allowed to determine whether these two self-contradictory statements establish that the
Core facility had no choice but to sell gasoline with MTBE.
Mr. Stem did not testify in any event that "alternatives to MTBE were not available to
CORE at all in Puerto Rico," but rather that "[ sJome form of octane enhancer would have to be
obtained externally." Id. (emphasis added). As the Commonwealth noted in its opposition, Juan
Perez, the person in charge of blending operations at the CORE facility, testified in his
deposition: "There was always the option ofblendstock that could be available from different
sources. That didn't have to be MTBE. It could be a so-called blendstock." Rule 56. l Opp. if
30; Axline Deel., Ex. 5. 6 Evidence of one source of external blendstock was provided by John

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The Commonwealth respectfully offers to make the entire deposition of Mr. Perez
available for the Court's review. At no point in his deposition did Mr. Perez testify that MTBE
was the only viable octane enhancer, or that there was an insufficient supply of alternatives. To
the contrary he consistently testified, as in the excerpt included in the Commonwealth's Rule
56.l Opp., that "[t]here was always the option ofblendstock that could be available from
different sources. That didn't have to be MTBE. Mr. Stem also does not controvert or address
the testimony by other Core employees that other octane enhancers were available and were
utilized by CORE. See Rule 56. l Opp, if 66 (Mark Scharre testified that CORE could utilize
toluene, mixed xylenes, or MTBE to enhance the octane of gasoline and that CORE would utilize
the toluene or mixed xylenes because they didn't "have any other place to put" them). Freddy
Flores, a former CORE employee, testified that CORE had numerous options for octane
enhancement including the use of toluene and mixed xylenes. Id.

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O'Brien, who testified that the Puerto Rico Sun Oil Company's Yabucoa refinery, an on-island
source, was producing high octane, non-MTBE blending components for use in gasoline during
most of the relevant time period. O'Brien Report, if 61. At a minimum this evidence should be
sufficient to establish disputed issues of fact for a jury to consider as to whether CORE had no
feasible alternatives to producing MTBE gasoline.
Mr. Stem discusses generally the relative toxicity of aromatics in air emissions, but this is
rebutted by the extensive evidence ofMTBE's environmental risks. 7 Mr. Stem concludes his
discussion by summarily stating: "Given regulatory trends requiring reductions in the level of
aromatics in gasoline, as well as the fact that the Core facility was a petrochemical facility built
for the purpose of using aromatics to make higher value petrochemicals, further increasing the
aromatics content of the gasoline produced at the Core facility was not a viable option." Id.

if

116.
Mr. Stem does not testify that alternatives are not "feasible," but only that alternatives
were not "viable" (in the economic sense) at the CORE facility. And his "not viable" testimony
refers only to gasoline that CORE was admittedly making "as an efficient and economical
method to dispose of material that it could not convert into its slate of higher value petrochemical
products." Stem Report, if 14. Certainly there are disputed issues of fact to be submitted to a
jury as to whether the benefits to CORE of disposing of material that could not be converted to
higher value products by adding MTBE to those materials and selling them as gasoline

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Mr. Stem relies on references to generic reports that the use of "aromatics" should
generally be curtailed, and does not cite any specific evidence that the increased use of aromatics
as an octane enhancer in Puerto Rico would result in greater environmental risks than the
increased use of MTBE.
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outweighed the evidence that MTBE "is 'a highly dangerous compound' that poses threats to
human health)." In Re MTBE, supra, 2015 WL 3763645, *5 (quoting In Re MTBE, 488 F.3d
112, 131 (2d Cir. 2007).

II.

Overlooked Data.
With respect to "[t]he key factual inquiry in determining the existence of a design defect

center[ ed] on the availability of feasible alternatives to MTBE for use in gasoline supplied to
Puerto Rico" (In re MTBE, supra, 2015 WL 3763645 at *5), the Commonwealth submitted
substantial (and uncontroverted) evidence that multiple refiners who supplied gasoline to the trial
sites primarily manufactured gasoline without using MTBE. Although this evidence goes
directly to feasibility, it is not addressed in the Court's opinion. For example, Juan Lopez,
Shell's most knowledgeable person concerning Shell's refinery at Yabuoca, Puerto Rico,
confirmed that "the gasoline reformer at Shell Y abucoa was able to make a conventional gasoline
without ethanol or MTBE ... " Plaintiffs Rule 56.1

at~

67. Ricardo Casas, 20-year employee

of Esso, testified that Caribbean Oil Refining Company (CORCO} was able to "refine the quality
of product that was required, [including both regular and premium gasoline], and so it [MTBE]
was not used." Plaintiffs Rule 56.1 at~ 68. Patrick Bloomer of Shell, also designated as an
employee expert, testified that he would compare the cost of multiple octane enhancers such as
MTBE, alkylate, reformate, and toluene to manufacture gasoline, and that any of these would be
acceptable. Plaintiffs Rule 56.1

at~

69. Both of Exxon's Rule 26(a)(2)(C) witnesses designated

on the need for MTBE, Victor Dugan and Thomas Eizember, testified that Exxon had numerous
choices for octane enhancement of gasoline, including toluene, mixed xylenes, and MTBE.
Plaintiffs Rule 56.1

at~

70. Edward Maciula, designated by Peerless as its Rule 30(b)(6)

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witness on Peerless' manufacture of gasoline for Sunoco, testified that MTBE was never needed
by Peerless to manufacture gasoline for Sunoco. Plaintiffs Rule 56.1 at if 71. Defendant Esso
Puerto Rico's expert David Millican stated that "after 1992, the gasoline blended by the
Bayamon Refinery is indicated to have contained no MTBE." Plaintiffs Rule 56.1 at if 12. Mr.
Millican also stated that from"1995 through 1999 the gasoline production by CAPECO contained
0.0% MTBE and less than 0.5% by volume in the first half of 2000."
Plaintiff's Rule 56.1atif12.
As noted in Part I, supra, the Expert Report of John O'Brien, submitted subsequent to the
briefing on defendants' motion and at the Court's request, confirms that, apart from the CORE
facility, gasoline without MTBE was in widespread commercial use in Puerto Rico, and gasoline
with MTBE was the exception rather than the rule. The Commonwealth respectfully suggests
that this evidence at a minimum establishes disputed issues of material fact for a jury to resolve
as to the feasibility of alternatives to gasoline with MTBE.
CONCLUSION

For the above reasons the Commonwealth respectfully requests that the Court reconsider
the design defect portion of its June 16, 2015, ruling on summary judgment
DATED: June 30, 2015

Respectfully submitted,

Michael Axline
Counsel for the Commonwealth

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PROOF OF SERVICE VIA LEXISNEXIS FILE & SERVE
Commonwealth of Puerto Rico, et al. v. Shell Oil Co. , et al., United States District Court,
Southern District of New York Case No . No. 07 Civ. 10470 (SAS)

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I, the undersigned, declare that I am, and was at the time of service of the paper( s) herein
referred to, over the age of 18 years and not a party to this action. My business address is 1050
Fulton Avenue, Suite 100, Sacramento, CA 95825-4225.

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On the date below, I served the following document on all counsel in this action
electronically through LexisNexis File & Serve:

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PLAINTIFF'S MOTION FOR RECONSIDERATION OF THE COURT'S ORDER RE
DESIGN DEFECT AND NEGLIGENCE

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I declare under penalty of perjury under the laws of the United States of America and the
State of California that the foregoing is true and correct.

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Executed on June 30, 2015, at Sacramento, California.
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