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

Filing 4241

REPLY MEMORANDUM OF LAW in Support re: (621 in 1:07-cv-10470-SAS) MOTION for Reconsideration of the Court's Order re Design Defect and Negligence., (616 in 1:07-cv-10470-SAS) MOTION Plaintiff's Motion for Clarification of the Court's Opinion on Defendants' Sophisticated Purchaser Motion for Summary Judgment . Corrected to Add Missing Line in Last Paragraph on Page 4. Document filed by Commonwealth of Puerto Rico. Filed In Associated Cases: 1:00-cv-01898-SAS-DCF, 1:07-cv-10470-SAS(Axline, Michael)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Master File No. 1:00 - 1898
In Re: Methyl Tertiary Butyl Ether ("MTBE")
Products Liability Litigation

MDL 1358 (SAS)

M2I-88
Civil Action

This Document Relates To:
Commonwealth ofPuerto Rico, et aL v.
. Sltell Oil Co., et al., No. 07 Civ. 10470

PLAINTIFF'S REPLY TO DEFENDANTS' OPPOSITION TO PLAINTIFF'S MOTIONS
FOR RECONSIDERATION OF COURT'S ORDER RE: DESIGN DEFECT AND
NEGLIGENCE, AND FOR CLARIFICATION OF THE COURT'S OPINION ON
DEFENDANTS' SOPIDSTICATED PURCHASER MOTION FOR SUMMARY
JUDGMENT

Defendants' combined response to the Commonwealth's separate motions for clarification
and for"reconsideration does not address the substance of either of the Commonwealth's motions.
Defendants' response instead relies upon characterizing the motions as "repetitive efforts to
re-litigate this Court's rulings" and failing to meet "the standard for this Court to reconsider its
decision .... "

Response at 1.

While the standards forreconsideration are indeed strict, this

Court has granted reconsideration when, as here, it is preSented with compelling substantive
reasons for doing so: See Abu Dhabi Commel'cialBankv. Morgan Stanley & Co., Inc., 888 F.
Supp.2d 478,482,487 (S.D. N.Y. 2012) (granting reconsideration based upon overlooked
evidence).

Defendants' failure to answer the substance of the Commonwealth's motions is not

simply an oversight - defendants have no substantive response and the motion should be granted.

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I.

Motion For Clarification
The Co=onwealth's motion for clarification noted that the Court had granted defendants'

SUinmary judgment motion based

on the sophisticated purchaser defense at one site and denied the

motion at other sites. Motion at 1-2. The Co=onwealth's motion sought clarification as to
how the ruling would apply to two groups of defendants - (i) Hess Oil Virgin Islands Corporation
(HOVIC) an HOVENSA LLC (Hess) and (ii) Chevron Phillips Chemical Puerto Rico Core LLC
and Conoco Phillips Company (Core) - who were not directly affiliated with specific sites and not
separately addressed in the Court's sophisticated purchaser opinion. Motion at ,1. This is
appropriate for a motion for clarification. I
The Co=onwealth's motion quoted. the Court's statements at the pre-motion status

·.confe~ence that: "IfC [the end user] is the local operator, B has

an obligation [to warn].

That's

it.... you can't rely onthe intermediary if you know the intermediary i~ not giving warnings."
Transcript of Status Conference (July 15,2014), at 71:14-25 (Exhibit 18 to the Declaration of
Steveri Dillard in Support of Sophisticated Purchaser Motion) (cited in Motion to Clarify at 2).
Defendants' response does not address, or even mention, these statements by the Court (which are
consistent with the well established authority cited in the Co=onwealth's opposition to
defendants' motion). Defendants' response also does not address, much less deny, the
. Co=onwealth's observation that neither CORE nor Hess provided a shred of evidence (much
less legally conclusive evidence) that they had satisfied the duty identified by the Court.
Defendants cite to In Re MI'BE,. 593 F. Supp. 2d 549, 569 (S.D. N.Y. 2008) for the
proposition that "there is no rule that fits Plaintiffs' petition." Response at 7, n. 9. That is not
accurate. The cited discussion noted that Local Rule 6.3 did not provide for clarification, but
went on to state: "[FRCP] Rule 60(a) 'permits the correction not only of clerical mistakes, but also
of inadvertent errors arising from oversight or omission. '" Id. (quoting In Re Marc Rich & Co. v.
United States, 739 F.2d 834,836 (2d Cir. 1984)
2.

..

Defendants' response also does not address, or even mention, the statements in the Court's
opinion on summary judgment that: "As noted earlier, the Co=onwealth may pursue its
failure-to-warn claims against most of the Sophisticated Purchasers. However, the Sophisticated
Purchaser Defendants cannot be held liable for failing to warn equally sophisticated entities about
dangers already known to them." Slip Op. at 22 (cited in Motion to ClarifY at 2). As with the
Court's statements at the pre-motion conference, defendants' response simply ignores this
statement in the Court's opinion.
The Court's opinion describes the sophisticated purchaser motion as being based upon "the
much narrower grounds that [the sophisticated purchaser defendants] had no duty to warn their
customers, which were exclusively major oil companies, of risks about which those companies
were already aware." Opinion at 2.

If the Court intended its ruling to apply to these narrower

facts only, and not to failure to warn claims based upon the separate duty to insure that
intennediaries are themselves giving warnings, the Co=onwealth respectfully submits that
clarification of the point pursuant to Rule 60(a) would be helpful to the parties going forward.
Defendants' response asserts that the Court's ruling "left no doubt that the CORE and
Hovensa [Hess] Defendants were granted summary judgment on failure-to-warn claims on the
basis of the 'sophisticated purchaser' doctrine" (Response at 1), but notably fails to cite any part of
the Court's opinion that specifically addresses the applicability of the sophisticated purchaser
defense to CORE or Hess.
Since CORE and Hess are not at all like the defendant for whom the Court did expressly
grant surmnary judgment (Chevron Puerto Rico), the Co=onwealth logically assumed (and still
does assume) that CORE and Hess are arnong "most of the Sophisticated PU):chasers" against

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whom "the Commonwealth may pursue its failure to warn claim." Slip Op. at 22. In what is
perhaps an excess of caution, however, the Commonwealth sought clarification on this point.
Defendants' bald assertion that the Court's opinion "unambiguously" ruled against the
Commonwealth, with no citation to any specific ruling to that effect in the Court's opinion, is both
conclusory and incorrect.2

II.

Motion For Reconsideration
Defendants' response to the Commonwealth's motion for reconsideration is equally

conclusory and incorrect. Defendants understandably discuss at length the difficult burden the
Commonwealth faces in seeking reconsideration. As the Commonwealth noted in its motion, it is
aware of this difficult burden and did riot file the motion lightly.3 In this instance, however, two
of the acceptable grounds for reconsideration are clearly present.

As with the motion for

clarification, the fact that defendants do not address the substance of the grounds for
reconsideration given in the Commonwealth's motion is revealing as to the lack of merit in
defendants' opposition.
As the motion pointed out, the Commonwealth was not given the opportunity to address
portions of Mr. O'Brien's expert report submitted to the Court after briefing was concluded and
cited in the Court's opinion. In those portions of Mr. O'Brien's report Mr. O'Brien conceded that
a number of refmers who "routinely supplied gasoline to the island" did not utilize MTBE. Mtn.
2 Again, if the Court's ruling addressed only whether manufacturers had a duty to warn

sophisticated purchasers, and not whether manufacturers had a separate duty to insure that
sophisticated purchasers warned downstream users, clarification on that point would assist the
parties going forward.
3 The Commonwealth, for example, is not seeking reconsideration of the Court's decision
not to apply the consumer expectation test, although the Commonwealth respectfully disagrees
that the Court's opinion on this point. The Commonwealth does not, by seeking clarification and
reconsideration of certain aspects of the Court's ruling, waive its right to challenge other aspects of
the ruling in any appeal.

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for Reconsideration at 5-6. This evidence demonstrates that Mr. O'Brien did not conclude that
MTBE was the only viable alternative for gasoline supplied to Puerto Rico. 4 In fact, no defense
expert.testified that MTBE was the only viable alternative for gasoline supplied to Puerto Rico.
. In contrast, the Commonwealth submitted substantial evidence that it was both pr.actical
and feasible to manufacture and supply adequate quantities of non-MTBE gasoline to Puerto Rico,
and that such gasoline was in wide commercial distribution during the relevant time period.
Defendants' only response to the Commonwealth's evidence that gasoline with MTBE was the
exception, rather than the rule, in Puerto Rico is to point out all gasoline manufactured at a single
refinery - the Core facility - contained MTBE during certain years. Response at 3, n. 3.
Defendants do not discuss the evidence 'of other refmeries producing non-MTBE gasoline and this
evidence also was not addressed in the Court's qpinion. Reconsideration is appropriate in such
circumstances. See 'Abu Dhabai, supra, 888 F. Supp.2d at 487.
The Commonwealth is not suggesting that there was anything improper about the Court
asking to see the full report after briefing was concluded, or citing to a portion of the report not
cited to or submitted by defendants during briefing. Rather, fairness dictates that the
Commonwealth be provided an opportunity to address the portion of the Report submitted after the
close of briefing if the Court is going to rely on that portion in its ruling.
Defendants offer no explanation or additional evidence to show that any other expert or
witness addressed or analyzed the feasibility of alternatives other than at the Core facility.
Instead, defendants wrongly assert t4at the Commonwealth must "identify and introduce evidence
4 Exhibit B to Defendants' response lists the documents for which the Court requested
complete copies. Complete copies of those documents were provided to the Court by the parties
but not filed with the Clerk. The Commonwealth will meet and confer with defendants as to the
most efficient method of getting these documents on file.

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of a specific safer, feasible alternative (e.g. gasoline with ethanol, toluene, xylene, DIPE, etc.) to
rebut defendants' evidence ..." Response at 4. This is contrary to this Court's ruling that
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)).5
With respect to the Core facility, defendants also ignore the extensive evidence that,
although Core produced a lot of gasoline with MTBE, it could have feasibly produced gasoline
without MTBE, or simply not produce gasoline at all, since Core's own witnesses testified that the
Core facility "only produced gasoline as an efficient and economical method to dispose ofmater~al

that it could not convert into its slate ofhigher value petrochemical products." Stern Report, ~ 14
(emphasis added). See also Stern Report, ~ 135. Defendants admitted that the Core facility
continued to make regular grade gasoline after it ceased using MTBE. See, e.g., Declaration of
Michael Dillon In Support Of Certain Defendants' Motion For Summary Judgment On Counts I
And IV, Ex. 1, Burke Depo. at pp. 183 - 185.
Mr: Burke testified that, rather than making gasoline with the lower octane materials
pr9duced at the Core facility by adding MTBE, Core could have sold these materials into the
regional market for unfinished blendstock. ld..at p. 182. Again, defendants' response simply

5 Defendants themselves argued that they should be granted summary judgment on
causation because "not all gasoline in Puerto Rico contained MTBE." Defendants' Rule 56.1
Statement in Support of Certain Defendants' Motion for Slll11lilary Judgment for Lack of Causation
at § II, ~ 5-9. Defendants cannot genuinely assert that there was no viable. alternative to MTBE
for gasoline supplied to Puerto Rico when they have already conceded that non-MTBE gasoline
was, in fact, supplied to Puerto Rico.

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ignores this evidence. At a minimum, the Commonwealth's evidence with respect to the Core
facility raises disputed issues of fact as to whether there were feasible alternatives to producing .
M'fBE gasoline at the facility.
CONCLUSION

For the above reasons, the Commonwealth of Puerto Rico respectfully requests that the
COUli grant the Commonwealth's motion for clarification and its motion for reconsideration.
DATED, July 23, 2015.

Respectfully submitted,

By:~~~~:;:::::::=v.~&~::...-_
Michael Axline
Counsel for the Co
onwealth

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