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

Filing 4291

OPINION AND ORDER: For the aforementioned reasons, the request for a 54(b) final judgment is GRANTED. The Clerk of Court is directed to enter final judgment for Atlantic Richfield Company, Inc., BP West Coast Products LLC, BP Products North America Inc., Equilon Enterprises LLC, Shell Oil Company, Inc., and Texaco Refining and Marketing Inc. (As further set forth in this Order) (Signed by Judge Shira A. Scheindlin on 12/1/2015) (kl)

Defendants Atlantic Richfield Company, Inc., BP West Coast
Products LLC, BP Products North America Inc. (the “BP Defendants”), Equilon
Enterprises LLC, Shell Oil Company, Inc., and Texaco Refining and Marketing
Inc. (the “Shell Defendants”) (together, the “Judgment Defendants”) request that
this Court enter final judgment under Federal Rule of Civil Procedure 54(b). For
the reasons stated below, that request is GRANTED.
II.

BACKGROUND
In 1999, the Orange County District Attorney (“OCDA”) sued the BP

Defendants, alleging that they were responsible for the release of MTBE into
Orange County soil and groundwater and requesting “equitable relief, damages,
and penalties.”1 In 2001, OCDA filed suit against the Shell Defendants on similar
allegations.2 The BP and Shell Defendants eventually agreed to settle the case, and
the Orange County Superior Court entered judgments (the “Consent Judgments”)
against the BP and Shell Defendants in 2002 and 2005 respectively.3
In 2003, the OCWD filed suit against the BP Defendants, Shell
Defendants, and various other oil and gas companies for MTBE and TBA
1

In re MTBE Prods. Liab. Litig., 46 F. Supp. 3d 440, 443 (S.D.N.Y.

2014).
2

See id.

3

See id.
2

contamination.4 On September 16, 2014, this Court granted summary judgment to
the BP and Shell Defendants on res judicata grounds based on the 2002 and 2005
Consent Judgments.5 Specifically, the Court found that the OCWD’s present
lawsuit sought to enforce the same “primary rights” at issue in the OCDA action
and that “[b]ecause the District and the OCDA were both acting on behalf of the
public to enforce the same primary right, the parties are in privity.”6
Despite this Court’s holding that res judicata barred the claims against
the BP and Shell Defendants, the OCWD moved to include them in this Court’s
Suggestion to Remand for certain focus plume sites on the theory that res judicata
did not bar claims for continuing nuisance.7 This Court denied that motion, in an
Opinion issued August 26, 2015, holding that the language of the Consent
Judgments indicates a clear intent on behalf of the parties to cover the current
continuing nuisance claims and that the contrary result would “create the very type

4

See Third Amended Complaint (Dkt. No. 27).

5

See In re MTBE Prods. Liab. Litig., 46 F. Supp. 3d at 443.

6

Id. at 449-51 (noting that the parties did not dispute that the Consent
Judgments constituted “final judgments”).
7

See Memorandum of Law in Support of Plaintiff Orange County
Water District’s Motion for Inclusion of Shell and BP in Remand Order (Dkt. No.
454).
3

of unfair and absurd result that courts strive to avoid when construing contracts.”8
No claims remain against the BP and Shell Defendants.
On September 29, 2015, this Court entered a Suggestion to Remand to
the United States District Court for the Central District of California for trial at
sixteen focus plume sites.9 The Judgment Defendants and the OCWD now request
that this Court enter final judgment under Rule 54(b). The remaining defendants
(the “Non-Judgment Defendants”) oppose entry of final judgment on the ground
that they will suffer prejudice if final judgment is entered and the OCWD is
permitted to appeal.
III.

APPLICABLE LAW
Rule 54(b) provides that:
When an action presents more than one claim for relief—whether
as a claim, counterclaim, crossclaim, or third-party claim—or
when multiple parties are involved, the court may direct entry of
a final judgment as to one or more, but fewer than all, claims or
parties only if the court expressly determines that there is no just
reason for delay.

In order to reach the conclusion that a final judgment under Rule 54(b) is
appropriate, a court must determine that three requirements are satisfied: “(1) there

8

In re MTBE Prods. Liab. Litig., No. 04 Civ. 4968, 2015 WL 5051660,
at *3 (S.D.N.Y. Aug. 26, 2015).
9

See Suggestion to Remand (Dkt. No. 460).
4

are multiple claims or parties; (2) at least one claim or the rights and liabilities of at
least one party has been finally determined; and (3) the court makes an ‘express [ ]
determin[ation] that there is no just reason for delay.’”10
As to the third determination, “[i]t is left to the sound judicial
discretion of the district court to determine the ‘appropriate time’ when each final
decision in a multiple claims action is ready for appeal.”11 In so deciding, the
Court “must take into account judicial administrative interests as well as the
equities involved. Consideration of the former is necessary to assure that
application of the Rule effectively ‘preserves the historic federal policy against
piecemeal appeals.’”12
IV.

DISCUSSION
There is no serious dispute that the first two requirements of Rule

54(b) are satisfied.13 The OCWD named numerous parties in addition to the BP

10

Acumen Re Mgmt. Corp. v. General Sec. Nat. Ins. Co., 769 F.3d 135,
140 (2d Cir. 2014) (quoting Fed. R. Civ. P. 54(b)) (alterations in original).
11

Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980)
(quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 435 (1956)).
12

Id. (quoting Sears, Roebuck & Co., 351 U.S. at 438).

13

See generally Opposition to Plaintiff Orange County Water District’s
Request for Rule 54(b) Order; 11/3/15 Transcript, No. 00 Civ. 1898 (Dkt. No.
4289).
5

and Shell Defendants in its Third Amended Complaint.14 The Court’s two
decisions issued on September 16, 2014 and August 26, 2015 determined all of the
rights and liabilities of the BP and Shell Defendants by finding that all claims
asserted against them were barred by res judicata.15
Finally, this Court is convinced that there is “no just reason for delay.”
The Second Circuit has made clear that the “increased complexity of litigation”
“cr[ies] out for flexibility in granting partial final judgments under rule 54(b).”16
Indeed, the Second Circuit specifically refers to “asbestos litigation [and] other
mass torts” as the types of cases that demand this sort of flexibility.17
Sound judicial administration and the equities of this particular case
strongly militate in favor of a 54(b) final judgment. The cases in the MTBE MDL
are unusually complex, involving numerous defendants and alleged contamination
sites. This case is no exception.18 The OCWD filed its initial Complaint in 2003
and only now in 2015 has the case advanced far enough for a trial on sixteen focus

14

See Third Amended Complaint.

15

See supra Section II.

16

Ginett v. Computer Task Grp., Inc., 962 F.2d 1085, 1095 (2d Cir.

1992).
17

Id. (citations omitted).

18

See Third Amended Complaint.
6

sites, selected from more than four hundred sites at issue.19 This “focused” trial at
sixteen potential contamination sites involves five different defendants and five
separate causes of action, requiring the factfinder to make forty-two separate
determinations of liability – not to mention damages calculations.20 The nature of
MTBE and the claims of contamination tend to require the extensive use of
hydrogeological experts to model the movement of MTBE through underground
aquifers.21 In the event that the parties do not reach a settlement, additional
proceedings and further trials will be required to resolve the claims at the
remaining contamination sites. No final judgment could be entered until all the
claims are resolved.

19

In re MTBE Prods. Liab. Litig., 475 F. Supp. 2d 286, 290 (S.D.N.Y.

2006).
20

See Suggestion to Remand, Trial Matrix (not all causes of actions
apply to every trial site).
21

See, e.g., In re MTBE Prods. Liab. Litig., 980 F. Supp. 2d 425, 454
(S.D.N.Y. 2013) (“The plaintiffs in New York engaged a hydrogeological expert
. . . who constructed site-specific models, and used them to ‘make numerical
projections about how high of a concentration of MTBE will occur at [the site at
issue] in the future, and how long it will last[,]’ and to ‘determine how long MTBE
contamination at [the sites at issue] would last . . . .’”) (quoting In re MTBE Prods.
Liab. Litig., 725 F.3d 65, 86 (2d Cir. 2013) (alterations in original)); In re MTBE
Prods. Liab. Litig., No. 04 Civ. 2389, 2007 WL 1601491, at *4 (S.D.N.Y. June 4,
2007) (“The process by which MTBE moves from multiple release points, through
soil and groundwater and a network of aquifers, and into plaintiffs’ wells is
complex.”).
7

Rule 54(b) certification is appropriate where immediate appellate
review “might avoid a duplicative trial should the decision . . . dismissing the []
claims be reversed.”22 If the Second Circuit determines that this Court’s res
judicata Opinions are in error, the Judgment Defendants will be reinstated, and the
California district court will likely have to hold a second trial of comparable
complexity related only to the sixteen focus sites – demanding significant
expenditure of judicial resources by the Court and monetary resources by the
parties. Depending on the trajectory of the litigation after the first trial, additional
discovery may be needed at the other sites and the Judgment Defendants may need
to make additional motions. This additional delay would extend an already lengthy
litigation which would further increase the litigation costs for all involved –
Judgment and Non-Judgment Defendants alike – and deprive the parties of a just
resolution of their dispute.23
22

Grand River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158, 165 (2d
Cir. 2005). Accord Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d
11, 16 (2d Cir. 1997) (holding that certification is appropriate “‘where an
expensive and duplicative trial could be avoided if, without delaying prosecution
of the surviving claims, a dismissed claim were reversed in time to be tried with
the other claims.’” (quoting Cullen v. Margiotta, 811 F.2d 698, 711 (2d Cir.
1987)).
23

See Olin Corp. v. Insurance Co. of N. Am., 771 F. Supp. 76, 80
(S.D.N.Y. 1991), aff’d sub nom. Olin Corp. v. Insurance Co. of NA, 972 F.2d 1328
(2d Cir. 1992) (holding that the possible accrual of litigation expenses justified
54(b) certification).
8

This complexity and potential duplication of proceedings are precisely
why the Second Circuit has concluded that “sound judicial administration must
involve a proper regard for the duties of both the district court and the appellate
court.”24 The possibility of piecemeal appeals is no longer talismanic and may be
“outweighed by harm that would be caused by preventing the parties in this MDL
from receiving appellate review until the remaining . . . claims are either tried or
settled.”25
The Non-Judgment Defendants’ claims of prejudice are either
nonexistent or overblown. The Judgment Defendants claims were resolved on res
judicata grounds – grounds that are unique to those defendants because of their
involvement in the OCDA litigation. In the event that the Second Circuit finds in
the Judgment Defendants’ favor on this unique and separable ground, the NonJudgment Defendants face no possibility of prejudice.
Even assuming that alternative grounds are implicated, the NonJudgment Defendants only generally argue that “critical, case-wide matters” could

24

Ginett, 962 F.2d at 1095 (emphasis added).

25

In re MTBE Prods. Liab. Litig., No. 04 Civ. 3417, 2010 WL 1328249,
at *5 (S.D.N.Y. Apr. 5, 2010).
9

be decided without specifying anything more.26 At the November 3, 2015 hearing,
the Judgment Defendants and the OCWD identified only two additional issues that
they anticipate being raised on appeal:27 (1) this Court’s determination of
recoverable damages under the Orange County Water District Act28 and (2) this
Court’s statute of limitations decisions.29
The risk of prejudice to the Non-Judgment Defendants in allowing
these two issues to be appealed now is minimal. The Judgment and Non-Judgment
Defendants have similar if not identical interests on these issues, and, in any event,
the parties will consent30 to the filing of an amicus brief by the Non-Judgment
Defendants which may then be filed as of right under Federal Rules of Appellate

26

Opposition to Plaintiff Orange County Water District’s Request for
Rule 54(b) Order at 8 (Dkt. No. 462).
27

See 11/3/15 Transcript at 8-10. The Non-Judgment Defendants did
not object to this characterization at the hearing.
28

See In re MTBE Prods. Liab. Litig., 824 F. Supp. 2d 524 (S.D.N.Y.

2011).
29

See In re MTBE Prods. Liab. Litig., 475 F. Supp. 2d 286 (S.D.N.Y.
2006); In re MTBE Prods. Liab. Litig., 676 F. Supp. 2d 139 (S.D.N.Y. 2009); In re
MTBE Prods. Liab. Litig., No. 04 Civ. 4968, 2009 WL 4496736 (S.D.N.Y. Dec. 2,
2009); In re MTBE Prods. Liab. Litig., 67 F. Supp. 3d 619 (S.D.N.Y. 2014).
30

See 11/3/15 Transcript at 12.
10

Procedure 29(a).31 In addition, the OCWD and Judgment Defendants have agreed
to support32 a request for an extended page limit and oral argument for the NonJudgment Defendants as amici.33
Entry of final judgment would benefit all parties by reducing litigation
costs and preventing possible duplicative trials. The res judicata decisions, which
are the focus of the appeal, are discrete and separable issues that are appropriately
decided by the circuit court on a 54(b) certification. Finally, to the extent other
issues are raised on appeal, the prejudice to the Non-Judgment Defendants would
be small and certainly does not justify the harm that both the OCWD and Judgment
Defendants would face by having to wait – potentially years – for a full appeal to
be heard.
V.

CONCLUSION
For the aforementioned reasons, the request for a 54(b) final judgment

is GRANTED. The Clerk of Court is directed to enter final judgment for Atlantic
Richfield Company, Inc., BP West Coast Products LLC, BP Products North
31

See Fed. R. App. P. 29(a) (“Any other amicus curiae may file a brief
only by leave of court or if the brief states that all parties have consented to its
filing.”).
32

See 11/3/15 Transcript at 12, 17.

33

See Fed. R. App. P. 29(d), (f) (directing that upon permission from the
appellate court, amici may file longer briefs and participate in oral argument).
11

- Appearances Liaison Counsel for Plaintiffs:
Robin Greenwald, Esq.
Robert Gordon, Esq.
Weitz & Luxenberg, P.C.
180 Maiden Lane
New York, NY 10038
[phone]
Counsel for OCWD:
Michael Axline, Esq.
Miller, Axline, & Sawyer
1050 Fulton Avenue, Suite 10
Sacramento, CA 95825
[phone]
Liaison Counsel for Defendants:
Peter John Sacripanti, Esq.
James A. Pardo, Esq.
McDermott Will & Emery LLP
50 Rockefeller Plaza, 11th Floor
New York, NY 10020
[phone]
Counsel for Shell Defendants:
Richard E. Wallace, Jr., Esq.
Peter C. Condron, Esq.
Amanda Gilbert, Esq.
Sedgewick LLP
29 K Street, N.W.
Harbourside - Suite 500
Washington, D.C. 20007
[phone]
13

Counsel for BP Defendants:
Matthew T. Heartney, Esq.
Lawrence A. Cox, Esq.
Stephanie B. Weirick, Esq.
Arnold & Porter LLP
777 South Figueroa Street
Los Angeles, CA 90017
[phone]
Counsel for Chevron U.S.A. Inc. and Union Oil Company of California and
on behalf of Non-Judgment Defendants:
Jeremiah J. Anderson, Esq.
Robert E. Meadows, Esq.
King & Spalding LLP
1100 Louisiana, Suite 4000
Houston, Texas 77002
[phone]
Charles C. Correll, Jr., Esq.
King & Spalding LLP
101 Second Street, Suite 2300
San Francisco, CA 94105
[phone]

14