In Re: Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation
Filing
4313
CORRECTED OPINION AND ORDER: For the foregoing reasons, the defendants' motion for summary judgment is DENIED. The Clerk of the Court is directed to close this motion (Dkt. No. 606). (As further set forth in this Order) (Signed by Judge Shira A. Scheindlin on 12/7/2015) Filed In Associated Cases: 1:00-cv-01898-SAS-DCF, 1:07-cv-10470-SAS(kl)
Limited (“Shell West”) and Shell International Petroleum Company Limited’s
(“SIPC’s”) motion for partial summary judgment on the grounds that the
Commonwealth’s claims are time-barred. For the reasons stated below, the motion
is DENIED.
II.
BACKGROUND
The Commonwealth filed its original Complaint alleging injury to the
waters of the Commonwealth on June 12, 2007. On December 3, 2012, the
Commonwealth filed its Third Amended Complaint (“TAC”) that added, inter alia,
defendants Shell West and SIPC as jointly and severally liable “Refiner/Supplier
Defendants.”1 The Commonwealth asserts Causes of Action I through V against
Shell West and SIPC, alleging that they “refined, marketed and/or otherwise
supplied (directly or indirectly) gasoline and/or other products containing MTBE
[and] knew or should have known [the products] would be delivered into the
Commonwealth.”2
III.
LEGAL STANDARD
Summary judgment is appropriate where, “viewing the record in the
1
Third Amended Complaint ¶ 21 (Dkt. No. 178).
2
Id. Causes of Action I through V are: (I) Strict Products Liability; (II)
Public Nuisance; (III) Trespass; (IV) Negligence; and (V) Puerto Rico
Environmental Public Policy Act (“EPPA”).
2
light most favorable to the non-moving party . . . ‘there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.’”3 “In
making this determination . . . we resolve all ambiguities and draw all permissible
factual inferences in favor of the party against whom summary judgment is
sought.”4 “A fact is material if it might affect the outcome of the suit under the
governing law, and an issue of fact is genuine if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”5
“The moving party bears the burden of showing the absence of a
genuine dispute as to any material fact.”6 To defeat a motion for summary
judgment, the non-moving party must “‘do more than simply show that there is
some metaphysical doubt as to the material facts, and may not rely on conclusory
allegations or unsubstantiated speculation.’”7
3
Robinson v. Concentra Health Servs., Inc., 781 F.3d 42, 44 (2d Cir.
2015) (quoting Fed. R. Civ. P. 56(a)) (quotations omitted).
4
Simpson v. City of New York, 793 F.3d 259, 265 (2d Cir. 2015)
(quotations omitted).
5
Windsor v. United States, 699 F.3d 169, 192 (2d Cir. 2012), aff’d, 133
S.Ct. 2675 (2013) (quotations and alterations omitted).
6
Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473, 486 (2d Cir.
2014) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)).
7
Robinson, 781 F.3d at 44 (quoting Brown v. Eli Lilly & Co., 654 F.3d
347, 358 (2d Cir. 2011)).
3
“‘The function of the district court in considering the motion for
summary judgment is not to resolve disputed questions of fact but only to
determine whether, as to any material issue, a genuine factual dispute exists.’”8
“‘Credibility determinations, the weighing of the evidence, and the drawing of
legitimate inferences from the facts are jury functions, not those of a judge.’”9
“‘Because the statute of limitations is an affirmative defense, the defendant bears
the burden of establishing by prima facie proof that the limitations period has
expired since the plaintiff’s claims accrued.’”10
IV.
APPLICABLE LAW
A.
Statute of Limitations
In Puerto Rico, Article 1802 of the Civil Code, L.P.R.A. section 5141,
governs obligations that “arise from fault or negligence.”11 “The statute of
8
Rogoz v. City of Hartford, 796 F.3d 236, 245 (2d Cir. 2015) (quoting
Kaytor v. Electric Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010)).
9
Crawford, 758 F.3d at 486 (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986)).
10
Szymanski v. Local 3, Int’l Bhd. of Elec. Workers, 577 Fed. App’x 52,
53 (2d Cir. 2014) (quoting Overall v. Estate of Klotz, 52 F.3d 398, 403 (2d Cir.
1995)).
11
Fraguada Bonilla v. Hospital Auxilio Mutuo, 186 D.P.R. 365, at *3
(2012). All page numbers of Puerto Rican cases refer to the translations submitted
by the parties (Dkt. Nos. 277, 643).
4
limitations for these actions is one year as provided by Art. 1868 of the Civil Code,
31 L.P.R.A. sec[tion] 5298.”12 In Puerto Rico, the limitations period runs from the
time the aggrieved party has “notice of the injury, plus notice of the person who
caused it.”13 Once the defendant has established that the injury occurred more than
one year prior to the filing of the TAC, i.e., December 3, 2011, the plaintiff “‘bears
the burden of proving that she lacked the requisite knowledge at the relevant
times.’”14
“Art. 1873 of the Civil Code, 31 L.P.R.A. sec. 5303 establishes that
the expiration of the statute of limitations in actions is tolled by [1] exercising them
in court, [2] by an extrajudicial claim by the creditors, and [3] by any other act of
acknowledgment of debt by the debtor.”15 On August 13, 2012, the Puerto Rico
Supreme Court changed the rule governing the function of these tolling
mechanisms in Fraguada Bonilla v. Hospital Auxilio Mutuo, 186 D.P.R. 365
(2012).
12
Id. (brackets in original).
13
Rodriguez-Suris v. Montesinos, 123 F.3d 10, 13 (1st Cir. 1997)
(quotation and citations omitted).
14
Alejandro-Ortiz v. Puerto Rico Elec. Power Auth., 756 F.3d 23, 27
(1st Cir. 2014) (quoting Hodge v. Parke Davis & Co., 833 F.2d 6, 7 (1st Cir.
1987)).
15
Fraguada at *3.
5
Prior to Fraguada, the standard enunciated in Arroyo v. Hospital La
Concepcion, 130 D.P.R. 596 (1992), governed. This standard provided for
generous tolling of the statute of limitations.
Timely filing of a complaint by an injured party against a joint and
several co-tortfeasor automatically tolls the statute of limitations
against all of the other co-tortfeasors. . . . [T]he alleged joint and
several co-tortfeasors can be incorporated into the litigation
through an amendment to the complaint or a third-party
complaint, and the claimant merely must allege well and
sufficiently that the new defendant is jointly and severally liable
for the harm.16
Under Arroyo, the plaintiff need only allege the later-added defendant is jointly
and severally liable for the claims brought in the initial complaint to toll the statute
of limitations.17
This standard failed to distinguish between “perfect” and “imperfect”
joint and several liability.18 Perfect joint and several liability is that arising from
“legal rules or a conventional agreement.”19 Vicarious liability would be an
example of such a legal rule, where suing an employee would indefinitely toll the
16
Id. at *4.
17
See Tokyo Marine & Fire Ins. Co. v. Perez & Cia., De Puerto Rico,
Inc., 142 F.3d 1, 5-10 (1st Cir. 1998) (analyzing whether a defendant can be jointly
and severally liable with his insurance company for Arroyo tolling).
18
Fraguada at *4.
19
Id. at *7-8.
6
statute of limitations for the employer.20 Imperfect joint and several liability is that
arising “from the illicit act that causes the injury.”21 This is the more common joint
and several liability arising, for example, from a car crash involving multiple
tortfeasors.22
The Fraguada court reconsidered the Arroyo tolling rule because
“[t]wo decades later, the accumulation of experiences forces us to conclude that the
rule established therein did not reach the balance that was sought.”23 The rule
“provide[d] the greatest protection to the plaintiff . . . provid[ing] an automatic and
indefinite tolling effect in prejudice of all those who could be jointly and severally
liable for the injury.”24
Fraguada overturned Arroyo by distinguishing between perfect and
imperfect joint and several liability. Both types of joint and several liability give
rise to the “primary effect” that “each codebtor [is] responsible for paying all of the
20
See Ramirez-Ortiz v. Corporacion Del Centro Cardiovascular De
Puerto Rico y Del Caribe, 994 F. Supp. 2d 218, 224 (D.P.R. 2014).
21
Fraguada at *8.
22
See Ramirez-Ortiz, 994 F. Supp. 2d at 223.
23
Fraguada at *8.
24
Id. at *8-9.
7
debt.”25 Only perfect joint and several liability, however, gives rise to the
“secondary effect” that “a statute of limitations [is] tolled . . . indefinitely . . .
against the rest of the co-tortfeasors.”26 Therefore, with imperfect joint and several
liability “the statute of limitations against each debtor [must] be tolled
individually.”27
At issue here is which rule to apply to the pending motion. The
Fraguada court declined to apply the new rule to the case before it because
“applying it to this case would have substantially unfair results for the respondents,
who relied on the prior rule.”28 The court held that:
Public policy and social considerations have made us decide that
this rule shall have prospective effects, since the purpose sought
is to award fair and equitable relief resulting in better social
coexistence. Subsequently, all causes of action filed according to
Art. 1802 of the Civil Code, supra, shall be adjudicated in
accordance with the rules established herein.29
The parties dispute the meaning of the term “prospective effects.”
25
Id. at *8.
26
Id.
27
Id. at *10.
28
Id. at *11.
29
Id. at *11-12 (citations omitted).
8
B.
Decisions by This Court30
This Court has issued three opinions in this case dealing with the
prospective application of Fraguada. First, on July 16, 2013, this Court held that
the Fraguada rule applies to defendants added in the TAC and granted three TAC
defendants’ motion to dismiss based on statute of limitations.31 This Court
reasoned that because Fraguada applied prospectively and because the TAC was
filed after Fraguada, “Fraguada bars the Commonwealth’s use of the 2007 filing
date to toll the statute of limitations.”32 Second, on August 2, 2013, this Court
denied a motion for reconsideration of the above opinion.33 The Court reiterated
that “[n]owhere does Fraguada indicate that the narrow retroactivity exception
should apply to cases filed after the date of the court’s opinion, nor is there any
indication that its new tolling rule should not apply to parties sued after its decision
was announced.”34 Third, on December 30, 2013, this Court granted summary
30
I address these decisions in a companion Opinion filed today.
31
See In re MTBE Prods. Liab. Litig., 959 F. Supp. 2d 476 (S.D.N.Y.
2013).
32
Id. at 497.
33
See In re MTBE Prods. Liab. Litig., No. 07 Civ. 10470, 2013 WL
4008632 (S.D.N.Y. Aug. 2, 2013).
34
Id. at *2 (emphasis in original).
9
judgment for three defendants added in the TAC.35 The Court did not repeat its
earlier discussion, but cited to the August 2 opinion for the proposition that the
Fraguada rule applies.36
C.
Decisions by Other Courts
The Puerto Rico Court of Appeals has now held three times that
Arroyo tolling applies to the current facts – where a complaint was filed prior to
Fraguada and an amended complaint adding defendants was filed after
Fraguada.37 The District Court for the District of Puerto Rico has reached the
same conclusion.38 In addition, the Puerto Rico Court of Appeals applied the
35
See In re MTBE Prods. Liab. Litig., No. 07 Civ. 10470, 2013 WL
6869410 (S.D.N.Y. Dec. 30, 2013).
36
See id. at *3.
37
See Lozada Maldonado v. Oliveras Guerras, No. Civ. KDP 20110836, 2014 WL 74633980 (T.C.A. Nov. 24, 2014) (Complaint: July 11, 2011.
Amended: Mar. 18, 2013. Cert. denied.); Davis Davis v. Colon Rivera, No. Civ.
KDP2010-0200, 2014 WL 7503720 (T.C.A. Nov. 25, 2014) (Complaint: Feb. 18,
2010. Amended: Aug. 29, 2012. Cert. denied.); Diaz Diaz v. Colon Gonzalez,
No. Civ. B3C1201000119, 2013 WL 5786802 (T.C.A. Sept. 30, 2013) (Complaint:
2010. The opinion does not provide the date of the amended complaint, but the
docket indicates and defendants concede that the amended complaint was filed
after Fraguada.). See also 10/15/15 Transcript of Oral Argument, No. 00 Civ.
1898 (Dkt. No. 4278) at 21-26.
38
See Santiago-Lampon v. Real Legacy Assurance, No. 12 Civ. 1314,
2014 WL 526620 (D.P.R. Feb. 6, 2014) (Complaint: May 8, 2012. Amended:
Sept. 12, 2012.).
10
Arroyo rule in one case where extrajudicial tolling steps were taken prior to
Fraguada but the initial complaint was filed after Fraguada.39
These decisions reflect that “the Supreme Court used ‘the plaintiffs’
reliance on the old rule’ as a criterion” for determining whether to apply the new
rule.40 Accordingly, it would be unfair to time-bar these actions because “plaintiffs
managed their case according to the rule in force at the time of filing their
action.”41
Only twice has the Puerto Rico Court of Appeals concluded that
Fraguada applies when the initial complaint was filed prior to Fraguada, but in
both cases, the court failed to discuss the Fraguada court’s admonition that the
tolling rule should apply prospectively.42 These opinions only note that because
39
See Burgos Rosario v. Commonwealth of Puerto Rico, No. Civ.
KDP13-0051 (801), 2013 WL 5800328 (T.C.A. Sept. 30, 2013) (Alleged Tolling
Steps: July 15, 2010 to Jan. 24, 2012. Complaint: Jan. 18, 2013. Cert. granted.
Partial judgment on statute of limitations reversed and remanded for discovery on
tolling steps.).
40
Lozada Maldonado, 2014 WL 74633980, at *4 (quoting Fraguada at
41
Davis Davis, 2014 WL 7503720, at *9.
*11).
42
See Ocasio Nieves v. Municipio de Catano, No. Civ. DDP2007-0820,
2014 WL 3827230 (T.C.A. June 11, 2014) (Complaint: Aug. 31, 2007. Amended:
May 9, 2013. Cert. granted and trial court reversed.); Cubero Aponte v. Puerto
Rico Aqueduct and Sewer Authority, No. Civ. DDP2008-1040, 2014 WL 7474663
(T.C.A. Oct. 10, 2014) (Complaint: Oct. 31, 2008. Amended: Apr. 27, 2010.
11
Fraguada overturned Arroyo, the Fraguada rule applies.43 Notably, both of these
opinions were decided by the same panel, authored by the same judge, and
reversed trial courts applying Arroyo.44
V.
DISCUSSION
A.
Law of the Case
Defendants argue that this Court should respect the law of the case
because there has not been an intervening change of law.45 This doctrine, while not
binding, “counsels a court against revisiting its prior rulings in subsequent stages
of the same case absent ‘cogent’ and ‘compelling’ reasons such as ‘an intervening
change of controlling law, the availability of new evidence, or the need to correct a
clear error or prevent manifest injustice.’”46 Nonetheless, the overwhelming weight
of later decisions considering this issue, while not an intervening change of law,
Cert. granted and trial court reversed.).
43
See Ocasio Nieves, 2014 WL 3827230, at *7; Cubero Aponte, 2014
WL 7474663, at *7.
44
See id.
45
See Reply in Support of Motion for Summary Judgment of Shell
Western Supply and Trading Limited and Shell International Petroleum Company
Limited (“Reply Mem.”) at 3.
46
Ali v. Mukasey, 529 F.3d 478, 490 (2d Cir. 2008) (quoting United
States v. Tenzer, 213 F.3d 34, 39 (2d Cir. 2000)).
12
has convinced this Court that its earlier decisions were clear error.47
B.
Statute of Limitations Tolling
The Puerto Rico Supreme Court has not yet clarified what it means for
the Fraguada tolling rule to have prospective effect. Where the Puerto Rico
Supreme Court has not spoken directly on the issue, this Court must “undertake the
imprecise but necessary task of predicting” how the court would rule.48 This Court
should consider the decisions of intermediate appellate courts, but “we are not
strictly bound by state intermediate appellate courts.”49
Fraguada’s prospective effect language can be read three ways. First,
as defendants urge, because Arroyo has been overruled, all subsequently filed
causes of action – including the TAC – must have been individually tolled from the
time the Commonwealth had knowledge of the injury and who caused it, regardless
of the fact that the Arroyo rule was in effect at that time.50 Second, as the
Commonwealth urges, the Arroyo rule tolls the statute of limitations in perpetuity
47
This Court has issued an Order to Show Cause why the earlier
decisions of this court should not be vacated and reconsidered. See 10/15/15 Order
to Show Cause (Dkt. No. 639).
48
DiBella v. Hopkins, 403 F.3d 102, 111 (2d Cir. 2005) (citing
Michalski v. Home Depot, Inc., 225 F.3d 113, 116 (2d Cir. 2000)).
49
Id. at 112.
50
See Reply Mem. at 1.
13
for co-tortfeasors – even after Fraguada – so long as the initial complaint was filed
while the Arroyo rule governed.51 Third, as this Court interprets Fraguada, that
decision ended Arroyo tolling and restarted the running of the statute of limitations
for imperfectly jointly and severally liable co-tortfeasors.
The first of these interpretations is irreconcilable with the fairness
concerns expressed in Fraguada. Courts typically apply newly announced statute
of limitations rules prospectively “based on fundamental notions of justified
reliance and due process.”52 To do otherwise would be to “shut[] the courthouse
door on [plaintiffs] because they were unable to predict the future.”53 This precise
concern motivated the Fraguada court when it announced that the new tolling rule
shall have prospective effect because plaintiffs “relied on the prior rule.”54 Every
Puerto Rico Court of Appeals decision considering Fraguada’s prospective effect
has reached the conclusion that it would be unfair to declare Arroyo tolling
51
See The Commonwealth of Puerto Rico’s Memorandum of Law in
Opposition to Shell Western Supply and Trading Limited’s [sic] and Shell
International Petroleum Company Limited’s Motion for Summary Judgment Based
on Statute of Limitations (“Pl. Mem.”) at 6.
52
Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S.
350, 370 (1991) (O’Connor, J., dissenting).
53
Id.
54
Fraguada at *11.
14
retroactively ineffective.55 The Commonwealth should not be barred from having
its day in court because it justifiably relied on a tolling rule which has now been
rejected.
The second interpretation, championed by the Commonwealth,
however, ignores the Fraguada court’s countervailing concern that the Arroyo rule
“far from achieving equilibrium between opposing interests . . . tilts the balance in
favor of claimant.”56 The Commonwealth, in support of its contention, notes that
the reasoning of subsequent Puerto Rico Court of Appeals decisions focuses solely
on the date of the original complaint to determine which tolling rule to apply.57
These cases, however, use the date of the complaint because that is when the
plaintiff relied on the tolling rule, but none of these cases have gone so far as to
hold that Arroyo tolling continues indefinitely after Fraguada.58
55
See supra Section IV.C. The two Puerto Rico Court of Appeals cases
to the contrary failed to discuss Fraguada’s prospective effect at all.
56
Fraguada at *9.
57
See 10/15/15 Transcript of Oral Argument at 33, No. 00 Civ. 1898
(Dkt. No. 4278).
58
The Commonwealth submitted a translation of one case where the
third-party complaint was filed more than a year after Fraguada. See Figuero
Otero v. Universidad del Este de Carolina, No. Civ. FDP2006-0612, 2015 WL
3488864 (T.C.A. Apr. 24, 2015). But, this case provides little guidance to this
Court because it confuses the Arroyo and Fraguada standards. The court held that
Arroyo applies to the third-party complaint but then quoted and applied the
15
The Fraguada court was motivated by “[p]ublic policy and social
considerations” and sought “to award fair and equitable relief resulting in a better
social coexistence.”59 Indefinite Arroyo tolling post-Fraguada would continue to
work injustice against unnamed defendants who may be added to this action in
perpetuity. This interpretation would also create a dual-track tolling system for
actions filed before and after Fraguada that would be unnecessarily complex and
inherently inequitable.
The third interpretation is most true to the actual text of Fraguada and
the policy concerns that motivated the decision. Fraguada unambiguously ended
Arroyo tolling for subsequently filed actions, but because the new tolling rule
applied prospectively, the prior Arroyo tolling was not retroactively invalidated.
Under Puerto Rican law when the action tolling the statute of limitations ends, the
statute of limitations “reset[s] and beg[i]n[s] to run anew for another year.”60 Here,
the Commonwealth suffers no undue prejudice because it is still given the benefit
Fraguada rule requiring individual tolling. See id. at *8. The court found that the
third-party action was untimely because the plaintiff had knowledge sufficient to
trigger the statute of limitations for the later-added defendants when the initial
complaint was filed. See id. at *7-8.
59
Fraguada at *11.
60
Rodriguez v. Suzuki Motor Corp., 570 F.3d 402, 408 (1st Cir. 2009)
(holding that the “tolling effect persisted until that action came to a ‘definite end’
. . . when it was voluntarily dismissed”).
16
of the entire year-long statute of limitations. Importantly, this also “settle[s] the
problem of uncertainty posed by the indefinite pendency of a cause of action” that
the Fraguada court sought to remedy when it overturned Arroyo.61 The prior
decisions by this Court were clear error on this point, and the law of the case is
overruled.
The Commonwealth’s claims against Shell West and SIPC are timely
under this Court’s interpretation of Fraguada.62 The TAC alleged that
“Defendants are jointly and severally liable” for the injury to the waters of the
Commonwealth.63 Under Arroyo, that allegation in conjunction with the timely
filing of the initial Complaint on June 12, 2007, was sufficient to toll the statute of
limitations indefinitely. Fraguada ended that tolling period on August 13, 2012,
and the statute of limitations began to run anew. Shell West and SIPC were added
by the TAC less than four months later on December 3, 2012, well within the oneyear statute of limitations.
VI.
CONCLUSION
61
Fraguada at *10.
62
This Court need not decide whether Shell West and SIPC are in
“perfect solidarity” with the initial defendants at this time because the claims are
timely regardless of whether perfect or imperfect joint and several liability applies.
See Pl. Mem. at 12.
63
TAC, Requests for Relief ¶ A.
17
- Appearances Liaison Counsel for Plaintiff:
Robin Greenwald, Esq.
Robert Gordon, Esq.
Weitz & Luxenberg, P.C.
180 Maiden Lane
New York, NY 10038
(212) 558-5500
Counsel for Plaintiff:
John D.S. Gilmour, Esq.
Jackson Gilmour & Dobbs, P.C.
3900 Essex, Suite 700
Houston, TX 77027
(713) 355-5000
Jorge L. Flores, Esq.
Legal Counsel
Puerto Rico Department of Justice
Olimpo Street, Pda. 11
San Juan, Puerto Rico 00907
John K. Dema, Esq.
Law Offices of John K. Dema, P.C.
1236 Strand Street, Suite 103
Christiansted, St. Croix
U.S. Virgin Islands 00820
Orland H. Martinez, Esq.
Orland H. Martinez Law Offices
Centra de Seguros, Suite 413
701 Ponce de Leon Avenue
San Juan, Puerto Rico 00907
Michael Axline, Esq.
19
Miller Axline
1050 Fulton Avenue, Suite 100
Sacramento, CA 95825
Liaison Counsel for Defendants, and Appearing on Behalf of Defendants:
Peter J. Sacripanti, Esq.
James A. Pardo, Esq.
Michael J. Dillon, Esq.
McDermott Will & Emery LLP
50 Rockefeller Plaza, 11th Floor
New York, NY 10020
(212) 547-5583
20
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