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

Filing 4314

TRANSCRIPT of Proceedings re: Conference held on 3/11/2008 before Judge Shira A. Scheindlin. Court Reporter/Transcriber: Pamela Utter, [phone]. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 1/1/2016. Redacted Transcript Deadline set for 1/11/2016. Release of Transcript Restriction set for 3/10/2016.(Siwik, Christine)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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ORANGE COUNTY WATER DISTRICT,

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Plaintiff,

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v.
UNOCAL, et al.,

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Defendants.
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04 Civ. 4968 (SAS)

March 11, 2008
11:05 a.m.
Before:
HON. SHIRA A. SCHEINDLIN,
District Judge

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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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APPEARANCES

MILLER, AXLINE & SAWYER
Attorneys for Plaintiff
BY: MIKE AXLINE
MCDERMOTT, WILL & EMERY
Attorneys for Defendant Exxon Mobil Corp/Defendants'
Liaison Counsel
BY: STEPHEN J. RICCARDULLI

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ARNOLD & PORTER, L.L.P.
Attorneys for Defendant BP Products North America, Inc.,
BP West Coast Products LLC and Atlantic Richfield, Co.
BY: MATTHEW HEARTNEY
KING & SPALDING, L.L.P.
Attorneys for Defendant Chevron U.S.A., Inc.
BY: CHARLES C. CORRELL, JR.
MUNGER, TOLLES & OLSON, L.L.P.
Attorneys for Defendant Shell
BY: WILLIAM D. TEMKO
WALLACE, KING, DOMIKE & REISKIN
Attorneys for Defendant Shell, Texaco, Chevron and Unocal
BY: RICHARD E. WALLACE, JR.

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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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(Case called)

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THE COURT:

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MR. AXLINE:

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THE COURT:

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MR. RICCARDULLI:

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THE COURT:

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MR. HEARTNEY:

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THE COURT:

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MR. CORRELL:

Mr. Axline.
Good morning, your Honor.
Mr. Riccardulli, good morning.
Good morning.

Mr. Heartney.
Good morning, your Honor.

Is there a Mr. Correll?
Good morning, your Honor.

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THE COURT:

Mr. Temko.

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MR. TEMKO:

Good morning, your Honor.

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THE COURT:

And Mr. Wallace.

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MR. WALLACE:

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THE COURT:

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Well, I thought we had a telephone conference and my

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clerk said you made them come in all the way from California.

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I guess I did.

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if it is a serious dispute of promotion issue it is still kind

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of hard to do on the phone.

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thinking it was by phone.

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Good morning, your Honor.

Good morning.

I'm sorry about that.

MR. AXLINE:

Mr. Axline has just said

Still, I'm sorry.

I came in

I have a daughter here, your Honor, so it

gives me an opportunity --

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THE COURT:

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In any event, I have a letter dated February 19th --

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That makes me feel much better.

and forgive my lack of voice, it is an asthma situation -SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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anyway, February 19th from the plaintiff asking for a

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pre-motion conference stating its intent to request leave to

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file an amended complaint and to request an extension of time

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to file the Orange County Water District's brief on the statute

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of limitations.

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It seems the parties don't disagree on a small change

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with respect to paragraphs 104 and 106 which is, the defense

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says all they accepted, but there is a bigger change that

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plaintiffs want to make which is to replace the term

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"groundwater" with such terms as "public drinking water

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supplies" and "principal aquifer."

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The defense wrote a letter dated February 22nd, 2008

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saying they had thought they negotiated an agreement on an

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amended complaint.

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104 and 106, but they think the change with respect to the

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phrase "groundwater resources," which has been around since the

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beginning of this case but certainly since the briefing on the

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statute of limitations motion, is a major change and it

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implicates the Court's reasoning in the earlier statute of

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limitations decision and in the permission to have supplemental

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briefing.

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They had no problem, again, with paragraphs

So, the defense writes, and I quote, by replacing the

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term groundwater with phrases such as "principal aquifer,"

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"public drinking water supplies" and "usable water," the

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District evidently hopes to salvage its statute of limitations
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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opposition by arguing that its jurisdiction is limited only to

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parts of the groundwater basin under its management and only

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some of the groundwater found there.

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And, they oppose the amendment saying it is dilatory
and it is prejudicial.
So, that's the summary of the letter writing.

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thought it would be useful to hear you orally.

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say any more if I can possibly help it.

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talking to you folks it would be a lot better.

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I don't want to

If I could switch the

So, they say you have the burden Mr. Axline, so and in

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a sense you didn't have a chance to reply to their February

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22nd letter.

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the application, can you explain why the Court should allow it?

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So, in the nature of reply in further support of

MR. AXLINE:

I will, your Honor.

And I will do so by

explaining my reasoning.
We were working cooperatively in response to a

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suggestion from the Court to amend the Orange County Water

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District Act language in the complaint, and we did reach an

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agreement on that.

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has been working on the supplemental brief on the statute of

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limitations.

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Simultaneously with that work our office

Reading back over the briefs and this Court's opinions

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on primary jurisdiction and some of the work that has happened

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in this case --

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THE COURT:

Yes.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. AXLINE:

-- although I think the initial

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complaint was accurate and still is accurate with respect to

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the scope of the Orange County Water District's jurisdiction,

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the nature of the claims that it is making in this case has

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been clarified through briefing hearings with the Court.

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For example, as the Court and defendants know, the

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District injects sea water at a certain point along the

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coast -- or injects, I'm sorry, water at a certain point along

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the coast to hold back sea water.

And although the District

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has jurisdiction over the groundwater that is present in the

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area between those injection wells and the coast, the District

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is not asserting in this case any injury to that groundwater.

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Similarly, in the briefing on primary jurisdiction the

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District explained, and the Court agreed, that with respect to

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discharges that are currently being remediated by the regional

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water quality control board, although the District has

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jurisdiction over those discharges it has a memorandum of

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understanding with the regional board and therefore is not

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asserting claims in this case for discharges that are being

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remediated by the regional water quality control board.

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In addition to that, some of the discharges may have

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occurred in what are called perched aquifers where there is, it

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is a narrow band of groundwater close to the surface that

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doesn't present a threat to the principal aquifer that the

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drinking water supply that the District is concerned with.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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To be candid about my thinking, it may have been

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fine -- I think it probably would have been to leave the

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complaint as it was and simply argue these points with regard

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to describing the District's injuries.

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working through this and looking at the complaint in a way that

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it would benefit all parties if the District took advantage of

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this point where we are and amended the language of the

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complaint to clarify in the complaint itself more precisely the

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nature of the District's injuries.

But, I thought as I was

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So, that was the thinking behind that.

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THE COURT:

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claim?

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MR. AXLINE:

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THE COURT:

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MR. AXLINE:

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THE COURT:

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MR. AXLINE:

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THE COURT:

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Would you agree it is a narrowing of the

Yes.
It is a limiting of the claim?
Yes.
That's what it sounds like.
Yes.
What about answering their point about

prejudice?

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MR. AXLINE:

I will let them explain that in more

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detail.

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that anything we are saying here is inconsistent with what

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we've presented to the Court today in the briefing on the case.

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I frankly don't see it, your Honor.

THE COURT:

I don't think

Well, relating it to the statute of

limitations I guess it affects the date of known or should have
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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known; right?
MR. AXLINE:

Well, I think that it takes out of the

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defendant's concerns discharges in the areas that I've been

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talking about on the coast or confined to aquifers and so it is

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not just the statute of limitations.

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THE COURT:
narrowing.

That's why I said it does sound like a

It is a narrowing of the claim.

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MR. AXLINE:

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THE COURT:

Yes.
It is a limitation of the claim.

So, to

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that extent, the defendants should be happy.

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hand, it probably pushes the date as to when you knew or should

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have known of the injury forward.

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groundwater, there was certain proof in some instances that

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there was no way no way you didn't know.

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there was an injury.

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that problem by this newer definition.

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MR. AXLINE:

On the other

Because with the broad term

There was litigation,

They think you are trying to get out of

That may be what they think is prejudice,

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your Honor.

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consistent with our prior briefing.

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I don't think it is because it is perfectly

We have taken the position in all of the prior

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briefing on the statute of limitations and on primary

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jurisdiction that the District is not harmed until

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contamination escapes remediation efforts in amount sufficient

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to threaten drinking water.

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amend the complaint to specify as well.

And that's what we are seeking to

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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THE COURT:

So now are you saying it is a matter of

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having the pleadings conform to the proof?

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concept and not an unheard of one; that the proof that you have

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been eliciting in the discovery process is that while there may

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be groundwater contamination, we aren't injured until the

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drinking water is affected and that's why we want to change

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those words in the complaint.

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to what the case really is.

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MR. AXLINE:

Which is an old

We want to conform our pleadings

Yes, your Honor.

And I can understand

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the defendants have done an excellent job of seizing on that

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word groundwater.

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THE COURT:

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MR. AXLINE:

Correct; because it is broader.
It is broader and it does describe the

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District's jurisdiction but it is too broad for what this case

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is about.

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THE COURT:

May be.

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MR. AXLINE:

Yes.

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THE COURT:

But you pled.

It may be too broad, but you put them

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through four or five years of discovery with respect to a word

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that you now say is too broad.

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affect the statute of limitations motions but we may have to

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have a "do-over" of earlier motions like primary jurisdiction.

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MR. AXLINE:

They say that not only does it

I don't agree with that, your Honor.

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think, in part, this reflects the Court's opinion and the

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briefing on the primary jurisdiction motion.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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The fact that the regional board is operating at some

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sites is, I mean the Court's opinion on that is what it is and

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nothing in this proposed amendment would suggest you have to

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revisit that.

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they can explain how it inaccurately accounts for it I guess I

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could respond to that.

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In fact it is intended to account for it.

THE COURT:

Okay.

If

Then who wants to start.

Mr. Heartney?
MR. HEARTNEY:

Yes, your Honor.

Thank you.

I guess to explain our concerns I would like to go

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back to the spring of 2006 when we were about to file the

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statute of limitations motion.

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THE COURT:

That's two years ago.

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MR. HEARTNEY:

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THE COURT:

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MR. HEARTNEY:

Two years ago.

Oh dear.
At that time we were developing our

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motion and deciding what arguments to make in our motion,

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obviously, and what we had in front of us were on the one hand

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the complaint that the District had already filed which did use

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the term "groundwater" and made other statements, and we had

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other statements by the District some of which we cited in our

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letter such as their December 2005 statement that the District

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is charged with protecting all groundwater in its jurisdiction.

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Beyond that, when we looked at the complaint and we
looked at their case and we said what is it that this case is
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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about?

What have they said that is the crux of their case?

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What they said was that there are 400 MTBE release sites that

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are contaminating and threatening to contaminate the

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groundwater in the District.

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assistance, gotten a list of those and they included every

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single underground storage tank release site in the District's

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territory as tabulated by the regional water quality control

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board.

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And we had, through your Honor's

So, when we filed the motion we focused it on the two

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injuries that we understood them to be asserting because

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that's -- obviously from our accrual standpoint we had to focus

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on the injuries that they were making the basis of their --

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THE COURT:

You say two injuries, two injuries

being -MR. HEARTNEY:

Two injuries in fact.

Injury in fact

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number one is when they are injured -- when MTBE or TBA

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contaminates groundwater that they're managing it, groundwater

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that is within their jurisdiction that they're managing.

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we coupled that in our minds in this first injury with their

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statement that they're charged with protecting all groundwater

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in the district.

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And

The other injury was their need to investigate,

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remediate, take steps, spend money, expend resources to focus

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on the MTBE release sites, the 400 sites which they identified

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as the crux of their case.

And their complaint stated at that

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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time that the District is required to investigate every UST

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release site in its territory.

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complaint.

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complaint, I don't think they've taken that one out.

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That statement is in the

In fact, I think it is still in the present

But, so, we said based on this that what they're doing

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is focusing on these underground storage tank release sites.

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And so, we developed a factual record that focused on those.

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And we showed that with a view few exceptions all of them had

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been known, they existed, they were known either to the

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District directly or they were -- the District was charged with

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that knowledge but they were known in the regional board sites.

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THE COURT:

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MR. HEARTNEY:

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THE COURT:

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MR. HEARTNEY:

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I'm sorry.

Known on the --

Regional board field, your Honor.

Okay.
So, that's what we focused our motion

on.

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Then, in the supplemental briefing, we kept the same

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focus.

Your Honor asked for certain things to be examined.

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First, had the MTBE reached groundwater?

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show that in all about again a very, very small number of cases

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before May 6, 2000 at these sites it had in fact reached

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groundwater.

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groundwater in levels sufficient to constitute an injury.

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so, we compared it to the regulatory standard and in virtually

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all cases, again, the MTBE that was known to exist at these

And we were able to

And the second issue was had it reached

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

And

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release sites before May 6, 2000 exceeded the regulatory

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standard.

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And so, your Honor, the problem we have with these

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amendments, we are familiar with the arguments that the

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District started to make in its supplemental briefing and said,

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well, we have a new four-part test that we believe should be

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used.

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appropriate.

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were working with and it is based on the statement that had

We, of course, dispute that that four-part test is
In part that's based on the complaint that we

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been made to us before we filed our motion.

But, it is also

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based on the statutes that the District has which don't make

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any distinction between protecting drinking water and

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protecting other water.

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by the District as quoted by the District, they refer to any

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contamination of groundwater.

The statutes, at least as interpreted

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And so, your Honor, from our perspective if they now

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say -- if they're now permitted to say, well, our case is not

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about the 400 plumes that were the basis that were in our

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complaint originally and they've actually changed the

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allegations that relate to those to now say that only some of

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those plumes are at issue, they don't identify which one which

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was not what they said before.

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change that focus, then the motion that we made is not aimed at

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what they've now made the basis of their case.

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stepping in a different direction, they have stepped away from

But, if they're allowed to

They have, by

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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the target of our motion even though the target of our motion,

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I believe I can demonstrate, was very much on point at the time

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that we presented it.

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And so, we believe that there are many admissions by

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the District that would block it and discovery, other factual

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materials that can't be changed by just changing the

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allegations of your complaint, that would mean that they're

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really stuck with the old focus.

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in changing the focus, then what that would mean is we would

But, if they were to succeed

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have to start over with a different statute of limitations

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argument because we would be facing a different target.

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THE COURT:

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But, one question I have is if you have a case where

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somebody says there are 400 releases that have injured me and

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then they amend the complaint to say there are 30 releases that

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injured me; generally speaking, one would think the defense

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would be happy about that because it takes out of the case a

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huge number of releases that theoretically the plaintiff would

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press for damages, to recover damages based on those releases.

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So, generally, a narrowing or cutting back is a good thing.

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Right.

The only reason, I suppose, that troubles me, is the

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impact on the statute of limitations.

Because if they want to

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rule out a lot of alleged bad conduct, so to speak, and not

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seek recovery for it, that's with prejudice.

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pretty powerful thing.

I mean, that's a

And they're now willing to say we are

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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not pursuing that and not just for today we are not pursuing

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it, we want to focus only on that which threatens the drinking

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water.

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groundwater.

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We don't want to talk about contamination of the
It is a narrower case.

So, while I agree that there is a lot of effort that

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the defense and the lawyers put into preparing a motion

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targeted at the old complaint, one should maybe consider the

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compensation for all that time.

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to narrow a complaint.

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It is really not a bad thing

And, it is not unheard of.

As I said before, we often have this notion of
conforming the pleadings to the proof.

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So, Mr. Axline, when he mentioned that it is not all

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400 anymore, it is only some, can you give the Court any idea

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of how many is the some?

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MR. AXLINE:

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THE COURT:

I can't give you a precise idea.
I didn't ask for precise.

Do you have any

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idea?

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them that's kind of a good thing but I don't know if you are

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narrowing by very little or by something substantial.

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Because I'm talking about a narrowing and am telling

MR. AXLINE:

Well, I do know that there were several

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stations in the coastal area that we previously informed both

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the defendants and the Court we are not making claims with

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respect to.

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Your Honor also said in your opinion that not every
release to groundwater constitutes an injury and the reason is
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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because we did brief this precise issue before.

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We have, by agreement, narrowed the focus of the case
for present purposes to 10 bellwether plumes.

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THE COURT:

That's bellwether, that is not with

prejudice of writing off the other 390 releases.

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motion

MR. AXLINE:

Correct.

But we have been focusing on

those for purposes of the current briefing.

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THE COURT:

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MR. AXLINE:

I know that.
That's why I can't give you a -- I can't

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give you any kind of a precise number.

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will narrow it.

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regional board now are not going to be the subject of a current

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claim.

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All I can say is it

Stations that are being remedied by the

THE COURT:

Stations that are being remedied by the

regional board now are not going to be the subject of?
MR. AXLINE:

-- of a current claim where there is no

evidence that the plume has escaped that remedial effort.
Now, I do want to say that if the District later finds

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out that that plume has escaped and is threatening drinking

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water, then we would not agree that we would be dismissing

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those claims.

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doing this in the context of statute of limitations briefing

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this month.

But, we are working now to narrow -- and we are

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THE COURT:

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MR. AXLINE:

Yes.
That's one of the reasons why we asked

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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for some additional time.

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THE COURT:

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MR. AXLINE:

Right.
To assess these a little more closely so

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that we can explain, in more detail, the status of each

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station.

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that will be taken out of the mix as a result of that closer

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assessment.

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And, I do expect that there will be some stations

THE COURT:

But you can't tell me about the 400 -- how

far down the 400 is going.
MR. AXLINE:

No, I can't tell you.

Off the top of my

head I would be very reluctant to even attempt that.
MR. HEARTNEY:

Your Honor, as I hear your question

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suggests and it is very much on point, yes, if there was going

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to be a meaningful substantial reduction in the case, that is

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something we would obviously see as a benefit.

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THE COURT:

Right.

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MR. HEARTNEY:

Our belief is that the terms that have

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been adopted to replace the concept of groundwater are --

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they're very multitudinous, there are many different words and

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they mean different things -- usable water, public drinking

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water supplies, common water supplies of the district.

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Our problem is we don't think that a standard has been

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adopted here which does create a meaningful narrowing.

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think that there is still so much flexibility in these terms

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for the district that what we have is a sidestep that is more
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

We

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conceptual in its basis and not concrete.

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a list that said it has gone from 500 to 20, then it would be a

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whole different story.

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THE COURT:

If we, in fact, had

You know, I think after all of these

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years -- and I don't remember the year that this case began,

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maybe '03?

Does somebody remember?

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MR. HEARTNEY:

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MR. AXLINE:

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THE COURT:

'03.

Yes.
After five years, Mr. Axline, I think it

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is -- what is a good word for it -- I was going to say

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chutzpah -- it is kind of chutzpah to say at this point I want

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to change the case after five years and after five years of

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discovery and five years of effort by the defendants without

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giving something back which would be rather specific narrowing.

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So, I think that if you are going to make this motion

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and they're going to have to oppose this motion because, after

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all, this is only a pre-motion conference, I'm not inclined to

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grant it unless it is very specific as to how it narrows the

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case.

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to avoid the statute of limitations problem, which I think you

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have, and I think you have come to realize you have.

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It is just unfair five years later to change the focus

But, one way around it is to focus on getting rid of

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the overbroad -- what you called earlier the overbroad term

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groundwater and looking more narrowly at the idea of the public

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drinking water and then being able to defend on the statute of
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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motion

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limitations ground when we knew or should have known that the

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threat, that there was threat to the actual drinking water.

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So, everybody knows why you want to do it but I would

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like to know and I think the defense might be satisfied if they

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saw how it took a broader case and made it narrower.

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it is just theoretical and you don't want to identify sort of

7

the benefit of the change, I don't think you are just entitled

8

to, willy-nilly, use a bunch of new words that are vague and

9

don't create a bright-line cutoff for what is in the case and

But, if

10

not in the case.

11

years, you get to change the theory such that you avoid the

12

statute of limitations problems but we don't know what is in

13

the case and what's outside the case.

14

There has to be a benefit if, after five

So, I think a bright-line is needed as to what those

15

terms mean rather than a bunch of amorphous terms that don't

16

cut things out and leave things in.

17

MR. AXLINE:

18

Honor.

19

I understand what you are saying, your

case in any way.

20

I disagree with the defendants that we are changing the

THE COURT:

You are narrowing it.

21

term "groundwater" is overbroad.

22

You said before the

record.

23

MR. AXLINE:

Correct.

24

THE COURT:

All right.

You conceded that on this

25

So, you are trying to narrow,

you are trying to be more specific than this broad term
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"groundwater" and you realize that that means that certain

2

spills/releases will be out of the case because of that.

3

said we are not going for releases on the coast, big releases

4

that were years ago and clearly we knew and they're being

5

remediated, etc.

6

You

So, you know you are cutting something out but you, at

7

this point, decline to say what.

And, you also decline to come

8

up with one bright-line term of what you are talking about.

9

They say you float between "public drinking water supplies,"

10

"principal aquifer," "usable" and maybe other terms.

11

saying if you are going to make this kind of major change after

12

five years, you should be held to a bright-line test of what is

13

in and what is out.

14
15
16

They're

If you want to talk about public drinking water rather
than groundwater, that's one change.
If you want to -- I mean, I don't know some of the

17

terms, but if you want to talk about principal aquifer as

18

opposed to everything else, that's a specific term.

19

To be able to sort of use all terms such that you can

20

expand or contract at will is really not fair.

21

fair to the years that they've been litigating the case and I

22

have been making decisions.

23

It is just not

It is not fair to either of us.

So, you know, I'm not going to allow the proposed

24

amended complaint as I see it attached to these letters.

25

going to have to be some level of specificity that is a benefit
SOUTHERN DISTRICT REPORTERS, P.C.
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at the same time to the defense as it is to you, both sides

2

benefit.

3

Because, to narrow a case is a good thing.
Now, it may be that after you narrow it they will lose

4

the statute of limitations motion.

But, they will have won

5

something.

6

there and will not be there because you have conceded it is not

7

there.

8

all these other years and you can't do it.

A percent of the case that was once there is not

And then the statute of limitations continues to run

9

So, there is a real narrowing here.

10

to be.

11

motion.

12

Has to be.

Has

It can't just be sort of a wordsmithing to get around a

effort.

I can't allow that at this date.

13

MR. AXLINE:

14

THE COURT:

15

MR. AXLINE:

Too many years of

I have two responses, your Honor.
Okay.
I do understand what you are saying and I

16

would like to figure out a little more precisely where to go

17

with it.

18

THE COURT:

19

MR. AXLINE:

Right.
I do want to say that our initial

20

complaint did refer to public drinking water and it used the

21

same terms.

22

and forth between groundwater and those terms.

23

It didn't use them consistently.

It switched back

As the course of the litigation has proceeded, the

24

District has refined its claims and so we, I think at this

25

point maybe everybody is in agreement that given that
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refinement, it would benefit the defendants if we were able to

2

identify some release sites --

3

THE COURT:

4

MR. AXLINE:

5

Oh yes.
-- that are no longer within our

definition of injury.

6

THE COURT:

7

Correct.

MR. AXLINE:

And if that will assist with reducing

8

prejudice to the defendants and with the Court's decision on

9

the motion to amend, I think we can do that.

10

I do think, however, that the terminology that we have

11

used in this complaint is the correct terminology for

12

describing the actual injury that the District is suffering as

13

a result of MTBE releases in the District service area.

14
15
16

THE COURT:
terms?

Well, why do you need so many different

What is wrong with public drinking water supplies?
MR. AXLINE:

One of the terms, public drinking water

17

supplies defines the other term, principal aquifer in a

18

colloquial way because that is where the drinking water supply

19

comes from.

20
21
22

THE COURT:

What about usable water, very elastic.

What is usable water?
MR. AXLINE:

That, your Honor -- frankly, there are

23

going to be some aquifers -- this is a very complicated

24

hydrogeological setting.

25

aquifers that don't -- that are not part of the principal

There are going to be some usable

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motion

aquifer that drinking water supplies are taken from and --

2

THE COURT:

Well then public drinking water supplies.

3

MR. AXLINE:

-- or that where public drinking water

4

could be taken but is not currently taken.

5

THE COURT:

It still comes under public drinking water

6

supplies.

I think they're fearful once you start using "usable

7

water" how long that will last and it will come back to

8

groundwater.

9

limitations motion after all these years.

They need to get a grip on the statute of
And, they quote from

10

your second amended complaint several paragraphs where you do

11

talk about claiming damages, to investigate, monitor, prevent,

12

abate or contain any contamination of or pollution to

13

groundwaters.

That's not where you want to be now.

14

MR. AXLINE:

That, your Honor, is a separate matter.

15

The Orange County Water District Act, like CERCLA,

16

awards some costs that you would not be able to get under

17

common law claims, and that includes investigatory claims

18

whether they lead to evidence of a common law compensable claim

19

or not.

20

claims.

The Act is much broader than the underlying common law

21

THE COURT:

22

MR. AXLINE:

23

That may be but they may be time-barred.
But we have amended the Act to say we are

not going to request any investigatory costs --

24

THE COURT:

25

MR. AXLINE:

Okay.
-- that were incurred prior to May 6,

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2000.

So, we have done that in the complaint.

2
3

THE COURT:

Which complaint?

The proposed amended

complaint?

4
5

motion

MR. AXLINE:

The proposed amended complaint in the

paragraphs that we stipulated to.

6

THE COURT:

7

MR. AXLINE:

104 and 106.
Correct.

We have said we are not going

8

to claim those costs but going forward those costs are much

9

broader than the underlying claims.

10
11

THE COURT:

But I have to deal with the statute of

limitations.

12

So, where does this friendly conversation leave us?

13

Mr. Heartney did you address why you thought this amendment in

14

any form might lead to re-litigating older motions like primary

15

jurisdiction?

16

MR. HEARTNEY:

17

THE COURT:

18

MR. HEARTNEY:

Your Honor --

Do you have any thoughts?
-- I will say we alerted the Court to

19

this possibility.

We have not studied it to the point where I

20

can give you chapter and verse but, generally, here is the

21

thought:

22

The thought was that when we made our primary

23

jurisdiction motion the District portrayed itself as a co-equal

24

to the regional board having the same jurisdiction as the

25

regional board and therefore under no obligation to defer to
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motion

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the regional board.

2

await what the regional board is doing.

3

wait to tell the regional board it has finished its work

4

because the District is fully capable and has every right to go

5

and clean up the spills itself.

6

Mr. Axline that we believe they have that jurisdiction.

7

There is no reason why the Court need
It doesn't need to

And, we have heard again from

But now -- well, when we look at the complaint we see

8

and they're saying that's not our job.

9

protect drinking water supplies.

10

Our real job is just to

In that case we think we would need to look hard at

11

what happened on the primary jurisdiction motion with where we

12

were essentially saying wait until the regional board has

13

finished its work before you come in and start making claims.

14

This would also depend, in part, on what the universal sites

15

are that's left.

16

when we don't know the nature of the situations that they may

17

now want to focus their case on.

You know, it is hard to speak in the abstract

18

It is, at this point, your Honor, I would simply say

19

we see it as a possibility because it seems to be a narrowing

20

of their powers or at least of their role vis-a-vis the

21

regional board compared to what they said in the primary

22

jurisdiction.

23

I can't say more than that.

24

THE COURT:

25

10 focused releases?

Mr. Axline, would this affect any of the
Do you know?

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motion
MR. AXLINE:

I believe that it is going to affect

2

several of the stations that have contributed to the 10 focused

3

plumes, yes.

4

THE COURT:

5

MR. AXLINE:

6

THE COURT:

7

Yes.
See, people need to know that I mean we

can't not know that and continue the briefing.

8
9

They would be out?

So, what comes next?

Your brief was due February

28th.

10

MR. AXLINE:

11

THE COURT:

12

MR. AXLINE:

13

THE COURT:

14

MR. AXLINE:

15

THE COURT:

It is now due March 28th.
Now due March 28th.
Yes, a couple of weeks.
Are you going to make that date?
Yes, we are, your Honor.
What about the amended complaint?

Do you

16

want to make the motion on that or do you want to negotiate

17

first?

18

MR. AXLINE:

I am happy to discuss this with the

19

defendants to see if we can come to an agreement on it.

20

think at a minimum those discussions might lead to me being

21

able to give you some more precision with respect to the

22

effects of the amendment that we are seeking in narrowing the

23

case after we discuss that with the defendants.

24
25

THE COURT:

I

Do you have another reply on this motion

after March 28th?
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motion
MR. HEARTNEY:

I believe the briefing schedule, your

2

Honor, is that the first supplemental briefing is March 28th,

3

it comes from the District.

4

opposition.

21 days later we have an

Two weeks after that, they have a reply.

5

There is three more briefs.

6

THE COURT:

Right.

The question is will you be in a

7

position to file your papers three weeks later if we don't know

8

what the complaint is?

9

MR. HEARTNEY:

It is very hard to say, your Honor,

10

without seeing what their paper is and what the next step would

11

be.

12

MR. AXLINE:

Your Honor, we are not going to be

13

presenting anything different or new beyond what we have done

14

in the prior briefing.

15

beginning, what I think our proposed amendments are consistent

16

with what we have said in the prior briefing on the statute of

17

limitations.

That's what, as I said at the

18

THE COURT:

So, why did you need an extra month?

19

MR. AXLINE:

Because we are going into much more

20

detail on specific sites in this additional briefing but it is

21

all consistent with what we have said before.

22

And, just to respond briefly to Mr. Heartney's comment

23

on the primary jurisdiction motion?

One of the reasons we have

24

gotten to where we are here is because of the outcome of the

25

primary jurisdiction motion.

And we said there and are saying

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it again in all of our statute of limitations briefing

2

including what has been filed is that the District isn't

3

injured.

4

those sites unless and until the regional board's remedial

5

efforts fail and there is some indication that the contaminant

6

is threatening.

7
8
9

Even though it has jurisdiction it is not injured at

THE COURT:

So, in other words, you are saying you do

wait for the outcome of the regional board's efforts.
MR. AXLINE:

Correct.

Although I'm not sure "outcome"

10

is the right term.

11

outside of the remedial area that the regional board oversees,

12

that contamination has escaped, then the district knows that it

13

is injured.

14

board's remedial efforts and presumes, until it is given

15

information otherwise, that the Board's efforts are going to

16

address the problem.

17
18
19

If there is some indication, some testing

But, the District doesn't oversee the regional

THE COURT:

So, it doesn't claim injury until the

board is done.
MR. AXLINE:

Right.

And we have said that

20

consistently including prior briefing on the statute of

21

limitations motion.

22

THE COURT:

23

MR. AXLINE:

24

THE COURT:

25

So, you think the schedule can be kept?
I do.
March 28th; April 18th for the defense is

21 days; and then two more weeks, May 2.
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motion
That's fine.

That's good.

But, I'm not entirely sure

2

how this plays into the amended complaint issue.

3

entirely sure where we are heading with this.

4

MR. AXLINE:

I'm not sure, your Honor.

I am not

As I said it

5

myself, as I said at the beginning, this was an effort to

6

conform the pleadings to the proof and we think it does that.

7

We can certainly talk to the defendants about the uniform

8

phrase to use.

9

THE COURT:

10

And how it narrows the case.

MR. AXLINE:

And we can identify -- I'm not sure that

11

because it is so expert intensive I'm not sure that we can go

12

through all 400 release sites and say well --

13
14
15

THE COURT:

But maybe definitionally how it narrows

the case.
MR. AXLINE:

Yes.

And maybe the defendants would

16

withdraw their opposition.

17

are going to be back before you.

18

THE COURT:

I don't know.

If they don't, we

Well you are going to be back.

We don't

19

need a pre-motion conference again, we need a briefing

20

schedule.

21

So, if you think -- today is March 11th.

Should it be

22

on the same schedule?

23

the motion to amend on the same date if you can't negotiate?

24

Or does that not give you enough time for negotiating?

25

MR. AXLINE:

Should you submit the moving papers on

I'm afraid that doesn't give us enough

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time to negotiate or, more importantly, to come up with what I

2

hear your Honor saying would be useful which is a better

3

description of how this narrows the case.

4

THE COURT:

Yes.

5

Mr. Heartney?

6

MR. HEARTNEY:

Your Honor, the timing is everything,

7

of course, because we have this briefing coming up.

To the

8

extent that the amended complaint is intended to create a focus

9

that is a critical part of their or substantive part of the

10

briefing they're going to be filing on March 28th, it seems to

11

me we need to know -- we need to have it resolved whether that

12

new pleading will be accepted or not before we --

13
14

THE COURT:

I can't possibly resolve it by March 28th.

You can't possibly brief it by March 28th.

15

MR. HEARTNEY:

16

THE COURT:

17
18

regardless.

I guess what I --

He says he can make his opposition

The arguments are much the same.

MR. HEARTNEY:

Okay.

Then, your Honor, I suggest we

19

stick with the current schedule, although I would like to note

20

that if something unexpected comes up on March 28th, we may

21

need to ask the Court for some adjustment.

22

THE COURT:

That is always the case.

23

amended complaint.

24

But, back to the

do you propose as briefing schedule?

25

If you can't negotiate successfully, what

MR. AXLINE:

Your Honor, I guess what makes the most

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1

sense to me would be to say let's not set a briefing schedule

2

now, let's do the briefing on the statute of limitations,

3

see -- and maybe even await the Court's ruling on the statute

4

of limitations.

5

to conform to the proof as we see it, all parties are going to

6

have a better sense of the Court's view of the proof.

7

don't think it is going to change the briefing at all because,

8

at least in our minds, the complaint simply is consistent with

9

the prior briefing.

10

THE COURT:

And then, since we are simply trying to amend

Maybe that's right.

And I

When you get the

11

ruling you will see what is left in the case and maybe that

12

creates the amended complaint so to speak, it is what is left

13

of the old complaint.

14

ruling certain things are ruled out because they're

15

time-barred.

16

And it may come to the same thing you are proposing.

17

It may come together that way.

In the

Whatever is left, essentially, is the complaint.

MR. AXLINE:

I'm going to be candid with the Court --

18

as I think I have been since the beginning of this discussion.

19

My thinking on this was that we have, over the course of the

20

litigation, I think, become more precise in determining the

21

nature of the District's injury and the District has been very

22

forthcoming in describing the nature of the injury.

23

So, what I didn't want to happen was to, after all of

24

that process have, where we have already conceded, for example,

25

the stations in the coastal zone that don't affect drinking
SOUTHERN DISTRICT REPORTERS, P.C.
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water and are not in the case, that have that come back against

2

us because even though we have narrowed it in the briefing,

3

there is still the word "groundwater" in the complaint.

4

THE COURT:

Right.

But when you brief it you are not

5

going to try to defend the statute of limitations with respect

6

to such releases.

7

MR. AXLINE:

8

THE COURT:

All right.

All right.

So, maybe it will sort itself out through

9

That's correct.

We are not.

So that makes it easy for the

Court.

10
11

the decision on the statute of limitations motion.

12

better way to go.

13
14

Okay.

That is the

I don't have anything further unless you do.

Thank you.

15

MR. RICCARDULLI:

16

MR. AXLINE:

17

MR. HEARTNEY:

18

THE COURT:

Thank you, your Honor.

Thank you, your Honor.
Thank you, your Honor.

Oh.

One other thing my clerk asked me to

19

ask.

20

order No. 40, and the question is objections, if any, would be

21

due March 18th.

22

that order?

23
24
25

There was an order from the special master, pretrial

Is anybody planing to file any objections on

It was issued February 27th, 2008.

MR. AXLINE:

On the plaintiff's side we are not

planning on objecting.
MR. CORRELL:

If that's the order on the plaintiff's

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motion

motion to compel?

2

THE COURT:

3

MR. CORRELL:

4

MR. HEARTNEY:

5

THE COURT:

6

Yes.
I don't think so.
No.

Okay.

Good.

Thank you.

o0o

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