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

Filing 4318

TRANSCRIPT of Proceedings re: Conference held on 12/16/2010 before Judge Shira A. Scheindlin. Court Reporter/Transcriber: Eve Giniger, [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 CORP., et al.,

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04 Cv. 4968 (SAS)

Defendants.
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December 16, 2010
2:35 p.m.

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Before:
HON. SHIRA A. SCHEINDLIN

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District Judge
APPEARANCES
MILLER AXLINE & SAWYER
Attorneys for Plaintiff
BY: MICHAEL AXLINE
KING & SPALDING LLP
Attorneys for Defendant Chevron USA, Inc.
BY: CHARLES CORRELL
ARNOLD & PORTER LLP
Attorneys for Defendants BP and Atlantic Richfield
BY: MATTHEW T. HEARTNEY
SHEPPARD MULLIN RICHTER & HAMPTON LLP
Attorneys for Exxon Mobil Corporation
BY: JEFFREY J. PARKER
BLANK ROME LLP
Attorneys for Defendant Lyondell Chemical
BY: JEFFREY MOLLER
JOHN J. DiCHELLO, 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. CORRELL:

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THE COURT:

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MR. HEARTNEY:

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THE COURT:

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MR. PARKER:

Good afternoon.

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THE COURT:

I recognize you.

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MR. MOLLER:

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MR. DiCHELLO:

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MR. CORRELL:

Good afternoon, Mr. Axline.
Good afternoon.
Good afternoon, Mr. Correll.
Good afternoon.

Good afternoon, Mr. Heartney.
Good afternoon.

Good afternoon, Mr. Parker.

Jeffrey Moller for Lyondell Chemical.
John DiChello, also for Lyondell.
Mr. Wallace may be joining us in person.

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He was caught on the tarmac a couple of hours ago at National.

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We checked our BlackBerries in downstairs, but he said he was

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going to try and make it.

He may come a few minutes later.

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THE COURT:

He is always welcome.

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This is Judge Scheindlin.

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MR. CONDRON:

Who is on the phone?

Peter Condron from Wallace King.

I

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believe you have about eight other parties on the phone as

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well.

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THE COURT:

They are going to have to identify

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themselves one by one, but I must say, Mr. Condron, I assume

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you are just a live audience and don't intend to speak because

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you're familiar with the difficulties of our phone system.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

I

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have to keep it on speaker so that the court reporter can take

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anything you do say, but the way the phone system works, and I

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have told you this before I think, if you're speaking there is

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absolutely no way for you to hear my voice.

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the other so I can't interrupt you.

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a stern look and say, all right, thank you, Mr. Heartney, sit

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down, and he will.

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on the phone.

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phone being heard.

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One voice cancels

In real live court I give

But I can't say that to you because you are

So I really can't have eight lawyers on the
You're welcome to listen in, and I don't

think you're welcome to say anything.

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That said, you can state your appearances.

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So Mr. Condron has given his appearance.

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MR. ANDERSON:

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Jon Anderson of Latham & Watkins for

Conocophilips.

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MR. WILFARB:

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on behalf of Shell defendants.

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MS. DOYLE:

Colleen Doyle on behalf of the Tesoro

defendants.
MR. PEREZ:

Ed Perez of Bracewell & Giuliani for the

Valero defendants.

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MR. PARDO:

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MS. VU:

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THE COURT:

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OK.

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David Wilfarb of Munger, Tolles & Olson

Jim Pardo on behalf of Exxon Mobil.

Monica Vu on behalf of G&M Oil.
Anybody else?

We have got the eight appearances on the phone.

For your own information, in the courtroom is Mr. Axline all
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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alone for the plaintiffs, Mr. Correll for Chevron, Mr. Heartney

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for Arco and BP, Mr. Parker for Exxon Mobil, Mr. Moller and his

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colleague for Lyondell.

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That's who is in the courtroom.

We are waiting potentially -- we are not waiting.

We

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are expecting, hopefully, maybe, Mr. Wallace depending on his

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flight from Washington which was delayed.

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Having now managed to get through all the appearances,

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we turn to the issue of the premotion conference, which is that

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the plaintiff Orange County -- who joined the conference?

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MR. TEMKO:

Bill Temko on behalf the Shell defendants.

I am sorry I am a minute late.

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THE COURT:

You didn't hear the speech, but basically

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you're a passive audience.

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people or so who are on the phone contribute to the argument,

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but you are welcome to listen in.

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I won't be able to hear the nine

I started to say the topic of the conference is the

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plaintiff's request to make a motion for summary judgment, or

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maybe it's partial summary judgment, and they wrote a letter

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dated December 8 explaining their views.

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in on December 13 from Arco explaining the defense views, more

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particularly Arco's views, but I think the defense views.

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Then a response came

The letters did raise some interesting and important

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issues.

The two that I consider procedural up front are, one,

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the timing of the motion, and, two, who should decide the

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motion.

The defense is arguing that the transferee court,
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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that's me, should not decide the summary judgment, but that it

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should be sent back to the transferor court to decide.

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There is also an issue of timing, in that I say in

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every case, even in this complex MDL but every other case too,

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you don't get multiple shots at summary judgment.

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you're ready now, that's fine, but if you lose, you can't make

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it again on a better record.

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If you think

So if the plaintiff is confident that now is the time,
then now is the time.

But plaintiff must realize that winning

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is one thing, but losing is another.

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shot.

You don't get a second

You know that, Mr. Axline, right?

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MR. AXLINE:

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THE COURT:

Yes, your Honor.
That's really, I would say, plaintiff's

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choice more than any ruling I would make.

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feels this is a right time, an opportune time, and the record

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is developed enough to support the position, then I certainly

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would allow it at this time.

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If the plaintiff

With respect to the second procedural issue, what

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court should decide it, I don't know that defendants' argument

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is that as a matter of law this court cannot do it.

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the argument is discretion.

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Is that right, Mr. Correll?

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MR. CORRELL:

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You have jurisdiction to do it.

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letter, what developing MDL case law says --

I think

Yes, your Honor.

It's your discretion.

But as we set forth in the

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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THE COURT:

You read my face.

He read my face for the

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people on the phone.

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notion of developing case law.

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district court opinions that have to do with an employment

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case, where every plaintiff, it would have to be decided what

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job category that plaintiff falls in with UPS.

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that that's really a developing trend.

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I gave him a funny little nod at the
Basically, you cited two recent

I don't know

I did look into this issue a little bit in terms of
actually the plain language of the MDL rules, the governing

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statute 28 U.S.C. 1407 and the rules developed since then, and

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whatever annotations I could find as to what existed up till

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now.

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think these two cases of the UPS show any developing trend at

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all.

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fact specific plaintiffs, what category are you in.

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And while I am happy to hear you, I have to say I don't

The point is there would be thousands of these little

The rules assume that summary judgment will in fact be

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decided by the transferee court prior to remand, and whatever

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little case law there was that reached to the circuit courts

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also said, of course, the transferee court certainly has the

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power, which you're not arguing, certainly has the power to do

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it.

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I also note that the court, at the defendants'

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request, did decide a summary judgment in the Orange County

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case.

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statute of limitations.

The defense made a summary judgment motion based on
It was a complicated motion.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

I think

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we had to brief it twice.

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end, but it was made and decided, certainly without objection

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by the defendants since the defendants brought it in the

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transferee court.

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troubling that it was OK for the defendants to bring their

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statute of limitations summary judgment, but somehow it isn't

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OK for the plaintiff to bring its motion for full or partial

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summary judgment.

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take an inconsistent view.

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It took a couple of years in the

So in this particular case, I would find it

That would bother me in the same case to

So I have to say, while I am happy to hear you, I am

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inclined to do it, and I think up till now I have done all the

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summary judgments, but go ahead.

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MR. CORRELL:

Two points.

The reason I say developing

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case law, if you look at the Nuvaring Products Liability case,

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what the judge there says is, "Like other MDL judges before me,

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I find such case specific rulings are neither the purpose nor

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the forte of a court presiding over multidistrict litigation.

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An MDL seeks to promote judicial economy and litigation

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efficiency by allowing the transferee court to preside over

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matters common among cases.

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transferee court typically does not rule on cumbersome case

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specific legal issues."

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Given this function, the

And he cites a couple of cases.
He cites two or three.

That's why I said

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developing law.

Then specifically to

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the In re Orthopedic Bone Screw Products case, in which there
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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is a finding that adjudication of summary judgment motions

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pertaining to state law claims would slow down the MDL process,

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thereby deferring state law dispositive motions to the

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transferor courts.

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because when this case gets back to California, the trial court

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is going to have to figure out how to try this case.

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going to have to come up with jury instructions, he is going to

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have to rule on evidentiary issues, and a lot of times these

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case specific summary judgment motions will aid in that

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And I think the reason that they do it is

He is

process.
If we look at the motions that the plaintiffs are

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talking about, they don't go to all defendants, they don't go

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to all the sites, and they are not even complete summary

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judgments at those sites.

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when we go through this, you will have basically the case in

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the same posture going back whether or not you decide these

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motions, and they won't have docket-wide implications.

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OCWD in all this briefing proclaims how different it is from

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the other California plaintiffs.

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motions and it doesn't provide water.

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position.

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So, therefore, at the end of the day

The

The OCWD act is in no other
It's in a unique

As far as the defendants' motion for summary judgment,

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if your Honor will recall, in the four focus cases it was

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ordered that certain motions be brought on a schedule, and the

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defendants complied with that order.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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THE COURT:

But defendants didn't say, we are happy to

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bring the motion, but we don't think it belongs in the

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transferee court; we think we should make that motion in the

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transferor court and you should send it back for that purpose.

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It's true I issued a schedule, but you didn't raise this whole

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question.

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Anyway, have you made enough of a record?

I can't

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imagine in the exercise of discretion this could ever be a

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reversible problem, but I am not inclined to send it there.

To

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me, pretrial proceedings means pretrial proceedings.

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to complete the pretrial proceedings in this case.

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long familiarity with this case.

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in this case.

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any district court in California, given the familiarity with

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the case, given the backlog and other people's dockets, given

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the known speed of this court in resolving motions.

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I intend

I have had

I have dealt with every issue

Frankly, I think we will get it done faster than

I think given that, Mr. Axline, so far your flight

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wasn't worth it.

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You haven't gotten to say a word.

that will change.

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MR. AXLINE:

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THE COURT:

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Hopefully,

So far it is worth it, your Honor.
You didn't get to argue anything.

You

just got to watch and smile from time to time.
Now, given the fact that I think I ought to do it,

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even though there are perfectly good arguments for not doing

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it, I do respect that, I think we ought to turn to the motion.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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First of all, it is partial summary judgment.
adversary is right.

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MR. AXLINE:

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THE COURT:

Your

Is that true?
That is correct, your Honor.
I misspoke earlier on the record.

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clearly partial.

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It's

And he says it's not even against all

defendants and all sites, right?

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MR. AXLINE:

That is correct, your Honor.

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THE COURT:

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I understand there is an argument about the fact that

Fair enough.

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it may involve 20 sites but in your premotion letter you only

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address one representative site, and the defense seemed

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troubled by that.

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It is a premotion conference.

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essentially 20 two-and-a-half-page letters to get fact specific

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on each.

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representative of the issues, and if he can, at least for the

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premotion purpose, deal with the generic issues in this

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discussion, those generic issues apply to the 20 sites.

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Once again, I seem less troubled by that.
He would have had to write

I think what he is saying is the Arco example is

Now, when the briefing actually comes, I don't know,

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Mr. Axline, if your intention was to only move with respect to

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Arco and then say, and you should apply this ruling to 19 other

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sites, or were you planning to try to do one omnibus motion

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that did address facts?

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MR. AXLINE:

The latter, your Honor.

We think, as you

can probably tell from the letter, that there are common types
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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of evidence, a common pattern at all of these gas station

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sites, that will tee up the question of whether, given the

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property ownership, UST ownership, franchise control and

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control over the remedial process, and the uncontested fact of

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MTBE above the MCL at the site, is that adequate partial

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summary judgment with respect to nuisance, trespass and the

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Orange County Water District Act.

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THE COURT:

Right.

But those are the facts in common.

There are also facts that would diverge somewhat.

So you would

address each of the 20 sites in the motion.

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MR. AXLINE:

Correct.

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THE COURT:

Separately.

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Does that meet your objection on that ground, Mr.

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Correll?
MR. CORRELL:

It does not, your Honor.

The reason is

obviously Mr. Axline knows what sites he is talking about.
THE COURT:

I didn't realize that.

You don't know

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which the 20 sites are that he would intend to move on?

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didn't appreciate that.

I

I thought the defense knew.

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MR. AXLINE:

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THE COURT:

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sites you intend to move on.

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MR. AXLINE:

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evaluating.

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We haven't actually done the motion.
Of course not.

But you must know the

There are a couple that we are still

We can tell the defendants now before we file the

motion I suppose.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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THE COURT:

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MR. AXLINE:

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THE COURT:

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I don't know them off the top of my head.
You didn't bring any piece of paper with

you that tells you that?

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Tell them right now.

MR. AXLINE:

I bet you did.

I did not.

However, I can do it

tomorrow.

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THE COURT:

But not for today's discussion.

All

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right.

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did know and you know which defendants would be involved in the

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Sadly, send him the list, but I thought you actually

motion.

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MR. AXLINE:

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THE COURT:

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MR. AXLINE:

I do, and I identified the defendants.
That we do know.
That I did.

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it out.

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Obviously, they can figure

They know which stations they own and franchise.

I will send them the list.

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THE COURT:

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MR. AXLINE:

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THE COURT:

But

How many sites will it be?
19, possibly one or two more.
Between 19 and 21.

He said he has told

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you which defendants will be involved in the motion, and he

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will identify the sites before actually making the motion.

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in terms of the premotion conference construct, while I

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appreciate your objection, it doesn't pay to put this off

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longer to discuss the 19 or 21 sites individually.

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certainly are some common facts, as he said, and he did list

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them out.

But

There

They were, all the sites are owned or leased by one
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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of the defendants, in each site the contamination has exceeded

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the MCL for a period of time, and in each case the defendant,

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who owns or leases, has engaged in apparently some amount of

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remediation.

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So those at least are common.

Now, Mr. Axline, you're not done.

I think you have to

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answer some of the attacks, so to speak, that came in Arco's

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letter that weren't procedural.

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establish a nuisance or a trespass as a continuing nuisance or

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trespass it must be, and this is a new English language word,

One is this notion of to

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it must be abatable.

If it's not abatable, then it's, I guess,

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not continuing, it's permanent or done; it became permanent

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when it was not abatable.

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So what do you have to say about this word abatable?

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MR. AXLINE:

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One is that under the Orange County Water District

Several things, your Honor.

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Act, the act statutorily creates a presumption that the

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district's cost of investigation and remediation are reasonable

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and puts the burden on the defendants.

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THE COURT:

I think you're seguing to a slightly

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different topic.

I didn't want to turn to the act, and I

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didn't want to turn to the shifting burdens.

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really deal in a sense with the notion of continuing tort and

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time bar.

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law claims of nuisance and trespass.

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the statutory claims and shifting burdens.

I wanted to

So this concept of abatable is more in the common
I wasn't ready to move to
Could we stay with

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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my question?
MR. AXLINE:

Certainly, your Honor.

I do want to make

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the point, however, that the valuation of the abatement issue

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is colored by the nature of the district and its powers.

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Now, the leading case, in our view, on the abatement

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issue is the Mangini case in the California Supreme Court, and

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there the court did say that, in responding to a statute of

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limitations claim, a plaintiff asserting nuisance and trespass

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has the burden of establishing that the nuisance and trespass

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are abatable at a reasonable cost.

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THE COURT:

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MR. AXLINE:

That's right.
So the district is going to have the

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burden, and I think the thing we would like to brief to you is,

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when did that burden arise?

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appropriate to make the nuisance and trespass determination,

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and then the defendants raise the statute of limitations issue,

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and then the response to the statute of limitations at that

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point is, well, it can be reasonably abated.

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THE COURT:

Because we believe that it's

I don't have any problem with the notion

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that statute of limitations is always an affirmative defense.

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So I think you're probably right that defendants raise it.

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That was not really my question.

My question is, is

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this amenable to summary judgment?

Because whenever you hear

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the word reasonableness, you immediately think a fact

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determination or a judgment call or a jury; somebody has to
SOUTHERN DISTRICT REPORTERS, P.C.
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make a judgment call usually involving expert testimony and

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fact-finding.

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and say as a matter of law something is reasonable?

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if I could do that, are we ready now without the expert

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testimony?

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How am I going to do that on summary judgment

MR. AXLINE:

Well, two responses.

And even

One is that we

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would like the opportunity to brief in a summary judgment

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motion to you why the district's abatement powers make that a

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question that is not a fact question in this case.

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THE COURT:

Can you develop that a little more for

this record?
MR. AXLINE:

Yes.

Because the damage remedy that the

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district is seeking is abatement itself.

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are ultimately going to be presented to the jury, as well as

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the question of whether the nuisance and trespass is

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continuing, will be presented to the jury at the time of trial.

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THE COURT:

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MR. AXLINE:

So the damages that

So what am I deciding?
The thing we want you to decide is that

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the evidence that we will present to you, the uncontested

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evidence that we will present to you on our motion shows that

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there is a nuisance, a trespass and a violation of the act at

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these stations.

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THE COURT:

But then I don't understand how you

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respond to the expected affirmative defense of statute of

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limitations without getting to this question of whether it is a
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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continuing nuisance and therefore they are not time-barred.

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You're sort of saying that the abatability question is down the

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road for the jury; the reasonableness of the treatment is for

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the jury later.

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their statute of limitations issue?

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But otherwise how am I going to deal with

MR. AXLINE:

You're not, your Honor.

I don't think

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you need to.

You have given guidance generally on the

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application of the statute of limitations to the common law

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products liabilities claim.

But it's clear from the Mangini

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case, and, frankly, the cases that the defendants cite, that

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the process for determining nuisance, trespass and continuation

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is a linear process.

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trespass or a nuisance, and then you determine whether the

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statute of limitations applies, and then you determine whether

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or not it's continuing based on evidence.

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THE COURT:

You first determine whether there is a

Somehow you must be missing the notion of

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the word judgment in summary judgment.

What can I decide if I

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can't decide that there is a timely claim of nuisance because

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it's continuing?

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What judgment can I give you?

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advisory opinion on an element of a claim.

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judgment?

Judgment is in the word summary judgment.
I can't give you just an
What is the

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I am not saying that every summary judgment is

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judgment on every claim in every case, but even partial summary

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judgment to me usually means some claims or some parties.
SOUTHERN DISTRICT REPORTERS, P.C.
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That's what makes it partial.

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have never heard of one element of one claim being amenable to

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a judgment.

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MR. AXLINE:

It's not the whole case.

It is an interesting question.

But I

The

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amendments to rule 56 that just went into effect encourage the

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court, where it can, to identify discrete issues or claims,

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such as this, to treat them as on partial summary judgment

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grounds.

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you permit us to, the judgment will say that the district,

In our view, and we will brief this to your Honor if

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assuming you agree with us, has proven its nuisance and

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trespass claims at these sites, but reserve for later the

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defendants' affirmative defense and the question of

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abatability.

That's the way it would play out.

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THE COURT:

Let me interrupt you then.

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What does the defense think of that?

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Mr. Heartney.

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MR. HEARTNEY:

Your Honor, I think it simply misses

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the point, as your Honor was indicating, of the motion as it

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was described to us.

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summary judgment based on liability.

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if an affirmative defense is out there and hasn't been

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adjudicated.

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THE COURT:

What we had described to us was a partial
We can't get to liability

So you don't think he can sever out, so to

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speak, the affirmative defense and just say, if it turns out at

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the end of hearing the affirmative defense that it was timely
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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and continuing because it was abatable, then the Court has

2

already found that there was as a matter of law a trespass or a

3

nuisance merely because the water was contaminated above the

4

MCLs?

5

MR. HEARTNEY:

I think what your Honor would be

6

talking about then would not be a partial summary judgment of

7

liability.

8

be severing out a discrete element of a claim.

9
10

What your Honor would then be talking about would

THE COURT:

That's right.

MR. HEARTNEY:

What I would urge then is this is a

11

very different kind of procedure than the summary judgment

12

motion that the defendants asserted, because the summary

13

judgment motion of the defendants actually decided something

14

that determined that a claim was good or was not good.

15

THE COURT:

Right.

16

MR. HEARTNEY:

Simply picking out a single element of

17

a claim and saying this element is established does not advance

18

the ball.

19

and legal, that undoubtedly would happen if we had to take 20

20

stations and go through a briefing process.

21

premotion conference process that your Honor has put in place

22

allows us to get to this and say, is this worth the candle, are

23

we doing something that makes sense?

24
25

There is a very large amount of work, both factual

THE COURT:

It might be too easy.

I think the

It might be that

you agree that, if it's timely, if it's abatable, which are the
SOUTHERN DISTRICT REPORTERS, P.C.
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real issues to be tried, there is no question that

2

contamination above the MCL would be a nuisance or a trespass,

3

if it's abatable and therefore timely.

4

left to be decided, nobody much cares to brief the other half

5

of it.

6

else were in place, it's a nuisance.

7

Since that's what is

If the contamination is above the MCL and everything

MR. HEARTNEY:

I think even there we would say, if the

8

nuisance is confined to the shallow groundwater right in the

9

area underneath the station, it's not being used for drinking

10

water, there is no beneficial use for that water where it is,

11

and if that's all the contamination they are pointing to, there

12

is authority under California law to say that's not a nuisance.

13
14
15

MR. AXLINE:

I don't think there is any such

authority, your Honor.
THE COURT:

Maybe Mr. Heartney knows it.

16

authority do you think that is?

17

MR. HEARTNEY:

18

THE COURT:

19

MR. HEARTNEY:

What

20

Cal.App.4th (1996).

21

THE COURT:

22

I think it is cited in our papers.

Why don't you tell us what it is?
It's the Beck Development case, 44

I can describe the facts.
Take a minute.

Mr. Axline heard the name

of the case and maybe has it with him.

23

Do you have that one, Beck?

24

MR. AXLINE:

25

THE COURT:

I am familiar with that case.
Go ahead.

SOUTHERN DISTRICT REPORTERS, P.C.
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MR. HEARTNEY:

In that case, there was a property that

2

had been used as a railroad, and the railroad had a big pit,

3

and it had poured a lot of fuel oil onto this pit years ago,

4

and the pit had then been covered over and it was being used

5

for farming, and so for many years the fuel oil that had been

6

poured into the pit that was in the ground had been there.

7

Then down the road the property was sold.

8

this piece of property and it was told to develop it he was

9

going to have to go in and remove all the fuel oil.

The new owner got

And the

10

new property owner sued the railroad saying this is a nuisance,

11

and this is a continuing nuisance, the same kind of argument

12

here.

13

limitations, it's a continuing nuisance.

It was a long time ago, but there is not a statute of

14

And the court looked at this and said, under

15

California law, the mere presence of the contamination there is

16

not a nuisance.

17

that it creates a harm of the kind that constitutes a nuisance.

18

And you would have needed to show, because this was a case -- I

19

may not be right on this procedural point, but I believe it was

20

after a trial or at least after some kind of hearing where all

21

these facts had come out.

22

that that fuel oil that's down there is either going to

23

contaminate a drinking water aquifer or cause harm to people on

24

the surface because they might come into contact with it.

25

very far down.

It's going to be necessary for you to prove

You would have had to have shown

It's five or six feet down.

You haven't

SOUTHERN DISTRICT REPORTERS, P.C.
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It's

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pointed to harm that's being caused by that, and because of

2

that, you don't have a nuisance.

3

THE COURT:

Mr. Axline said about two and a half

4

minutes ago, I don't think there is any such authority, and I

5

don't think Mr. Heartney can cite it.

6

has he miscited it?

7

MR. AXLINE:

Well, he has, and how

In Beck there was failure of evidence.

8

None of the agencies had -- in fact, all the agencies had

9

declined to take any action with respect to the Beck property

10

because they didn't think there was a contamination problem;

11

they didn't think there was any harm at those sites.

12

defendants themselves affirmatively convinced you that there is

13

harm at the sites that we want to seek summary judgment on.

14

Beck simply is distinguishable on its facts.

15

THE COURT:

16

Here the

So

have already conceded harm?

17

MR. AXLINE:

18

THE COURT:

19
20

Because you're going to say the defendants

Correct.
How did they concede harm, by saying so or

by taking action to abate the harm?
MR. AXLINE:

Both.

And by asking you to find as a

21

matter of law that there was harm for purposes of the statute

22

of limitations.

23

well, there was really no harm for purposes of nuisance and

24

trespass.

25

Now they want to do an about-face and say,

More importantly, there is a more recent case that we
SOUTHERN DISTRICT REPORTERS, P.C.
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cited to you.

It's a Ninth Circuit case applying California

2

law, California v. Campbell, in which the court said, and I am

3

quoting from it now, "To state a claim under California law,

4

California need not prove that trichloroethylene migrated from

5

the release property to other areas.

6

water under the release property itself was contaminated."

7

THE COURT:

8

MR. AXLINE:

9

It is enough that the

Read that again.

This is 138 F.3d 772, at 782.

I will give you the pinpoint cite here.

10

"Thus, to state a claim under California law,

11

California need not prove that trichloroethylene migrated from

12

the 20th Street property to other areas.

13

water under the 20th Street property itself was contaminated."
THE COURT:

14

It is enough that the

Does that decision talk about the word

15

harm?

16

contaminated.

17

may be, but unless it causes harm, just the mere fact that it's

18

contaminated is not enough.

19

wasn't going to be used for anything, wasn't going to affect

20

drinking water, it was just sitting there contaminated, and the

21

court said, so what, essentially.

22

what is the impact of the fact that the water underneath the

23

site is contaminated?

24
25

I understand the water underneath the property was
Mr. Heartney already said in Beck it said, that

MR. AXLINE:

That the water in Beck apparently

Does this case talk about

It does under California law.

grants summary judgment to the plaintiff.
SOUTHERN DISTRICT REPORTERS, P.C.
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And it

23
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THE COURT:

2

MR. AXLINE:

3
4
5

Maybe it discussed harm.
It didn't discuss harm in a lot of detail

but -THE COURT:

If I did a word search, would I find the

word harm?

6

MR. AXLINE:

7

THE COURT:

8

MR. AXLINE:

I suspect you would.
What does it say?
There is another point I want to make

9

here, which is that when the defendants moved for summary

10

judgment, we argued to the court that the district is not

11

harmed until the contamination moves off-site and threatens

12

drinking water, and that's a fact dispute that we are entitled

13

to put on evidence regarding.

The Court rejected that argument

14

at the defendants' insistence.

Now Mr. Heartney is saying that

15

there isn't harm.

16

opposition of the motion on the statute of limitations in which

17

he rejected.

He is making the argument we were making in

18

THE COURT:

And he then said that the harm was the

19

mere contamination.

20

contamination and that's harm.

21

MR. AXLINE:

22

MR. HEARTNEY:

The impact is there.

There is

That's what he said then.

Correct.
To respond to that, your Honor, I guess

23

what I would say is that our summary judgment motion was based

24

on what the plaintiff's case was.

25

the fundamental interest that they were talking about in the

And they took the position,

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case was to say that we own all the groundwater, we have a

2

property right to all the groundwater.

3

they have that, but that's what they said, and your Honor had

4

assumed that that was true in dealing with the cognizable

5

interest claims that we had.

6

fundamental interest that you have in the case, then having

7

MTBE in your property would be a harm.

8
9

We didn't agree that

We said, if that's the

That I think is different from, is there a nuisance?
I think those are distinct points.

But whether they are or

10

not, the defendants, of course, we were simply taking a

11

position that flowed from what the plaintiffs had told us was

12

the interest that they claimed that they were building their

13

case around.

14

MR. AXLINE:

15

We went through an elaborate exercise, again at the

16

defendants' insistence, of amending our complaint to make it

17

clear that what we were talking about in the complaint was

18

drinking water.

19

We responded that the district wasn't harmed until it moved

20

off-site and threatened drinking water, and again that was

21

rejected.

22

Your Honor, may I?

And the defendants still made their argument.

THE COURT:

All right.

So where are we left?

All I

23

said was that the part that you're seeking summary judgment on

24

then might be terribly simple and not worth the cost of making

25

a motion because it gets you only so far.

It gets you to the

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0CG8ORAC
1

point, that if indeed there is contamination above the MCL at a

2

certain site, if everything else falls into place, you have a

3

nuisance or a trespass or both.

4

It doesn't get you judgment on that claim because there is an

5

affirmative defense, and it will require possibly fact-finding

6

or at least another determination after there is more evidence.

7

So I don't know if the game is worth the candle because it gets

8

you so little.

9

harm question now, you win, but you win the small point, so to

10

But that's all it gets you.

It's almost as if, if you're right about this

speak.

11

MR. AXLINE:

Your Honor, I think it significantly

12

advances the ball if we get that determination.

13

defendants are willing to stipulate, I suspect they won't, but

14

if they were willing to stipulate, given these facts, there is

15

a nuisance and a trespass at the site --

16

THE COURT:

17

MR. AXLINE:

If the

Assuming everything else falls into place.
Assuming everything else falls into

18

place.

But given the fact that I started with, which is that

19

the district is charged with abating these nuisances, and given

20

the fact that you don't have to completely abate a nuisance in

21

order to be entitled to recover for the damages of at least

22

partially abating it -- under common law and under the statute

23

by the way -- we think it's going to significantly advance the

24

likelihood of settlement, one, and two, it's going to

25

significantly narrow the issues to be tried to the issue of
SOUTHERN DISTRICT REPORTERS, P.C.
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26
0CG8ORAC
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abatement only.

2
3

THE COURT:

Which you admit has to be tried before

there could be judgment on the trespass or nuisance claim?

4

MR. AXLINE:

Well, your Honor, we would like the

5

opportunity to present to you the argument that, given the

6

district's powers and the relationship between the act and the

7

nuisance and trespass claims, the statutory presumption, and

8

what we know about the defendants' answers -- the answers that

9

the defendants filed here said in almost every case this kind

10

of contamination is remedial, that's what the defendants

11

conceded in their answers.

12

Now, they were doing that in response to a fear of a

13

market share claim, but that's a judicial admission.

14

like the opportunity to make the pitch that, at least at some

15

of these sites, it's appropriate to find as a matter of law

16

that the costs of abatement are reasonable.

17

rejected, we go to trial on it.

18

THE COURT:

We would

If that gets

Do you agree that expert testimony would

19

be quite pertinent to that determination of this abatability

20

issue?

21

MR. AXLINE:

I think if we do not prevail on our

22

arguments that you can determine it as a matter of law, then,

23

yes, I think there will ultimately be some expert testimony on

24

that.

25

anymore as to how you go about remediating and what it's going

Although, frankly, your Honor, it's not rocket science

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27
0CG8ORAC
1

to cost.

2

THE COURT:

Mr. Heartney.

3

MR. HEARTNEY:

I don't think that the type of evidence

4

that Mr. Axline is talking about gets to what the abatability

5

issue is really about.

6

We have two cases on that.

The Beck case I think is

7

the one that I would point to most prominently, because what it

8

points to there was a situation in which a judgment based on

9

continuing nuisance got reversed because the site had not been

10

sufficiently characterized.

11

and other scientific analysis of just what was the problem, how

12

big is it, where is it going, what is going to happen to it,

13

and there was not enough evidence of the methods and costs of

14

what it would take to remediate it.

15

THE COURT:

There had not been enough expert

Was that a bifurcated judgment?

You

16

couldn't even have liability without getting to the details of

17

the costs which is damages?

18

MR. HEARTNEY:

This wasn't damages, your Honor,

19

because this is an affirmative defense.

You have got to

20

remember here, if you don't have permanent nuisance, then you

21

have to show that it's abatable.

22

requires that you say, here is the problem, we have

23

characterized it, we know what it is, this is what we say will

24

remedy it, and here is our arguments as to why this is a

25

reasonable means and a reasonable cost.

And the abatability analysis

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So the reasonableness pieces come in, and they come in

2

after the plaintiff has shown, as a matter of fact, here is the

3

animal we are talking about.

4

unless we do get into evidence that goes far beyond what Mr.

5

Axline is suggesting here.

6

separate statutory presumption that's limited only to the costs

7

recovery statute that they have, I think we will have to deal

8

with that presumption when we are dealing with the statutory

9

cost recovery claim, but it has nothing to do with nuisance and

10

That's not going to be possible

And I don't think that the entirely

trespass.
THE COURT:

11

I don't know that you can say it has

12

nothing to do with it because he is saying, as a matter of law,

13

abatement has to happen, and, frankly, as a matter of law, the

14

costs of doing so is reasonable because it has to be done under

15

statute.

16

That's the summary of the argument.
MR. AXLINE:

And one other distinction I would make

17

between the Beck case that Mr. Heartney relies on and our case

18

is a distinction that was present in the California v. Campbell

19

case that I quoted to you earlier.

20

case and the other cases that they rely on, you had private

21

actors and they were seeking damages.

22

also sought injunctive relief ordering abatement, but the

23

primary focus was on damages.

24

diminution of your property value?

25

The district's sole focus is, how do we get this problem

And that is, in the Beck

Admittedly, some of them

What was the cost to you of the
We don't have that here.

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cleaned up?

And in the California v. Campbell case, the Ninth

2

Circuit had no trouble saying, state, you have shown

3

contamination of water beneath that site, you get partial

4

summary judgment.

5

One other point that occurred to me --

6

THE COURT:

When you say partial summary judgment, was

7

that liability as opposed to damages?

It didn't have this

8

issue of nuisance or trespass and continuing versus permanent?

9

MR. AXLINE:

No.

10

THE COURT:

11

MR. AXLINE:

12

One other thing that occurred to me as Mr. Heartney

It was a statutory claim?
Yes.

13

was talking is that I think we have the presumption under the

14

Orange County Water District Act that the costs are reasonable.

15

I think that is particularly appropriate for a summary judgment

16

motion here.

17

perhaps, or maybe they will settle, but they are going to want

18

to try whether the costs are reasonable.

19

to overcome --

The defendants are still going to want to try,

They are going to try

20

THE COURT:

21

MR. AXLINE:

22

THE COURT:

23

MR. AXLINE:

24

So that issue is going to be tried later anyway.

25

They are going to try to?
Overcome our presumption at trial.
It is a rebuttable presumption?
It is rebuttable presumption, correct.
The

purpose of a partial summary judgment motion, as long as you're
SOUTHERN DISTRICT REPORTERS, P.C.
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0CG8ORAC
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looking at claims and whether you can preclude an entire claim,

2

and especially in an MDL setting, is to narrow the things --

3

THE COURT:

You can't preclude the entire claim.

You

4

really mean an element of the claim at best.

You can't end the

5

debate over whether at the end of the day you're going to be

6

successful on a trespass or nuisance claim because there still

7

is the issue of abatability.

8

MR. AXLINE:

9

THE COURT:

10

on an element of that claim.

11

MR. AXLINE:

Correct.
So at best you could foreclose the trial

Yes.

I would suggest that it's not an

12

element of our claim; it's an element of a defense.

That's why

13

I keep referring to the Mangini case, because in the Mangini

14

case, the California Supreme Court made a point at the

15

beginning of the opinion, and I will give you the pinpoint cite

16

to this as well.

17

1097.

18

came up after trial -- the question of whether any nuisance was

19

a continuing nuisance was presented to the jury as an element

20

of plaintiff's cause of action for a continuing nuisance.

21

question was not presented to the jury in the context of a

22

defense or excuse by plaintiffs to avoid Aerojet's statute of

23

limitations defense.

24

no party complains of the manner in which the matter was

25

submitted to the jury, as an element of plaintiff's cause of

This is 12 Cal.4th 1087 and the jump cite is

The court went out of its way to say, at trial -- this

The

The court then goes on to say, on appeal

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0CG8ORAC
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action rather than as an exception to the statute of

2

limitations defense, which we believe is the logical way it

3

should be presented.

4

were any technical defects in the manner of presentation.

5

To me, that signals that, had it been raised, it

Thus, we need not consider whether there

6

should have been treated as a response to an affirmative

7

defense rather than an element.

8

THE COURT:

9

trespass and nuisance claims?

10
11
12

All right.

MR. HEARTNEY:

Is there more to say about the

No, your Honor.

To us the key point is

that it doesn't lead to partial summary judgment on liability.
THE COURT:

It doesn't, and I need to research whether

13

a court can do it on less than the claim.

14

the court can, should the court?

15

And then, assuming

Does it make any sense?

Let's go on to the Water District Act question.

There

16

I thought the argument is that plaintiffs can only recover

17

costs that they have already incurred for cleanup, containment

18

or abatement.

19

Has the district already incurred costs for cleanup,

20

containment or abatement at all these sites?

Because there is

21

no declaratory judgment language in the act.

I know you

22

analogize it to CERCLA, but, in fact, CERCLA mentions

23

declaratory relief and the Orange County Water District Act

24

does not.

25

already incurred costs?

My first question is factual.

Has the district

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MR. AXLINE:

Yes.

2

THE COURT:

It has.

3

MR. AXLINE:

4

THE COURT:

5

At all of these sites?

It has.
I thought the defendants thought

otherwise.

6

Mr. Heartney, did you think otherwise?

7

MR. HEARTNEY:

Your Honor, we believe that what the

8

district has said are costs that it has incurred are simply

9

litigation consultants that it has --

10

THE COURT:

11

MR. HEARTNEY:

12

THE COURT:

13

Go ahead, Mr. Axline.

14
15
16
17
18

MR. AXLINE:

You thought otherwise.
Tell me how you have incurred

We cited the Key Tronic case, which was

admittedly a CERCLA case.
THE COURT:

That's a good point.

I told you already

CERCLA has a declaratory judgment.
MR. AXLINE:

20

THE COURT:

21

MR. AXLINE:

I mean for purposes of costs.
But it's a different act.
The act authorizes the district to

recover incurred remedial costs.

23

THE COURT:

24

MR. AXLINE:

25

No.

costs.

19

22

The shorter answer is?

Which act?
The Orange County Water District Act.

Not simply after cleanup is completed.
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33
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THE COURT:

2

MR. AXLINE:

But it says incurred.
We have incurred nonlitigation

3

investigation and characterization costs at each of these

4

sites.

5

related, but they are not.

6

incurred in the normal course of attempting to figure out what

7

needs to be done ultimately to clean up these sites.

8

The defendants say they think they are only litigation

THE COURT:

They are costs that the district

Do you know about that, Mr. Heartney?

He

9

says in each case the district has spent money on investigation

10

and characterization which are required, in essence, to get to

11

the point of remediation.

12

the first two steps.

You can't get there until you take

13

MR. HEARTNEY:

14

answers to our interrogatories.

15

interrogatories, when we said what costs have you incurred at

16

each one of these stations that you can contend are recoverable

17

under the Orange County Water District Act, the only thing that

18

was pointed to were reports that were done by the Comex

19

consulting firm and the Hargis consulting firm, both of which,

20

when we have tried to get discovery concerning them, we have

21

been told that their work is work product, and there have been

22

work product objections raised to that.

23

were retained by the district's counsel, not by the district

24

itself, in at least the case of the first of those, the Comex.

I guess what I am familiar with is the
And the answers to our

We view this as, they

25
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THE COURT:

Do you think you can get to the point of

2

remediation, which I define as cleanup, containment or

3

abatement, without doing an investigation and characterization?

4

Can you skip over that and just hire somebody and say, come in

5

and abate, I have no information for you, but please abate?

6

Don't you need to do an investigation and a characterization

7

first?

8
9
10
11

MR. HEARTNEY:

I think what we would say is the

question of whether these costs are potentially recoverable
here will have to do with whether that's their purpose.
THE COURT:

While they may be useful in litigation,

12

the fact is can you get to cleanup, containment and abatement

13

without having done an investigation and/or characterization?

14

Because it seems to me that, while it's not uncommon that

15

moneys spent for one purpose are also useful when you get

16

around to litigation, but that doesn't mean it wasn't spent

17

equally, so to speak, for another business purpose.

18

other business purpose is to set up the cleanup, containment

19

and abatement, even though it's perfectly useful in a

20

litigation.

21

Here the

I don't know that it loses its potential to help in

22

setting up the cleanup, containment and abatement just because

23

an attorney hired the consultant.

24

product privilege point is interesting.

25

plaintiff can protect it and then say, but this is our proof of

Although I think your work
I don't know how the

SOUTHERN DISTRICT REPORTERS, P.C.
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35
0CG8ORAC
1

the costs we have incurred.

If it's proof of costs, you won't

2

be able to protect it as work product.

3

MR. AXLINE:

If I may, Special Master Warner has

4

already addressed this issue.

5

THE COURT:

6

MR. AXLINE:

How has he come out?
He has come out by saying that a

7

consultant such as Comex and Hargis can wear two hats.

8

can do work that the district is going to use to investigate

9

and clean up, and they can also do litigation consultant work.

10

They

Here we have provided the Comex and the Hargis reports

11

to the defendants because, at least for the investigation and

12

characterization part of this, we are not claiming --

13

THE COURT:

OK.

14

MR. HEARTNEY:

I guess what I would say is the statute

15

itself sets a standard that I think goes beyond just the

16

sequencing fact question.

17

what your goal is to do is to clean up, you're going to

18

investigate first.

19

act says that the costs that are going to be recovered have to

20

be actually incurred, they have to be necessary and reasonable

21

in amount, and they have to in fact have resulted in pollution

22

or contamination being cleaned up or remediated.

23
24
25

I acknowledge, your Honor, that if

I don't have any question about that.

THE COURT:

The

So it's the third prong that you feel

hasn't been reached.
MR. HEARTNEY:

Here, your Honor, we have put testimony

SOUTHERN DISTRICT REPORTERS, P.C.
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from the end of fact discovery, no more fact discovery, this

2

was right at the end, in which we asked questions.

3

Are you planning to do any remediation?

4

you want to do based on this work that you have done and what

5

is coming next, because we want to know that for our case.

6

What they told us was, Well, based on the advice of our

7

consultant, the Hargis consulting firm, we have identified

8

stations at which we are going to go forward and do work to

9

investigate and get to the point where we will know what we

We said,

Can you tell us what

10

need to do, but this station isn't one of them.

And that

11

station was the one station that they provided information

12

about in their papers, Arco 1887.

13

THE COURT:

The premotion letters?

14

MR. HEARTNEY:

15

So I think our problem here is that they may have done

Correct.

16

these reports, and I think there is going to be a record in

17

which we are going to say, no, these aren't remediation

18

reports, this is in fact lawyer stuff, but the ultimate problem

19

is, are these being used in a way that they would have to be

20

used for them to be recoverable now?

21

It's one thing for the district to say, well, we need

22

to have them before we can decide how we are going to

23

remediate.

24

when are you going to do it?

25

right to our letter.

We then asked them, what are you going to do and
And the evidence is attached

The answers we got at the end of fact

SOUTHERN DISTRICT REPORTERS, P.C.
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2

discovery was we don't know what we are going to do.
THE COURT:

Is that true for all these sites, Mr.

3

Axline, that you don't know what you're going to do with the

4

recommendation anyway?

5

prong in the statute?

6

MR. AXLINE:

And if so, how do you meet that third

It's not a third prong in the statute.

7

They are just wrong about that.

I have got the statute right

8

here, and I can read it to you.

Obviously, this would be

9

briefed, but the statute says, it's a run-on sentence --

10

THE COURT:

11

Not unusual for legislators.

MR. AXLINE:

It says, "The person causing or

12

threatening to cause that contamination or pollution shall be

13

liable to the district, to the extent of the reasonable costs

14

actually incurred in cleaning up or containing the

15

contamination or pollution, abating the effects of the

16

contamination or pollution, or taking other remedial action."

17
18
19

THE COURT:

And your view is the other remedial action

is the investigation?
MR. AXLINE:

Right.

The defendants' reading of this

20

would eliminate the last two circumstances.

21

only after you finish completely cleaning up.

22

THE COURT:

No.

They would say

They would say, so long as you spent

23

money on cleaning up.

We are not arguing it has to be done,

24

but you have to have spent it to clean up, and you haven't yet

25

spent a penny to clean up.

What you have spent is money to

SOUTHERN DISTRICT REPORTERS, P.C.
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prepare to clean up, at best, by investigating.

2

saying that falls in the third category of other remedial

3

action.

4
5
6

MR. HEARTNEY:

We say they haven't gotten to the point

of remedial actions yet.
THE COURT:

So this turns on the interpretation of the

7

word remedial action.

8

remedial action means?

9

And you're

MR. AXLINE:

Is there legislative history what
Is there case law?

Not in the Orange County Water District

10

Act, although we did provide the Court with one state court

11

opinion in an Orange County Water District case that our firm

12

handled, where the court found that the Orange County Water

13

District Act was in pari materia with CERCLA and the HSAA.

14
15

THE COURT:
has been defined?

16

MR. AXLINE:

17

THE COURT:

18

In those acts the phrase remedial action

Similar phrases such as response costs.
The answer is no.

The phrase remedial

action hasn't been defined anywhere.

19

MR. AXLINE:

20

THE COURT:

21

MR. PARKER:

22

THE COURT:

24

MR. PARKER:

If I could just add one point to what Mr.

Mr. Parker.

25

Yes.

Heartney mentioned.

23

Correct.

Just one second.

In the depositions of the district's

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person most knowledgeable on the issues of this work they were

2

performing, the investigative work, we all specifically asked,

3

when you get these results back -- they hadn't even embarked on

4

any work.

5

contract but nothing had been done.

6

the next step when you do these four different cone

7

penetrometer borings?

The district's board had apparently authorized the

8

THE COURT:

9

MR. PARKER:

And we asked them, What is

Say it again, please.
It's shortened to CPT for cone

10

penetrometer testing.

11

the district's witness said, I don't know what we will do until

12

we get those results.

13

different places.

14

see what is there.

15

will have to be done?

16

you until we go through these steps.

17

It's a type of testing that's done.

And

We may have to do more borings in

We may have to put in groundwater wells to
And we asked, Can you tell what remediation
And the witness said, No, I can't tell

So your Honor's point about those steps maybe being

18

prefatory steps to remediation, the contrary is also true.

19

they determine that nothing needs to be done, or that a plume

20

that they thought extended way off-site in fact doesn't, there

21

may be ultimately no remediation done and that's our point.

22

THE COURT:

What about that, Mr. Axline?

If

If the

23

investigation shows that there is no need for further action,

24

has there still been remedial action?

25

MR. AXLINE:

Yes, because remedial action includes the

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cost of investigation and characterization.

2
3

THE COURT:

That finds no need for action.

That's

called remedial action?

4

MR. AXLINE:

5

THE COURT:

6

MR. AXLINE:

Yes.
What did it remediate?
In the very narrowest sense, perhaps it

7

confirms the remediation that has already occurred has taken

8

care of the problem.

9
10

THE COURT:

I thought there are many sites here where

not a penny has been spent on remediation.

11

MR. AXLINE:

12

THE COURT:

No.

I'm sorry?

We started this because the investigation

13

or characterization, they are both used together, is the only

14

money that has been spent.

15

on cleanup or abatement.

16

that what has been spent so far is enough, we don't need to do

17

more.

So you can't come up with the answer

I thought some of these places haven't spent any money.

18
19

There hasn't been any money spent

MR. AXLINE:

Well, the defendants have been doing

remediation on-site is what I was referring to.

20

THE COURT:

So the report says, no need for anything

21

further.

22

whatever the defendants have spent is enough.

23

spend anything.

24
25

We have investigated and we are satisfied that

MR. AXLINE:

We don't have to

Under any other statute, CERCLA, the

HSAA, that would be considered a response cost regardless, and
SOUTHERN DISTRICT REPORTERS, P.C.
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41
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2
3
4

you would be able to recover that.
THE COURT:

Just to confirm that it's satisfactory

now, it doesn't need more?
MR. AXLINE:

Yes.

There was contamination there.

It

5

came from the defendants.

6

guess had to do some investigation and characterization.

7

the defendants should thank their stars if that shows that no

8

further work is necessary.

9

likely in any of these cases, but regardless, that typically is

10

a recoverable cost, and we think it is under the act as well as

11

under CERCLA.

12

THE COURT:

The district or any plaintiff I
And

I don't think that's going to be

Although while admitting at the same time

13

that it hasn't been construed yet specifically under the Orange

14

County Water District Act, the term remedial action has not yet

15

been construed.

16

MR. AXLINE:

I would suggest that it has by Judge

17

Colaw in the opinion that we attached.

18

parsed the phrase remedial action.

19

him, and he said in his opinion that we attached to our brief

20

or letter --

21

THE COURT:

22

MR. AXLINE:

23
24
25

I don't remember if he

That was all briefed to

Which was that?
It's Exhibit 6, the last exhibit to our

premotion letter.
THE COURT:

OK.

This was Orange County Water District

v. Northrop Corporation.
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MR. AXLINE:

Yes.

There I will represent to the Court

2

that the facts were as they are here.

3

and concrete remedial work had been done.

4

investigation and characterization.

5

both the Orange County Water District Act and the HSAA, and

6

case law interpreting those acts, authorized the district to

7

recover for incurred expenses of remediation and future costs.

8
9

THE COURT:

And Judge Colaw found that

decision.
MR. AXLINE:

11

THE COURT:

12

MR. AXLINE:

It's admittedly brief.
Where do you see it?
There is a first page that is sort of

notice.

14
15

There had only been

Well, I don't see that in the one page

10

13

No actual sort of pipes

THE COURT:

I am in the decision, pages 1 and 2 of the

decision.

16

MR. AXLINE:

Paragraph numbered 1.

I was reading the

17

second sentence.

18

interpreting those acts authorized the district to recover for

19

incurred expenses for remediation and future costs.

20

Both the OCWDA and the HSAA and case law

THE COURT:

I can't tell from that small statement

21

whether any moneys had been spent at the time the court wrote

22

that.

23

There may have been some money spent already.
Now, true, the phrase "and future costs," well, they

24

weren't spent yet.

25

I assume this is a trial court.

lower court.
SOUTHERN DISTRICT REPORTERS, P.C.
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This is a

43
0CG8ORAC
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MR. AXLINE:

Yes, it was.

But the state of play at

2

the time of this decision was that the district, as here, had

3

spent some initial money investigating and characterizing.

4

THE COURT:

5

MR. AXLINE:

6

THE COURT:

7

Yes.
Do you know that case enough to know if

you agree with it?
MR. PARKER:

8
9

And that's all?

I do not.

I represent a defendant in

another case, the one that the defendants submitted the rulings

10

saying there is no declaratory relief and there is no future

11

costs recoverable under that.

12

THE COURT:

13

MR. PARKER:

14

Which exhibit is yours?
Exhibit C Mr. Heartney tells me.

C and

D.

15

THE COURT:

One second.

16

So C is the Sabic case?

17

MR. PARKER:

18

THE COURT:

19

MR. PARKER:

20

THE COURT:

Yes.
Where is the operative language?
The operative language is -These courts are a model of short decision

21

writing.

I have a lot to learn from these courts.

22

I have got to change my ways.

23

MR. PARKER:

One page.

Exhibit C is the notice of ruling, and

24

then Exhibit A to the notice of ruling.

The top one, demur and

25

motion to strike, demur to first cause of action.
SOUTHERN DISTRICT REPORTERS, P.C.
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That is

44
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where the judge held that declaratory relief was not available.

2
3

THE COURT:

That's obvious because it's not a statute.

But go ahead.

4

MR. PARKER:

5

THE COURT:

It was raised -I know.

Plaintiffs can only recover costs

6

that were already incurred for cleanup, containing or abating

7

the contamination or other remedial acts.

8

because that's a direct quote of the statutory language.

9

doesn't tell us how that court defines remedial acts that I

10
11

Not a surprise
That

know of.
MR. PARKER:

Your Honor, what happened in between is

12

the district, in response to the ruling, amended their

13

complaint, and instead of seeking the recovery of future costs,

14

instead sought declaratory relief.

15

Nancy Wieben Stock, at paragraph 3 in the substantive part,

16

says, "Defendants' motion to strike OCWD's allegations

17

concerning declaratory relief in the first cause of action is

18

granted."

19

Water District Act claim.

20

And that ruling by Judge

And that first cause of action was the Orange County

So those two taken together support the point that the

21

district, represented by Miller Axline, asserting these same

22

claims under the act, the court found future costs are not

23

recoverable and declaratory relief for liability for future

24

costs is not recoverable.

25

THE COURT:

Is that right, Mr. Axline?

SOUTHERN DISTRICT REPORTERS, P.C.
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45
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MR. AXLINE:

2

THE COURT:

3

MR. AXLINE:

Not exactly.
In what way was it not right?
The district had a separate count for

4

declaratory relief under California's Omnibus Declaratory

5

Relief Act that's referred to in this language.

6

motions to strike in California the court is very particular

7

about separating out causes of action, and what Judge Wieben

8

Stock said here was, there is nothing in the act that provides

9

for declaratory relief, and I am not going to let you include

10

in this first cause of action a request for declaratory relief

11

under the act.

12

discussed with her in subsequent conferences, the sixth cause

13

of action, where we say we get declaratory relief under the

14

Omnibus Declaratory Relief Act once we have shown that we have

15

liability under the Orange County Water District Act.

16

was merely a parsing of counts in the complaint.

17

On demurs and

She did not address, although it has been

MR. PARKER:

That's not true.

So this

I agree that they pled

18

a claim under the California declaratory relief statute that

19

wasn't challenged on demur because it wasn't amenable to the

20

challenge.

21

County Water District Act and the court held as a matter of law

22

they were not entitled to that.

23

this specific law here.

24

claim they may have served they are entitled to declaratory

25

relief, that's a separate issue, and that's what is addressed

But they sought specific relief under the Orange

That is a ruling interpreting

Regardless of whether under some other

SOUTHERN DISTRICT REPORTERS, P.C.
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46
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in the other cause of action.

2

record that declaratory relief and future costs are not

3

available under the act.

4

THE COURT:

This is absolutely clear on the

Well, all right.

But that's only a part

5

of plaintiff's argument anyway.

6

think, Mr. Axline, you have already expended moneys, and that

7

comes to defining the term other remedial action.

8

you're concerned, the investigation and characterization costs

9

are already spent.

10

MR. AXLINE:

11

MR. HEARTNEY:

Plaintiff argues that, I

As far as

Yes.
Let me go to one other point that we

12

also raised.

As to those costs, you asked a very good question

13

and very important question when you said, all right, if all

14

that you have is money that was spent to investigate and it

15

hasn't led to any actual remediation, and it might end up

16

leading just to a report that says, well, actually, nothing

17

needs to be done, then, your Honor, I think that possibility

18

leads us directly to the point that under the act no defendant

19

may be required to pay money for a cost or expense until it has

20

been able to submit evidence to rebut whether the work was

21

necessary or the costs were reasonable.

22

I think it's important here that California has a

23

comprehensive scheme to clean up pollution that covers the

24

whole state.

25

county.

The Orange County Water District Act covers one

California has a comprehensive scheme which puts
SOUTHERN DISTRICT REPORTERS, P.C.
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47
0CG8ORAC
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responsibility for cleaning up in the Regional Water Quality

2

Control Boards.

3

are already out there requiring the defendants to clean up.

4

And I cannot imagine it will not be a disputed fact if Mr.

5

Axline was to come in and say, well, we decided that even

6

though the Regional Water Quality Control Board, the statewide

7

authority on this, was already cleaning up and already

8

controlling things, we weren't sure that they were doing a good

9

job so we wanted to do our own investigation.

They are already out there cleaning up.

They

We did and it

10

turned out we found out we didn't need to do anything, but we

11

still are entitled to recover that money from the defendants as

12

the necessary and reasonable costs.

13

develop evidence, including expert evidence, that would say

14

that money was wasted.

15

we had an expert regulator already doing this.

16

regulator for the state of California is throughout the state

17

doing this sort of thing.

18

I think we can readily

There was no need for that money since
The expert

So it's going to get to the same point.

We are still

19

going to be faced with an issue of whether, if they have not

20

done work that has led to or reached a conclusion on some

21

remedial work that actually needs to be done, whether they will

22

be able to get a summary judgment that will establish any

23

liability or move the ball forward in any sense.

24
25

THE COURT:

Certainly both proposed prongs of the

motion for partial summary judgment have pitfalls for
SOUTHERN DISTRICT REPORTERS, P.C.
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48
0CG8ORAC
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plaintiff's side that may insnare them, but if they wish to

2

try, the usual practice is to say yes, you can go ahead and

3

make your motion, considering all that you have heard from the

4

premotion conference, but you won't be able to do it again.

5

Keep that in mind.

6

argument and the exchange of letters you have a reasonable

7

chance of prevailing and wish to bring the motion, in the face

8

of some of these difficulties, OK.

9

go ahead.

If you think that after listening to the

We set the schedule and you

My practice is to use this as essentially the oral

10

argument so everybody should congratulate themselves on being

11

clear today on the arguments.

12

papers.

13

Generally, then I take it on the

Assuming you wish to proceed, Mr. Axline, on both

14

prongs of this, I need a proposed schedule, and I want to talk

15

about page limits, because we have covered this many times and

16

everybody says their case is the big exception for page limits,

17

I can't possibly do this in 25 pages.

18

hearing this argument, there are very discrete and legal

19

issues, on both prongs.

20

trespass, you basically say it's quite a simple motion, the

21

presumption under the statute means that my expenses are

22

reasonable and it is continuing and it's harm as a matter of

23

law, and I cite a couple of cases, I win.

24

your argument is also fairly straightforward, at least until

25

the rebuttal.

But I have to say, after

On the first prong, the nuisance and

On the second point,

And it says, the statutory language, other
SOUTHERN DISTRICT REPORTERS, P.C.
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49
0CG8ORAC
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remedial action should be construed to include investigation

2

and characterization, and I spent that money so I fall under

3

the statute, and that's the ball game at this point, short of

4

any actual damages.

5

brief.

6

raised, you might have a need for more pages on the reply than

7

usual, but I think the motion is fairly straightforward, and I

8

am not inclined to grant what I know is the inevitable request

9

for extra pages.

10
11
12
13
14
15
16

It's a fairly straightforward and moving

Then it gets complicated.

Once the arguments are

When can you make the motion, Mr. Axline?

Assuming

you decide to proceed, when do you want to do it?
MR. AXLINE:

I think we can get it filed by the end of

January, say February 1st and on.
THE COURT:

So you need a lot of time.

You want six

weeks to file it.
MR. AXLINE:

Yes.

I say that not because there are

17

going to be a lot of pages.

18

page limits.

19

for each one of these stations.

20

I heard what you said about the

But we do need to assemble just the excerpt pages

THE COURT:

If it is limited to the mere fact of the

21

contamination above the MCL, or the mere fact that there has

22

been an investigation, that's not very many pages.

23

that's what you say it takes, that will be Tuesday, February 1.

But if

24

How long would the defense want to respond?

25

MR. HEARTNEY:

Taking into account that we don't know

SOUTHERN DISTRICT REPORTERS, P.C.
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0CG8ORAC
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what stations we are talking about --

2

THE COURT:

You will know that tomorrow.

3

MR. HEARTNEY:

There are 20 stations.

There are

4

multiple defendants.

5

brief, and I recognize that.

6

difficult to make sure we can pull everybody's stuff together.

7

I think we need at least 75 days, your Honor.

8
9

THE COURT:

I know we are only going to get one
But that makes it a little more

Two and a half months?

dream about two and a half months.

I wouldn't even

I wasn't really dreaming

10

about six weeks, but if you said, in fairness, you gave them

11

six, how can you really give us less when we have to coordinate

12

with bunches of co-defendants.

13

and they are well delineated now on this record.

I get the

14

point.

Some issues

15

of law go back 50 years and you end up looking at hundreds of

16

pages and various circuits and getting yourself completely

17

confused.

18

California law, virtually no case law, for example, on the

19

phrase other remedial action.

20

impression.

21

That's for the court to decide.

22

that complicated.

23

complicated, because if you're right about needing to consider

24

the statute of limitations issues now, it might be that it

25

can't be disposed of on summary judgment and the short answer

The legal issues are uncommon

There are not a lot of cases to look at.

This isn't like that.

This is a California statute,

It's really kind of a first

Yes, you might analogize it, you might not.
But I don't think it's all

Nor did I think the other part was all that

SOUTHERN DISTRICT REPORTERS, P.C.
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51
0CG8ORAC
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is denied.

2

I don't think it's all that complicated, and I think

3

even six weeks is long and it's plenty.

4

Mr. Axline, to reply?

5

can add to the reply.

6

MR. AXLINE:

7

THE COURT:

So March 15.

And any pages you don't use you

How long would you like?
I will say three weeks.

That's a long schedule.

That's April 5.

8

That's so long that I would ask you please not to ask for

9

extensions.

I am not going to give them.

But if you want to

10

negotiate within those dates with each other, I am not going to

11

know and I am not going to care, as long as it's fully

12

submitted on April 5.

13

So that is the schedule.

What about these page limits?

I assume the defense is

14

coordinating on the legal arguments, but may need a small

15

number of extra pages per site to make the fact argument.

16

says hopefully three pages per cite.

17

sites, you might need a 60 page appendix, separated out of the

18

25 page brief, where you simply say, we have to show you enough

19

facts per site for you to get our point.

20

there is no need to extend the pages at all.

21

today.

22

years, not a lot of circuits.

23

Ninth Circuit.

24

appendix, so to speak, but the legal brief is 25 pages.

25

one brief.

He

If you really have 20

But the legal issue,
I get it from

As I say, there's not a lot of case law, not a lot of
It's only going to be in the

It's only one state.

So there can be a fact
And

Somebody will take the lead and everybody else will
SOUTHERN DISTRICT REPORTERS, P.C.
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52
0CG8ORAC
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edit your work.

2

Anything else?

3

MR. AXLINE:

There is one other thing.

I just wanted

4

to preview for the Court and for the defendants that we have

5

reached a settlement in principle with a minor defendant in the

6

Orange County Water District case.

7

up.

8

THE COURT:

9

MR. AXLINE:

The papers are being drawn

Who might be this minor defendant?
Actually, they asked it not be disclosed

10

until the papers are filed.

So I am not at liberty to say

11

that.

12

papers, both parties would like to get it done by the end of

13

the year, we will ask the Court to instruct the defendants to

14

indicate in a 10 or 12 day period whether they intend to object

15

or not.

But what I did want to preview is that when we file the

16

THE COURT:

17

MR. AXLINE:

Do I have to do a good faith assessment?
Yes.

We would like you to direct the

18

defendants to indicate whether they intend to object.

19

then we would like to try to get it done by the end of the

20

year.

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THE COURT:

If not,

Defendants will have two weeks from the

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time they receive notice to decide whether to object or not.

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If they decide affirmatively, then they can have two further

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weeks to file any objections.

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to file, but two weeks to decide.

So you have a total of 30 days

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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0CG8ORAC
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MR. HEARTNEY:

If I could just ask for clarification,

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not to change those times, but when we get notice, that we get

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the necessary information, what the terms of the settlement

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are.

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THE COURT:

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MR. AXLINE:

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THE COURT:

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Thank you all for coming in and thank the folks on the

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phone.

How else can you decide whether to object?
That will all be in the papers.
All right.

I think we are done.

Obviously, the transcript must be ordered.

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argument and I do need this.

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(Adjourned)

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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

This is the