PRICE et al v. FIRSTENERGY GENERATION CORPORATION
Filing
224
MEMORANDUM OPINION re plaintiffs’ motion for reconsideration (ECF No. 211 ) of the opinion (ECF No. 196 ) limiting the testimony of plaintiffs’ expert, Dr. Kilpatrick. Signed by Chief Judge Joy Flowers Conti on 10/27/2014. (blr)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
Patrick et al.,
Plaintiffs,
v.
Civil Action No. 08-1025
FirstEnergy Generation Corp.,
Defendant.
Price et al.,
Plaintiffs,
v.
Civil Action No. 08-1030
FirstEnergy Generation Corp.,
Defendant.
MEMORANDUM OPINION
CONTI, Chief District Judge
I.
Introduction
Plaintiffs seek reconsideration of the portion of the court’s memorandum
opinion and order that limited the testimony of plaintiffs’ expert John A. Kilpatrick
(“Kilpatrick”), PhD, in two cases consolidated for discovery, Patrick v. FirstEnergy
Generation Corp. (No. 08-1025) and Price v. FirstEnergy Generation Corp. (No. 081030).1 These cases involve the Bruce Mansfield Power Plant (“Bruce Mansfield”), a
coal-fired electric generating facility located along the Ohio River in Shippingport,
Pennsylvania. Bruce Mansfield is owned and operated by defendant FirstEnergy
Generation Corporation (“FirstEnergy” or “defendant”). The plaintiffs allege harm
from air pollution discharged by Bruce Mansfield. The alleged pollution came in the
form of “white rain,” a chronically discharged corrosive material, and “black rain,” a
1
The motions for reconsideration are ECF No. 304 (Patrick) and ECF No. 211
(Price). The court’s opinion and order are ECF Nos. 288 and 289 (Patrick) and
ECF Nos. 196 and 197 (Price). Unless otherwise specified, ECF numbers
appearing in the text of the opinion refer to the Patrick case.
1
dark-colored sooty residue discharged on two occasions in 2006 and 2007. The
white rain and black rain were deposited on the area surrounding Bruce Mansfield,
allegedly causing property damage and adverse health effects. The named plaintiffs
in Patrick are four couples who make class-action claims for damages due to
diminution of property value and seek to enjoin the plant from operating until it
can prevent the white rain emissions. In Price, nineteen plaintiffs seek injunctive
relief and monetary damages for adverse health effects and property losses.
Kilpatrick is an expert in the field of real estate valuation. Kilpatrick filed an
expert report in which he opined about the diminution of property values due to the
emissions from Bruce Mansfield and feasibility of determining the damages of the
putative class using mass-appraisal techniques. Kilpatrick modeled the diminution
in value of residential properties in the areas affected by black rain and white rain
using four modeling techniques: telephone and internet surveys, case studies of similar pollution incidents, meta-analysis of previously published research, and hedonic
regression analysis of actual property values in the affected areas. As the court
previous described, the results of the modeling were as follows:
The results of the survey research indicated a diminution of
12 percent for properties in the white rain area and 45
percent for properties in one or both black rain areas.
[(Kilpatrick Rep. ¶¶ 78, 108, ECF No. 221-5.)] The analysis
of case studies most similar to the pollution alleged in this
case showed a diminution in value of 20 to 39 percent. (Id.
¶ 82.) Three meta-analyses found property value losses of
33, 34, and 76 percent, for an average of 48 percent. (Id. at
32, tbl.5.) The hedonic regression analysis of sales transactions found diminution of between 2 and 4 percent for the
white rain area and about 14 percent for the black rain area.
(Id. ¶ 100.)
To reconcile the approaches, Kilpatrick performed an
“implicit weighting process … based on the quality and
quantity of data coming from” the four methodologies.
(Hr’g Tr. 126:22–25, Oct. 15, 2013, ECF No. 259.) He
concluded that the hedonic model based upon sales prices
should be given little weight because the market was
2
uninformed about the extent of the contamination and that
the 14 percent figure represented a “lower bound” estimate
for properties in the black rain areas. (Kilpatrick Rep.
¶¶ 101–05.) After considering the similar results of the
surveys, case studies, and meta-analyses, Kilpatrick opined
that the overall diminution in value was 12 percent for the
white rain area and 45 percent for the black rain area. (Hr’g
Tr. 127:12–17, Oct. 15, 2013.) Kilpatrick concluded that a
mass appraisal is the best technique for determining
valuation and damages in this case. (Kilpatrick Rep. ¶ 108.)
(Mem. Op. 6–7, ECF No. 288.)
Defendant moved to prevent Kilpatrick from offering his opinions under Rule
702 of the Federal Rules of Evidence. After extensive briefing and a hearing with
testimony and oral argument, the court granted the motion in part. The court
determined that Kilpatrick’s white rain model did not meet the reliability
requirement of Rule 702. The white rain survey questions were unreliable because
they referred to contaminants and hand-washing and home-produce advisories that
were only relevant to the black rain. (Id. at 11.) Kilpatrick’s calculation of
unimpaired property values in the white-rain area was flawed because he used a
cut-off date of July 22, 2006—the date of the first black rain event—even though he
had no factual basis to support his assumption that this date was “‘before people
began to be significantly annoyed by the white rain.’” (Id. at 24 (quoting Hr’g Tr.
144:19–20, Oct. 15, 2013, ECF No. 259).) The court excluded the white rain opinion
in its entirety. (Id.)
Kilpatrick concluded that the residential real estate market in the area affected
by black rain was uninformed about the significance of the contamination. Therefore,
he explained that the “market value” of the affected properties—that is, the true
value of properties when both buyer and seller are informed—is less than the
“market price” reflected in actual property sales. The court noted it could not
resolve at that time the factual dispute between the parties about whether or to what
extent the market was uninformed. (Id. at 20.) The court found, however, that
3
Kilpatrick’s opinion about property values in the black rain area was unreliable
because he was unable to explain how the market would become informed, leading
to market price equaling market value. (Id. at 22.) The court excluded Kilpatrick’s
black rain opinion to the extent he opined “about hypothetical ‘market value’
diminution above ‘market price’ losses.” (Id.) The court permitted Kilpatrick to give
his opinion about the diminution in property value from black rain based upon his
modeling of actual prices. Kilpatrick’s case studies and meta-analyses were ruled
admissible as background support, but not as evidence of actual loss. (Id. at 28.)
II.
Standard of Review
The court may grant a motion for reconsideration if the party seeking reconsid-
eration establishes one of the following grounds: “(1) an intervening change in the
controlling law; (2) the availability of new evidence that was not available when the
court granted the motion for summary judgment; or (3) the need to correct a clear
error of law or fact or to prevent manifest injustice.” Max’s Seafood Cafe v. Quinteros,
176 F.3d 669, 677 (3d Cir. 1999). In this case, plaintiffs seek reconsideration based
upon the need to correct clear error and prevent manifest injustice. (ECF No. 298,
¶ 5.) A finding of clear error is appropriate when the record supports “‘the definite
and firm conviction that a mistake has been committed.’” Johnson v. SmithKline
Beecham Corp., 724 F.3d 337, 345 (3d Cir. 2013) (quoting Inwood Labs., Inc. v. Ives
Labs., Inc., 456 U.S. 844, 855 (1982)).
Because of the interest in finality, district courts grant motions for reconsideration sparingly—the parties are not free to relitigate issues the court has already
decided. Rottmund v. Cont’l Assurance Co., 813 F. Supp. 1104, 1107 (E.D. Pa. 1992);
see Williams v. City of Pittsburgh, 32 F. Supp. 2d 236, 238 (W.D. Pa. 1998) (“[A]
motion for reconsideration is not properly grounded in a request for a district court
to rethink a decision it has already made, rightly or wrongly.”).
4
III.
Discussion
A. Black Rain Opinion
Plaintiffs argue Kilpatrick had good grounds for concluding that the market
was uninformed about the black rain incidents and therefore the court erred by
excluding his conclusion that properties in the black rain area suffered a loss in
market value above the loss in market price. (Pl.’s Mot. 6–7, ECF No. 304.) Plaintiffs
assert the court’s opinion about “the reasonable duration of market lag time and
stigma is based upon an inadequate record” because the numerous applicable
factors were never “properly presented, briefed or argued.” (Id. at 7.) Plaintiffs
request that the court “allow an evidentiary record on the specific topic of market
lag” to clarify the issue. (Id. at 8.) Plaintiffs assert that “Kilpatrick’s conclusion of an
uninformed market creating market lag deserved testing through the adversarial
process rather than complete exclusion.” (Id. at 9.)
The arguments advanced by plaintiffs are insufficient to justify reconsideration.
When the court asked Kilpatrick when he expected market price and value to
intersect, he said he “wouldn’t expect it would take long.” (Hr’g Tr. 145:17, Oct. 15,
2014, ECF No. 259.) He referenced a case from Wyoming, Michigan, where prices
stagnated in two years after there was full knowledge in the market. (Id. at 145:18–
21.) The court noted in its opinion that the black rain events occurred more than six
years ago and found it unreasonable to assume that knowledge would become
widespread after this amount of time had passed. (Mem. Op. 22, ECF No. 288.)
Plaintiffs point out that the surveys were conducted in March 2010, just two and a
half years and three and a half years after the black rain incidents. (Pl.’s Mot. 6, ECF
No. 304.) The date of the surveys, however, is not the relevant point for determining
whether market value and market price have coalesced. The relevant consideration
is the sales transaction data used in the regression analysis. Kilpatrick used sales
data from transactions that occurred between April 1992 and March 2012.
(Kilpatrick Rep. ¶ 40, ECF No. 221-5.) In Kilpatrick’s Rebuttal Affidavit, he states
5
that the mass appraisal model includes data from 2002 to 2011. (Kilpatrick Rebuttal
Aff. ¶ 16, ECF No. 235-8.) The sales data encompassed a period of at least five years
after the July 2006 black rain event, but Kilpatrick did not point to sufficient
evidence showing that market knowledge is increasing.
Plaintiffs bore the burden of establishing the reliability of their expert’s testimony by a preponderance of the evidence. In re TMI Litig., 193 F.3d 613, 663 (3d
Cir. 1999). They failed to carry this burden. Plaintiffs cannot now, on a motion for
reconsideration, seek an evidentiary hearing to bolster their case. See Blunt v. Lower
Merion Sch. Dist., 559 F. Supp. 2d 548, 574 (E.D. Pa. 2008) (“A litigant that fails in its
first attempt to persuade a court to adopt its position may not use a motion for
reconsideration either to attempt a new approach or correct mistakes it made in its
previous one.”). Moreover, other courts that considered the uninformed market
theory advanced by Kilpatrick found it unreliable. See Palmisano v. Olin Corp., Civil
No. 03-1607, 2005 WL 6777561, at *5 n.5 (N.D. Cal July 5, 2005) (“The court has
serious concerns with the degree of speculation Kilpatrick’s theory entails. If
plaintiffs could recover for a decline in value that had not yet been reflected in
prices, they could sell their homes immediately and receive a windfall: damages for
as-yet realized diminution in value plus the full market price.”); Exxon Mobil Corp.
v. Albright, 71 A.3d 30, 104 (Md. 2013) (finding the level of speculation about when
market price will reflect market value too great for the testimony to be admissible).
For these reasons, the court finds that excluding Kilpatrick’s testimony about
the hypothetical loss in market value above that reflected in market prices was not
based upon a clear error of law or fact.
B. White Rain Opinion
Plaintiffs argue the court erred by excluding Kilpatrick’s white rain opinion.
According to plaintiffs, the court “misperceived the economic concept of willingness
to pay,” and, in light of the willingness to pay concept, the white rain survey
questions were not misleading or unreliable. (Pl.’s Mot. 5, ECF No. 304.) Plaintiffs
6
assert that white rain has harmful constituents similar to those found in black rain
and that the argument that white rain is not as damaging as black rain is a factual
dispute between the parties. (Id. at 3–4.) The key factor plaintiffs point to is the
impact on value by perceived risk. (Id. at 5.) Because the warnings issued after the
black rain event in July 2006 increased the perceived risk in the white rain areas,
plaintiffs argue the incorporation of black rain warnings in the white rain survey
questions was not a fundamental flaw. (Id.) Kilpatrick applied his experience and
determined that there was no need to redo the survey in light of the information
included in the white rain survey questions. (Kilpatrick Dep. 455:21–456:1, Mar. 22,
2013, ECF No. 235-14.)
Plaintiffs’ argument with respect to the court’s finding that the calculation of
the unimpaired value in the white rain area was unreliable is similar to the
perception argument raised above. Plaintiffs argue reconsideration is appropriate
because the tax assessments did not capture any disamenity due to white rain until
after the black rain occurred. (Pl.’s Mot. 11, ECF No. 304.) The black rain triggered
the negative perception of white rain that led to the diminution found by Kilpatrick.
Again, plaintiffs note the existence of a factual dispute between the parties about the
amount of knowledge in the market about white rain. (Id.)
None of these arguments leave the court with the “definite and firm conviction”
its previous opinion was mistaken. Johnson, 724 F.3d at 345. The court has no trouble
understanding the concept of willingness to pay. The problem for the court is
plaintiffs’ argument that the perceived risk of white rain changed after the black rain
events. Plaintiffs argue that the market was uninformed with respect to the black rain
events, yet the black rain events triggered a loss in value in the white rain zone. In
addition, Kilpatrick testified that he had no basis for his assumption any disamenity
7
due to white rain would not have been captured in the tax assessments.2 (Hr’g Tr.
144:15–23, Oct. 15, 2013, ECF No. 259.)
IV.
Conclusion
Plaintiffs failed to demonstrate a clear error of law or fact in the court’s opinion
(ECF No. 288). No other basis for reconsideration exists. Plaintiffs’ motions will be
denied. Appropriate orders will be entered.
Dated: October 27, 2014
2
/s/ Joy Flowers Conti
Joy Flowers Conti
Chief United States District Judge
After the hearing, plaintiffs submitted a supplemental affidavit in which
Kilpatrick explained his answer to the court’s question about the basis for his
assumption. Kilpatrick stated that the reason for his assumption that the tax
assessments did not capture the disamenity of white rain was the lack of
disclosure by sellers. (Kilpatrick Cannon Aff. 3, ECF No. 259-1.) This raises the
same issue that is present in the black rain analysis. (See id.) If the market is
uninformed, when, if ever, will it become informed so that market prices equal
market values? Plaintiffs presented no sufficient answer to this question.
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?