Ear To The Ground

In litigation, experts need to refer to hard data and to note how they arrived at their conclusions, notes Connecticut District Court. Duh

It seems like second nature, but in trial one always needs to make sure that one's expert(s) point to specific data related to contaminants at a site or area under consideration in order to support their conclusions and to demonstrate that alternative explanations have been ruled out.  The failure so to do cost the plaintiff his lawsuit in Innis Arden Golf Club v. Pitney Bowes, Inc., 2009 U.S. Dist. LEXIS 54135 (D. Conn. 2009) [a case noted in a prior post regarding a motion by defendants].

 

Plaintiff's property was contaminated with organic pollutants identified as polychlorinated biphenyls (PCB’s).  The experts for plaintiffs, who certainly had the credentials to address the issues in the case, concluded that the operators of adjacent property were responsible for the PCB contamination on plaintiff's property without considering any other explanations, let alone the obvious alternative causes, because the experts did not consider whether other nearby industrial properties were a source of the PCB’s on plaintiff's property.  The District Court found that the experts' methods and opinions were not capable of being tested or verified because the underlying data was not available.  The opinions were neither based on sufficient facts or data nor the product of reliable principles and methods.  Plaintiff's expert testimony was insufficiently reliable to be admissible, the Court held.  Without the experts' testimony, plaintiff could not have established a causal relationship between the costs it incurred in cleaning up its property and the PCBs found on the adjacent property, as required by 42 U.S.C. §9607(a)(4).

 

This case also has a spoliation aspect to it that will be discussed in a forthcoming post.

Federal judgment may collaterally estop re-litigation of the same action in state court, rules California Supreme Court

In a case which has application to environmental and toxic tort cases, by analogy, the California Supreme Court in Hernandez v. City of Pomona (2009), 46 Cal.4th 501, held that a Federal judgment may operate as collateral estoppel to preclude re-litigation of the same issues in a subsequently filed state court action.  In Hernandez, the plaintiff filed and lost a 1983 action in Federal court; he subsequently filed a wrongful death action in state court, based on the same set of facts.  The California Supreme Court applied collateral estoppel under this circumstance.

It is rare for environmental and toxic court cases in California to not include, if applicable, both Federal and State causes of action in the original complaint.  However, this case notes the risk of not so proceeding, and attempting to address Federal and state causes of action sequentially.

[For the sake of full disclosure, I should note in passing that the City of Pomona is a client of mine.]

Consistent with various rulings by federal courts, California's Court of Appeal holds that service on a foreign corporation is effective by serving the American subsidiary as the "manager"; the Hague Service Convention need not be followed

To say that the Hague Service Convention is a pain when it comes to serving a foreign company is an understatement.  It greatly slows a case because of the time consuming manner of service dictated by the Hague Service Convention.  Consistent with numerous rulings by Federal courts in the 9th Circuit, California's Court of Appeal in Yamaha Motor Co. Ltd. v. Superior Court (2009), 174 Cal.App.4th 264, held that service upon an American subsidiary of a foreign corporation is sufficient.  The Court did note, however, that such service may impair the ability of the party to execute abroad on any judgment obtained.

I should note in passing that the 9th Circuit permits service of a foreign corporation by Federal Express as long as the country in which the corporation is located has not opted out of the service-by-mail provision of the Hague Service Convention.  Thus, parties that seek to circumvent the Hague Service Convention's more traditional modes of service may wish to consider serving both the U.S. subsidiary and, if permitted, serving the parent by FedEx, especially given the cost savings.

Summary judgment cannot be subject to stipulation, rules California Court of Appeal

Occasionally, as a vehicle to get a case before an appellate court, especially when the sole question is one of law (not fact), parties will stipulate to a summary judgment in the trial court.  Following cases noted in prior posts, the Court of Appeal in Magana Carthcart McCarthy v. CB Richard Ellis, Inc. (2009), 174 Cal.App.4th 106, held (2-1) that a trial court may not grant summary judgment by stipulation unless the procedural requirements of Section 437c Code of Civil Procedure are followed.  This case follows in the footsteps of prior opinions that have held, consistent with California law, that explicit statutory requirements trump stipulations or other attempts to modify statutorily mandated procedural requirements.

Revivor of corporate powers can be applied retroactively, rules California appellate court

The general rule in California is that a corporation that is suspended (e.g., failure to file corporate tax returns) cannot file suit or a "responsive pleading" (e.g., answer, demur).  In Center for Self-Improvement v. Lennar Corp. (2009), 173 Cal.App.4th 1543, the plaintiff was suspended at the time that it gave notice under Prop. 65, a prerequisite to filing a lawsuit.  The trial court granted judgment for defendant on the grounds that plaintiff lacked standing.  The Court of Appeal reversed.  The Court noted that under Section 23301 Revenue & Tax Code, once deliquencies are corrected, revivor of the corporate status occurs "without prejudice to any action, defense, or right which has accrued."  The Court found that the revivor operates retroactively, thus validating the notice.

It is for this reason that any party seeking to disqualify an opposing party in an environmental or toxic tort or Prop. 65 action usually waits until the last moment (e.g., eve of trial) to raise the issue so that the opposing party lacks the time needed to correct the error.

California Governor signs new e-discovery legislation; it is effective immediately

Federal and State rules pertaining to e-discovery have been at odds for several years.  After several attempts, California has now enacted explicit e-discovery rules that will impact all litigation, including that related to environmental and toxic tort issues in State court.  A copy of the State legislation can be found at http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0001-0050/ab_5_bill_20090629_chaptered.html.  Since the bill is "urgency legislation" it takes effect immediately.

A copy of an e-discovery hold letter can be found at http://www.ediscoverycalifornia.com/insights/pdf/Preservation%20of%20Electronic%20Data.pdf.  [My thanks to the blog, e-Discovery Insights.] 

More later.

California Bay Air AQMD proposes faster phase-out of PCE dry cleaning

The staff of the Bay Area Air Quality Management District has proposed accelerating the phase-out of PCE dry cleaning equipment.  Under Regulation 11, Rule 16, the current deadline is for all PCE dry cleaning machines co-located in residential facilities, all converted machines, all machines manufactured prior to 1995, and all machines of unknown manufacturing date to cease operation by 7/1/10.  The staff is considering changing the date on machines made before 1995 to those made before 1998, 2000, or 2002.  Currently all machines manufactured after 7/1/95 must cease operation after 15 years; the staff is considering changing the 15 years time frame to 12, 10, or 8 years.  Currently all PCE machines are prohibited by 1/1/23; staff is considering changing the cutoff date to 2020, 2018, or 2016.

A workshop will take place tomorrow, June 10, from 1-3pm to address the proposed changes.

Amendment to complaint during trial to allege a written contract instead of an oral contract is not permitted in California

As noted in prior posts, many environmental disputes involving landlords and tenants are couched as tort and breach of contract actions.  California permits a plaintiff to "amend their complaint" to conform to proof during trial if the amended cause of action or the new cause of action relates to the same general set of facts set forth in the complaint at issue at the start of the trial.  In a case with implications for all landlord-tenant disputes, the California Court of Appeal in Garcia v. Roberts (2009), 173 C.A.4th 900, held that there are limits.  In the complaint at the start of the trial, plaintiff alleged an oral contract; during the trial, plaintiff was permitted to amend to plead a written contract.  The Court of Appeal reversed, noting that this was a material reversal of plaintiff's position, and thus not permitted under the standards allowing amendments to conform to proof.

California updates "guidance" on VOC vapor intrusion into buildings

The California Department of Toxic Substances Control has released new "guidance" on preventing VOC's from entering into buildings.  Like the earlier 2005 "guidance", the new document provides an analytical framework for assessing if site-specific mitigation technologies should be employed.  Although labeled as guidance, the so-called guidance has in essence become the regulatory approach utilized by all State and local regulatory agencies in assessing VOC intrusion related issues.

DTSC will "preview" the document June 3-4 in Sacramento and June 9-10 in Los Angeles.  Written comments on the document will be accepted through October 31. 

The 77-page Vapor Intrusion Mitigation Advisory can be found at http://www.dtsc.ca.gov/SiteCleanup/upload/VI_Mitigation_Advisory_Apr09r.pdf.

Supreme Court finds that FAA does not prohibit a noncontractual third-party from seeking a stay of litigation pending an arbitration if such assertion is permitted under State law

As noted in prior posts, leases of property or premises may contain an arbitration clause.  Although not an environmental case, the U.S. Supreme Court in Arthur Andersen LLP et al v. Carlisle et al, 2009 U.S. LEXIS 3463 (5/4/09) addressed recently the law pertaining to arbitration clauses when a third party is involved in a multi-way litigation/dispute who is not directly bound by the contractual arbitration agreement.

In Arthur Anderson, Carlisle, Bushman, and Strassel used a “shelter” to minimize taxes from the sale of their company.  Limited liability corporations created by Carlisle, Bushman, and Strassel entered into investment-management agreements with Bricolage Capital, LLC; the agreements provided for the arbitration of disputes.  After the Internal Revenue Service found the tax shelter illegal, Carlisle, Bushman, and Strassel filed a lawsuit against Arthur Anderson in federal court based on diversity jurisdiction.  Claiming that equitable estoppel required Carlisle, Bushman, and Strassel to arbitrate their claims per the agreements with Bricolage, Arthur Anderson invoked §3 of the Federal Arbitration Act (FAA), 9 U.S.C. § 3, which entitles litigants to stay an action that is "referable to arbitration under an agreement in writing."  Section 16(a)(1)(A) of the FAA allows an appeal from "an order . . . refusing a stay of any action under section 3."  The District Court denied petitioners' stay motions, and the Sixth Circuit dismissed their interlocutory appeal for want of jurisdiction.

The U.S. Supreme Court reversed the Sixth Circuit on the following grounds:

1. The Sixth Circuit had jurisdiction to review the denial of petitioners' requests for a §3 stay. By its clear and unambiguous terms, §16(a)(1)(A) entitles any litigant asking for a §3 stay to an immediate appeal from that motion's denial regardless of whether the litigant is in fact eligible for a stay.  Jurisdiction over the appeal "must be determined by focusing upon the category of order appealed from, rather than upon the strength of the grounds for reversing the order," noted the Court, citing Behrens v. Pelletier, 516 U.S. 299, 311 (1996).  The statute makes the underlying merits irrelevant, for even a request's utter frivolousness cannot turn a denial into something other than "an order . . . refusing a stay of any action under section 3," §16(a)(1)(A).

2. A litigant who was not a party to the arbitration agreement may invoke §3 if the relevant state contract law allows him to enforce the agreement.  Neither FAA §2 [which makes written arbitration agreements "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of a contract"] nor §3 purports to alter state contract law regarding the scope of agreements.  Thus, whenever the relevant state law would make a contract to arbitrate a particular dispute enforceable by a non-signatory, that non-signatory is entitled to request and obtain a stay under §3 because that dispute is "referable to arbitration under an agreement in writing."  Because traditional state law principles allow enforcement of contracts by (or against) nonparties through (for example) assumption or third-party beneficiary theories, the Sixth Circuit erred in holding that §3 relief is categorically not available to non-signatories.

The Court then held that since questions as to the nature and scope of the applicable state contract law in the case had not been briefed, they were to be addressed on remand.

Once again, as has appeared on occasion in CERCLA, the Court has interpreted a federal statute as being a mix of purely federal questions and state law questions.