Summary
denying a motion to dismiss state tort claims based on MTBE because they "would not conflict with the Congressional clean air objectives"
Summary of this case from Maryland v. Exxon Mobil Corp.Opinion
Civil No. 3:00-CV-2029-H
July 17, 2002
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Valero's Motion to Dismiss, filed November 27, 2001 (revised version); Plaintiffs' Response filed December 17, 2001; and Defendant Valero's Reply filed January 2, 2002. The Court heard oral argument on Defendant's Motion to Dismiss on March 22, 2002. Upon review of the pleadings, briefs, and relevant authorities, the Court is of the opinion for the reasons stated below that Defendant's Motion to Dismiss should be DENIED.
I. BACKGROUND
This case derives from an alleged spill of 600,000 gallons of methyl tertiary butyl ether ("MTBE") treated gasoline into East Caddo Creek and Lake Tawakoni, the atmosphere, and the properties of the Plaintiffs on or about March 9, 2000. (Pls. Second Am. Compl. at 3). All Plaintiffs reside in Hunt County, Texas. Plaintiffs allege that Defendant Valero Energy Corporation ("Valero"), an Oklahoma Corporation, manufactured and/or distributed reformulated gasoline containing MTBE. (Compl. at 4). Plaintiffs assert various state law causes of action, including negligence for failure to warn and failure to test and monitor pipelines, gross negligence, and strict liability. (Compl. at 14-16).
Defendant notes in its brief that it was improperly named as Valero Energy Company and that it proper name is Valero Marketing and Supply Company. (Mot. at 1 n. 1).
MTBE is a chemical compound that increases the oxygen content of gasoline. 42 U.S.C. § 7545 (k)(2)(B) provides that the oxygen content of reformulated gasoline "shall equal or exceed 2.0 percent by weight. . . ."
Defendant Valero launches two main attacks at Plaintiffs' claims. First, it argues that the state law claims, which include negligence for failure to warn and failure to test and monitor pipelines, gross negligence, and a strict liability are preempted by federal law and should be dismissed pursuant to FED. R. CIV. P. 12(b)(6). Second, and in the alternative, Defendant Valero asserts that the state law claims cannot proceed as a matter of law and therefore should be dismissed pursuant to FED. R. CIV. P. 12(b)(6).
Only state law claims were asserted against Defendant Valero.
II. ANALYSIS
A. Standard
In considering a motion to dismiss a complaint for failure to state a claim, the Court must accept as true the non-movant's well-pleaded factual allegations and any reasonable inferences to be drawn from them. Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir. 1994). To avoid dismissal for failure to state a claim, however, a plaintiff "must plead specific facts, not mere conclusory allegations." Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992) (citation omitted). Thus, the Court will not accept as true any conclusory allegations or unwarranted deductions of fact. Generally, the Court may not look beyond the pleadings, except in instances where public officials' qualified immunity is raised. Compare Mahone v. Addicks Util. Dist., 836 F.2d 921, 936 (5th Cir. 1988) with Babb v. Dorman, 33 F.2d 472 (5th Cir. 1994) [and] Schultea v. Wood, 47 F.3d 1427 (5th Cir. 1995) [and] Elliot v. Perez, 751 F.2d 1472 (5th Cir. 1985).
Dismissal for failure to state a claim is not favored by the law. Mahone, 836 F.2d at 926. A Plaintiff's "complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) ("The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims."); Heimann v. National Elevator Industry Pension Fund, 187 F.3d 493, 502 (5th Cir. 1999) (court may dismiss a claim under 12(b)(6) only if "it appears that no relief could be granted under any set of facts that could be proved consistent with the allegations.") (quoting Barrientos v. Reliance Standard Life Ins. Co., 911 F.2d 1115 (5th Cir. 1990). However, "there are times when a court should exercise its power to dismiss a complaint under Rule 12 (b)(6) of the Federal Rules of Civil Procedure." Mahone, 836 F.2d at 927 (emphasis in original).
B. Preemption
The Supremacy Clause of the Constitution provides that the laws of the United States "shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. CONST., ART. IV, cl. 2. Preemption may occur where: (1) Congress explicitly defines the extent to which its enactments pre-empt state law; (2) state law regulates conduct in a field that Congress intended the Federal Government to occupy exclusively; and (3) state law conflicts with federal law. See English v. General Electric Co., 496 U.S. 72, 78-79 (1990). Where Congress does not explicitly preempt state law, the Courts must look to a statute's legislative history, to determine the structure and purpose of the law. See Barnett Bank of Marion Co. v. Nelson, 517 U.S. 25, 31 (1996). In addition, federal preemption applies not only to statutes and regulations, but to state common law as well. See San Diego Building Trades Council v. Garmon, 359 U.S. 236, 246-47 (1959). Defendant Valero contends that Plaintiffs' state law claims are conflict preempted.
The CAA contains an express preemption provision in Section 211(c)(4)(A):
Except as otherwise provided . . . no State (or political subdivision thereof) may prescribe or attempt to enforce, for purposes of motor vehicle emission control, any control or prohibition respecting any characteristic or component of a fuel or fuel additive in a motor vehicle or motor vehicle engine —
(i) if the Administrator has found that no control or prohibition of the characteristic or component of a fuel or fuel additive under paragraph (1) is necessary or has published his finding in the Federal Register.42 U.S.C. § 7545 (c)(4)(A).
Defendant Valero does not assert that the claims asserted are preempted by this provision.
Conflict preemption is sometimes referred to a subset of implied preemption. See, e.g., Geier v. American Honda Motor Co., Inc., 529 U.S. 861, 884 (2000). Defendant Valero favors the term "impliedly conflict-preempted." (Mot. at 8). For purposes of this opinion and clarity, the Court will refer to preemption that arises when state law conflicts with federal law as "conflict preemption."
In determining whether Plaintiffs' claims are conflict preempted, this Court must determine 1) whether it is impossible for a private party to comply with both state and federal requirements, or 2) whether the state law is an obstacle to the accomplishment and execution of the full purpose and objectives of Congress. See English, 496 U.S. at 79. The same presumption against implied preemption does not exist for conflict preemption, because where a direct conflict exists, the state law must yield to the federal law. See Felder v. Casey, 487 U.S. 131, 138 (1988).
The federal provision relevant here is Section 211(k) of the Clean Air Act Amendments of 1990, which requires the EPA to issue regulations to establish requirements for reformulated gasoline ("RFG") to be used in gasoline fueled vehicles. See 42 U.S.C. § 7545 (k). Congress provided that "the regulations shall require the greatest reduction in emissions of ozone forming volatile organic compounds (during the high ozone season) and emissions of toxic air pollutants (during the entire year) achievable through the reformulation of conventional gasoline, taking into consideration the cost of achieving such emission reductions, any non-air-quality and other air-quality related health and environmental impacts and energy requirements." See 42 U.S.C. § 7545 (k)(1). The EPA has promulgated regulations that list MTBE and several other oxygenates, including ethanol, as possible ingredients to gas. See 40 C.F.R. § 80.46 (2001). In promulgating the regulations for the RFG Program, the Administrator stated "Given present and projected conditions, EPA also expects that MTBE and ethanol will be the most commonly used oxygenates during Phase I of the reformulated gasoline program." See Final Rule, Regulation of Fuels and Fuel Additives: Standards for Reformulated and Conventional Gasoline, 59 Fed. Ref. 7716, 7732 (daily ed. Feb. 16, 1994).
Defendant asserts that permitting a tort suit to proceed against the manufacturer of MTBE would present an obstacle to the achievement of Congressional objectives for the CAA. Defendant contends that such a finding would be in accordance with the rule provided in Geier v. American Honda Motor Co., 529 U.S. 861, 881 (2002), in which the Supreme Court found that a product liability suit against a car manufacturer for failure to install air bags instead of seat belts was conflict preempted because such a suit would pose an obstacle to Congress' objectives. Defendant acknowledges that Plaintiffs' suit here is not a failure to install case, but asserts that a products liability case against the Defendant would pose a similar type of impermissible obstacle to the objectives of the federal regulation. See Carrasquilla, et al. v. Mazda Motor Corp., et al., 166 F. Supp.2d 169, 176 (D. Md. 2001) (finding no difference between a failure to install claim and a defective design claim for purposes of preemption). Fifth Circuit law, however, prevents such a conclusion.
In Perry v. Mercedes Benz of North America, Inc., 957 F.2d 1257, 1262-63 (5th Cir. 1992), the Fifth Circuit extensively analyzed failure to install cases that were precursors to Geier, all of which found preemption. See, e.g., Pokorny v. Ford Motor Co., 902 F.2d 1116 (3d Cir. 1990); Taylor v. General Motors Corp., 875 F.2d 816 (11th Cir. 1989); Kitts v. General Motors Corp., 875 F.2d 787 (10th Cir. 1989); Wood v. General Motors Corp., 865 F.2d 395 (1st Cir. 1988). The Fifth Circuit, however, distinguished these cases from the defective design suit before it, noting that "even if we assume that allowing liability for a manufacturer's failure to install an air bag would conflict with Congress' chosen method by removing or requiring one of the manufacturer's choices . . . [t]o allow tort liability for the design . . . would not remove or require any particular choice, or otherwise frustrate `flexibility' that the federal scheme provides." Perry, 957 F.2d at 1265. Thus, this Court must reject Defendant's contention that the Geier reasoning easily preempts product liability suits.
This holding is consistent with the opinion of the United States District Court for the Southern District of New York in In re: Methyl Tertiary Butyl Ether ("MTBE ") Products Liability Action, 175 F. Supp.2d 593, 598 (S.D.N.Y. 2001), a multi-district class action stemming from MTBE contamination to groundwater. The In re: MTBE Court considered conflict preemption and distinguished Geier on several grounds, must importantly that the MTBE Plaintiffs did not seek to require the use of one oxygenate over another, as the Plaintiffs did in Geier. See id. at 615. Ultimately, the Court held that a question of fact existed as to whether "practicable" alternatives to MTBE were available and thus, was not able to determine on the motion to dismiss whether conflict preemption existed. See id. at 616.
Of special note is that the Defendant here, Valero Marketing and Supply Company, was a Defendant in the In re: MTBE litigation. See In re: MTBE, 175 F. Supp.2d at 599 n. 1.
In Oxygenated Fuels Ass'n, Inv. v. Pataki, 158 F. Supp.2d 248, 259 (N.D.N.Y. 2001), the Northern District of New York determined that the CAA reformulated gas provisions did not impliedly preempt a state law ban on the use of MTBE, but also found that a fact question remained on whether conflict preemption existed because neither party had presented sufficient evidence on the effect of an MTBE ban. See id. at 259-60.
Defendant argues that the In re: MTBE decision is incorrect because the EPA considered the possibility of a gradual phase-in and thus permitting regulation via tort suits would prevent the goal of implementing the use of oxygenates, and MTBE in particular. Defendant relies on two California state court opinions in support of preemption. See Kubas, et al. v. Unocal Corp., et al., No. BC191876 (Cal.Super.Ct. L.A. Cnty., Aug. 23, 2001) (Order on Motion of Tosco Corporation for Summary Adjudication) (finding preemption of Plaintiffs' claims for negligence and strict liability based on EPA's express provisions for MTBE use and noting that prohibiting such use would be an obstacle to the accomplishment of the objectives of the CAA); see also Hixson, et al. v. Unocal Corp., et al., No. DC195295 (Cal. Super Ct. L.A. Cnty., Aug. 23, 2001) (Order on Motion of Tosco Corp. for Summary Adjudication) (applying the holding and reasoning in Kubas). Defendant also cites an unpublished United States District Court opinion from New Jersey, in which the Court found that MTBE could not be found to be a defective product where Congress "required that gasoline include an oxygenate and specifically designated that MTBE would be one of the most common and effective oxygenates." See Holten v. Chevron U.S.A., CV No. 00-4703 (D.N.J. July 10, 2001) (order on Defendants' Motion for Summary Judgment) (unpublished). The Court in Holten, however, did not discuss or analyze preemption.
These three cases formed part of the basis for grounds for a Motion for Reconsideration filed by the Defendants in In re: MTBE, which was denied. See Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation, 174 F. Supp.2d 4, 8 (S.D.N.Y. 2001).
Defendant would have this Court believe that proceeding with a state law tort suit would throw the Nation "back to the clean air stone age" by defeating the federal regulatory goals to thereby "nullif[y] the entire clean air statutory scheme." (Mot. at 11). Defendant argues that Congress identified MTBE repeatedly throughout the 1990 hearings on amendments to the CAA and designed the 2% requirement to permit MTBE use and thus, any suit that sought to impose damages on the use of MTBE would impermissibly frustrate Congress' goal. Congress' primary goal is "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population." 42 U.S.C. § 7401 (b)(1). Although Congress repeatedly discussed MTBE in hearings on the 1990 CAA amendments, it also discussed a number of other oxygenates and Senator Dashcle noted that "We are not favoring one fuel over another." 101 Cong. Rec. S2288 (daily ed. Mar. 7, 1990) (statement of Sen. Daschle). Defendant could, perhaps, overcome the implication against preemption that a range of oxygenates presents by arguing that there are no practicable alternatives to MTBE use. The Defendant, however, does not present such an argument and the most recent Congressional efforts to convert MTBE use to ethanol use suggests that an alternative to MTBE may not only be practicable, but required. Nevertheless, Defendant has not sufficiently shown that permitting this suit to proceed would seriously alter the Congressional clean air plan.
A brief review of recent bills proposed to amend Section 211 show a consistent Congressional intent to ban or phase-out the use of MTBE. See, e.g. S. 950, 107th Cong., § 3 (2001); H.R. 2230, 107th Cong., § 1 (2001); H.R. 199, 107th Cong., § 2 (2001); S. 892, 107th Cong., § 2 (2001); H.R. 1695, 107th Cong., § 1 (2001); S. 670, 107th Cong., § 3 (2001); H.R. 608, 107th Cong., § 3 (2001); S. 265, 107th Cong., § 4 (2001); H.R. 454, 107th Cong., § 4 (2001).
The In re: MTBE Court found that question of fact existed on whether there were practicable alternatives to MTBE use. See In re: MTBE, 175 F. Supp.2d at 615-16.
Relying on Fifth Circuit precedent, this Court finds that Geier does not dictate preemption in this matter and permitting this state law suit to proceed would not conflict with the Congressional clean air objectives. Thus, Defendant's Motion on this ground is DENIED.
C. State Law Claims
Plaintiffs assert claims for negligence, gross negligence and strict liability. Defendant initially argues that Plaintiffs cannot maintain claims in negligence and strict liability because Defendant did not have a duty to warn beyond its immediate customer and that a manufacturer has no duty to warn where the risks associated with a product are common knowledge. Defendant invokes the "bulk-seller" exception to the duty to warn, but states it with inappropriate simplicity. The rule is not that the bulk seller has no duty to warn beyond the immediate customer, but that "the bulk seller fulfills its duty to the consumer when it ascertains that the distributor is adequately trained." Khan v. Velsicol Chemical Corp., 711 S.W.2d 310, 314 (Tex.App.-Dallas 1986). The Defendant having made no showing of fulfilling this duty to train the distributor, the Court finds a question of fact on this issue that precludes granting Defendant's motion at this stage. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
In addition, Defendant is correct that a manufacturer has no duty to warn where the risks associated with a product are common knowledge. See Ritz Car Wash, Inc. v. Kastis, 976 S.W.2d 812, 814 (Tex.App. — Houston [1st Dist.] 1998, pet. denied). Defendant argues that the risks associated with gasoline are common knowledge and therefore, it has no duty to warn. See, e.g., Beans v. Entex, 744 S.W.2d 323, 325 (Tex.App. — Houston [1st Dist.] 1988, writ denied) (finding that asphyxiation due to carbon monoxide poisoning from a gas heater was a risk that was common knowledge and therefore there is no duty to warn). Plaintiff asserts that Defendant must show that the risks associated with MTBE are common knowledge to avoid the duty to warn. Plaintiff is correct. In American Tobacco Co. v. Grinnell, 951 S.W.2d 420 (Tex. 1997), in which the state Supreme Court held that although there was common knowledge of the risks associated with smoking, such common knowledge did not extend to the risks associated with nicotine. See id. at 429, 430 ("But we cannot simply assume that common knowledge of the general health risks of tobacco use naturally includes common knowledge of tobacco's addictive quality."). Such a finding can be applied to the relationship between MTBE and gasoline to find that although the risks associated with gasoline may be commonly known, Defendant makes no showing that this knowledge extends to MTBE. Thus, it is inappropriate to dismiss Plaintiffs' claims on the basis that the risks associated with the product are common knowledge warranting a finding that it had no duty to warn is DENIED.
Defendant's only argument for dismissing Plaintiffs' gross negligence claim was that the negligence claims could not proceed. Given the Court's decision not to dismiss Plaintiffs' negligence claims, the Court will not dismiss the gross negligence claim.
III. CONCLUSION
For the reasons stated above, Defendant's Motion to Dismiss is DENIED.