Blue Water Boating Inc v. Plains All American Pipeline L.P. et al

NOTICE OF MOTION AND MOTION to Dismiss Case Second Amended Complaint

C.D. Cal.October 17, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2:16-cv-03283-PSG-JEM DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT BRAD D. BRIAN (State Bar No. 79001) brad.brian@mto.com HENRY WEISSMANN (State Bar No. 132418) henry.weissmann@mto.com DANIEL B. LEVIN (State Bar No. 226044) daniel.levin@mto.com MELINDA E. LeMOINE (State Bar No. 235670) melinda.lemoine@mto.com THOMAS P. CLANCY (State Bar No. 295195) thomas.clancy@mto.com JORDAN X. NAVARRETTE (State Bar No. 306143) jordan.navarrette@mto.com MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue Thirty-Fifth Floor Los Angeles, California 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 Attorneys for Defendants PLAINS ALL AMERICAN PIPELINE, L.P. and PLAINS PIPELINE, L.P. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA BLUE WATER BOATING, INC. D/B/A SANTA BARBARA SAILING CENTER, a California corporation, Plaintiffs, vs. PLAINS ALL AMERICAN PIPELINE, L.P., a Delaware limited partnership, and PLAINS PIPELINE, L.P., a Texas limited partnership, and JOHN DOES 1 through 10, Defendants. Case No. 2:16-cv-03283-PSG-JEM DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS [FED. R. CIV. P. 12(b)(6)] FILED PER ORDER ISSUED ON SEPTEMBER 15, 2016 Hearing Date: January 30, 2017 Hearing Time: 1:30 P.M. Judge: Hon. Philip S. Gutierrez Courtroom: Roybal Room 880 Case 2:16-cv-03283-PSG-JEM Document 37 Filed 10/17/16 Page 1 of 4 Page ID #:243 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- 2:16-cv-03283-PSG-JEM DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT PLEASE TAKE NOTICE THAT on January 30, 2017, at 1:30 p.m., or as soon thereafter as the matter may be heard, in Courtroom 880 of the United States District Court, Central District of California, located at 255 East Temple Street, Los Angeles, CA 90012-3332, Defendants Plains Pipeline L.P. and Plains All American Pipeline, L.P. (“Plains”) will and hereby does move to dismiss, with prejudice and without leave to amend, Plaintiff Blue Water Boating, Inc. D/B/A Santa Barbara Sailing Center’s (“Blue Water”) Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. This motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on September 8, 2016. This motion is made on the following grounds:  Blue Water’s OPA claim must be dismissed because it fails to satisfy OPA’s statutory causation requirements, which permit recovery only if economic damages are “due to the injury, destruction or loss of real property, personal property, or natural resources” that “result[s] from” the discharge of oil . . . into or upon the navigable water or adjoining shoreline.” 33 U.S.C. §§ 2702(a), (b)(2)(E).  Blue Water’s OSPRA claim fails because it does not meet OSPRA’s statutory causation requirements that lost profits be “due to the injury, destruction, or loss of real property, personal property, or natural resources.” Cal. Gov’t Code § 8670.56.5(h)(6). Blue Water also fails to plead sufficient facts to state a claim under OSPRA.  Blue Water’s negligence claim fails because the economic loss rule bars Blue Water’s claim.  Blue Water’s claim for negligent interference with prospective economic advantage fails because the economic loss rule bars Blue Water’s claim and Blue Water has failed to state a claim. Case 2:16-cv-03283-PSG-JEM Document 37 Filed 10/17/16 Page 2 of 4 Page ID #:244 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- 2:16-cv-03283-PSG-JEM DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT  Blue Water has failed to state a claim for fraud.  Blue Water’s claim for ultrahazardous strict liability fails because the transportation of oil through a pipeline is not ultrahazardous as a matter of law, and Blue Water’s injuries are not the kind of harm for which ultrahazardous liability would exist.  Blue Water has failed to state a claim for willful misconduct.  Finally, Blue Water’s claims for punitive damages and permanent injunction fail because they are derivative of Blue Water’s other claims. This Motion is based upon this Notice of Motion, the Memorandum of Points and Authorities In Support Thereof, Request for Judicial Notice, and Declaration of Jordan X. Navarrette filed simultaneously herewith; all of the pleadings and papers on file in this matter; and upon such oral or documentary evidence that may be presented at the hearing. DATED: October 17, 2016 Respectfully submitted, MUNGER, TOLLES & OLSON LLP BRAD D. BRIAN HENRY WEISSMANN DANIEL B. LEVIN MELINDA E. LeMOINE THOMAS P. CLANCY JORDAN X. NAVARRETTE By: /s/ Daniel B. Levin DANIEL B. LEVIN Attorneys for Defendants Case 2:16-cv-03283-PSG-JEM Document 37 Filed 10/17/16 Page 3 of 4 Page ID #:245 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- 2:16-cv-03283-PSG-JEM DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing document was filed electronically on October 17, 2016. Therefore, this document was served on all counsel who are deemed to have consented to electronic service. /s/ Daniel B. Levin DANIEL B. LEVIN Case 2:16-cv-03283-PSG-JEM Document 37 Filed 10/17/16 Page 4 of 4 Page ID #:246 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT BRAD D. BRIAN (State Bar No. 79001) brad.brian@mto.com HENRY WEISSMANN (State Bar No. 132418) henry.weissmann@mto.com DANIEL B. LEVIN (State Bar No. 226044) daniel.levin@mto.com MELINDA E. LeMOINE (State Bar No. 235670) melinda.lemoine@mto.com THOMAS P. CLANCY (State Bar No. 295195) thomas.clancy@mto.com JORDAN X. NAVARRETTE (State Bar No. 306143) jordan.navarrette@mto.com MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue Thirty-Fifth Floor Los Angeles, California 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 Attorneys for Defendants PLAINS ALL AMERICAN PIPELINE, L.P. and PLAINS PIPELINE, L.P. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA BLUE WATER BOATING, INC. D/B/A SANTA BARBARA SAILING CENTER, a California corporation, Plaintiffs, vs. PLAINS ALL AMERICAN PIPELINE, L.P., a Delaware limited partnership, and PLAINS PIPELINE, L.P., a Texas limited partnership, and JOHN DOES 1 through 10, Defendants. Case No. 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Hearing Date: January 30, 2017 Hearing Time: 1:30 P.M. Judge: Hon. Philip S. Gutierrez Courtroom: Roybal Room 880 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 1 of 34 Page ID #:247 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page -i- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT I. INTRODUCTION ............................................................................................. 1 II. BACKGROUND ............................................................................................... 2 III. ARGUMENT .................................................................................................... 3 A. Standard of Review ................................................................................. 3 B. Blue Water Fails To State A Claim For Strict Liability Under OPA or OSPRA (First and Second Claims) ........................................... 4 C. Blue Water Also Fails To State a Claim Under OSPRA Because It Fails to Allege Facts Showing 25 Percent of Its Earnings Derive from Damaged Property (Second Claim) ................................... 6 D. Blue Water’s Common-Law Claims Fail as a Matter of Law ................ 7 1. Blue Water’s Negligence Claims Fail .......................................... 7 (a) Blue Water Fails To State A Claim For Negligence And Gross Negligence (Fourth Claim) .............................. 7 (i) Blue Water’s Claim Is Barred by the Economic Loss Rule ................................................ 7 (ii) Blue Water’s Claim Does Not Qualify for the Narrow Exception to the Economic Loss Rule ...... 10 (b) Blue Water Fails To State A Claim For Negligent Interference With Prospective Economic Advantage (Sixth Claim) .................................................................... 11 2. Blue Water’s Claim for Public Nuisance Should Be Dismissed (Fifth Claim) ............................................................. 13 (a) Blue Water Cannot Bring a Public Nuisance Claim ........ 13 (b) Even if Blue Water Has Standing to Bring a Public Nuisance Claim, Its Claim Should Be Dismissed Because It Is Indistinct from the Negligence Claim ........ 14 3. Blue Water Fails To State A Claim For Fraud (Seventh Claim) ......................................................................................... 16 4. Blue Water Fails To State A Claim For Strict Liability For Ultrahazardous Activity (Third Claim) ...................................... 17 (a) The Transportation of Oil Through Pipelines Is Not Ultrahazardous as a Matter of Law .................................. 17 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 2 of 34 Page ID #:248 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS (continued) Page -ii- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT (b) Blue Water’s Harm Is Not The Type Of Harm That Would Make Transporting Oil Ultrahazardous ................ 20 5. Blue Water Fails To State a Claim for Willful Misconduct (Fourth Claim) ............................................................................ 20 6. Punitive Damages and Permanent Injunction Are Not Distinct Causes of Action And Must Be Dismissed (Eighth and Ninth Claims) ....................................................................... 22 IV. CONCLUSION ............................................................................................... 23 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 3 of 34 Page ID #:249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page -iii- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT FEDERAL CASES Adams v. Star Enter., 51 F.3d 417 (4th Cir. 1995) .................................................................................... 5 Ainsworth v. Shell Offshore, Inc., 829 F.2d 548 (5th Cir. 1987) ................................................................................ 19 Arlington Forest Assocs. v. Exxon Corp., 774 F. Supp. 387 (E.D. Va. 1991) ........................................................................ 19 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ......................................................................................... 3, 22 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696 (9th Cir. 1988) .................................................................................. 3 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ............................................................................................... 3 Blue Dolphin Charters, Ltd. v. Knight & Carver Yachtcenter, Inc., No. 11-CV-565-LWVG, 2011 WL 5360074 (S.D. Cal. Nov. 3, 2011) ..................................................................................................................... 12 Bondarenko v. Wells Fargo Bank, N.A., No. CV-15-304-DMG, 2016 WL 1622410 (C.D. Cal. 2016) ................................ 3 Campbell v. PricewaterhouseCoopers, LLP, 642 F.3d 820 (9th Cir. 2011) .................................................................................. 4 Chaveriat v. Williams Pipe Line Co., No. 94 C 0750, 1994 WL 583598 (N.D. Ill. Oct. 18, 1994) ................................ 19 Chipman v. Nelson, No. 2:11-CV-2770-TLN-EFB, 2015 WL 5330143 (E.D. Cal. Sept. 11, 2015) ............................................................................................................... 21 Close v. Thomas, 653 F.3d 970 (9th Cir. 2011) .................................................................................. 5 Dazo v. Globe Airport Sec. Servs., 295 F.3d 934 (9th Cir. 2002) ................................................................................ 21 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 4 of 34 Page ID #:250 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page -iv- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Dubbs v. Glenmark Generics Ltd., No. CV 14-346 RSWL (MRWx), 2014 WL 1878906 (C.D. Cal. 2014) ..................................................................................................................... 11 Dumas v. Kipp, 90 F.3d 386 (9th Cir. 1996) .................................................................................. 23 Exxonmobil Oil Corp. v. Nicoletti Oil, Inc., 713 F. Supp. 2d 1105 (E.D. Cal. 2010) .......................................................... 10, 11 F.M. Tarbell Co. v. A & L Partners, Inc., No. CV 10-1589 PSG (Ex), 2011 WL 1153539 (C.D. Cal. Mar. 23, 2011) ............................................................................................................... 12, 13 Fletcher v. Conoco Pipe Line Co., 129 F. Supp. 2d 1255 (W.D. Mo. 2001) ......................................................... 18, 19 Galvan v. Mimms, No. 1:11-CV-00326-SAB, 2013 WL 1962688 (E.D. Cal. May 10, 2013) ..................................................................................................................... 21 Gatlin Oil Co., Inc. v. U.S., 169 F.3d 207 (4th Cir. 1999) .................................................................................. 5 Henke v. Arco Midcon, L.L.C., 750 F. Supp. 2d 1052 (E.D. Mo. 2010) ................................................................ 19 Indiana Harbor Belt R.R. Co. v. Am. Cyanamid Co., 916 F.2d 1174 (7th Cir. 1990) .............................................................................. 18 In re McKesson HBOC, Inc. Sec. Litig., 126 F. Supp. 2d 1248 (N.D. Cal. 2000) ................................................................ 17 Moore v. Brewster, 96 F.3d 1240 (9th Cir. 1996) ................................................................................ 16 Moore v. R.G. Indus., Inc., 789 F.2d 1326 (9th Cir. 1986) .............................................................................. 18 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 5 of 34 Page ID #:251 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page -v- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Moore v. Sharp Gas Inc., No. CIV. A. 90-504 MMS, 1992 WL 147930 (D. Del. Jun. 11, 1992) ..................................................................................................................... 19 Moss v. U.S. Secret Serv., 572 F.3d 962 (9th Cir. 2009) ................................................................................ 22 Navarro v. Block, 250 F.3d 729 (9th Cir. 2001) .................................................................................. 3 In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on Apr. 20, 2010, 808 F. Supp. 2d 943 (E.D. La. 2011), aff’d sub nom. In re DEEPWATER HORIZON, 745 F.3d 157 (5th Cir. 2014) .............................................................................................................. 19 In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on Apr. 20, 2010, 168 F. Supp. 3d 908 (E.D. La. 2016) ..................................................................... 4 Pinole Point Props., Inc. v. Bethlehem Steel Corp., 596 F. Supp. 283 (N.D. Cal. 1984) ....................................................................... 20 In re Real Estate Assocs. Ltd. P’ship Litig., 223 F. Supp. 2d 1142 (C.D. Cal. 2002) ................................................................ 16 Schaeffer v. Gregory Village Partners, L.P., 105 F. Supp. 3d 951 (N.D. Cal. 2015) .................................................................. 14 Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393 (9th Cir. 1986) .............................................................................. 16 Stace Cheverez et al. v. Plains All American Pipeline, L.P., et al., No. 2:15-cv-04113 (C.D. Cal. Mar. 4, 2016), ECF No. 77 .................................. 13 State of La. ex rel. Guste v. M/V TESTBANK, 752 F.2d 1019 (5th Cir. 1985) (en banc) ................................................................ 9 In re Taira Lynn Marine Ltd. No. 5, 444 F.3d 371 (5th Cir. 2006) .................................................................................. 5 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 6 of 34 Page ID #:252 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page -vi- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Union Oil Co. v. Oppen, 501 F.2d 558 (9th Cir. 1974) .................................................................................. 9 United States v. S. California Edison Co., 300 F. Supp. 2d 964 (E.D. Cal. 2004) .................................................................. 18 Venoco, Inc. v. Plains Pipeline, L.P., et al., No. 2:16-cv-02988 (C.D. Cal. Sept. 26, 2016) ............................................. 4, 5, 20 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) .............................................................................. 16 Wells Fargo Bank, N.A. v. Renz, 795 F. Supp. 2d 898 (N.D. Cal. 2011) .............................................................. 7, 10 STATE CASES Aas v. Superior Ct., 24 Cal. 4th 627 (2000) ........................................................................................ 7, 8 Aguilar v. Atl. Richfield Co., 25 Cal. 4th 826 (2001) .......................................................................................... 21 Allen v. City of Sacramento, 234 Cal. App. 4th 41 (2015) ................................................................................. 22 Berkley v. Dowds, 152 Cal. App. 4th 518 (2007) ............................................................................... 21 Calvillo-Silva v. Home Grocery, 19 Cal. 4th 714 (1998) .......................................................................................... 21 Cnty. of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292 (2006) ................................................................................. 7 Colich & Sons v. Pac. Bell, 198 Cal. App. 3d 1225 (1988) .............................................................................. 21 Edwards v. Post Transp. Co., 228 Cal. App. 3d 980 (1991) ................................................................................ 18 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 7 of 34 Page ID #:253 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page -vii- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT El Escorial Owners’ Ass’n v. DLC Plastering, Inc., 154 Cal. App. 4th 1337 (2007) ....................................................................... 14, 15 Goodwin v. Reilley, 176 Cal. App. 3d 86 (1985) .................................................................................. 20 Greystone Homes, Inc. v. Midtec, Inc., 168 Cal. App. 4th 1194 (2008) ............................................................................... 8 Hilliard v. A. H. Robins Co., 148 Cal. App. 3d 374 (1983) ................................................................................ 22 J’Aire Corp. v. Gregory, 24 Cal. 3d 799 (1979) ..................................................................................... 10, 11 Koll-Irvine Ctr. Prop. Owners Ass’n. v. Cnty. of Orange, 24 Cal. App. 4th 1036 (1994) ............................................................................... 14 Lazar v. Superior Ct., 12 Cal. 4th 631 (1996) .......................................................................................... 16 Luthringer v. Moore, 31 Cal. 2d 489 (1948) ........................................................................................... 18 McDowell v. Watson, 59 Cal. App. 4th 1155 (1997) ............................................................................... 22 Melso v. Sun Pipe Line Co., 394 Pa. Super. 578 (1990) .................................................................................... 19 Melton v. Boustred, 183 Cal. App. 4th 521 (2010) ......................................................................... 14, 15 N. Am. Chem. Co. v. Superior Ct., 59 Cal. App. 4th 764 (1997) ................................................................................. 12 New Meadows Holding Co. by Raugust v. Washington Water Power Co., 102 Wash. 2d 495 (1984) ..................................................................................... 19 Ott v. Alfa-Laval Agri, Inc., 31 Cal. App. 4th 1439 (1995) ............................................................................... 10 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 8 of 34 Page ID #:254 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page -viii- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Pierce v. Pac. Gas & Elec. Co., 166 Cal. App. 3d 68 (1985) .................................................................................. 18 Quelimane Co. v. Stewart Title Guar. Co., 19 Cal. 4th 26 (1998), as modified (Sept. 23, 1998) .............................................. 8 Roberts v. Los Angeles Cnty. Bar Assoc., 105 Cal. App. 4th 604 (2003) ............................................................................... 22 Seely v. White Motor Co., 63 Cal. 2d 9 (1965) ................................................................................................. 8 Shell Oil Co. v. Richter, 52 Cal. App. 2d 164 (1942) .................................................................................. 23 Simmons v. S. Pac. Transp. Co., 62 Cal. App. 3d 341 (1976) .................................................................................. 21 Van Zyl v. Spiegelberg, 2 Cal. App. 3d 367 (1969) .................................................................................... 15 Venuto v. Owens-Corning Fiberglas Corp., 22 Cal. App. 3d 116 (1971) .................................................................................. 14 Westside Center Assoc. v. Safeway Stores 23, Inc., 42 Cal. App. 4th 507 (1996) ................................................................................. 12 Work v. Cnty. Nat’l Bank & Trust Co. of Santa Barbara, 4 Cal. 2d 532 (1935) ............................................................................................. 15 FEDERAL STATUTES 33 U.S.C § 2702(a) ...................................................................................................... 4 33 U.S.C. § 2702(b)(2)(E) ................................................................................... 1, 4, 5 STATE STATUTES Cal. Civ. Code. § 3493 ............................................................................................... 13 Cal. Gov’t Code § 8670.56.5(a) .................................................................................. 4 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 9 of 34 Page ID #:255 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page -ix- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Cal. Gov’t Code § 8670.56.5(h)(6) ..................................................................... passim RULES - OTHER Fed. R. Civ. Proc. 9(b) ..................................................................................... 2, 16, 17 Fed. R. Civ. Proc. 12(b)(6) .......................................................................................... 3 Fed. Rule of Evid. 201 ................................................................................................. 3 TREATISES Rest. 2d Torts, § 519 .................................................................................................. 20 Restatement (Third) of Torts: Liab. for Econ. Harm § 7 TD No 2 (2014) .................................................................................................................. 8, 9 Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 10 of 34 Page ID #:256 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT I. INTRODUCTION Plaintiff Blue Water Boating, Inc., D/B/A/ Santa Barbara Sailing Center (“Blue Water”) seeks damages allegedly resulting from a release from a pipeline owned by Defendant Plains Pipeline, L.P. (collectively with the other named defendants “Plains”), known as Line 901. All of Blue Water’s claims fail as a matter of law, and its Second Amended Complaint (“SAC”) should be dismissed. First, Blue Water’s claim under the federal Oil Pollution Act (“OPA”) must be dismissed. Blue Water has alleged a claim for damages under OPA section 2702(b)(2)(E), which permits recovery of economic losses “due to the injury, destruction, or loss of real property, personal property, or natural resources.” 33 U.S.C. § 2702(b)(2)(E). But Blue Water claims that its damages stem from a worsened public perception of Santa Barbara beaches, not from damage to those beaches or any other property or natural resources, which does not satisfy OPA’s causation requirement. Because OPA was not designed to cover such attenuated economic loss claims, Blue Water’s OPA claim fails. Second, Blue Water’s claim under California’s Oil Spill Prevention and Response Act (“OSPRA”) fails to satisfy OSPRA’s causation and damages requirements. Lost profits are recoverable only if they are “due to the injury, destruction, or loss of real property, personal property, or natural resources.” Cal. Gov’t Code § 8670.56.5(h)(6). Blue Water again relies on a theory that worsened public perception of Santa Barbara beaches will hurt its business, which does not satisfy OSPRA’s causation requirement. Furthermore, lost profits are only recoverable by a claimant “who derives at least 25 percent of his or her earnings from the activities that utilize the property or natural resources.” Id. Blue Water fails to make any factual allegations to support finding that it meets the statutory requirement to collect lost profits. Third, Blue Water’s common-law tort claims must be dismissed for multiple reasons. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 11 of 34 Page ID #:257 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -2- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT  Blue Water’s negligence claim fails because, under long-established California law, plaintiffs cannot sustain a claim for negligence based purely on economic loss without accompanying physical harm to their property, and Blue Water cannot satisfy the narrow exception to that rule.  Blue Water’s claim for negligent interference with prospective economic advantage fails because a defendant’s knowledge of an existing or prospective economic relationship is a necessary element of that claim, but Blue Water does not, and could not plausibly, allege that Plains knew of specific relationships between Blue Water and particular customers that were allegedly disrupted by the spill.  Blue Water has failed to plead multiple elements of its fraud claim, which must be pled with particularity under Rule 9(b). Most notably, Blue Water fails to plead any facts to show it relied on any allegedly false statements made by Plains.  Blue Water’s claim for strict liability under a theory of ultrahazardous activity must be rejected because the transportation of oil by pipeline is not an ultrahazardous activity, and because Blue Water’s economic harms are not the type that would make an activity ultrahazardous.  Blue Water’s willful misconduct claim fails because it does not and cannot allege willfulness or intentional conduct to cause a spill. II. BACKGROUND Plains operates Line 901—an approximately 10 mile pipeline—in Santa Barbara County. On May 19, 2015, Line 901 failed, resulting in a release of crude oil. Plains shut down the operation of Line 901 that same day. SAC ¶ 24. A portion of the released crude oil traveled from the pipeline, through a water drainage culvert, to the Pacific Ocean just north of Refugio State Beach. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 12 of 34 Page ID #:258 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -3- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Blue Water alleges that it operates a boat and watercraft rental and charter business in Santa Barbara that provides instruction, charters, rentals, and coastline cruises. Id. ¶ 68-69. Blue Water alleges that its business has been harmed due to “[t]he public perception [] that the beaches and water near Santa Barbara were destroyed and/or unsafe for the type of services offered by Plaintiff” due to the release. Id. ¶ 73. Blue Water also alleges that it “invested additional capital in marketing staff and related products,” which, “[b]ut for the spill and the resulting perception of the coastline,” it would not have had to spend. Id. ¶ 74. III. ARGUMENT A. Standard of Review A Rule 12(b)(6) motion “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A complaint may be dismissed either because it lacks a cognizable legal theory, or because it does not allege sufficient facts that, if true, would support a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). In order to survive a Rule 12(b)(6) motion for failure to state a claim, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In addition, “[a]lthough for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’” Id. at 678-679 (quoting Twombly, 550 U.S. at 555). Pleading legal conclusions disguised as factual allegations is not sufficient. In ruling on a motion to dismiss, a court may take judicial notice under Federal Rule of Evidence 201 of “facts not subject to reasonable dispute and ‘capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.’” Bondarenko v. Wells Fargo Bank, N.A., No. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 13 of 34 Page ID #:259 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -4- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT CV-15-304-DMG, 2016 WL 1622410, at *1 (C.D. Cal. 2016) (quoting Campbell v. PricewaterhouseCoopers, LLP, 642 F.3d 820, 824 n.3 (9th Cir. 2011)). B. Blue Water Fails To State A Claim For Strict Liability Under OPA or OSPRA (First and Second Claims) Blue Water seeks economic losses under both the federal Oil Pollution Act (“OPA”) and California’s Lempert-Keene-Seastrand Oil Spill Prevention and Response Act (“OSPRA”). Because neither OPA nor OSPRA creates a cause of action for the losses alleged by Blue Water, those claims must be dismissed. To collect damages under OPA, a plaintiff’s loss must “result from” “a discharge of oil, into or upon the navigable waters or adjoining shorelines . . .” 33 U.S.C § 2702(a). When a plaintiff seeks to recover for lost profits or impairment of earning capacity, as Blue Water does, its damages must be “due to the injury, destruction, or loss of real property, personal property, or natural resources.” 33 U.S.C. § 2702(b)(2)(E). Read together, “Plaintiffs must establish that their economic losses were ‘due to’ the injury, destruction, or loss of property or natural resources that ‘result[ed] from’ the discharge or threatened discharge of oil.” In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on Apr. 20, 2010, 168 F. Supp. 3d 908, 916 (E.D. La. 2016). OSPRA similarly permits the recovery of damages “incurred by any injured party that arise out of, or are caused by a spill.” Cal. Gov’t Code § 8670.56.5(a). For economic damages claims, OSPRA, like OPA, permits recovery only for “[l]oss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources . . .” Id. § 8670.56.5(h)(6). This Court has previously observed that “[b]ecause OSPRA’s requirements are nearly identical to those in OPA, the Court interprets the Acts in the same way.” Order Granting in Part and Den. in Part Mot. to Dismiss, Venoco, Inc. v. Plains Pipeline, L.P., et al., No. 2:16-cv-02988 (C.D. Cal. Sept. 26, 2016) (“Venoco Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 14 of 34 Page ID #:260 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -5- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Order”), ECF No. 71 at 5 (citing Close v. Thomas, 653 F.3d 970, 975 (9th Cir. 2011)). Both OPA and OSPRA “are designed to incentivize relief efforts and ensure swift recovery, not long-term liability.” Venoco Order at 5. Though the Ninth Circuit has not considered the issue, both the Fourth and Fifth Circuits have agreed that OPA “was not designed to cover economic losses that are derivative of an oil spill.” Id. at 6 (citing Gatlin Oil Co., Inc. v. U.S., 169 F.3d 207, 211 (4th Cir. 1999); In re Taira Lynn Marine Ltd. No. 5, 444 F.3d 371, 383 (5th Cir. 2006)). “OPA’s provision allowing for recovery . . . under section 2702(b)(2)(E) should be interpreted narrowly.” Venoco Order at 7. Blue Water’s claims for economic loss under OPA and OSPRA fail. Blue Water does not allege that its damages are the result of physical damage to any property (its own or someone else’s), nor does it allege that the clean-up caused harm to its business or prevented it from operating. Rather, the Second Amended Complaint alleges that Blue Water “has sustained and will continue to sustain a loss of profits” because the release of oil caused a “public perception . . . that the beaches and water near Santa Barbara were destroyed and/or unsafe for the type of services offered by Plaintiff.” SAC ¶ 93; 73. OPA and OSPRA do not create a cause of action for such losses. Both statutes require a nexus between economic loss and actual damage to property, not “public perception” of harm. See 33 U.S.C. § 2702(b)(2)(E) (providing for damages for lost profits “due to the injury, destruction, or loss of real property, personal property, or natural resources”); Cal. Govt. Code § 8670.56.5(h)(6) (similar); cf. Adams v. Star Enter., 51 F.3d 417, 425 (4th Cir. 1995) (rejecting claim under Virginia oil spill statute, which is analogous to OPA and OSPRA, for “stigma” damage unconnected to some physical injury caused by oil spill). “Although lost profits and earnings are recoverable under section 2702(b)(2)(E), they must be closely linked to the oil spill and traceable to clean-up efforts.” Venoco Order at 8. Blue Water’s claim is too Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 15 of 34 Page ID #:261 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -6- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT attenuated because damages from “public perception” are a step removed from damage due to any oiling or subsequent clean-up. In fact, such a claim could be utterly divorced from any actual damage from oiling, as would be the case if an erroneous public perception existed that oil from Line 901 reached beaches in the City of Santa Barbara, whereas in fact oil from Line 901 did not reach that location. Claimed tourism losses due to “public perception” – rather than due to actual property or natural resource damage or related clean-up – cannot support a claim under OPA or OSPRA. C. Blue Water Also Fails To State a Claim Under OSPRA Because It Fails to Allege Facts Showing 25 Percent of Its Earnings Derive from Damaged Property (Second Claim) Blue Water’s OSPRA claim fails for an additional reason: It fails to allege sufficient facts to show it derives 25 percent of its earnings from activities that utilize damaged property or natural resources. OSPRA holds responsible parties strictly liable for “Loss of profits or impairment of earning capacity due to the injury, destruction, or loss of real property, personal property, or natural resources, which shall be recoverable by any claimant who derives at least 25 percent of his or her earnings from the activities that utilize the property or natural resources, or, if those activities are seasonal in nature, 25 percent of his or her earnings during the applicable season.” Id. § 8670.56.5(h)(6) (emphasis added). Blue Water alleges it “derives at least 25 percent of its annual or seasonal earnings from activities that utilize property or natural resources damaged by Defendants’ oil spill.” SAC ¶ 86. But the Complaint includes no specific facts about Blue Water’s business or the sources of its revenue that would support the conclusory statement that it derives at least 25 percent of its earnings from activities that utilize property or natural resources injured, destroyed, or lost due to the release. The Second Amended Complaint’s allegation that Plaintiff’s business “includes” activities on the Santa Barbara coastline, id. ¶ 69, leaves unanswered Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 16 of 34 Page ID #:262 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -7- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT whether it operates in other areas or whether it has multiple income streams. Nor does the Complaint allege that Blue Water operated in the limited area off the Santa Barbara coastline that was actually affected by the release, much less that it derives 25 percent or more of its income from that area. It does not even allege that Blue Water derives 25 percent of its income from the entirety of the Santa Barbara coastline. Instead, the Complaint is silent as to whether Blue Water meets the criteria of section 8670.56.5(h)(6).1 D. Blue Water’s Common-Law Claims Fail as a Matter of Law 1. Blue Water’s Negligence Claims Fail (a) Blue Water Fails To State A Claim For Negligence And Gross Negligence (Fourth Claim) (i) Blue Water’s Claim Is Barred by the Economic Loss Rule The law is well established in California that “[t]o sustain a claim for negligence, the plaintiff must seek damages for a physical injury.” Wells Fargo Bank, N.A. v. Renz, 795 F. Supp. 2d 898, 924-25 (N.D. Cal. 2011) (citing Aas v. Superior Ct., 24 Cal. 4th 627, 635-36 (2000), superseded by statute on other grounds). “[E]conomic loss alone, without physical injury, does not amount to the type of damage that will cause a negligence or strict liability cause of action to accrue.” Cnty. of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292, 318 1 The complaint includes conclusory allegations directed to other damages sections in OSPRA, but these allegations are implausible on their face. Blue Water alleges that it “relies on natural resources for subsistence use,” SAC ¶ 86, which is facially implausible because Blue Water does not allege that it engages in fishing and certainly does not allege that it subsists off seafood. Blue Water alleges that it “has ownership or leasehold interests in real or personal property damaged by Defendants’ oil spill,” id., but, as noted above, it fails to specify any of its property that was actually damaged by oil released from Line 901. Blue Water also alleges that its “livelihoods and earning capacity depends directly on the ability to extract the natural resources of the oil fields,” id., which is facially implausible because it is not in the oil business. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 17 of 34 Page ID #:263 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -8- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT (2006). California courts have long recognized this rule that a tort plaintiff cannot seek economic damages for negligence unless the plaintiff can show an accompanying physical injury. Quelimane Co. v. Stewart Title Guar. Co., 19 Cal. 4th 26, 59 (1998), as modified (Sept. 23, 1998) (“With rare exceptions, a business entity has no duty to prevent financial loss to others with whom it deals directly. A fortiori, it has no greater duty to prevent financial losses to third parties who may be affected by its operations.”); Seely v. White Motor Co., 63 Cal. 2d 9, 18 (1965) (in negligence actions “liability is limited to damages for physical injuries and there is no recovery for economic loss alone”); Greystone Homes, Inc. v. Midtec, Inc., 168 Cal. App. 4th 1194, 1215 (2008) (“the economic loss rule provides that entities generally have no duty to prevent purely economic loss to a potential plaintiff”). This so-called “economic loss rule” has long precluded negligence claims for “economic loss alone” absent physical injury to a plaintiff’s property, Aas, 24 Cal. 4th at 636, and it operates here to bar Blue Water’s claim. Blue Water’s negligence and gross negligence claim seeks recovery solely for economic loss. See SAC ¶¶ 116, 120, 121. Blue Water does not allege any accompanying physical damage to its property. Because this is precisely the type of pure economic loss claim barred by the economic loss rule set forth above, the claim should be dismissed. The Draft Restatement (Third) of Torts confirms the view that a plaintiff like Blue Water may not bring a negligence claim to recover for economic losses without any physical injury. The Restatement provides: “a claimant cannot recover for economic loss caused by (a) unintentional injury to another person; or (b) unintentional injury to property in which the claimant has no proprietary interest.” Restatement (Third) of Torts: Liab. for Econ. Harm § 7 TD No 2 (2014). It explains the rationale behind this rule as follows: [E]conomic losses can proliferate long after the physical forces at work in an accident have spent themselves. A collision that sinks a ship will cause a well-defined loss to the ship's owner; but it also may Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 18 of 34 Page ID #:264 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -9- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT foreseeably cause economic losses to wholesalers who had expected to buy the ship's cargo, then to retailers who had expected to buy from the wholesalers, and then to suppliers, employees, and customers of the retailers, and so on. Recognizing claims for those sorts of losses would greatly increase the number, complexity, and expense of potential lawsuits arising from many accidents. In some cases, recognition of such claims would also result in liabilities that are indeterminate and out of proportion to the culpability of the defendant. These costs do not seem likely to be justified by comparable benefits. Courts doubt that threats of open-ended liability would usefully improve the incentives of parties to take precautions against accidents or would make a material contribution to the cause of fairness. Id., comment b. This rule, which has long applied as the economic loss rule in California, bars a negligence claim by a plaintiff who suffers only economic injury as a result of a plaintiffs’ unintentional conduct. The Restatement provides an example of a business “which operates next door” to a building that collapses as a result of Builder’s negligence. Id., comment. a. The Restatement explains that if the business “suffers no physical damage but loses profits because customers cannot reach the entrance while the street is closed[,] . . . [the business] has no tort claim for negligence against Builder for lost profits.” Id. In the context of oil pollution, the Ninth Circuit has recognized this same “general rule that the negligent defendant owes no duty to plaintiffs seeking compensation for [economic] injuries” without accompanying physical injury. Union Oil Co. v. Oppen, 501 F.2d 558, 563 (9th Cir. 1974) (applying rule to negligence claim under general maritime law arising from an oil spill, but creating an exception for claims by commercial fisherman). And the Fifth Circuit reached the same result, holding that plaintiffs may not bring negligence or nuisance claims for economic loss without accompanying physical injury. State of La. ex rel. Guste v. M/V TESTBANK, 752 F.2d 1019, 1024 (5th Cir. 1985) (en banc) (recognizing that “[t]his circuit has consistently refused to allow recovery for economic loss absent physical damage to a proprietary interest” and barring general maritime claims for economic loss resulting from collision of two ships, even where the collision caused a discharge of pollution). Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 19 of 34 Page ID #:265 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -10- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT (ii) Blue Water’s Claim Does Not Qualify for the Narrow Exception to the Economic Loss Rule California courts recognize only a narrow exception to the economic loss rule, and Blue Water’s claim does not qualify for that exception. A duty to prevent economic losses arises only “if a special relationship exists between the parties that imposes a special duty to exercise ordinary care to avoid causing economic injury to the other.” Renz, 795 F. Supp. 2d at 925 (citing Ott v. Alfa-Laval Agri, Inc., 31 Cal. App. 4th 1439, 1448-49 (1995)). Blue Water has the burden of showing Plains owed Blue Water a duty of care as a matter of law, J'Aire Corp. v. Gregory, 24 Cal. 3d 799, 803 (1979), but it cannot satisfy that burden here. Courts consider six factors in making this determination: “(1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant's conduct and the injury suffered, (5) the moral blame attached to the defendant's conduct and (6) the policy of preventing future harm.” Id. at 804. Blue Water, however, pleads no facts to support a finding that Plains had a sufficiently “special relationship” with Blue Water to owe it a duty of care. Blue Water fails to allege facts sufficient to support the existence of a special relationship under this test. Exxonmobil Oil Corp. v. Nicoletti Oil, Inc., 713 F. Supp. 2d 1105, 1113 (E.D. Cal. 2010) (“In order to survive a motion to dismiss, a claim for negligence based on a special relationship, a claimant must allege facts sufficient to support the existence of a special relationship.” (citing Ott, 31 Cal. App. 4th at 1448-49)). Most importantly, there is no allegation that Plains’ operation of the pipeline was intended to affect Blue Water. Generically benefiting from an arrangement is not sufficient to meet the requirement of a particularized intent to benefit the plaintiff. Absent such a particularized intent, there is no special relationship. See, e.g., Ott, 31 Cal. App. 4th at 1455–56 (where relationship not Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 20 of 34 Page ID #:266 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -11- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT specifically intended to benefit plaintiffs, the Court found that “[t]he absence of this foundation precludes a finding of a ‘special relationship’”); Dubbs v. Glenmark Generics Ltd., No. CV 14-346 RSWL (MRWx), 2014 WL 1878906, at *6 (C.D. Cal. 2014) (“[S]imply because economic injury is a foreseeable outcome of a particular action is insufficient in and of itself to support a finding of a ‘special relationship’ and, consequently, the imposition of a duty to prevent such economic harm.”); Nicoletti Oil, Inc., 713 F. Supp. 2d at 1114 (E.D. Cal. 2010) (“In order to establish that Defendants’ actions were ‘intended to affect’ Plaintiff within the meaning of the first J'Aire factor, Plaintiff must allege facts which demonstrate that Defendants’ had actual knowledge that their conduct would directly affect Plaintiff.”). Because courts have long held that a tort plaintiff cannot collect for economic losses resulting from alleged negligent conduct and Blue Water does not allege any physical injury to its property from the release, Blue Water’s negligence claim fails. Blue Water fails to establish that its claims meet the narrow J’Aire exception. (b) Blue Water Fails To State A Claim For Negligent Interference With Prospective Economic Advantage (Sixth Claim) As with its negligence claim, Blue Water’s claim for negligent interference with prospective economic advantage fails because, as set forth above, California generally bars tort claims for economic loss based on negligence. Even if the economic loss doctrine did not apply, however, Blue Water has not sufficiently pled its claim. Even assuming Blue Water adequately alleged a legal duty under J’Aire, the standard for bringing a claim of negligent interference with prospective economic advantage is high: “[A] Plaintiff bringing a claim for negligent interference with prospective economic advantage must sufficiently allege: (1) an economic relationship existed between the plaintiff and a third party which contained a Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 21 of 34 Page ID #:267 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -12- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence cause[d] damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship.” F.M. Tarbell Co. v. A & L Partners, Inc., No. CV 10-1589 PSG (Ex), 2011 WL 1153539, at *5 (C.D. Cal. Mar. 23, 2011) (quoting N. Am. Chem. Co. v. Superior Ct., 59 Cal. App. 4th 764, 786 (1997)). Blue Water has not met its burden to plead this claim. First, it fails to sufficiently allege the existence of specific economic relations with third parties containing a reasonably probable future economic benefit. Blue Water alleges only that it “has existing or prospective economic relationships with citizens of Santa Barbara County, visitors to Santa Barbara County, and other individuals and organizations doing business in and related to Santa Barbara County.” SAC ¶ 138. The “Plaintiff’s Facts” section is no more descriptive, vaguely asserting that “Plaintiff enriches the lives of locals and tourists alike by providing unique on-the- water experiences.” Id. ¶ 69. But relationships with “citizens,” “locals,” “visitors,” “individuals,” and “businesses” – like “[r]elationships with the ‘general public’ and ‘tourists’” – “do not satisfy the specificity requirement.” Blue Dolphin Charters, Ltd. v. Knight & Carver Yachtcenter, Inc., No. 11-CV-565-LWVG, 2011 WL 5360074, at *5 (S.D. Cal. Nov. 3, 2011) (“Plaintiff must allege … the existence of a specific economic relationship between it and one or more third parties.”); cf. Westside Center Assoc. v. Safeway Stores 23, Inc., 42 Cal. App. 4th 507, 527-28 (1996) (plaintiff failed to identify "an existing relationship with an identifiable Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 22 of 34 Page ID #:268 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -13- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT buyer" or to specify the "factual basis upon which to determine whether the plaintiff was likely to have actually received the expected benefit"). In Andrews, this Court found that allegations were sufficiently specific to establish the existence of an economic relationship where the Plaintiffs “substantiate[d] their allegations with specific details.” Order Granting in Part and Den. in Part Mot. to Dismiss, Stace Cheverez et al. v. Plains All American Pipeline, L.P., et al., No. 2:15-cv-04113 (C.D. Cal. Mar. 4, 2016), ECF No. 77 at 12. But, even though Plains disagrees with the Andrews ruling, the fact is that the Andrews complaint included far more specific allegations than Blue Water’s complaint. This Court cited, among other things, allegations about specific bookings that were allegedly cancelled as a result of the release. Id. In contrast, the Complaint here fails to describe Blue Water’s alleged economic relationships in anything but the vaguest of terms. Second, to plead a claim for negligent interference with prospective economic advantage, Blue Water would have to plead not only the existence of a specific economic relationship with a third-party, but also that Plains knew about that relationship. F.M. Tarbell Co., 2011 WL 1153539, at *5. Blue Water fails to do so, offering only the conclusory assertion that “Defendants knew or should have known of these existing and prospective economic relationships.” SAC ¶ 140. Not only does the Complaint fail to plead any facts to support the knowledge element, it is implausible to think that Plains was aware of Blue Water, much less its customers. Blue Water’s claim for negligent interference with prospective economic advantage should be dismissed. 2. Blue Water’s Claim for Public Nuisance Should Be Dismissed (Fifth Claim) (a) Blue Water Cannot Bring a Public Nuisance Claim “A private person may maintain an action for a public nuisance, if it is specially injurious to himself, but not otherwise.” Cal. Civ. Code. § 3493. “The Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 23 of 34 Page ID #:269 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -14- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT damage suffered must be different in kind and not merely in degree from that suffered by other members of the public.” Koll-Irvine Ctr. Prop. Owners Ass’n. v. Cnty. of Orange, 24 Cal. App. 4th 1036, 1040 (1994) (holding that plaintiff did not have special injury where homes and businesses in the area suffered similar damages, including diminished property values). Blue Water fails to establish that it has suffered the special injury required to bring a claim for public nuisance. Plaintiff alleges that the release occasioned “harm and injury to its economic livelihood . . . which is different from the type of harm suffered by the general public.” SAC ¶ 130. But the economic losses claimed by Blue Water are not different in kind from those claimed by other businesses in the area. Even if Blue Water could recover for damages due to public perception arising from the spill, other businesses in the area – as well as homeowners – could likewise assert they suffered the same kinds of damages, though proving whether the release caused such harm would require inquiry into each specific claim. Because Blue Water is not claiming a unique type of harm, it cannot maintain an action for public nuisance under California law. See Venuto v. Owens-Corning Fiberglas Corp., 22 Cal. App. 3d 116, 126 (1971) (plaintiffs could not bring a public nuisance claim where air pollution especially aggravated their allergies and respiratory disorders, as the public also suffered from a general irritation due to the pollution). (b) Even if Blue Water Has Standing to Bring a Public Nuisance Claim, Its Claim Should Be Dismissed Because It Is Indistinct from the Negligence Claim California courts have held that “where negligence and nuisance causes of action rely on the same facts about lack of due care, the nuisance claim is a negligence claim.” El Escorial Owners’ Ass’n v. DLC Plastering, Inc., 154 Cal. App. 4th 1337, 1349 (2007) (citations omitted); see also Schaeffer v. Gregory Village Partners, L.P., 105 F. Supp. 3d 951, 966 (N.D. Cal. 2015); Melton v. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 24 of 34 Page ID #:270 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -15- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Boustred, 183 Cal. App. 4th 521, 542 (2010) (upholding trial court’s dismissal of public nuisance claim where negligence claim also failed). Blue Water’s negligence and nuisance claims are functionally identical. Because what Blue Water “seeks is to recover in damages under the same set of facts but under different theories of recovery . . . there is but one cause of action” – the negligence action. Van Zyl v. Spiegelberg, 2 Cal. App. 3d 367, 372 (1969). Even if Blue Water has standing to plead a nuisance claim, that duplicative claim should be dismissed as a clone of its negligence claim. In both its nuisance and negligence causes of action, Blue Water claims that it has suffered and will suffer economic harm because Plains acted negligently. In alleging factual support for both claims, Blue Water refers to the same alleged acts and omissions of Plains and claims that Plains violated the same statutes. SAC ¶¶ 113, 132. And Blue Water seeks to recover for the same alleged economic harms under both claims. Id. ¶¶ 116-117, 133-134. Under California law, “when a complaint alleges but one primary right and one wrong, but one cause of action has been stated.” Work v. Cnty. Nat’l Bank & Trust Co. of Santa Barbara, 4 Cal. 2d 532, 540 (1935). Blue Water has not alleged a nuisance claim separately from its negligence claim, but rather put a different label on the same cause of action. Since Blue Water’s nuisance claim is “merely a clone of the [negligence] cause of action using a different label,” and since Blue Water’s negligence claim fails, the nuisance claim should be dismissed. See DLC Plastering, 154 Cal. App. 4th at 1348-49 (upholding trial court’s ruling that Plaintiff could not obtain recovery under a nuisance claim where that claim mirrored Plaintiff’s simultaneously-brought negligence claim); Melton, 183 Cal. App. 4th at 543 (“[P]laintiffs' cause of action for public nuisance has no independent vitality, because it merely restates their negligence claims ‘using a different label.’”). Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 25 of 34 Page ID #:271 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -16- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT 3. Blue Water Fails To State A Claim For Fraud (Seventh Claim) “Under California law, the ‘indispensable elements of a fraud claim include a false representation, knowledge of its falsity, intent to defraud, justifiable reliance, and damages.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003) (quoting Moore v. Brewster, 96 F.3d 1240, 1245 (9th Cir. 1996)); see Lazar v. Superior Ct., 12 Cal. 4th 631, 638 (1996). Blue Water has failed to plead at least three of these “indispensable elements”— knowledge, intent, and reliance. That failure is especially apparent given the heightened pleading standard for fraud claims. Rule 9(b) of the Federal Rules of Civil Procedure requires that parties alleging fraud “state with particularity the circumstances constituting fraud.” Fed. R. Civ. Proc. 9(b). Under this heightened pleading standard, a plaintiff alleging fraud must “state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., Inc., 806 F.2d 1393, 1401 (9th Cir. 1986); see also Vess, 317 F.3d at 1106 (“Averments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” (citation omitted)). Blue Water fails to allege the “who, what, when, where, and how” of Plains’ alleged fraudulent conduct. In support of its fraud claim, Blue Water refers to only two statements by Plains, which it takes from a 1200-page spill response plan. SAC ¶ 151 (“In Defendants’ 1200-page spill response plan, it called the odds of a rupture ‘extremely unlikely.’ Defendants also stated, ‘the pipeline and its operation are state-of-the-art.’”). As an initial matter, Blue Water fails to plead facts to show these statements, which are opinion statements, were false – that is, that they were both untrue and known to be untrue by the speaker. See, e.g., In re Real Estate Assocs. Ltd. P’ship Litig., 223 F. Supp. 2d 1142, 1148-49 (C.D. Cal. 2002) (“Where a statement of opinion is claimed to be false, the speaker's ‘state of mind’ is Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 26 of 34 Page ID #:272 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -17- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT implicated, and the plaintiff is required to plead the evidentiary facts showing the speaker knew the opinion to be false.” (quoting In re McKesson HBOC, Inc. Sec. Litig., 126 F. Supp. 2d 1248, 1265 (N.D. Cal. 2000)). But even assuming that Blue Water has adequately pled the statements were false, Blue Water does not allege who made these statements, to whom they were made, or when they were made. Blue Water does not allege that whomever made those statements knew they were false, nor does it plead any facts to show the speaker had an intent to defraud—let alone plead intent with the particularity required by Rule 9(b). Nor does Blue Water even attempt to allege that it ever relied on a statement made by Plains, much less that it would have been justified in doing so. All it offers is the conclusory statement that “Defendants failed to disclose or concealed the foregoing material facts, and their failure to do so induced Plaintiff to act or to refrain from acting to protect its property and business.” SAC ¶ 154. The only two statements that Blue Water alleges to be false were contained in Plains’ oil spill response plan. But Blue Water does not allege that anyone at Blue Water had ever seen or read that plan, let alone that someone at Blue Water, having read the statements, then took some action (or refrained from acting) in reliance on the statement and was justified in doing so. Because Blue Water fails to plead the elements of its fraud claim, much less meet the heightened burden of Rule 9(b), the Court must dismiss this claim. 4. Blue Water Fails To State A Claim For Strict Liability For Ultrahazardous Activity (Third Claim) (a) The Transportation of Oil Through Pipelines Is Not Ultrahazardous as a Matter of Law Under California law, “an activity is ultrahazardous only if (1) it involves a risk of serious harm to the person, land or chattels of others which cannot be eliminated by exercise of utmost care, and (2) it is not a matter of common usage.” Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 27 of 34 Page ID #:273 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -18- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Moore v. R.G. Indus., Inc., 789 F.2d 1326, 1328 (9th Cir. 1986) (citation omitted). “The California Supreme Court ‘has limited the doctrine of ultrahazardous activity to encompass only activities which are neither commonplace nor customary.’” United States v. S. California Edison Co., 300 F. Supp. 2d 964, 991 (E.D. Cal. 2004) (citing Pierce v. Pac. Gas & Elec. Co., 166 Cal. App. 3d 68, 85 (1985)). Furthermore, “whether an activity is an ultrahazardous activity is a question of law for court decision.” Edwards v. Post Transp. Co., 228 Cal. App. 3d 980, 983 (1991); see Luthringer v. Moore, 31 Cal. 2d 489, 496 (1948). Blue Water alleges that Plains was engaged in an ultrahazardous activity because it was “transporting flammable, hazardous, and toxic oil through Line 901.” SAC ¶ 101. However, this conclusory statement about the properties of oil does not establish that the transportation of oil is ultrahazardous. Indiana Harbor Belt R.R. Co. v. Am. Cyanamid Co., 916 F.2d 1174, 1181 (7th Cir. 1990) (finding that the transportation of hazardous chemical by rail was not ultrahazardous). As a common-place activity, the transportation of oil through pipelines is not ultrahazardous. According to PHMSA, there are approximately 207,810 miles of liquid pipeline in the United States, of which there are approximately 72,443 miles of crude oil pipelines. Navarrette Decl., Ex. A, PHMSA website. Not surprisingly, multiple courts have determined that the transportation of oil through pipelines is not ultrahazardous. In Fletcher v. Conoco Pipe Line Co., 129 F. Supp. 2d 1255, 1261 (W.D. Mo. 2001), the Western District of Missouri examined whether the transportation of petroleum through pipelines constituted an ultrahazardous liability. Id. at 1260. The Court rejected the argument that use of a cathodically protected petroleum pipeline was an ultrahazardous activity because it found that “the operation and cathodic protection of a petroleum pipeline is a routine and easily regulated activity.” Id. at 1261. Further, the Court found that “the transmission of natural gas and petroleum products by pipeline is a common activity in our highly- industrialized society” and that “the transportation of petroleum products is a highly Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 28 of 34 Page ID #:274 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -19- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT beneficial activity necessary for civilization as we know it.” Id. As such, the Court concluded that “as a matter of law, the operation of a cathodically-protected petroleum pipeline is not an abnormally dangerous activity.” Id.; see also Henke v. Arco Midcon, L.L.C., 750 F. Supp. 2d 1052, 1059 (E.D. Mo. 2010) (extending the holding of Fletcher to state that the maintenance of pipelines is also not an ultrahazardous activity); Melso v. Sun Pipe Line Co., 394 Pa. Super. 578, 587 (1990) (holding, as a matter of law, that running petroleum pipeline under a housing development was not an ultrahazardous activity); Chaveriat v. Williams Pipe Line Co., No. 94 C 0750, 1994 WL 583598, at *6 (N.D. Ill. Oct. 18, 1994) (granting motion to dismiss “abnormally dangerous activity” claim because “transporting petroleum products by pipeline is a common and highly beneficial activity in this industrialized society”). Courts have reached the same conclusion regarding the transportation of other potentially dangerous materials through pipelines. For instance, the Supreme Court of Washington has held that the transportation of natural gas through pipelines is not an abnormally dangerous activity. New Meadows Holding Co. by Raugust v. Washington Water Power Co., 102 Wash. 2d 495, 502 (1984) (noting that “[t]he underground transmission of gas is a matter of common usage which is appropriate to the place where it is carried on. In its brief, the American Gas Association estimates approximately 160 million people use gas for residential needs.”); Moore v. Sharp Gas Inc., No. CIV. A. 90-504 MMS, 1992 WL 147930, at *2–3 (D. Del. Jun. 11, 1992) (finding the operation of a natural gas pipeline is not inherently dangerous). Further, the Fifth Circuit has found that “offshore drilling operations are not considered ultrahazardous.” In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on Apr. 20, 2010, 808 F. Supp. 2d 943, 963 (E.D. La. 2011), aff'd sub nom. In re DEEPWATER HORIZON, 745 F.3d 157 (5th Cir. 2014) (citing Ainsworth v. Shell Offshore, Inc., 829 F.2d 548, 550 (5th Cir. 1987)); see also Arlington Forest Assocs. v. Exxon Corp., 774 F. Supp. 387, 389–93 (E.D. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 29 of 34 Page ID #:275 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -20- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Va. 1991) (storage and removal of underground gasoline storage tanks is not abnormally dangerous activity).2 (b) Blue Water’s Harm Is Not The Type Of Harm That Would Make Transporting Oil Ultrahazardous Blue Water also fails to state a claim for strict liability for ultrahazardous activity because its claimed “economic harms are not the kind of harm that would make transporting oil ultrahazardous.” Venoco Order at 14. Recovery under strict liability for ultrahazardous activity is limited to “the kind of harm, the possibility of which makes the activity abnormally dangerous.” Goodwin v. Reilley, 176 Cal. App. 3d 86, 91 (1985) (citing Rest. 2d Torts, § 519, p. 34.); see also Pinole Point Props., Inc. v. Bethlehem Steel Corp., 596 F. Supp. 283, 292 n.5 (N.D. Cal. 1984). If transporting oil were held to be ultrahazardous, it would be because of the risk of harm to persons or physical damage to property from an oil spill. Venoco Order at 15. The economic damages that Blue Water claims to have suffered from a worsened public perception are not of the same type as those direct, physical harms from oil. Because Blue Water’s alleged damages are not caused by the oil itself, it has failed to plead damages cognizable under an ultrahazardous activity claim. 5. Blue Water Fails To State a Claim for Willful Misconduct (Fourth Claim) Blue Water pleads “Negligence, Gross Negligence, and Willful Misconduct” as a single cause of action. SAC ¶¶ 108-124. But under California law, “‘willful or 2 Plains recognizes this Court declined in Venoco to find as a matter of law that transportation of oil through a pipeline was not an ultrahazardous activity, although it dismissed the claim there on other grounds. Venoco Order at 14. Plains preserves the argument here and urges the Court to revisit the issue. In any event, however, as explained in the next subsection, Blue Water’s ultrahazardous activity claim fails for the same reasons as Venoco’s—because the alleged damages would not be recoverable even assuming transportation of oil in a pipeline is ultrahazardous. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 30 of 34 Page ID #:276 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -21- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT wanton misconduct is separate and distinct from negligence.’” Dazo v. Globe Airport Sec. Servs., 295 F.3d 934, 941 (9th Cir. 2002) (quoting Calvillo-Silva v. Home Grocery, 19 Cal. 4th 714, 729 (1998), disapproved on other grounds by Aguilar v. Atl. Richfield Co., 25 Cal. 4th 826 (2001)). While negligence and gross negligence mark an absence of care, willful misconduct “involves a more positive intent actually to harm another or to do an act with a positive, active and absolute disregard of its consequences.” Home Grocery, 19 Cal. 4th at 729. To state a claim for willful misconduct, Blue Water must show “(1) actual or constructive knowledge of the peril to be apprehended, (2) actual or constructive knowledge that injury is a probable, as opposed to a possible, result of the danger, and (3) conscious failure to act to avoid the peril.” Simmons v. S. Pac. Transp. Co., 62 Cal. App. 3d 341, 360 (1976) (citations omitted). Moreover, under both federal and California law, Blue Water must plead a willful misconduct claim to a heightened pleading standard. Galvan v. Mimms, No. 1:11-CV-00326-SAB, 2013 WL 1962688, at *5 (E.D. Cal. May 10, 2013) (“The pleading requirements for willful misconduct are stricter than those for negligence, and the acts or omissions must be more specifically described to rise to the level of willful misconduct.”) (citation omitted); Chipman v. Nelson, No. 2:11-CV-2770-TLN-EFB, 2015 WL 5330143, at *5 n.7 (E.D. Cal. Sept. 11, 2015) (“Although the pleading requirements for willful misconduct are similar to a negligence claim, they require more specific facts to state a claim for willful misconduct.”); Berkley v. Dowds, 152 Cal. App. 4th 518, 528 (2007) (“The act or omission must be even more specifically described in order to raise it to the level of willful misconduct.”) (citation omitted); Colich & Sons v. Pac. Bell, 198 Cal. App. 3d 1225, 1241 (1988) (“Where a party relies on willful misconduct there are sound reasons why he should be required to state facts more fully than in ordinary negligence cases so that it may be determined whether they constitute willful misconduct rather than negligence or gross negligence.”). It fails to do so. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 31 of 34 Page ID #:277 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -22- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT Blue Water’s conclusory assertions fail to meet the pleading burden for its willful misconduct claim. Blue Water pleads only that Plains “should have known that Line 901 could rupture or otherwise fail,” and that Plains “actively avoided taking action to protect Plaintiff from apparent risks Line 901 presented.” SAC ¶¶ 65, 111. However, “bare assertions ... amount[ing] to nothing more than a ‘formulaic recitation of the elements’ of a ... claim ... are not entitled to an assumption of truth.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 556 U.S. at 681). Blue Water has not pled any facts that would support its bare assertion that Plains knew Line 901 was going to fail and consciously decided to let that happen. The allegation that a May 2015 inspection of Line 901 revealed corrosion does not support that assertion, as Plaintiff does not and cannot allege that those results were known to Plains as of the time of the release. SAC ¶ 47. Moreover, Blue Water alleges that Plains did take actions to prevent ruptures on Line 901. Id. (“Defendants apparently repaired corrosion at three adjacent parts of Line 901 in recent years . . .”). Absent supporting facts for the extreme and counterintuitive claim that Plains willfully allowed its own line to experience a failure, Blue Water’s claim for willful misconduct must be dismissed. 6. Punitive Damages and Permanent Injunction Are Not Distinct Causes of Action And Must Be Dismissed (Eighth and Ninth Claims) Separate from their state law claims, Blue Water asserts a standalone cause of action for punitive damages and one for permanent injunction. However, both permanent injunction and punitive damages are remedies, not causes of action. Allen v. City of Sacramento, 234 Cal. App. 4th 41, 65 (2015) (“Injunctive relief is a remedy, not a cause of action.” (citing Roberts v. Los Angeles Cnty. Bar Assoc., 105 Cal. App. 4th 604, 618 (2003); McDowell v. Watson, 59 Cal. App. 4th 1155, 1159 (1997))); Hilliard v. A. H. Robins Co., 148 Cal. App. 3d 374, 391 (1983) (“There is no cause of action for punitive damages.”). Because neither permanent injunction Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 32 of 34 Page ID #:278 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e -23- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT nor punitive damages constitute separate causes of action under California law, the Eighth and Ninth claims in the Second Amended Complaint must be dismissed. Shell Oil Co. v. Richter, 52 Cal. App. 2d 164, 168 (1942) (“Injunctive relief is a remedy and not, in itself, a cause of action, and a cause of action must exist before injunctive relief may be granted.”(citation omitted)). IV. CONCLUSION The Court should dismiss Plaintiff’s claims with prejudice because “it is clear that the complaint cannot be saved by further amendment.” Dumas v. Kipp, 90 F.3d 386, 389 (9th Cir. 1996). As the defects in Plaintiff’s pleading arises from the basic premise of its claims, further amendment would be futile. DATED: October 17, 2016 MUNGER, TOLLES & OLSON LLP BRAD D. BRIAN HENRY WEISSMANN DANIEL B. LEVIN MELINDA E. LeMOINE THOMAS PAUL CLANCY JORDAN X. NAVARRETTE By: s/ Daniel B. Levin DANIEL B. LEVIN Attorneys for Defendants PLAINS ALL AMERICAN PIPELINE, L.P. and PLAINS PIPELINE, L.P. Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 33 of 34 Page ID #:279 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- 2:16-cv-03283-PSG-JEM MEMORANDUM IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT CERTIFICATE OF SERVICE The undersigned hereby certifies that a copy of the foregoing document was filed electronically on October 17, 2016. Therefore, this document was served on all counsel who are deemed to have consented to electronic service. /s/ Daniel B. Levin DANIEL B. LEVIN Case 2:16-cv-03283-PSG-JEM Document 37-1 Filed 10/17/16 Page 34 of 34 Page ID #:280 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2:16-cv-03283-PSG-JEM [PROPOSED] ORDER GRANTING MOTION TO DISMISS UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA BLUE WATER BOATING, INC. D/B/A SANTA BARBARA SAILING CENTER, a California corporation, Plaintiffs, vs. PLAINS ALL AMERICAN PIPELINE, L.P., a Delaware limited partnership, and PLAINS PIPELINE, L.P., a Texas limited partnership, and JOHN DOES 1 through 10, Defendants. Case No. 2:16-cv-03283-PSG-JEM [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS Hearing Date: January 30, 2017 Hearing Time: 1:30 P.M. Judge: Hon. Philip S. Gutierrez Courtroom: Roybal Room 880 Case 2:16-cv-03283-PSG-JEM Document 37-2 Filed 10/17/16 Page 1 of 3 Page ID #:281 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- 2:16-cv-03283-PSG-JEM [PROPOSED] ORDER GRANTING MOTION TO DISMISS Defendants Plains All American Pipeline, L.P., and Plains Pipeline, L.P. (“Plains”) have filed a Motion to Dismiss Plaintiff Blue Water Boating, Inc. D/B/A Santa Barbara Sailing Center’s (“Blue Water”) Second Amended Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), which came on for hearing before this Court on January 30, 2017, Honorable Philip S. Gutierrez presiding. Having considered the parties’ papers, evidence, declarations, and oral argument presented at the hearing, and good cause appearing therefore, IT IS HEREBY ORDERED that the Motion to Dismiss Plaintiff’s Second Amended Complaint, with prejudice, is GRANTED, for the following reasons: First, Blue Water’s OPA claim fails to satisfy OPA’s statutory causation requirements. Blue Water has alleged a claim for damages under OPA section 2702(b)(2)(E), which permits recovery of economic losses “due to the injury, destruction, or loss of real property, personal property, or natural resources.” 33 U.S.C. § 2702(b)(2)(E). Blue Water fails to satisfy OPA’s causation requirement because it claims that its economic losses stem from a worsened public perception of Santa Barbara beaches, not from damage to those beaches or any other property or natural resources. Second, Blue Water’s claim under California’s Oil Spill Prevention and Response Act (“OSPRA”) fails to satisfy OSPRA’s causation and damages requirements. Lost profits are recoverable only if they are “due to the injury, destruction, or loss of real property, personal property, or natural resources.” Cal. Gov’t Code § 8670.56.5(h)(6). As with its OPA claim, Blue Water fails to satisfy OSPRA’s causation requirement by relying on a theory that worsened public perception of Santa Barbara beaches will hurt its business. Furthermore, lost profits are only recoverable by a claimant “who derives at least 25 percent of his or her earnings from the activities that utilize the property or natural resources.” Id. Because Blue Water fails to make any factual allegations to support finding that it meets the statutory requirement to collect lost profits, its claim fails. Case 2:16-cv-03283-PSG-JEM Document 37-2 Filed 10/17/16 Page 2 of 3 Page ID #:282 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- 2:16-cv-03283-PSG-JEM [PROPOSED] ORDER GRANTING MOTION TO DISMISS Blue Water’s common-law tort claims must be dismissed for multiple reasons. First, Blue Water’s negligence claim fails because, under long-established California law, plaintiffs cannot sustain a claim for negligence based purely on economic loss without accompanying physical harm to their property, and Blue Water cannot satisfy the narrow exception to that rule. Blue Water’s claim for negligent interference with prospective economic advantage is barred by the economic loss rule. It also fails because a necessary element of that claim is that defendants had knowledge of an existing or prospective economic relationship, but Blue Water does not – and cannot plausibly – allege that Plains knew of specific relationships between Blue Water and particular customers that were allegedly disrupted by the spill. Blue Water fails to plead multiple elements of its fraud claim with the particularity required under Rule 9(b), including failing to plead any facts to show it relied on any allegedly false statements made by Plains. Blue Water’s claim for strict liability under a theory of ultrahazardous activity must be rejected because the transportation of oil by pipeline is not an ultrahazardous activity, and because Blue Water’s economic harms are not the type that would make an activity ultrahazardous. Blue Water’s willful misconduct claim fails because it does not and cannot allege willfulness or intentional conduct to cause a spill. Finally, Blue Water’s punitive damages and permanent injunction claims are derivative of and rely on its other claims and, therefore, must also be dismissed. For the foregoing reasons, Blue Water’s Second Amended Complaint is dismissed with prejudice and without leave to replead. DATED: ___________, 2017 HON. PHILIP S. GUTIERREZ Case 2:16-cv-03283-PSG-JEM Document 37-2 Filed 10/17/16 Page 3 of 3 Page ID #:283