City of Spokane v. Monsanto Company et al

MOTION to Dismiss for Failure to State a Claim

E.D. Wash.December 14, 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS BARON & BUDD, P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 OFFICE OF THE CITY ATTORNEY Elizabeth L. Schoedel (WSBA #20240) Salvatore J. Faggiano (WSBA #15696) Hunt M. Whaley (WSBA #46419) Assistant City Attorneys 808 W. Spokane Falls Blvd. Spokane, Washington 99201-3326 Telephone: (509)625-6225 Fax: (509)625-6277 BARON & BUDD, P.C. Scott Summy (admitted Pro Hac Vice) (Texas Bar No. 19507500) Carla Burke (admitted Pro Hac Vice) (Texas Bar No. 24012490) Celeste Evangelisti (admitted Pro Hac Vice) (CA Bar No. 225232) Brett Land (admitted Pro Hac Vice) (Texas Bar No. 24092664) 3102 Oak Lawn Avenue, Suite 1100 Dallas, Texas 75219-4281 Telephone: (214) 521-3605 GOMEZ TRIAL ATTORNEYS John H. Gomez (admitted Pro Hac Vice) (CA Bar No. 171485) John P. Fiske (admitted Pro Hac Vice) (CA Bar No. 249256) 655 West Broadway, Suite 1700 San Diego, CA 92101 Telephone: (619) 237-3490 Attorneys for Plaintiff City of Spokane UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON CITY OF SPOKANE, a municipal corporation located in the County of Spokane, State of Washington, Plaintiff, v. MONSANTO COMPANY, et al., Defendants. Case No.: 2:15-cv-00201-SMJ PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS Judge: Hon. Salvador Mendoza Jr. Complaint Filed: July 31, 2015 Hearing Date: February 2, 2017 Time: 6:30 p.m. Without Oral Argument Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS BARON & BUDD, P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 TABLE OF CONTENTS I. INTRODUCTION ………………………………………………………… 1 II. BACKGROUND…………………………………………………………. 2 III. STANDARD OF REVIEW………………………………………………. 3 IV. ARGUMENT……………………………………………………………....3 A. Monsanto Lacks Standing To Sue The City…………………………....3 1. Monsanto cannot, by definition, allege “injury-in-fact.”………….. 4 2. Monsanto cannot show causation………………………………….. 6 3. Monsanto cannot show redressability…………………………….... 6 4. Monsanto cannot show that it is in the “zone of interest” that CERCLA was intended to protect……………………………... 7 B. Monsanto Cannot Prevail On A Cost Recovery Action……………..... 9 1. Monsanto cannot show that it incurred necessary response costs……………………………………………………… 9 a. The discharge of PCBs did not cause Monsanto’s expenditures………………………………………………….....10 b. Monsanto’s expenditures were not “necessary.”……………….11 c. Monsanto cannot recover litigation costs and attorney’s fees under CERCLA……………………………….. 14 C. Monsanto Cannot Prevail on a Declaratory Judgment Action ……… 14 V. CONCLUSION…………………………………………………………... 15 Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS BARON & BUDD, P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 TABLE OF AUTHORITIES Page(s) Cases Balistreri v. Pacifica Police Dep't, 901 F.2d 696 (9th Cir.1990) ................................................................................. 3 California Dep't of Toxic Substances Control v. Jim Dobbas, Inc., No. 2:14-595 WBS EFB, 2014 WL 4627248 (E.D. Cal. Sept. 16, 2014) .......... 14 Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863 (9th Cir. 2001) ............................................................................ 8, 9 Chevron Envtl. Mgmt. Co. v. BKK Corp., 880 F. Supp. 2d 1083 (E.D. Cal. 2012) .............................................................. 14 City of Colton v. American Promotional Events, Inc.-West, 614 F.3d 998 (9th Cir. 2010) ........................................................................ 14, 15 Clarke v. Securities Indus. Ass’n, 479 U.S. 388, 107 S. Ct. 750, 93 L. Ed. 2d 757 (1987) ....................................... 8 Ecological Rights Foundation v. Pacific Lumber Co., 230 F.3d 1141 (9th Cir. 2000) .......................................................................... 4, 5 Ellis v. Gallatin Steel Co., 390 F.3d 461 (6th Cir. 2004) .................................................................... 7, 11, 12 Friends of the Earth v. Laidlaw Environmental Services, Inc., 528 U.S. 167, 120 S. Ct. 693, 145 L. Ed. 2d 610 (2000) ..................................... 4 Key Tronic Corp. v. United States, 511 U.S. 809, 114 S. Ct. 1960, 128 L. Ed. 2d 797 (1994) ....................... 7, 12, 14 Krygoski Const. Co. v. City of Menominee, 431 F. Supp. 2d 755 (W.D. Mich. 2006) ................................................ 12, 13, 14 Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209 (3d Cir. 1993) ........................................................................... 11, 12 Louisiana-Pac. Corp. v. ASARCO Inc., 24 F.3d 1565 (9th Cir. 1994) .............................................................................. 14 Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS BARON & BUDD, P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 Lujan v. Defs. of Wildlife, 504 U.S. 555, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992) ............................... 4, 7 Pakootas v. Teck Cominco Metals, Ltd., 632 F. Supp. 2d 1029 (E.D. Wash. 2009) ............................................................. 3 Pritikin v. Dep't of Energy, 254 F.3d 791 (9th Cir. 2001) ................................................................................ 7 Public Interest Research Group of New Jersey v. Yates Industries, Inc., 757 F. Supp. 438 (D.N.J. 1991) ............................................................................ 6 Sierra Club v. Morton, 405 U.S. 727, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972) ....................................... 4 United States v. Atlantic Research Corp., 551 U.S. 128, 127 S. Ct. 2331, 168 L. Ed. 2d 28 (2007) ................................... 10 United States v. Hardage, 982 F.2d 1436 (10th Cir.1992) ........................................................................... 11 United States v. Iron Mountain Mines, Inc., 987 F. Supp. 1263 (E.D. Cal. 1997) ................................................................... 11 United States v. W. Processing Co., 761 F. Supp. 725, 730 (W..D. Wash. 1991)...………………………………….. 8 Young v. United States, 394 F.3d 858 (10th Cir. 2005) ............................................................................ 11 Statutes 42 U.S.C. § 9601 ........................................................................................................ 1 42 U.S.C. § 9607 ........................................................................................................ 9 Other Authorities Fed. R. Civ. Pro. 11 .................................................................................................... 2 Fed. R. Civ. Pro. 12(b)(6) ...................................................................................... 2, 3 Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 1 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 I. INTRODUCTION The Court has already found that the City of Spokane alleges an unbroken causal chain between Monsanto’s production of PCBs and the contamination of the City’s property and of the Spokane River. In an outrageous move, Monsanto now claims that it is injured by the PCB contamination --- caused by Monsanto’s own product --- and seeks to recover damages from the City for its “injury.” Through a twisted and unprecedented application of environmental law, Monsanto seeks to profit from the very situation that it created. The legal claims are baseless and are merely an attempt to intimidate the City and other municipalities who have filed or plan to file similar lawsuits.1 The company should not escape its own liability by abusing the court system or alleging frivolous claims. In Defendants’ Answer to Complaint and Counterclaims (“Counterclaims,” ECF Doc. 79), Monsanto states two claims against the City of Spokane under the federal CERCLA statute, 42 U.S.C. § 9601, et seq. Furthermore, the company explains that it will amend to add additional claims under the Clean Water Act and allege state-law negligence, unjust enrichment, contribution, and equitable indemnity --- all relating to the environmental contamination of the Spokane River.2 See ECF No. 79 at 36, ¶¶ 4-5. 1 The State of Washington filed a lawsuit against Monsanto on December 8, 2016, making it the ninth governmental entity to sue the company for damages arising from PCB contamination. 2 Monsanto’s “Clean Water Act Notice of Intent to Sue/60-Day Notice Letter” to the City is attached as Exhibit “A.” A corporation, which has a principal place of business in St. Louis, Missouri and no connection to the Spokane River other than the Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 2 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 The City now moves to dismiss the Counterclaims pursuant to Rule 12(b)(6). Monsanto’s allegations are legally deficient and fail to state claims under CERCLA. They should be dismissed. Moreover, because the company cannot amend to cure these defects, the Court should dismiss without leave to amend. II. BACKGROUND The City of Spokane operates wastewater and stormwater systems that gather and transport rainwater, wastewater, and other runoff to treatment facilities and, ultimately, into the Spokane River. Complaint, ECF No. 1 at 3. The water that washes into that system contains toxic chemical contaminants known as polychlorinated biphenyls or “PCBs.” The River is considered an “impaired” water body because PCBs have been detected in the water, sediments, fish, and wildlife. Id. at 3-4. The Clean Water Act thus requires the City to obtain a National Pollutant Discharge Elimination System (“NPDES”) Permit to discharge stormwater into the River and requires the City to reduce the amount of PCBs present in the stormwater that it discharges. Id. at 3, 7. The City has already spent money to reduce PCB discharges and expects to incur significant costs to further reduce the PCBs entering and flowing through its stormwater system. Id. at 8. In addition, the presence of PCBs limits the public uses of the River. contamination it created, has no colorable claim for standing under either CERCLA or the Clean Water Act. Because Monsanto cannot reasonably allege that it is in any way affected by the contamination of the Spokane River to support standing in a CWA action, the City will oppose the letter and may file a malicious prosecution claim and possibly seek Rule 11 sanctions. Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 3 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 Given the potential for adverse health effects, the Washington State Department of Health and Ecology issued a Health Advisory for Spokane River Fish Consumption and has designated certain segments of the River as “catch and release only.” Id. at 4. The City sued Defendants Monsanto Company, Solutia, Inc., and Pharmacia Corporation (collectively “Monsanto”) to recover costs and damages associated with PCB contamination. Monsanto has now filed counterclaims against the City for damages arising from the pending litigation. By twisting the purpose of federal environmental laws, Monsanto actually seeks to shift back to the City any damages it is found to owe to the City for its own PCB products. Because these claims are baseless and/or specious, at best, the City asks the Court to dismiss these counterclaims. III. STANDARD OF REVIEW A court may dismiss a counterclaim under Rule 12(b)(6) where there is either a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1990); Pakootas v. Teck Cominco Metals, Ltd., 632 F. Supp. 2d 1029, 1031 (E.D. Wash. 2009) (applying standard to motion to dismiss CERCLA counterclaims). IV. ARGUMENT A. Monsanto Lacks Standing To Sue The City. In Lujan v. Defenders of Wildlife, the United States Supreme Court has articulated three requirements for Article III standing: (1) the plaintiff must have suffered an “injury in fact”—an invasion of a legally protected interest which is (a) concrete and Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 4 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection between the injury and the conduct complained of so that the injury is fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court; and (3) it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-1, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992) (internal citations and quotations omitted). 1. Monsanto cannot, by definition, allege “injury-in-fact.” As a fundamental matter, an environmental plaintiff must have suffered an “injury in fact” – an invasion of a legally-protected interest that is both concrete and actual or imminent, rather than hypothetical and demonstrates a “‘personal stake in the outcome of the controversy.’” Sierra Club v. Morton, 405 U.S. 727, 732, 92 S. Ct. 1361, 1364, 31 L. Ed. 2d 636 (1972). A plaintiff cannot make this showing by alleging generalized harm to society or to the environment; the plaintiff must show damage to its own interests. Id.; Ecological Rights Foundation v. Pacific Lumber Co., 230 F.3d 1141, 1152 (9th Cir. 2000). For example, a plaintiff who uses the affected area may demonstrate that such uses will be affected by the pollution. Friends of the Earth v. Laidlaw Environmental Services, Inc., 528 U.S. 167, 183, 120 S. Ct. 693, 705, 145 L. Ed. 2d 610 (2000). But the Supreme Court insists on a connection to the affected area, explaining that “a plaintiff claiming injury from environmental damage must use the area affected Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 5 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 by the challenged activity and not an area roughly ‘in the vicinity’ of it.” Lujan, 504 U.S. at 565-66. The Ninth Circuit likewise requires a “connection to the area of concern” that is “sufficient to make credible the contention that the person’s future life will be less enjoyable – that he or she really has or will suffer in his or her degree of aesthetic or recreational satisfaction if the area in question remains or becomes environmentally degraded.” Ecological Rights Foundation, 230 F.3d at 1149. A plaintiff that lacks such a connection to the area of concern similarly lacks standing to sue. Monsanto does not and cannot allege any interest in the Spokane River and how that interest has been affected by the City’s discharges. The Counterclaims allege that Monsanto has incurred “response costs, including the costs of investigation of PCB sources into the Spokane River” and “legal and other costs pertaining to the present suit.” ECF No. 79 at ¶¶ 25, 58, 66. By its own admission, these costs arise from the City’s litigation against Monsanto; the company does not allege that it incurred these costs for any other reason or to protect any other interest. Without identifying why Monsanto has incurred these so-called necessary “response” costs, Monsanto fails to state any basis for standing. Under Monsanto’s distorted argument pertaining to its CERCLA standing, any third party could allege it has incurred necessary response costs without a showing of a necessary nexus to establish standing. This would allow any third party to unnecessarily incur costs without a legal nexus, then sue to recover those costs, creating a cottage industry of unintended litigation. Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 6 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 2. Monsanto cannot show causation. Monsanto cannot show that the City’s discharges caused its injury (if any). A plaintiff must also show a causal connection between the injury and the conduct alleged. Public Interest Research Group of New Jersey v. Yates Industries, Inc., 757 F. Supp. 438, 443 (D.N.J. 1991) (plaintiff must show that discharged pollutant “causes or contributes to the kinds of injuries alleged by the plaintiffs.”). To satisfy this requirement, Monsanto would have to show that the City’s discharges are the reason that it suffers the injury above. Monsanto’s own language belies any allegation of causation: it alleges that it has incurred costs as a result of the litigation, ECF No. 79 at ¶¶ 25, 58, 66, not as a result of the presence of PCBs in the River. The lawsuit itself does not suffice. The City’s suit involves injury and damages to the City’s stormwater system, not cleanup and abatement of the Spokane River. Thus, Monsanto cannot use the Spokane River as a basis for incurring “necessary costs” associated with the Spokane River. In fact, Monsanto so passionately argued earlier in this case that the matter cannot be about cleanup and abatement of the Spokane River because the City cannot force such a cleanup as it lacks a property interest in the waters of the state, including the Spokane River. 3. Monsanto cannot show redressability. Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 7 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 Monsanto cannot show that it has injuries, much less injuries that may be remedied via CERCLA counterclaims. Monsanto’s claimed injury is the cost of defending against the City’s suit. ECF No. 79 at 66-68 (alleging that it has incurred costs “to assess and investigate contamination” and that, if found liable, Monsanto “will incur costs to investigate and/or remediate” the contamination). As discussed in greater detail below, those costs are not recoverable under CERCLA. Monsanto cannot obtain the relief it seeks. See Key Tronic Corp. v. United States, 511 U.S. 809, 820-1, 114 S. Ct. 1960, 1968, 128 L. Ed. 2d 797 (1994) (tests performed to defend litigation do not rise to the level of “response costs” and are not recoverable); Ellis v. Gallatin Steel Co., 390 F.3d 461, 482 (6th Cir. 2004) (“Further, investigative activities that are litigation- related costs are not compensable under CERCLA.”). Where the relief will not remedy the alleged injury, a district court properly dismisses a claim for lack of standing. See Pritikin v. Dep't of Energy, 254 F.3d 791, 801 (9th Cir. 2001) (affirming dismissal by Eastern District of Washington). 4. Monsanto cannot show that it is in the “zone of interest” that CERCLA was intended to protect. In addition to the constitutional requirements for standing, courts also require that the plaintiff show that the injury suffered falls within the “zone of interests” that the statute was designed to protect. Lujan, 497 U.S. at 883. Monsanto’s only alleged injury is its costs of defending against the City’s lawsuit. The statute at issue here, CERCLA, was not designed to protect the manufacturers of chemicals from the costs of defending tort suits for damages caused by those chemicals. Nor can CERCLA be perverted to Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 8 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 insulate chemical manufacturers from those damages by shifting the responsibility to the claimant whose property is contaminated. “CERCLA was enacted to protect and preserve public health and the environment by facilitating the expeditious and efficient cleanup of hazardous waste sites.” Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 880 (9th Cir. 2001). CERCLA’s protective scope does not include reimbursing Monsanto for its self-serving testing. The Western District rejected a similar attempt to impose CERCLA liability on the EPA for its efforts at a remediation site. In United States v. W. Processing Co., the court observed that CERCLA “was designed to compel commercial concerns to internalize the costs of waste disposal.” 761 F. Supp. 725, 730 (W.D. Wash. 1991). Imposing liability on EPA “would violate the fundamental principle that ‘those who benefit financially from a commercial activity [should] internalize the health and environmental costs of that activity into the costs of doing business.’” Id. at 728. This principle coupled with Lujan’s “zone of interests” test appropriately excludes those plaintiffs --- like Monsanto --- “whose suits are more likely to frustrate than to further statutory objectives.” Clarke v. Securities Indus. Ass’n, 479 U.S. 388, 397, 107 S. Ct. 750, 93 L. Ed. 2d 757 (1987). Under this test, standing is barred if “the interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.” Id. at 399. Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 9 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 Clarke describes the present circumstances perfectly. Monsanto cannot be allowed to claim that it is “injured” by the PCB contamination in the Spokane River, when its only injury is potential liability to the City for the same contamination. Congress never intended such an absurd result in enacting CERCLA, and this does not give Monsanto standing to now sue the victim of its own actions. B. Monsanto Cannot Prevail On A Cost Recovery Action. Even if Monsanto somehow demonstrated Article III standing, it cannot state a valid cost recovery claim under CERCLA. 1. Monsanto cannot show that it incurred necessary response costs. Monsanto’s first counterclaim seeks “reimbursement from the City pursuant to CERCLA § 107(a), 42 U.S.C. § 9607(a) for all necessary response costs” that it has incurred. ECF No. 79 at ¶ 68. To prevail in a private cost recovery action under Section 107, a plaintiff must establish that: (1) the site on which the hazardous substances are contained is a “facility” under CERCLA's definition of that term, Section 101(9), 42 U.S.C. § 9601(9); (2) a “release” or “threatened release” of any “hazardous substance” from the facility has occurred, 42 U.S.C. § 9607(a)(4); (3) such “release” or “threatened release” has caused the plaintiff to incur response costs that were “necessary” and “consistent with the national contingency plan,” 42 U.S.C. §§ 9607(a)(4) and (a)(4)(B); and Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 10 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 (4) the defendant is within one of four classes of persons subject to the liability provisions of Section 107(a). Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 870–71 (9th Cir. 2001). Assuming that Monsanto can show that the City’s stormwater system is a “facility” and that PCBs are a “hazardous substance” that the system “released,” Monsanto’s Section 107 action still fails because it cannot show the release of PCBs into the River caused Monsanto to incur any necessary response costs, as required by subsection 3, above. As the instant suit does not regard cleanup and abatement of the Spokane River, by definition there is no necessity to Monsanto’s claim for costs. a. The discharge of PCBs did not cause Monsanto’s expenditures. Monsanto’s counterclaim does not allege that it has incurred costs in connection with remediation of the Spokane River; rather, it alleges that it has incurred costs “to assess and investigate contamination” and that, if found liable, Monsanto “will incur costs to investigate and/or remediate” the contamination. ECF No. 79 at 66-68. The Supreme Court has rejected this very argument, explaining that satisfying a judgment or settlement agreement does not constitute incurring response costs: Section 107 allows a private party “to recover only the costs it has ‘incurred’ in cleaning up a site. When a party pays to satisfy a settlement agreement or a court judgment, it does not incur its own costs of response. Rather, it reimburses other parties for costs that those parties incurred.” U.S. v. Atlantic Research Corp., 551 U.S. 128, 139, 127 S. Ct. Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 11 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 2331, 2338, 168 L. Ed. 2d 28 (2007). In other words, Monsanto’s costs are not even “response costs” that are recoverable under Section 107. If anything, Monsanto’s own nuisance and conduct has caused it to respond to its own PCB products. b. Monsanto’s expenditures were not “necessary.” Moreover, the alleged investigation costs are not necessary and Monsanto’s Section 107 counterclaim fails. Necessary costs are costs that are “necessary to the containment and cleanup of hazardous releases.” United States v. Hardage, 982 F.2d 1436, 1448 (10th Cir.1992); United States v. Iron Mountain Mines, Inc., 987 F. Supp. 1263, 1271 (E.D. Cal. 1997). Testing and sampling costs are “necessary” only where the party seeking to recover those costs has an interest in property that may be affected by a release of hazardous substances. See, e.g., Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209, 1220 (3d Cir. 1993) (public drinking water provider could recover costs of investigating extent of contamination following release near its water supply). “[O]nly ‘work that is closely tied to the actual cleanup ... may constitute a necessary cost of response.’” Ellis v. Gallatin Steel Co., 390 F.3d 461, 482 (6th Cir. 2004). “Federal courts have determined that costs cannot be ‘necessary’ ‘absent some nexus between the alleged response cost and an actual effort to respond to environmental contamination.’” Young v. United States, 394 F.3d 858, 863 (10th Cir. 2005). Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 12 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 Here, Monsanto’s costs to assess and investigate the contamination are entirely unnecessary. It does not allege that it has an interest in property that may be affected by the presence of PCBs. The counterclaims do not allege how the testing is necessary, or even helpful, to the cleanup of the PCB contamination in the Spokane River. The contamination of the River is well-documented, and neither Ecology nor the City requested that Monsanto perform additional testing. Under the necessity analysis, courts deny recovery where the costs incurred were duplicative of other costs, wasteful, or otherwise unnecessary to address the hazardous substances at issue. Lansford- Coaldale Joint Water Auth., 4 F.3d at 1219 (necessity requirement “prevent a plaintiff from recovering the costs incurred in instituting a needless and expensive monitoring study”). Rather, Monsanto concedes that its costs arose from the litigation and not from any effort to contain or clean up the PCB contamination. ECF No. 79 at ¶¶ 58, 66-68. The Supreme Court has held that tests performed to defend litigation do not rise to the level of “response costs” and are not recoverable. Studies that Key Tronic's counsel prepared or supervised during those negotiations may indeed have aided the EPA and may also have affected the ultimate scope and form of the cleanup. We nevertheless view such work as primarily protecting Key Tronic's interests as a defendant in the proceedings that established the extent of its liability. As such, these services do not constitute “necessary costs of response” and are not recoverable under CERCLA. Key Tronic Corp. v. United States, 511 U.S. 809, 820-1 (1994); see also Ellis, 390 F.3d at 482 (“Further, investigative activities that are litigation-related costs are not compensable under CERCLA.”). The same result holds here. Monsanto cannot Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 13 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 reasonably argue that it has acted primarily to aid in the remediation of the river. Again, the suit does not seek damages for cleanup and abatement of the Spokane River, but rather for the costs to retrofit the City’s own stormwater systems. A district court in Michigan denied cost recovery to a plaintiff who similarly had no interest in the affected property in Krygoski Const. Co. v. City of Menominee, 431 F. Supp. 2d 755 (W.D. Mich. 2006). In that case, Krygoski, the owner of a commercial site adjacent to city property, sought response costs under Section 107 for “environmental testing,” “expert fees,” and attorneys’ fees after Krygoski’s expert performed unsolicited testing on the city property. Id. at 764. The court noted that Krygoski had no connection to the affected property at all: It is undisputed that Krygoski has no protectable property interest in the Site. … Neither the EPA nor the MDEQ, federal and state agencies that are experts in the area, have ordered Krygoski to participate in any cleanup, testing or remediation activities. No state or federal entity forced Krygoski to undertake sampling and testing activities on property that it did not own. Krygoski entered the Site without permission to extricate soil samples for its own personal reasons. Id. The court concluded that Krygoski failed to satisfy the causation requirement of its prima facie case under Section 107 because the release did not cause the actions. Rather, the response costs that Krygoski incurred stemmed from its own voluntary efforts to obtain samples of soil from property in which it had no interest. Krygoski directs this Court to no caselaw awarding response costs for sampling and testing the soil of property in which the plaintiff had no interest. This Court concludes that Krygoski's actions were not justified. Id. (dismissing Krygoski’s CERCLA claims with prejudice). Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 14 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 This opinion highlights the frailty of Monsanto’s claims. As removed as Krygoski was from the clean-up there, Monsanto is even more removed here. Krygoski was, at least, an adjacent property owner who had a legally-cognizable interest that was potentially affected by contamination. Monsanto has no interest in the Spokane River at all. It owns no property that is potentially affected; it does not use the river for any commercial or recreational purposes; it does not state any potential negative impact on its business, which is located in St. Louis, Missouri. Whatever actions Monsanto takes are even less justified than those found lacking in Krygoski. c. Monsanto cannot recover litigation costs and attorney’s fees under CERCLA. Monsanto’s Prayer For Relief seeks damages for past and future response costs including attorneys’ fees, expert witness fees, and “oversight costs.” ECF No. 79 at page 58. The United States Supreme Court has clearly stated that CERCLA “does not provide for the award of private litigants' attorney's fees associated with bringing a cost recovery action.” Key Tronic, 511 U.S. at 819 (1994); Louisiana-Pac. Corp. v. ASARCO Inc., 24 F.3d 1565, 1577 (9th Cir. 1994), as amended (Aug. 30, 1994) (district court exceeded its authority by awarding litigation costs for CERCLA cost recovery action); California Dep't of Toxic Substances Control v. Jim Dobbas, Inc., No. 2:14- 595 WBS EFB, 2014 WL 4627248, at *7 (E.D. Cal. Sept. 16, 2014) (slip opinion). C. Monsanto Cannot Prevail on a Declaratory Judgment Action. Monsanto’s second counterclaim is for declaratory relief under CERCLA Section 113 and the Declaratory Judgment Act. ECF No. 79 at ¶¶ 70-85. A Section 113 Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 15 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 declaratory judgment claim is proper only in conjunction with a valid Section 107 claim. Chevron Envtl. Mgmt. Co. v. BKK Corp., 880 F. Supp. 2d 1083, 1091 (E.D. Cal. 2012). If there is no legally viable Section 107(a) claim, there can be no declaratory relief claim. City of Colton v. American Promotional Events, Inc.-West, 614 F.3d 998, 1007-08 (9th Cir. 2010). Pleading under the Declaratory Judgment Act does not change the outcome. In Colton, the Ninth Circuit treated a claim under the Declaratory Judgment Act as one stated under CERCLA: Although Colton's complaint referred to the Declaratory Judgment Act rather than CERCLA section 113(g)(2), the latter provision clearly governs this initial cost-recovery action. Because “a precisely drawn, detailed statute pre-empts more general remedies,” Hinck v. United States, 550 U.S. 501, 506, 127 S.Ct. 2011, 167 L.Ed.2d 888 (2007) (internal quotation marks omitted), we must consider whether Colton was entitled to declaratory relief under CERCLA's more detailed declaratory relief provision. Id. at 1007. Like Monsanto, Colton sought a declaratory judgment as to future liability. The court rejected that claim because CERCLA section 113 does not provide for future relief; instead, the court held that declaratory relief is available “only if liability for past costs has been established under Section 107.” Id. at 1008. V. CONCLUSION As discussed above, the defects in Monsanto’s counterclaims cannot be remedied by an amended pleading because: • As a matter of law, Section 107 allows recovery of necessary response costs. Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS - Page 16 BARON & BUDD. P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 • As a matter of law, voluntary testing costs undertaken without a property interest in the affected area are not recoverable “response costs.” • As a matter of law, voluntary testing costs undertaken without some nexus to the affected area are not caused by the release. • As a matter of law, voluntary testing costs that are duplicative of other costs are not recoverable “necessary” response costs. • As a matter of law, voluntary testing costs that are not connected to remediation of the contamination are not recoverable “response costs.” • As a matter of law, declaratory relief is not available absent a valid claim for cost recovery. • As a matter of law, litigation costs and attorneys’ fees are not recoverable under CERCLA. Dated: December 14, 2016 By: s/ Elizabeth L. Schoedel OFFICE OF THE CITY ATTORNEY Elizabeth L. Schoedel WSBA #20240 Salvatore J. Faggiano WSBA #15696 Hunt M. Whaley WSBA #46419 Assistant City Attorneys GOMEZ TRIAL ATTORNEYS John H. Gomez (admitted Pro Hac Vice) John P. Fiske (admitted Pro Hac Vice) BARON & BUDD, P.C. Scott Summy (admitted Pro Hac Vice) Carla Burke (admitted Pro Hac Vice) Celeste Evangelisti (admitted Pro Hac Vice) Brett Land (admitted Pro Hac Vice) Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16 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 CERTIFICATE OF SERVICE BARON & BUDD, P.C. 3102 Oak Lawn Ave., Ste. 1100 Dallas, Texas 75219 Telephone: 214-521-3605 CERTIFICATE OF SERVICE I hereby certify that on the 14th day of December, 2016, I caused the foregoing PLAINTIFF’S MOTION TO DISMISS MONSANTO’S COUNTERCLAIMS to be electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Counsel for Defendants: Bryce James Wilcox bryce@leehayes.com Geana Van Dessel GeanaV@leehayes.com Brent J Gilhousen brent.gilhousen@earthlink.net Robert M Howard robert.howard@lw.com Kelly E Richardson kelly.richardson@lw.com Andrea M Hogan andrea.hogan@lw.com Jennifer Casler-Goncalves jennifer.casler@lw.com Dated: December 14, 2016 By: s/ Elizabeth L. Schoedel Elizabeth L. Schoedel Case 2:15-cv-00201-SMJ Document 83 Filed 12/14/16