805 F.3d 685
6th Cir.2015Background
- Diageo operates whiskey distillation and aging facilities in Louisville that emit ethanol vapor, which allegedly causes "whiskey fungus" on nearby property, damaging and staining real and personal property.
- Plaintiffs (nearby property owners, lessors, renters) sued Diageo in federal court under Kentucky common-law claims: negligence, nuisance, trespass, and sought injunctive relief to abate emissions.
- Louisville Metro Air Pollution Control District issued a Notice of Violation to Diageo for violating district Regulation 1.09 and required a compliance plan; Diageo disputed the violations but agreed to vacate two warehouses.
- Diageo moved to dismiss arguing (1) no duty under state law to curb ethanol emissions and (2) Clean Air Act (CAA) preempts plaintiffs’ state-law claims.
- The district court rejected CAA preemption, dismissed negligence for failure to state a duty, and allowed nuisance, trespass, and injunctive claims to proceed; the order was certified for interlocutory appeal.
- The Sixth Circuit affirmed, holding the CAA does not preempt state common-law claims grounded in the law of the source state (Kentucky), relying on the CAA’s states’ rights savings clause and precedent distinguishing displacement of federal common law from preemption of state law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Clean Air Act preempts state common-law claims based on source-state law | CAA does not preempt state common-law claims; states retain authority to regulate emissions and individuals retain common-law remedies | CAA preempts plaintiffs’ state-law claims because the Act provides the exclusive federal framework for regulating emissions and displaces/state law conflicts with federal scheme | Held: CAA does not preempt state common-law claims brought under the law of the source state; states’ rights savings clause preserves such claims |
| Whether AEP’s displacement of federal common law compels preemption of state law | Plaintiffs: AEP displaces federal common law only and does not decide state-law preemption | Diageo: AEP reasoning requires preemption of state common law too | Held: AEP displaces federal common law but does not compel preemption of state common law; federalism presumption favors state-law survival |
| Whether source-state common-law suits disrupt the CAA cooperative federalism balance | Plaintiffs: Source-state common law complements state role, allowed by CAA §7416 | Diageo: Allowing state suits would upset allocation of authority and the permit-based regulatory scheme | Held: Applying source-state common law does not disrupt the CAA’s balance; Congress expressly allowed states to impose stricter standards |
| Whether plaintiffs pleaded legally sufficient common-law claims to survive dismissal | Plaintiffs: Complaints sufficiently allege nuisance, trespass, and entitlement to injunctive relief | Diageo: Complaints fail to plead duty, breach, or other elements (especially negligence) | Held: Negligence dismissed for failure to allege duty/breach; nuisance, trespass, and injunctive claims permitted to proceed |
Key Cases Cited
- Cipollone v. Liggett Grp., Inc., 505 U.S. 504 (plurality opinion on breadth of statutory preemption language)
- Bates v. Dow Agrosciences LLC, 544 U.S. 431 (treating "requirements" to include common-law duties)
- Riegel v. Medtronic, Inc., 552 U.S. 312 (common-law causes impose "requirements" for preemption analysis)
- Int’l Paper Co. v. Ouellette, 479 U.S. 481 (Clean Water Act preserves source-state common-law nuisance claims)
- Am. Elec. Power Co. v. Connecticut, 564 U.S. 410 (displacement of federal common law re: interstate/global emissions)
- City of Milwaukee v. Illinois & Michigan, 451 U.S. 304 (displacement of federal common law by comprehensive federal environmental statute)
- Bell v. Cheswick Generating Station, 734 F.3d 188 (3d Cir. holding CAA does not preempt source-state common-law claims)
- North Carolina ex rel. Cooper v. Tenn. Valley Auth., 615 F.3d 291 (4th Cir. distinguishing source-state vs. affected-state law for preemption)