231 F.Supp.3d 357
N.D. Cal.2017Background
- From the 1930s–1970s Monsanto manufactured and sold PCBs, now known to be persistent environmental contaminants harmful to humans and wildlife.
- Plaintiffs: Cities of San Jose, Oakland, and Berkeley operate municipal stormwater/dry-weather runoff systems that discharge to San Francisco Bay and allege PCB contamination of those systems and of tidelands/submerged lands they steward.
- EPA-approved PCB TMDL and regional stormwater permits impose limits and stricter requirements that the Cities say have forced expenditures to reduce PCB discharges.
- Cities allege Monsanto knew of PCB hazards, promoted PCB uses, provided disposal guidance (incineration for liquids; landfilling for solids), and thus caused the Bay contamination; they assert a single claim for public nuisance seeking damages (including punitive damages and fees).
- Procedural posture: Monsanto moved to dismiss these FACs. The court previously dismissed the original complaints for lack of a demonstrated property interest; the FACs add allegations (and AB 2594 was enacted) asserting a property interest in captured stormwater. The court denied Monsanto’s motions to dismiss but invited limited further briefing on whether administrative-exhaustion issues require stay/dismissal.
Issues and Key Cases Cited
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cities have a cognizable property interest in stormwater to sue for public nuisance | AB 2594 grants public entities a right to use captured stormwater (a usufructuary interest) sufficient to support a nuisance damages claim | AB 2594 only grants limited use rights; no property interest for water abandoned/discharged to Bay | Held: The Cities sufficiently allege a property interest; whether captured water "augments" supplies is a factual question not resolvable on a 12(b)(6) motion |
| Causation: whether Monsanto’s conduct is a proximate cause of PCB contamination | Monsanto promoted PCBs, concealed risks, and provided disposal guidance that foreseeably led to environmental dissemination | Third-party intervening uses and long passage of time break causation; Monsanto did not specifically market PCBs for discharge into the Bay | Held: Allegations plausibly connect Monsanto’s conduct to the nuisance; foreseeability of third‑party acts precludes dismissal on causation at this stage |
| Availability of public nuisance damages against a product manufacturer | Cities may recover for contamination of their property and for damages tied to cleanup/mitigation under nuisance theories (and allege exceptions) | Public nuisance damages against manufacturers are disfavored and may improperly supplant products-liability law | Held: Exceptions apply where manufacturer "instructed users to dispose of wastes improperly" or created systems causing improper disposal; Cities plausibly plead such facts, so damages claim survives |
| Whether case must be stayed/dismissed for failure to exhaust administrative remedies (state reimbursement proceedings) | Plaintiffs say the damages sought are distinct from pending reimbursement proceedings and are not barred | Monsanto points to Dep’t of Finance and pending Commission on State Mandates claims; argues exhaustion may be required before this court action proceeds | Held: Court finds the issue requires further briefing; Monsanto may file a limited motion to dismiss or stay on exhaustion grounds |
Key Cases Cited
- County of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292 (cal. app.) (discussing limits on public-entity nuisance suits against manufacturers and exceptions)
- National Audubon Soc’y v. Superior Court, 33 Cal. 3d 419 (Cal. 1983) (usufructuary nature of water rights and right to use as property interest)
- In re Methyl Tertiary Butyl Ether (MTBE) Products Liability Litigation, 457 F. Supp. 2d 455 (S.D.N.Y. 2006) (recognizing usufructuary interests as sufficient for nuisance claims)
- City of Modesto Redevelopment Agency v. Superior Court, 119 Cal. App. 4th 28 (Cal. Ct. App.) (manufacturer liability in nuisance when creating or instructing improper disposal systems)
- Department of Finance v. Commission on State Mandates, 1 Cal. 5th 749 (Cal. 2016) (state must reimburse municipalities for costs imposed by unfunded state mandates; central to exhaustion argument)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard governing plausibility review on Rule 12(b)(6))