231 F. Supp. 3d 357
N.D. Cal.2017Background
- From the 1930s–1970s Monsanto manufactured and sold PCBs, which later contaminated the San Francisco Bay via municipal stormwater and dry-weather runoff. Plaintiffs are the Cities of San Jose, Oakland, and Berkeley seeking damages for public nuisance.
- Cities operate stormwater systems and hold/use captured stormwater, tidelands, and submerged lands; EPA-approved PCB TMDL and Regional Board permits limit PCB discharges and led Cities to spend money to reduce PCBs.
- Plaintiffs amended complaints to allege three property interests: (1) contaminated municipal stormwater systems requiring retrofit; (2) contaminated tidelands/submerged lands held in trust; (3) contaminated stormwater the Cities capture and use.
- Court previously dismissed nuisance claims for lack of a property interest; after amendment and enactment of California AB 2594 (granting public entities a right to use captured stormwater), Cities assert a usufructuary property interest in captured stormwater.
- Cities allege Monsanto knew PCBs were hazardous, concealed risks, promoted PCB use, and encouraged disposal practices (e.g., recommending landfill disposal for solids) that foreseeably caused widespread environmental contamination.
- The Court denied Monsanto’s motions to dismiss, finding the FACs state public nuisance claims, but invited supplemental briefing on whether administrative-exhaustion under Dep’t of Fin. v. Comm’n on State Mandates requires stay/dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Property interest in stormwater | AB 2594 gives Cities a right to use captured stormwater (usufructuary interest) sufficient for nuisance standing | Any water not actually used and discharged to the Bay is abandoned; no property interest | Held: AB 2594 creates a use-right that plausibly supplies the required property interest; factual question on augmentation precludes dismissal |
| Causation | Monsanto’s manufacture, promotion, concealment, and disposal guidance foreseeably caused PCB contamination of the Bay | Causal chain too remote; contamination from third-party uses breaks proximate cause | Held: Allegations sufficiently plead that Monsanto created/assisted the nuisance and foreseeability overcomes remoteness at pleading stage |
| Availability of damages (products vs. nuisance) | Cities seek damages for contamination of their property/system, not a substitute products-liability claim; exceptions apply where manufacturer created/assisted disposal system or instructed improper disposal | Public-nuisance damages against product manufacturers are disfavored and often barred as disguised products-liability claims | Held: Cities plead facts fitting Modesto exceptions (instructing improper disposal); damages available at this stage |
| Administrative exhaustion / permit-cost recovery | Plaintiffs say this suit seeks damages distinct from pending reimbursement claims and need not be stayed | Dept. of Finance suggests municipalities must exhaust administrative remedies before court recovery of state-mandate compliance costs | Held: Court deferred final decision; ordered limited supplemental briefing on whether exhaustion requires dismissal or stay |
Key Cases Cited
- County of Santa Clara v. Atlantic Richfield Co., 137 Cal.App.4th 292 (2006) (public entity must hold a property interest to bring non‑representative nuisance claim)
- Nat’l Audubon Soc’y v. Superior Court, 33 Cal.3d 419 (1983) (water rights are usufructuary; right to use constitutes property interest)
- City of Modesto Redev. Agency v. Superior Court, 119 Cal.App.4th 28 (2004) (manufacturers may be liable in nuisance if they create/assist a disposal system or instruct improper disposal)
- In re Methyl Tertiary Butyl Ether (MTBE) Prod. Liab. Litig., 457 F.Supp.2d 455 (S.D.N.Y. 2006) (usufructuary interests can support nuisance claims)
- Mosley v. Arden Farms Co., 26 Cal.2d 213 (1945) (intervening acts do not bar liability when outcomes were reasonably foreseeable)
- In re Firearm Cases, 126 Cal.App.4th 959 (2005) (causation is an element of public nuisance)
- Department of Finance v. Comm’n on State Mandates, 1 Cal.5th 749 (2016) (state must reimburse local governments for costs imposed by unfunded state mandates)
- Corrie v. Caterpillar, 403 F.Supp.2d 1019 (W.D. Wash. 2005) (dismissal where causal link between sale and third‑party wartime acts was too remote)
- Team Enterprises, LLC v. Western Inv. Real Estate Trust, 647 F.3d 901 (9th Cir. 2011) (liability for assisting creation of a nuisance may include manufacturing or installing a disposal system)