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From Products Liability Law Daily, March 7, 2014

Outstanding MTBE contamination claims brought by Fresno dismissed with prejudice

By Pamela C. Maloney, J.D.

Outstanding MTBE contamination claims brought by the City of Fresno, California, against a number of companies that refined, manufactured, supplied, distributed, handled, and/or used MTBE in their gasoline were dismissed with prejudice by a federal district court in New York pursuant to a stipulation in which Fresno agreed that it would not object to the dismissal of the remainder of its contamination claims against those companies (In re: Methyl Tertiary Butyl Ether (“MTBE”) Products Liability Litigation (City of Fresno v. Chevron U.S.A.), March 5, 2014, Scheindlin, S.)

Background. The City of Fresno sought damages from a number of companies that refined, manufactured, supplied, distributed, handled, and/or used MTBE in their gasoline to pay the costs to remove MTBE pollution from drinking water supplies and to cover the costs of site assessments. Following initial settlements and stipulated dismissals with respect to a number of defendants, three groups remained: (1) the Causation Defendants seeking dismissal of strict liability and negligence claims because Fresno failed to prove that their products caused or threatened to cause damage to the water supply; (2) the Limitations Defendants seeking dismissal of all claims against them arising out of MTBE contamination at certain stations as time-barred by California’s three-year statute of limitations; and (3) the Nuisance Defendants, whose claims were mooted as a result of the resolution of the other Defendants’ motions. In September 2013, the court dismissed the city’s complaints relating to a number of the sites finding that Fresno failed to prove injury against the Causation Defendants and that the three-year statute of limitations applicable to claims for tortious injury to property barred the city’s claims against the Limitations Defendants. Thereafter, Fresno and the companies entered into a stipulation whereby Fresno agreed that the companies would prevail on summary judgment on claims relating to any remaining sites, and that it would not object to dismissal of those claims. However, Fresno argued that the remaining claims should be dismissed without prejudice.

Claims dismissed with prejudice. The Federal Rules of Civil Procedure permit a plaintiff to voluntarily dismiss an action by filing a stipulation of dismissal signed by all parties and that, unless the stipulation provides otherwise, the ensuing dismissal is without prejudice. However, courts may dismiss these actions with prejudice under the doctrine of “prudential ripeness.” In the Second Circuit, prudential ripeness is determined by examining the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.

Fresno argued that its claims should be dismissed without prejudice because its remaining claims were not ripe for review. However, this argument misconstrued the September 2013 opinion in which the court granted summary judgment because Fresno did not have sufficient evidence linking the defendant’s MTBE with current or threatened injury to drinking water in the city’s jurisdiction. The court explained that Fresno’s inability to prove an essential element of its claims did not render those claims unripe. Furthermore, the litigation in this issue has lasted more than 10 years and has required extensive discovery by multiple parties and future litigation would undoubtedly result in duplicative expenses. Finally, Fresno’s need to dismiss was based on its acknowledgement that the evidence would not support its claims. All of these factors supported the court’s decision to dismiss Fresno’s claims with prejudice.

The case number is Master File No. 1:00-1898; MDL 1358 (SAS); M21-88.

Attorneys: A. Hoyt Rowell (Richardon, Patrick, Westbrook & Brickman, LLC) for Steven C. Greene. Brian A. McGill (McDermott Will & Emery) and Eric Michael Kraus (Sedgwick LLP) for Shell Oil Products Co.

Companies: Exxon Mobil Corp.; Shell Oil Products Co.; Equilon Enterprises LLC; Equiva Services LLC; Texaco Refining and Marketing Inc., CITGO Petroleum Corp.; Chevron U.S.A., Inc., Union Oil Co. of California; Nella Oil Co.; New West Petroleum

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