California v. M & P Investments

• Decision Date: 03 May 2002
• Docket Number: No. CIV. S-00-2441 FCD/J.,CIV. S-00-2441 FCD/J.
• Court: U.S. District Court — Eastern District of California
• Parties: People of the State of CALIFORNIA, and City of Lodi, California, Plaintiffs, v. M & P INVESTMENTS, a California Partnership, et al., Defendants. And Related Cross-Claims, Counterclaims, Third Party Claims and Fourth Party Claims.

213 F.Supp.2d 1208

People of the State of CALIFORNIA, and City of Lodi, California, Plaintiffs, v. M & P INVESTMENTS, a California Partnership, et al., Defendants. And Related Cross-Claims, Counterclaims, Third Party Claims and Fourth Party Claims.

No. CIV. S-00-2441 FCD/J.

United States District Court, E.D. California.

Filed: May 3, 2002.

Randall A. Hays, City Attorney, City of Lodi, California, Michael C. Donovan, Cecelia C. Fusich, Assistant City Attorneys, Envision Law Group, LLP, Lafayette, CA, for Plaintiffs.

Lori J. Gualco, Attorney at Law, Sacramento, CA, Steven J. Meyer, Steven H. Goldberg, Michael N. Mills, Downey, Brand, Seymour & Rohwer, LLP, Sacramento, CA, for Defendants.

MEMORANDUM AND ORDER

DAMRELL, District Judge.

On April 19, 2002, the court held a hearing on the various jurisdictional and other issues presented by the court's January 28, 2002 order. In light of the granting of plaintiff People of the State of California's (the "Plaintiff People") motion to dismiss the Resource Conservation and Recovery Act ("RCRA") claim, many of the issues presented in the January 28 order are now moot. Accordingly, this order addresses only those issues unaffected by the motion to dismiss. The resolution of these issues however, will have a significant impact on this case.

BACKGROUND

While this case was filed in November 2000, the starting point of the litigation particularly relevant to this hearing began in May 2001. At that time, the Plaintiff People and co-plaintiff City of Lodi (the "City") (sometimes collectively referred to herein as "plaintiffs") filed a motion to dismiss the first amended counterclaim of defendants Guild Cleaners, Inc. and Jack Alquist (collectively, "Guild"), which included Guild's claim under RCRA against the City. On June 19, 2001, the court granted the motion, in part, finding (among other things) that Guild's RCRA counterclaim against the City under § 7002(a)(1)(B) was barred because the State of California (i.e., the Plaintiff People) was diligently prosecuting this action.

Also in June 2001, plaintiffs filed a motion for docket preference, seeking to schedule this case in an expedited fashion due to the nature of the Plaintiff People's claims (particularly, abatement of a public nuisance). Ultimately, the court scheduled the case on its own timetable, and denied plaintiffs' motion as moot. See Pretrial Scheduling Order, filed Sept. 26, 2001.

Thereafter, in August of 2001, the City issued a "time critical abatement action order" ("AAO"), pursuant to a provision of the City's municipal law (referred to as "MERLO") against certain defendants in an effort to force the named defendants to engage in an immediate investigation and remediation of the Lodi Area of Contamination.¹ Defendants brought a motion to stay enforcement of the AAO, which the court granted on August 28, 2001. Mem. & Order, filed Aug. 28, 2001. The court held that the AAO contravened the jurisdiction of the court, and under the All Writs Act its enforcement was properly stayed.²

Shortly after that decision, the Plaintiff People filed, in September 2001, an application for a temporary restraining order ("TRO") against Guild³ seeking the same relief requested in the AAO. The court denied the application for a TRO finding that the Plaintiff People had unjustifiably delayed bringing the request for a TRO. Mem. & Order, filed Sept. 6, 2001. The Plaintiff People then filed a motion for preliminary injunction against Guild. That motion was extensively briefed by the parties between September 2001 and December 2001. During the course of those proceedings and with the parties' consent, the court appointed an expert to assist the court in reviewing the technical issues presented by the motion.

Also in September, defendant Odd Fellows Hall Association of Lodi, Inc. ("Odd Fellows") filed a motion to disqualify plaintiffs' counsel from simultaneously representing the Plaintiff People and the City. Odd Fellows argued that such representation presented a conflict of interest because the City Attorney of Lodi cannot represent the City, a party alleged to be responsible for the public nuisance condition, while at the same time represent the Plaintiff People, who is suppose to be the neutral, public prosecutor of the alleged harm. In other words, the interests of the City in avoiding liability for the cleanup of the nuisance are directly at odds with the interests the City Attorney seeks to vindicate in the name of the People, namely the prosecution of those allegedly responsible for the contamination. Without reaching the merits of the purported conflict, the court denied Odd Fellows' motion on the ground that as a third-party (Odd Fellows was neither a former or current client of plaintiffs' counsel), it lacked standing to assert a conflict of interest. Mem. & Order, filed Nov. 13, 2001.

On November 26, 2001 the court held a tutorial with the court expert and the parties regarding the technical issues involved in the motion for preliminary injunction. The court's expert, Dr. Michael Kavanaugh, and the parties' various consultants gave presentations and were questioned by the court and each other. Significantly, Megan Cambridge of the California Department of Toxic Substances Control ("DTSC") appeared, gave testimony, and questioned the various presenters.

The hearing on the motion for preliminary injunction took place on December 14, 2001. At the hearing, the court orally ruled that the Plaintiff People was entitled to a preliminary injunction against Guild under RCRA and state law. One of the primary bases for the ruling was the court's treatment of the Plaintiff People as an "innocent" party, in that no claims were asserted against the Plaintiff People. The court indicted that it would issue its written order regarding entitlement to an injunction forthwith. However, the court requested further briefing on the form of the proposed preliminary injunction. A further hearing on that issue was scheduled for January 25, 2002.

Then, on January 23, 2002, staff legal counsel for the DTSC and the Regional Water Quality Control Board ("RWQCB") (collectively, the "State Agencies")⁴ sent a letter to plaintiffs and Guild asserting the State Agencies' position that the court did not have jurisdiction over the agencies.⁵ At the request of the State Agencies, the letter was transmitted to the court.

In light of the letter, on January 24, 2002, the court continued the hearing on the form of the injunction and directed the parties to appear on January 25 to discuss the jurisdictional implications of the State Agencies' letter. Mem. & Order, filed Jan. 24, 2002. The court specifically ordered the authors of the letter to appear, as well as a representative of the Attorney General's office. They did so. Following the hearing, the court issued an order requiring the parties⁶ to respond to a series of questions:

(1) Is the State of California a party to this suit?

(2) Does California Code of Civil Procedure § 731 authorize a City Attorney to bring an action in federal court on behalf of the State of California? Specifically, does it authorize a City Attorney to bring such a suit under the Resource Conservation and Recovery Act of 1976 ("RCRA") § 7002 (42 U.S.C. § 6972)?

(3) If California Code of Civil Procedure § 731 authorizes the City Attorney of Lodi to bring an action on behalf of the People of the State of California, has the State consented to federal jurisdiction when suit is brought in federal court in the name of the "People of the State of California?"

(4) Does California Code of Civil Procedure § 731 specify the State of California's express intention to waive Eleventh Amendment immunity?

(5) Has the State of California waived its sovereign immunity by its conduct in this litigation, in particular through the conduct of the DTSC?

(6) If the State of California is not a party to this case, then who is the moving party in the motion for preliminary injunction and what is that party's standing to bring the motion?

(7) What effect, if any, does the Cooperative Agreement between DTSC and the City have on these issues?

(8) In light of the DTSC and RWQCB's letter, can the City Attorney continue to represent both the People of the State of California and the City? Is there a conflict of interest? If so, what is the nature of the conflict?

(9) What does DTSC and RWQCB mean when they state in their June 23, 2002 letter "for the most part all that is required is rewording of the order so as to place obligations on Guild rather than on DTSC or the RWQCB?"

The parties were also permitted to raise any issue not addressed by the above questions which affected the determinations. Because of the importance of the above issues, the court stayed its oral ruling on the Plaintiff People's motion for preliminary injunction,⁷ and continued various other pending motions. Mem. & Order, filed Jan. 28, 2002.

ANALYSIS

Because the court grants the Plaintiff People's motion to dismiss the RCRA claim (see Mem. & Order, filed April 23, 2002), several issues raised above are now moot (question numbers 2, 7, and 9).⁸ Also, for similar reasons, the court does not consider whether there has been a waiver of sovereign immunity in this case (either by the assertion of a RCRA claim in federal court in the name of the "People of the State of California" [via CCP § 731] or by the DTSC's conduct in this litigation) (question numbers 3, 4, and 5). Such a ruling on waiver of sovereign immunity is premature at this time since no party has sued the "People of the State of California," the "State of California" or any agency or instrumentality of the State of California. See Papasan v. Allain, 478 U.S. 265, 276, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) (the question of whether a State has waived its sovereign immunity arises as a shield after the improper assertion of claims against a State in federal court).⁹ Because of this ruling, representatives of...