City of San Diego v. Monsanto Co.

• Decision Date: 17 April 2018
• Docket Number: Case No.: 15cv578–WQH–AGS
• Citation: 310 F.Supp.3d 1057
• Parties: CITY OF SAN DIEGO, a municipal corporation, Plaintiff, v. MONSANTO COMPANY; Solutia, Inc.; and Pharmacia Corporation, Defendants.
• Court: U.S. District Court — Southern District of California

310 F.Supp.3d 1057

CITY OF SAN DIEGO, a municipal corporation, Plaintiff,

v.MONSANTO COMPANY; Solutia, Inc.; and Pharmacia Corporation, Defendants.

Case No.: 15cv578–WQH–AGS

United States District Court, S.D. California.

Signed April 17, 2018

Carla Burke, Pro Hac Vice, Celeste A. Evangelisti, Scott Summy, Pro Hac Vice, Baron & Budd PC, Dallas, TX, Jaimie Leeser Nawaday, Pro Hac Vice, Kelley Drye & Warren LLP, Los Angeles, CA, Jennifer Caplan Barks, Pro Hac Vice, Kenneth Olan Corley, Pro Hac Vice, Kelley Drye & Warren LLP, Houston, TX, John N. Carter, Mark D. Ankcorn, Paul Frederick Prather, Office of the City Attorney, San Diego, CA, John P. Fiske, Jason J. Julius, Baron & Budd, P.C., Solana Beach, CA, for Plaintiff.

Adam Edward Miller, Pro Hac Vice, Michael Wade Cromwell, Pro Hac Vice, Capes, Sokol, Goodman & Sarachan, P.C., St. Louis, MO, Daniel R. Blakey, Manhattan Beach, CA, Jennifer P. Casler–Goncalves, Kelly Eugene Richardson, Robert M. Howard, Daniel Patrick Brunton, Latham & Watkins LLP, San Diego, CA, Andrea M. Hogan, Latham & Watkins, San Francisco, CA, Garrett L. Jansma, Latham & Watkins LLP, Costa Mesa, CA, for Defendants.

ORDER

HAYES, Judge:

The matter before the Court is the Motion for Reconsideration or, in the alternative, Certification for Interlocutory Appeal Pursuant to 28 U.S.C. § 1292(b) filed by Defendants Monsanto Company, Solutia Inc., and Pharmacia Corporation. (ECF No. 175).

I. BACKGROUND

On March 13, 2015, Plaintiffs San Diego Unified Port District (the "Port District") and City of San Diego (the "City") commenced this action by filing the Complaint. (ECF No. 1). On August 3, 2015, the City and the Port District filed separate First Amended Complaints ("FACs") against Defendants Monsanto Company, Solutia Inc., and Pharmacia Corporation (collectively, "Monsanto"). (ECF Nos. 24, 25). On August 31, 2015, Monsanto filed a Motion to Dismiss the City's FAC (ECF No. 31) and a Motion to Dismiss the Port District's FAC (ECF No. 32). On September 28, 2016, the Court issued an Order granting in part and denying in part Monsanto's Motion to Dismiss the Port District's FAC and granting Monsanto's Motion to Dismiss the City's FAC in its entirety. (ECF No. 81).

On December 22, 2016, the City filed the Second Amended Complaint ("SAC") alleging a single cause of action against Monsanto for public nuisance.¹ (ECF No. 93).

On March 24, 2017, Monsanto filed a Motion to Dismiss the SAC. (ECF No. 108). Monsanto argued, in part, that the SAC must be dismissed for lack of jurisdiction because the City must first exhaust administrative remedies before the Commission on State Mandates ("the Commission").² Monsanto argued that the City was required to exhaust administrative remedies because the tort damages the City seeks in this case are permit compliance costs that qualify as unfunded state mandates under Department of Finance v. Commission on State Mandates , 1 Cal.5th 749, 207 Cal.Rptr.3d 44, 378 P.3d 356 (2016). Monsanto asserted that the City is currently seeking reimbursement for these permit compliance costs through test claims before the Commission. Further Monsanto argued that the Court should exercise its discretion to dismiss or stay this matter pending resolution of the test claims on prudential exhaustion grounds. On April 7, 2017, the City filed a response in opposition and argued that administrative exhaustion is inapplicable to this case because the Commission was not authorized to address the City's public nuisance claim for tort damages or to award tort damages for the costs of PCB removal. Further, the City argued that the Court should not exercise its discretion to require exhaustion because any decision by the Commission would have no impact on this action. (ECF No. 109).

On November 11, 2017, the Court denied the Motion to Dismiss. (ECF No. 163). With respect to the parties' arguments on exhaustion, the Court stated,

[I]n this case, the City brings a cause of action in tort for public nuisance against a private entity pursuant to applicable sections of the California Civil Code and the California Code of Civil Procedure. California law does not establish an administrative procedure for a public nuisance claim. See Abelleira [v. District Court of Appeal, Third Dist. ], 109 P.2d [942] at 949 [ (1941) ] ("[W]here an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act."). While some portion of the damages the City seeks from Monsanto in this public nuisance claim may overlap in part with unfunded state mandate costs at issue in pending test claims before the Commission, the jurisdictional requirement of administrative exhaustion is limited to "where an administrative remedy is required by statute." Id. The Court concludes that the City is not precluded from bringing its public nuisance claim by any statutory administrative exhaustion requirement. The Court further concludes that prudential exhaustion is not warranted at this stage in proceedings. The Court declines to exercise any discretion to stay or dismiss the City's suit pending resolution of the test claims. See Morrison–Knudsen Co. , 811 F.2d at 1223.

(ECF No. 163 at 20).

On December 20, 2017, Monsanto filed a Motion for Reconsideration or, in the alternative, Certification for Interlocutory Appeal Pursuant to 28 U.S.C. § 1292(b). (ECF No. 175). Monsanto requests that the Court reconsider its earlier denial of a stay of this litigation on prudential exhaustion grounds and, in the alternative, requests that "the Court certify that portion of its November 22nd Order declining to dismiss or stay this case pending exhaustion of administrative remedies for appeal to the Ninth Circuit pursuant to 28 U.S.C. Section 1292(b)." (ECF No. 175–1 at 7). On January 16, 2018, the City filed a response in opposition. (ECF No. 187). On January 22, 2018, Monsanto filed a reply. (ECF No. 188).

II. RECONSIDERATION

A. Contentions

Monsanto requests that the Court reconsider the earlier denial of a stay of this litigation on prudential exhaustion grounds. Monsanto contends that reconsideration is warranted because the Court committed clear error by failing to stay or dismiss the case on prudential exhaustion grounds. Monsanto asserts that the California Court of Appeal decision in Department of Finance v. Commission on State Mandates , 18 Cal.App.5th 661, 226 Cal.Rptr.3d 846 (2017)³ "constitutes new or different circumstances under which the failure to dismiss or stay this case would be clear error." (ECF No. 175–1 at 12). Monsanto contends that this decision "entitles the City to reimbursement from the State for the very same storm water permit compliance costs" that the City seeks from Monsanto as damages in this public nuisance action. Id. at 7. Monsanto contends that prudential exhaustion will reduce the scope of discovery and motion practice and result in a "more streamlined trial" because "the Commission's final determination regarding the amount of the unfunded State mandate that must be reimbursed by the State to the City will moot or substantially narrow the scope of the City's action and it damages." Id. at 17. Monsanto contends that the collateral source rule is inapplicable to this action and that the law prohibits double recovery by the City of both permit compliance costs reimbursed by the state and damages for tort liability. (ECF No. 188).

The City contends that reconsideration is not warranted and that the recent state appellate decision in Department of Finance v. Commission on State Mandates does not modify the legal principles underlying the Court's prior determination that administrative exhaustion is not required. The City contends that the state appellate court decision "does not change the fact that the agency cannot, as a matter of law, award the City damages for its tort claims." (ECF No. 187 at 5). The City asserts that the "only overlap" between damages sought from Monsanto in this case and unfunded state mandate costs at issue in the state appellate court decision is "in the cost of street-sweeping." Id. at 10. The City contends that "the reimbursement of the costs of street sweeping does not substantially impact the City's claimed damages."Id. Further, the City contends that California has "long adhered to the collateral source rule" and that, under the collateral source rule, "the City's recovery of ... costs from the State does not preclude the City from seeking those same costs from Monsanto[.]" Id. at 10–11. The City contends that "Monsanto should not be given the benefit of payments of public funds to avoid tort liability." Id. at 11.

B. Legal Standard

Reconsideration is an "extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources." Kona Enters., Inc. v. Estate of Bishop , 229 F.3d 877, 890 (9th Cir. 2000). "[A] motion for reconsideration should not be granted, absent highly unusual circumstances, unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law." Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co. , 571 F.3d 873, 880 (9th Cir. 2009) (quoting 389 Orange St. Partners v. Arnold , 179 F.3d 656, 665 (9th Cir. 1999) (internal quotation marks omitted) ). "A motion for reconsideration ‘may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation.’ " Id. at 880 (quoting Kona , 229 F.3d at 890 ). "Whether or not to grant reconsideration is committed to the sound discretion of the court." Navajo Nation v. Confederated Tribes & Bands of the Yakama Indian Nation , 331 F.3d 1041, 1046 (9th Cir. 2003).

C. Discussion

The Ninth Circuit Court of Appeals has held that "[a]dministrative exhaustion can be either statutorily required or judicially imposed as a matter of prudence." Puga v. Chertoff , 488 F.3d 812, 815 (9th...