In re Groundwater Cases

• Decision Date: 24 August 2007
• Docket Number: No. A112964.,A112964.
• Citation: 64 Cal.Rptr.3d 827,154 Cal.App.4th 659
• Court: California Court of Appeals Court of Appeals
• Parties: In re GROUNDWATER CASES.

64 Cal.Rptr.3d 827

154 Cal.App.4th 659

In re GROUNDWATER CASES.

No. A112964.

Court of Appeal, First District, Division 5.

August 24, 2007.

Barry I. Goldman, David A. Rosen, Christopher P. Ridout, Rose, Klein & Marias, Los Angeles, Walter J. Lack, Joy Robertson, Ann A. Howitt, Richard P. Kinnan, Engstrom, Lipscomb & Lack, Los Angeles, for plaintiffs and appellants.

W. Keith Lemieux, Lemieux & O'Neill, Westlake Village, Thomas H. Clarke, Jr., Terry Anastassiou, Ropers, Majeski, Kohn & Bentley, San Francisco, Mary Hulett, Ragsdale Liggett, Paul R. Fine, Daniels Fine Israel & Schonbuch, Los Angeles, Michael K. Stagg, E. Lee Horton, Waller Lansden Dortch & Davis, Los Angeles, Gary C. Ottoson, Bacalski, Koska & Ottoson, San Diego, William K. Koska, Solomon, Ward, Siedenwurm & Smith, San Diego, Gary A. Praglin, Los Angeles, for defendants and respondents.

JONES, P.J.

These coordinated appeals are before us after remand from the Supreme Court's decision in Hartwell Corporation v. Superior Court (2002) 27 Cal.4th 256, 115 Cal. Rptr.2d 874, 38 P.3d 1098 (Hartwell), and they require us to determine whether the trial court properly applied the Supreme Court's holding in that case. In Hartwell, the Supreme Court held that Public Utilities Code section 1759 (section 1759) barred actions for damages against water purveyor defendants regulated by the California Public Utilities Commission (PUC) and arising out of exposure to contaminated drinking water where such actions challenged the adequacy of drinking water standards or sought damages for exposure to water that met applicable regulatory standards. (Hartwell, supra, 27 Cal.4th at pp. 276-277, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) The Supreme Court allowed plaintiffs to pursue "damage claims based on the theory that the water [supplied by defendants] failed to meet federal and state drinking water standards[.]" (Id. at p. 276, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) It held section 1759 did not bar damages claims for exposure to water that violated those standards. (Id. at pp. 277-278, 115 Cal.Rptr.2d 874, 38 P.3d 1098.)

The plaintiffs in the actions below appeal from the dismissal of their damages claims against two groups of water purveyor defendants—one group of defendants regulated by the PUC and another group of public entity water suppliers. Plaintiffs contend that the trial court misapplied the holding of Hartwell. First, they argue that the trial court adopted overly narrow definitions of the terms "federal and state drinking water standards" and "violations" as those terms were used in Hartwell. Second, plaintiffs claim that the trial court erred in concluding that plaintiffs had failed to identify any enactment imposing a "mandatory duty" on the public entity defendants within the meaning of Government Code section 815.6. Finally, plaintiffs contend that the trial court improperly limited their discovery. We find plaintiffs' contentions unpersuasive and accordingly affirm.

Factual and Procedural Background

The cases now before us have a rather long and complex history. The early history is fully set forth in the Supreme Court's opinion in Hartwell, and we will not repeat it here. Instead, we will only summarize briefly the pre-Hartwell proceedings before turning to the present appeals. We refer the reader to Hartwell for a more detailed recitation of the early history of the case. (See Hartwell, supra, 27 Cal.4th at pp. 260-264, 115 Cal.Rptr.2d 874, 38 P.3d 1098.)

Pre-Hartwell Proceedings

The genesis of the appeals now before us was a series of actions filed in 1997 and 1998 by a number of residents of Los Angeles County against four water companies regulated by the PUC, certain water companies not regulated by the PUC, and numerous corporate parties that are neither water suppliers nor regulated by the PUC. (Hartwell, supra, 27 Cal.4th at pp. 260-261, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) By August 2002, over 2000 plaintiffs were parties to these actions. The lawsuits alleged causes of action for negligence, strict liability, trespass, public and private nuisance, fraudulent concealment, and, in some instances, wrongful death. (Id. at p. 261, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) The claims against the defendant water suppliers alleged that they had provided contaminated water to the plaintiffs. (Ibid.)

In response to the actions against the regulated utilities, on March 12, 1998, the PUC issued an order instituting Investigation No. 98-03-013 because the complaints "raise public concerns over the safety of the drinking water supplies of these utilities." (Cal.P.U.C. Order Instituting Investigation No. 98-03-013 (Mar. 12, 1998) [1998 Cal.P.U.C. Lexis 73, p. *2].) The PUC proceeding investigated a number of issues, including whether current drinking water standards adequately protect public health and safety and whether regulated utilities have complied with those standards. ([1998 Cal.P.U.C. Lexis at p. *17].)

After the PUC's order instituting Investigation No. 98-03-013, the defendants regulated by the PUC filed demurrers to the complaints on the ground that section 1759 deprives the superior courts of jurisdiction to review or annul any order of the PUC or to interfere in the performance of the PUC's official duties.¹ (Hartwell, supra, 27 Cal.4th at pp. 263-264, 115 Cal. Rptr.2d 874, 38 P.3d 1098.) One superior court sustained the PUC-regulated defendants' demurrers without leave to amend, and the others stayed the actions pending the completion of the PUC's investigation. (Ibid.)

The parties to the actions filed numerous petitions for writs of mandate with this court, which consolidated the writ proceedings with the plaintiffs' appeal from the granting of the demurrer by the PUC-regulated defendants. (Hartwell, supra, 27 Cal.4th at p. 264, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) After we issued our opinion in the consolidated appeals, the Supreme Court granted review. (Ibid.)

The Supreme Court's Decision in Hartwell

In Hartwell, the Supreme Court held that section 1759 barred some of plaintiffs' claims, but not others. (Hartwell, supra, 27 Cal.4th at pp. 266-282, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) While Hartwell resolved a number of legal issues, the portion of the opinion that is relevant for purposes of the appeals now before us is the court's discussion of plaintiffs' damages claims.

In addressing those claims, the court noted that plaintiffs' actions challenged both the adequacy of the water quality standards adopted by the Department of Health Services (DHS) and the PUC and the defendants' compliance with those standards. (Hartwell, supra, 27 Cal.4th at p. 276, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) It concluded that plaintiffs' challenge to the adequacy of the standards themselves was barred for two reasons. (Ibid.) First, "[a]n award of damages on the theory that the public utilities provided unhealthy water, even if that water actually met DHS and PUC standards, would interfere with a `broad and continuing supervisory or regulatory program' of the PUC." (Ibid., quoting San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 919, 55 Cal.Rptr.2d 724, 920 P.2d 669 (Covalt).) As the court explained, for the PUC to perform its regulatory functions, such as ratemaking, the agency "must have certain water quality benchmarks." (Hartwell, supra, 27 Cal.4th at p. 276, 115 Cal. Rptr.2d 874, 38 P.3d 1098.) "For example, in determining whether to approve a rate increase, the PUC must consider whether a regulated water utility's existing revenues are adequate to finance any water treatment facility that may be needed. Whether a treatment facility is needed, and, if so, the expense thereof, cannot be determined except with reference to an applicable water quality standard. General order No. 103, promulgated by the PUC in 1956, formally adopted the DHS water quality standards as its own. Thus, the DHS standards serve as those benchmarks. A superior court determination of the inadequacy of a DHS water quality standard applied by the PUC would not only call DHS regulation into question, it would also undermine the propriety of a PUC ratemaking determination." (Ibid.)

Second, the Supreme Court explained that the PUC provided a "safe harbor" to regulated utilities if they complied with DHS standards. (Hartwell, supra, 27 Cal.4th at p. 276, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) "An award of damages on the theory that the public utilities provided unhealthy water, even if the water met DHS standards, "would plainly undermine the commission's policy by holding the utility liable for not doing what the commission has repeatedly determined that it and all similarly situated utilities were not required to do.' (Covalt, supra, 13 Cal.4th at p. 950[, 55 Cal.Rptr.2d 724, 920 P.2d 669].)" (Hartwell, supra, 27 Cal.4th at p. 276, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) The court thus held that section 1759 barred any action claiming damages from water that complied with DHS standards. (Ibid.)

But the Supreme Court also held that damages claims based on the theory that the water failed to meet federal and state drinking water standards were not barred. (Hartwell, supra, 27 Cal.4th at p. 276, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) Such claims would not interfere with the PUC's regulatory policy of requiring water utility compliance with DHS standards. (Ibid.) Plaintiffs could thus seek relief for past violations of those standards without interfering with the PUC's implementation of its supervisory and regulatory policies. (Id, at p. 277, 115 Cal.Rptr.2d 874, 38 P.3d 1098.) As the court explained, "a jury award supported by a finding that a public water utility violated DHS and PUC standards ... would not hinder or frustrate the PUC's declared supervisory and regulatory policies[.]" (Id. at pp. 277-278, 115 Cal.Rptr.2d 874, 38 P.3d 1098, italics added.) A jury verdict in such an action therefore would not be barred by section 1759. (Id. at p. 278, 115 Cal.Rptr.2d 874, 38...