Liebhart v. SPX Corp.

• Decision Date: 06 March 2019
• Docket Number: Nos. 18-1918 & 18-2598,s. 18-1918 & 18-2598
• Citation: 917 F.3d 952
• Parties: William LIEBHART & Nancy Liebhart, Plaintiffs-Appellants, v. SPX CORPORATION, TRC Environmental Corporation, & Apollo Dismantling Services, Inc. Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

917 F.3d 952

William LIEBHART & Nancy Liebhart, Plaintiffs-Appellants,

v.SPX CORPORATION, TRC Environmental Corporation, & Apollo Dismantling Services, Inc. Defendants-Appellees.

Nos. 18-1918 & 18-2598

United States Court of Appeals, Seventh Circuit.

Argued December 4, 2018

Decided March 6, 2019

David G. Peterson, Attorney, Waukesha, WI, Malinda J. Eskra, Attorney, Milwaukee, WI, Reinhart Boerner Van Deuren S.C., Carey S. Rosemarin, Attorney, Law Offices of Carey S. Rosemarin, Northbrook, IL, for Plaintiffs-Appellants.

Laurie Styka Bloom, Attorney, Buffalo, NY, Joseph J. Ortego, Attorney, Jericho, NY, Nixon Peabody LLP, Matthew J. Splitek, Attorney, Quarles & Brady LLP, Madison, WI, for Defendant-Appellee SPX Corporation.

Bradley D. Fisher, Attorney, Brian D. Steffes, Attorney, Fisher, Bren & Sheridan, LLP, Minneapolis, MN, for Defendant-Appellee TRC Companies, Inc.

Stephanie L. Dykeman, Attorney, Litchfield Cavo, Milwaukee, WI, for Defendant-Appellee Appollo Dismantling Services, Inc.

Before Bauer, Kanne, and Brennan, Circuit Judges.

Kanne, Circuit Judge.

William and Nancy Liebhart together own three houses on the same block in Watertown, Wisconsin. Besides a few other houses, the rest of the block was previously occupied by an abandoned transformer factory, last owned by SPX Corporation. In 2014, SPX demolished the building with the assistance of TRC Environmental Corporation and Apollo Dismantling Services (collectively, "the defendants"). The Liebharts allege that dust and debris containing toxic chemicals migrated onto their properties, contaminating their yards and jeopardizing their health and the health of their tenants.

The Liebharts sued under federal statutes authorizing private rights of action for environmental contamination. They also brought various state-law claims. Following discovery and the submission of expert witness reports, the district court denied the Liebharts’ motion for partial summary judgment and granted summary judgment to the defendants with costs. Although the district court adequately evaluated the expert witnesses and did not abuse its discretion in its procedural decisions, the court set the bar unnecessarily high for the plaintiffs to show a violation of the applicable federal statutes. For that reason, we vacate the district court’s judgment and remand for reconsideration.

I. BACKGROUND

The factory dates to the 1920s and was used to manufacture various industrial equipment. Most relevant to our purpose, the factory manufactured power transformers containing polychlorinated biphenyls (PCBs), a carcinogenic chemical banned by the Environmental Protection Agency in 1979. See Polychlorinated Biphenyls (PCBs) Manufacturing, Processing, Distribution in Commerce, and Use Prohibitions, 44 Fed. Reg. 31,514 (May 31, 1979) (codified at 40 C.F.R. pt. 761). The parties all agree that the facility has not manufactured or handled any items containing PCBs since 1971, and that it shut down completely in 2005.

But even with all the products and manufacturing equipment removed, PCB contaminants remained in the facility. In 2009, SPX retained TRC and another company (not named as a defendant in this suit) to study the property and determine the extent and precise location of any PCB contamination. Those studies revealed that the concrete floor of the factory was generally contaminated, with concentrated amounts located in specific areas throughout the site.

Several years went by. In 2014, SPX decided to move ahead with the demolition, retaining Apollo to conduct the work and TRC to supervise the project. That November, the defendants timely proposed a self-implementing cleanup plan to the EPA, as required by 40 C.F.R. § 761.61(a). The trouble began as demolition commenced in January 2015. The Liebharts allege that Apollo demolished the building recklessly, failing to use appropriate safety methods to control the dust generated by demolition equipment. They assert that their properties were covered in dust, and they submitted hundreds of photos and videos of dust from the facility blowing toward their homes to support their allegation.

The Liebharts filed a complaint with the local government in February. They also collected a dust-covered sample of snow from their yard and placed it in a mason jar. Soon thereafter, a representative of the Wisconsin Department of Natural Resources ("DNR") contacted the defendants about the Liebharts’ concerns. In April, TRC collected samples of the surface soil (roughly down to eight inches below ground) on both the industrial and residential properties. Sure enough, the properties tested positive for the presence of PCBs. In August, the Liebharts vacated the property on advice of their physician to avoid further exposure to the chemicals. Frustrated with the lack of action, William Liebhart had the snow sample tested for PCBs. Although the sample did, in fact, contain PCBs, the irregular manner of collection and storage spoiled the sample, and the laboratory declined to endorse the results with any confidence.

In September 2015, SPX submitted a plan to remediate the contamination to the DNR. In turn, the Liebharts sued in federal district court in October. The complaint sought injunctive relief under both the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6901 et seq. , and the Toxic Substances Control Act (TSCA), 15 U.S.C. § 2601 et seq . In addition, the Liebharts brought a host of state-law claims under supple-mental jurisdiction, including strict liability, negligence, trespass, nuisance, and negligent infliction of emotional distress.

During discovery, the Liebharts submitted to further testing for PCBs both in their yard and inside their home. They also underwent blood testing. Although the external surveys revealed a more comprehensive picture of the extent to which the soil on the Liebharts’ properties contained PCBs, the internal sampling and blood tests were both negative for contamination. The Liebharts later learned in October 2017 that the defendants allegedly buried some of the concrete remains on-site rather than removing them to a toxic waste dump as required by the EPA-approved clean-up plan.

The parties prepared and submitted the reports of the expert witnesses who were to testify at trial. Among those, three are pertinent to our discussion. First, the Liebharts submitted a report by John Woodyard, a licensed professional engineer. His report included a description of standard methods used when demolishing PCB-contaminated buildings and an analysis of the purported ways in which the defendants deviated from those practices, thereby causing the contamination of the residences. The Liebharts’ second expert was Dr. David Carpenter, a public health physician who opined on ways in which the Liebharts might have been exposed to PCBs and the potential health effects of continuing exposure. He concluded that "there is no ‘safe’ level of exposure to PCBs that does not increase the risk of disease." Finally, the defendants submitted a report prepared by Dr. Russell Keenan, a toxicologist who analyzed the survey data and determined that it was impossible to determine whether the presence of PCBs on the Liebharts’ property was due to the recent demolition or to runoff that occurred over the last several decades.

In December 2017, the Liebharts moved for partial summary judgment on the issue of causation, reserving the issue of damages for a jury trial. The defendants cross-moved for summary judgment; they also filed a motion to exclude the testimony of plaintiffs’ experts Woodyard and Carpenter under Fed. R. Evid. 702. In February 2018, after those motions were fully briefed to the court, the Liebharts sought leave to amend their complaint. In light of the information they obtained through discovery regarding the burial of concrete on the property, they intended to allege separate RCRA and TSCA violations and seek an enlargement of the proposed injunction to include removal of that material.

The district court issued its decisions on March 30. First, the court granted in part the defendants’ motion to exclude the plaintiffs’ expert witness reports. The court explained that Woodyard’s report was "equivocal" as to the issue of causation; it hedged on whether the contaminants came from demolition or from runoff during the preceding decades. See Liebhart v. SPX Corp. , No. 16-cv-700-jdp, 2018 WL 1583296 at *3–4 (W.D. Wis. Mar. 30, 2018). Second, the report "overlook[ed] too much significant evidence" and failed to account for "obvious alternative explanations" in determining the cause of the contamination. Id. at *4 (quoting Fed. R. Evid. 702 advisory committee’s note to 2000 amendments). Finally, the court noted that Woodyard’s report depended on "unreliable or uninformative" evidence, including the Liebharts’ defective snow sample, while omitting other evidence such as grass clippings and a chromatogram that allegedly detected PCBs on the property. Id. at *4–5. For those reasons, the court excluded Woodyard’s report in its entirety. Id. at *5.

Although the court admitted the vast majority of Dr. Carpenter’s report, it struck Carpenter’s conclusion that "there is no ‘safe’ level of exposure to PCBs that does not increase the risk of disease" as unsupported by the medical studies he cited. Id. at *5. In doing so, the court pointed to the absence of PCBs inside the Liebharts’ home and in their blood, suggesting that the Liebharts had not actually been exposed to PCBs and so could not have suffered harm. Id. at *5–6.

With that expert testimony off the table, the district court concluded that the Liebharts failed to present any admissible evidence to support their RCRA and TSCA claims. The remaining photos and videos certainly showed dust migrating onto the Liebharts’ property, but there was no reliable evidence proving that the dust contained PCBs. Given that any PCBs detected in the soil may have been there prior to the demolition, the lack of evidence doomed...