Lynn v. Amoco Oil Co.

• Decision Date: 10 October 2006
• Docket Number: Civil Action No. 2:96cv940-MHT.
• Citation: 459 F.Supp.2d 1175
• Parties: Buddy LYNN, et al., Plaintiffs, v. AMOCO OIL COMPANY et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

459 F.Supp.2d 1175

Buddy LYNN, et al., Plaintiffs, v. AMOCO OIL COMPANY et al., Defendants.

Civil Action No. 2:96cv940-MHT.

United States District Court, M.D. Alabama, Northern Division.

October 10, 2006.

Charles Alan Runyan, Marion Clyde Fairey, Jr., Speights & Runyan, Hampton, SC, Dennis Reich, Elizabeth J. Cabraser, Campbell Waller & Poer LLC, Nicola Thompson Drake, Whatley Drake & Kailas, LLC, David Johnathan Guin, Donaldson & Guin LLC, Richard A. Freese, T. Roe Frazier, Sweet & Freese PLLC, Birmingham, AL, Ernest (Sonny) Clayton Hornsby, Sr., Fred Sr. D. Gray, Joe R. Whatley, Jr., Morris Haynes & Hornsby, Alexander City, AL, John Martland, Kenneth F. Ingram, Jr., Larry Wade Morris, Leslie Elizabeth McFall; David Pastor, Douglas M. Brooks, Kenneth G. Gilman, Gilman and Pastor, Saugus, MA, Michael T. Howell, Mitchell A. Toups, Morris A. Ratner, Paul Thomas Warner, Peter Harrington Burke, Richard E. Norman, Russell J. Drake, Reich & Binstock, Houston, TX, Scott P. Nealey, Thomas Christopher Tuck, Timothy J. Crowley, Lieff, Cabraser, Heimann & Bernstein, San Francisco, CA, William H. Garvin, III, Garvin Law Firm, Tallahassee, FL, Andrew Hoyt Rowell, III, Richardson Patrick Westbrook & Brickman LLC, Charleston, SC, Robert Lieff, Lieff, Cabraser, Heimann & Bernstein, San Francisco, CA, for Plaintiffs.

Anne Sikes Hornsby, John Mann Johnson, Lightfoot Franklin & White LLC, Rusha Christina Smith, Sid J. Trant, Bradley Arant Rose & White LLP, Schuyler Allen Baker, Jr., Balch & Bingham, Gregory Rascal Hawley, White Arnold Andrews & Dowd, H. Thomas Wells, Jr., James Letcher Mitchell, Melinda J. Lucas, Stephen Foster Black, Maynard, Cooper & Gale, P.C., Birmingham, AL, Daniel Laytin James Andrew Langan, Mark S. Lillie, Richard C. Godfrey, Scott W. Fowkes, Thomas Lawrence Campbell, Thomas Tozer, Timothy Elliott, Jacquelne White Johnson, Kirkland & Ellis, Craig H. Zimmerman, McDermott, Will & Emery, Roland Karl Filippi, Chicago, IL, Anthony F. King, Richard E. Wallace, Jr., Wallace King Marraro & Branson, PLLC, Lance L. Shea, Fulbright & Jaworski LLP, Brian A. McGill, Richard M. Wirsing, McDermott, Will & Emery, Washington, DC, Donald Rush Jones, Jr., Attorney at Law, PC, Robin Garrett Laurie, Balch & Bingham, Clement Clay Torbert, Jr., Peter Sean Fruin, Maynard Cooper & Gale, PC, Montgomery, AL, Deborah E. Barnard, Ralph T. Lepore, III, Holland & Knight, Boston, MA, Marc Rollo, Robert Thomas Egan, Robert T. Lehman, Archer and Grenier, Haddonfield, NJ, Robert Gilchrist Newman, Fulbright, Jaworski, San Antonio, TX, Stephen Cann Dillard, Fulbright & Jaworski LLP, William J. Stack, Exxon Company U.S.A., Houston, TX, Peter John Sacripanti, McDermott, Will & Emery, New York, NY, for Defendants.

OPINION

MYRON H. THOMPSON, District Judge.

This lawsuit is now before the court on the motions for summary judgment filed by defendants Amoco Oil Company, BP Exploration & Oil Inc., Texaco Refining and Marketing Inc., Shell Oil Products Company, Mobil Oil Corporation, Exxon Corporation, Chevron U.S.A. Inc., and Chevron USA Products Company, as to count D of the third amended complaint. In count D, the plaintiffs, who own property adjacent to or near sites where gasoline has been stored in underground storage tanks (USTs), allege that the defendants conspired together to contain their costs and avoid liability for the prevention, detection, and clean-up of leaking USTs, and, in furtherance of this conspiracy, conspired to commit the following state-law torts: fraudulent concealment, trespass, and nuisance. For the reasons below and based on a voluminous record, the motions for summary judgment will be granted as to this claim.

I. PROCEDURAL HISTORY

The plaintiffs originally filed this action in the Circuit Court of Coosa County, Alabama. The suit was removed to federal court on grounds of diversity of citizenship. 28 U.S.C. § 1332.¹ The plaintiffs filed an amended complaint, a second amended complaint, and a third amended complaint. The defendants moved to dismiss this action, and the court, adopting the recommendation of the United States Magistrate Judge, denied their motions. Peters v. Amoco Oil, 57 F.Supp.2d 1268 (M.D.Ala.1999). After a lengthy period of discovery, the defendants moved for summary judgment. The court heard extensive oral argument on the defendants' motions.

II. SUMMARY-JUDGMENT STANDARD

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Once the party seeking summary judgment has informed the court of the basis for its motion, the burden shifts to the nonmoving party to demonstrate why summary judgment would be inappropriate. Celotex Corp. v Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-17 (11th Cir.1993). In making its determination, the court must view all evidence and any factual inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). However, "[f]or issues ... on which the non-movant would bear the burden of proof at trial, ... the moving party [for summary judgment] simply may show[] — that is, point[] out to the district court — that there is an absence of evidence to support the nonmoving party's case." Fitzpatrick, 2 F.3d at 1115-16 (citations and quotation marks omitted).

III. FACTUAL BACKGROUND

The facts, construed in a light most favorable to the plaintiffs, are as follows: The plaintiffs own property, in Alabama and Massachusetts, adjacent to or near sites where gasoline has been stored in USTs. The defendants are oil companies doing business throughout the United States, many of whom owned, operated, leased, or controlled USTs near the plaintiffs' properties. The USTs near the plaintiffs' properties have had confirmed leaks which already have or imminently will contaminate the plaintiffs' properties.

The kind of USTs that are the subject of this lawsuit were first installed early in the last century and were extensively used in the 1950s and 1960s. Made of bare steel, they have corroded over time and have developed significant leaks. The leaks, replacement costs, clean-up expenses, and liability for environmental damage has cost hundreds of millions of dollars.

Each of the defendants used bare-steel USTs, although since 1965 corrosion-resistant designs, such as double-walled tanks, fiberglass tanks, and steel tanks with cathodic protection, were available. The defendants also all relied on inadequate methods for detecting leaks. For instance, all of the defendants used various methods of "inventory control" — reconciling the quantity of gasoline put into the USTs with the quantity of gasoline being sold using different techniques for measuring the amount of gasoline in the tanks — to detect leaks. One method that the defendants commonly used to measure quantity was the "stick" method in which a wooden pole was dipped into USTs to measure gasoline levels. So-called "sticking" tanks is not an accurate method for detecting leaks because, for instance, it fails to account for tank settlement and the different volumes liquids assume at different temperatures.

Confronted with potential liability from leaking USTs, the defendants all adopted strategies to reduce their costs and exposure. This entailed, in part, selling off UST sites that had leaks or were at significant risk of leaking — sometimes for nominal prices — but upgrading tanks at the sites that the defendants chose to keep. When the defendants sold off sites, they did not adequately test them to determine their condition or the likelihood that they would imminently develop leaks. Moreover, none of the defendants devoted what the plaintiffs consider to be adequate resources into researching and developing better tanks or leak detection and control technologies.

Over the period that this lawsuit encompasses, 1970 through the present, the defendants maintained contact and interacted with each other through the American Petroleum Institute (API), which published articles, reported studies, and fostered research into UST issues. API events also provided opportunities for members of the industry to come together to discuss the problem of leaking USTs.

The defendants also closely monitored each other's conduct with regard to UST leaks and tank-upgrade programs. They exchanged information regarding the cost of upgrades and the projected goals of their upgrade policies.

Additionally, the defendants collectively tracked regulatory and legislative attempts to address the problem of leaking USTs. They championed a clean-up method called risk-based corrective action (RBCA), which sought to control the costs of cleaning up the damage caused by leaks.² They came together in a group called "partnership in RBCA implementation" (PIRI) to influence state legislation and regulation that enabled them to reduce or avoid clean-up costs. This group also provided an opportunity for the defendants to exchange information and discuss questions of mutual concern regarding the costs of UST clean-up and regulation.

IV. DISCUSSION

The heart of this case is the allegation that the defendants conspired together to contain their costs and avoid liability for the prevention, detection, and clean-up of leaking USTs. As this court understands the plaintiffs' contentions, there are three basic claims.³ The first is that the defendants were aware that bare-steel USTs had significant leakage problems, and they agreed to divest themselves of their USTs, agreed to delay or inadequately implement UST-upgrade programs, agreed to make misleading statements about the dangers posed by USTs, and agreed to adopt inadequate methods of leak detection. The second claim is that the defendants reached two other...