Nodine ex rel. Situated v. Plains All Am. Pipeline, L.P.

• Decision Date: 27 September 2018
• Docket Number: Case No. 17-CV-163-SMY-DGW
• Parties: KEVIN NODINE, CHERYL MORR, and DAVID MEDLOCK, On Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. PLAINS ALL AMERICAN PIPELINE, L.P., PLAINS PIPELINE, L.P., and JOHN DOES, Defendants.
• Court: U.S. District Court — Southern District of Illinois

KEVIN NODINE, CHERYL MORR, and DAVID MEDLOCK,On Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. PLAINS ALL AMERICAN PIPELINE, L.P.,PLAINS PIPELINE, L.P., and JOHN DOES, Defendants.

Case No. 17-CV-163-SMY-DGW

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ILLINOIS

September 27, 2018

MEMORANDUM AND ORDER

YANDLE, District Judge:

Plaintiffs Kevin Nodine¹, Cheryl Morr, and David Medlock filed the instant putative class action lawsuit against Defendants Plains All American Pipeline, L.P. and Plains Pipeline, L.P., arising from an oil spill that occurred on July 10, 2015 (Doc. 1). Now before the Court is Defendants' combined motion seeking dismissal pursuant to F.R.C.P. 12(b)(1) and 12(b)(6) (Doc. 10). For the following reasons, Defendants' Motion will be DENIED.

Background

Plaintiffs' class action Complaint asserts claims under the Oil Pollution Act ("OPA"), 33 U.S.C. §§ 2701, et seq. as well as Illinois state law. Plaintiffs claim that during the morning of July 10, 2015, a pipeline fitting ruptured or otherwise failed at Defendants' Pocahontas Pump Station. Plaintiffs allege the pipeline was equipped with a defective leak detection system that failed to trigger any alarms when the crude oil spilled into the containment dike (a backup storagecontainer), and that Defendants knew that erosion had caused leakage between a drain pipe and a catchment berm of the containment dike eight days before the oil spill. Plaintiffs further allege that the oil spill caused 4,000 gallons of crude oil to contaminate the surrounding area and caused "real and lasting effects" on the environment and Highland residents' properties, including a creek adjacent to Plaintiff David Medlock's property and a lake from which residents of Highland and the surrounding communities of Grantfork, Pierron, and St. Jacob derive their drinking water.

Defendants argue that Plaintiffs' Complaint is subject to dismissal on the following grounds: (1) Plaintiffs have not satisfied the OPA's pre-litigation claims presentment requirement; (2) the economic loss doctrine bars recovery because the Complaint does not identify physical injuries to Plaintiffs' properties; (3) Plaintiffs have not sufficiently pleaded OPA or state law claims; and (4) Plaintiffs' class action allegations are conclusory and inadequate.

Legal Standards

When considering a motion to dismiss under Federal Rules of Civil Procedure 12(b)(1), the Court must accept all well-pleaded factual allegations as true, draw reasonable inferences in the plaintiff's favor, and dismiss the case without ever reaching the merits if it concludes that it has no jurisdiction. Capitol Leasing Co. v. F.D.I.C., 999 F.2d 188, 191 (7th Cir. 1993); Shockley v. Jones, 823 F.2d 1068, 1070 n. 1 (7th Cir. 1987).

To survive a motion to dismiss under Rule 12(b)(6), the Complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Detailed facts are unnecessary, but the Complaint must give the defendant fair notice of what the claim is and the grounds upon which it rests. Olson v. Champaign Cnty., 784 F.3d 1093, 1098 (7th Cir. 2015) (citing Erickson v. Pardus, 551 U.S. 89, 93, (2007) (per curiam), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

A plaintiff is not expected to prove her case in the Complaint in order to survive dismissal under Rule 12(b)(6), but she must state a claim for relief that is plausible on its face. Id. at 404. What is required is enough facts to raise a reasonable expectation that discovery will reveal evidence supporting the allegations. Olson, 784 F.3d at 1099. As is true under Rule 12(b)(1), when reviewing a motion under Rule 12(b)(6), the Court takes all facts alleged by the plaintiff as true and draws all reasonable inferences from those facts in the plaintiff's favor. Iqbal, 556 U.S. at 662, 663.

Discussion

Rule 12(b)(1) - Subject Matter Jurisdiction

Defendants contend that Plaintiffs failed to satisfy the mandatory presentment clause of the Oil Pollution Act ("OPA"), and that therefore, this Court lacks subject matter jurisdiction over Plaintiffs' claim brought under the Act. Specifically, Defendants argue that Plaintiffs' October 18, 2016 demand letter "lacks the specificity necessary to satisfy presentment as it contains no 'sum certain' of damages, no description of damages Plaintiffs are personally claiming, and no basis to suggest that members of a putative class have satisfied presentment." (Doc. 10, p. 10).

The OPA requires that "all claims for removal costs or damages shall be presented first to the responsible party." 33 U.S.C. § 2713(a). "Claim" is defined as a "request, made in writing for a sum certain, for compensation for damages for removal costs resulting from an accident." 33 U.S.C. § 2701(3). Damages recoverable under the Act include damages for real property damage, loss of subsistence use of natural resources, loss of revenue, loss of profits, and loss of public services. 33 U.S.C. § 2701(5); see also 33 U.S.C. § 2702(b)(2). The OPA does not define the term, "sum certain."

Plaintiff's October 18, 2016 demand letter included the following with respect to damages:

For the above reasons, my clients and the potential putative class of Highland residents have been significantly damaged by the release. These damages can be quantified as follows:

• Environmental and Socioeconomic Damages:

...the nature and extent of the damages caused by the oil spill are extensive and broad-based. Quantification of the socioeconomic and environmental damages caused by the loss of 4,200 U.S. gallons of crude oil to the environment is a function of a number of factors such as the following: amount of oil released, the type of oil, the type and effectiveness of the cleanup response, the environmental media affected such as soils and surface water, the socioeconomic and cultural value/ of the area affected by the spill, the relative freshwater vulnerability, the relative habitat and wildlife sensitivity, and the nature of the area impacted by the spill such as rural, agricultural or urban, for example.

An accepted approach to estimating the costs of an oil spill, including cleanup and the socioeconomic and environmental damages was developed by the United States Environmental Protection Agency (U.S. EPA) in 2004 and can be refened to as BOSCEM (Basic Oil Spill Cost Estimation Model). The U.S. EPA BOSCEM is a model developed to address the above-noted parameters in estimating oil spill costs. Employing the model utilizing the spill-specific input parameters associated with this spill, the socioeconomic and the environmental damages total $8,069,145.

• Diminished Property Value:

In addition to the above damages, there is very real market resistance to properties in the impacted area. The scale of these damages can be calculated as described below.

There are an estimated 380 residential parcels and 120 agricultural parcels in the impacted area, some bordering an impacted waterway and others in close proximity. As described above, all these parcels are subject to market resistance resulting in diminished property values. Based on assessed values and published sources, such as the 2016 Illinois Farmland Values & Lease Trends pamphlet, the aggregate market value of all 500 parcels in the impacted area, without considering damages, is estimated at $112,700,000 (i.e., Residential property values totaling $64,250,000 + agricultural property values totaling $48,450,000).

The estimated damages to these property values can be calculated by subtracting a certain percentage based on methods discussed in relevant publications. These publications, by applying a variety of methods accepted in the appraisal industry, found that residential properties in or near an area affected by an oil spill experienced a reduction in property values in excess of 10%. Since market resistance (stigma) is often slightly more pronounced in residential than agricultural properties, a reduction of 5% can conservatively be applied to agricultural properties. Here, the result would be $6,425,000 in damages to residential property values (i.e., 10% of $64,250,000) and $2,422,500 in damages to agriculturalproperty values (i.e., 5% of $48,450,000) for a total decrease in property value of $8,847,500.

For all of the above reasons, the aggregate damages in this matter are $16,916,645 ($8,069,145 in Socioeconomic and Environmental Damages+ $8,847,500 in Damage to Property Values). At this time, I am authorized to settle my clients' claims and would recommend settlement of the class claims for that amount. This offer represents my minimum settlement authority and recommendation as we believe it to be a conservative calculation of damages. If I do not hear from you within ninety (90) days, this offer will be revoked and we will proceed with filing this matter in court.

In their demand letter, Plaintiffs detailed how the oil spill affected land use, property values, surface water and sediments, and soil and groundwater in the Highland community. While Defendants requested more specificity regarding Plaintiffs' claimed damages in subsequent letters, the OPA merely requires claimants to "present all claims and damages" to the responsible party; the statute does not require claimants to itemize damages individually.

The OPA does not define the term "sum certain." However, the Seventh Circuit has addressed what is needed to satisfy the requirements for a "sum certain" in the context of the Federal Tort Claims Act. In Khan v. U.S., 808 F.3d 1169, 1172-73 (7th Cir. 2015), the Court noted, "[a]ll that must be specified...is 'facts plus and demand for money;' if those two things are specified, 'the claim encompasses any cause of action fairly implicit in the facts.'" Id. at 1172-73 (quoting Murrey v. United States, 73 F.3d 1448, 1452 (7th Cir. 1996)). "But as 'facts plus a demand for money' must be specified, failure to ask for any damages -...