Pennsylvania v. Exxon Mobil Corp. (In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig.)

• Decision Date: 02 August 2021
• Docket Number: MDL 1358,1:00-1898
• Parties: In Re Methyl Tertiary Butyl Ether “MTBE” Products Liability Litigation This document relates to: Commonwealth of Pennsylvania v. Exxon Mobil Corporation, et al., No. 14 Civ. 6228 (VSB)
• Court: U.S. District Court — Southern District of New York

In Re Methyl Tertiary Butyl Ether “MTBE” Products Liability Litigation This document relates to: Commonwealth of Pennsylvania
v.
Exxon Mobil Corporation, et al., No. 14 Civ. 6228 (VSB)

MDL No. 1358

No. 1:00-1898

United States District Court, S.D. New York

August 2, 2021

James A. Donahue, III Pennsylvania Office of the Attorney General Harrisburg, Pennsylvania

Linda C. Barrett Pennsylvania Governor's Office of General Counsel Harrisburg, Pennsylvania

Michael Axline Miller & Axline, P.C. Sacramento, California

Daniel Berger Tyler E. Wren Berger & Montague, P.C. Philadelphia, Pennsylvania

Stewart L. Cohen Robert L. Pratter Michael Coren Cohen, Placitella & Roth, P.C. Philadelphia, Pennsylvania Counsel for Plaintiff Commonwealth of Pennsylvania

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James P. Tuite Katherine M. Katchen Matthew A. Scarola Akin Gump Strauss Hauer & Feld LLP Philadelphia, Pennsylvania; Washington, D.C.; San Francisco, CA Counsel for Defendant Lukoil Americas Corporation

James A. Pardo Lisa A. Gerson McDermott Will & Emery LLP New York, New York Counsel for Certain Defendants

OPINION & ORDER

VERNON S. BRODERICK, United States District Judge

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I. Factual Background.................................................................................................................3

A. MTBE Generally.................................................................................................................3

B. LAC and Getty Petroleum Marketing Inc...........................................................................3

C. Material Safety Data Sheets Produced by Certain Defendants...........................................6

D. Public Statements and Advertising by Certain Defendants................................................9

E. Certain Defendants' Claims for Payments From the Underground Storage Tank Indemnification Fund................................................................................................................13

II. Relevant Procedural History..................................................................................................13

III. Legal Standards.................................................................................................................16

A. Rule 12(b)(2).....................................................................................................................16

B. Rule 12(b)(6).....................................................................................................................17

IV. Discussion.........................................................................................................................18

A. Lukoil Americas Corporation's Motion to Dismiss..........................................................18

1. Personal Jurisdiction.....................................................................................................18

a. Applicable Law..............................................................................................18

b. Application.....................................................................................................21

i. General Jurisdiction....................................................................................22

a) Choice of Law...........................................................................................23

ii. Specific Jurisdiction...................................................................................25

2. Failure to State a Claim.................................................................................................35

a. Liability for Conduct After LAC Acquired GPMI.........................................36

b. Liability for Conduct Before LAC Acquired GPMI......................................39

B. Certain Defendants' Motion to Dismiss...........................................................................40

1. Count III: Public Nuisance...........................................................................................41

2. Counts VI and VII: Violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law.....................................................................................................41

a. Applicable Law..............................................................................................41

b. Application.....................................................................................................42

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i. Count VI: The Material Safety Data Sheets...............................................43

ii. Public Statements.......................................................................................45

a) Government Gas Advertisement...............................................................45

b) Newspaper Articles...................................................................................48

iii. Availability of Injunctive Relief...............................................................52

3. Count IX: Violation of the Pennsylvania Storage Tank and Spill Prevention Act......52

a. Applicable Law..............................................................................................52

b. Application.....................................................................................................53

V. Conclusion.............................................................................................................................56

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This is a consolidated multi-district litigation (“MDL”) relating to contamination-actual or threatened-of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether (“MTBE”) and/or tertiary butyl alcohol, a product formed by the breakdown of MTBE in water. In this case, the Commonwealth of Pennsylvania (“the Commonwealth” or “Pennsylvania”) alleges that defendants' use and handling of MTBE contaminated, or threatens to contaminate, groundwater within its jurisdiction. Before me are (1) Defendant Lukoil Americas Corporation's (“LAC”) motion to dismiss for lack of personal jurisdiction and for failure to state a claim; and (2) the motion to dismiss for failure to state a claim of certain other Defendants.^[1]

For the reasons that follow, the motions are each GRANTED IN PART and DENIED IN PART. Specifically, the Commonwealth has sufficiently alleged that Defendant Getty Petroleum Marketing Inc.'s veil may be pierced for jurisdictional purposes; therefore, LAC's motion to dismiss for lack of personal jurisdiction is DENIED. However, because the Commonwealth has

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failed to plausibly allege facts sufficient to warrant a finding that Defendant Getty Petroleum Marketing Inc.'s veil may be pierced for liability purposes and the Commonwealth has not properly pled successor liability, LAC's motion to dismiss for failure to state a claim is GRANTED. Because the Commonwealth has once again failed to allege that any Defendants possessed or controlled the MTBE release sites that the Commonwealth alleged created a nuisance, Certain Defendants' motion to dismiss Count III is GRANTED.^[2] Because the Commonwealth has not set forth any specific allegations of deceptive and misleading conduct that are actionable under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), Certain Defendants' motion to dismiss Counts VI and VII against them are GRANTED.^[3] Finally, because the Commonwealth has adequately alleged that the Insurance Defendants^[4] were required to disclose information about their private insurance coverage in response to the Commonwealth's request for information on subrogation, Certain Defendants' motion to dismiss the Commonwealth's claim under the Pennsylvania Storage Tank and Spill Prevention Act is DENIED.

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I. Factual Background^[5]

A. MTBE Generally

MTBE is an additive used to oxygenate and/or enhance the octane of gasoline. (SAC ¶¶ 138, 140.)^[6] It can be introduced into the environment “through disposals, deposits, releases, leaks, overfills, spills and evaporative releases . . . from a variety of sources, principally . . . gasoline storage and delivery systems.” (Id. ¶ 144.) When it encounters water, MTBE behaves differently from the other constituents of gasoline. (Id. ¶ 145.) It separates from those constituents, dissolves easily, does not readily adhere to soil particles, and moves approximately at the rate of the movement of water. (Id. ¶¶ 145-46.) As a result, MTBE is extremely mobile in water sources and can migrate far away from the source of the environmental release, including to subsurface soil regions, from which it may leach into groundwater. (Id. ¶¶ 146-47.) Because of these properties, MTBE is also difficult to remediate. (Id.) Since its introduction into gasoline, MTBE has been found throughout the groundwaters of Pennsylvania at varying concentrations, affecting the drinking-water supplies of the entire state. (Id. ¶¶ 248-49.)

B. LAC and Getty Petroleum Marketing Inc.

Defendant LAC is the Delaware corporation that wholly owns Defendant Getty Petroleum Marketing Inc. (“GPMI”), a Maryland corporation. (Id. ¶¶ 74, 83.) LAC is an indirect subsidiary of Lukoil Oil Company, also known as OAO Lukoil (“OAO Lukoil”), a publicly traded Russian company that has registered the name “Lukoil” as a trademark. (Id. ¶¶

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83, 85, 297.) Defendant Lukoil North America LLC (“LNA”) is also an indirect subsidiary of OAO Lukoil. (Id. ¶ 84.) The Commonwealth alleges that LAC is the alter ego of and successor-in-liability to GPMI. (Id. ¶ 83.)

Prior to October 2000, GPMI leased service stations in Pennsylvania and elsewhere from Getty Realty Corporation. (Id. ¶ 301.) In October 2000, OAO Lukoil created LAC, and in November 2000, OAO Lukoil acquired GPMI. (Id. ¶¶ 298, 299). Thereafter, LAC acquired all the stock of GPMI, which it owned from January 25, 2001 to February 28, 2011, with the...