Rice v. First Energy Corp.

• Decision Date: 07 September 2018
• Docket Number: Case No. 2:17-cv-489-LPL
• Parties: Holly RICE, individually and as parent and natural guardian of N.R., D.W., D.W., K.W., minor children; Rudolph Smith and Yma Smith; Gary J. Kuklish and Kimberly Kuklish; George and Ursula C. Markish; and Darrel Redman and Gina Redman, individually and on behalf of all others similarly situated, Plaintiffs, v. FIRST ENERGY CORP., NRG Energy, Inc., and Matt Canestrale Contracting, Inc., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

339 F.Supp.3d 523

Holly RICE, individually and as parent and natural guardian of N.R., D.W., D.W., K.W., minor children; Rudolph Smith and Yma Smith; Gary J. Kuklish and Kimberly Kuklish; George and Ursula C. Markish; and Darrel Redman and Gina Redman, individually and on behalf of all others similarly situated, Plaintiffs,

v.FIRST ENERGY CORP., NRG Energy, Inc., and Matt Canestrale Contracting, Inc., Defendants.

Case No. 2:17-cv-489-LPL

United States District Court, W.D. Pennsylvania, Pittsburgh.

Signed September 7, 2018

William Steven Berman, Napoli Shkolnik, PLLC, Marlton, NJ, for Plaintiffs.

Thomas P. McGinnis, Karin M. Romano, Louis C. Long, Thomas E. Zumpella, Thomas, Thomas & Hafer LLP, William B. Pentecost, Jr., Gerard J. Cipriani, Jennifer M. Swistak, Philip J. Sbrolla, Cipriani & Werner, P.C., Kathy K. Condo, Carla M. Voigt, Babst Calland Clements & Zomnir, Pittsburgh, PA, William T. Gorton, III, Stites & Harbison, Lexington, KY, for Defendants.

ECF Nos. 58 & 72

OPINION

LISA PUPO LENIHAN, United States Magistrate Judge

Currently pending before the Court for disposition are the Motions for Summary Judgment filed by First Energy Corp. (ECF No. 58) and NRG Energy (ECF No. 72). In the motions, First Energy Corp. ("FEC") and NRG Energy (collectively, the "Energy Defendants") ask the Court to dismiss all claims in Plaintiffs' First Amended Complaint against them because they do not own or operate the power stations at issue in this action, and under Pennsylvania law, a parent corporation is not liable for the conduct of its subsidiaries. For the reasons that follow, the Court will grant FEC's motion for summary judgment and will grant/deny NRG Energy's motion for summary judgment. In addition, the Court will grant Plaintiffs leave to file an amended complaint for the purpose of adding proper party defendants.

I. FACTS

Plaintiffs, who are owners and/or residents of private property in LaBelle and Luzerne Townships, instituted this class action to assert claims arising out of alleged environmental contamination and polluting of their property and persons by coal ash emanating from the LaBelle Refuse Site ("LaBelle Site"), which is owned and operated by Defendant Matt Canestrale Contracting, Inc. ("Canestrale"). First Am. Compl., Intro. & ¶¶ 8, 13 (ECF No. 12). The coal ash at the LaBelle Site came from several closed power plants in Western Pennsylvania allegedly owned and/or operated by the Energy Defendants. Id. at ¶¶ 7-8, 10-11, 14.

Essentially, Plaintiffs assert four claims against the Energy Defendants: (1) Medical Monitoring; (2) Negligence; (3) Private Nuisance; and (4) Trespass. However, the Energy Defendants disclaim ownership of the closed power stations and seek dismissal from this action. The facts relating to their motions are set forth separately below.

A. First Energy Corp.

Plaintiffs allege that FEC owns and/or operates the Hatfield's Ferry and Mitchell Power Stations. Id. at ¶ 7. FEC disputes that it owns or operates Hatfield's Ferry or Mitchell Power Statements.

The record evidence supports the following relevant, undisputed facts. FEC is a holding company whose principal business is the holding, directly or indirectly, of all the outstanding common stock of its principal subsidiaries, including Allegheny Energy, Inc. ("AE") and AE's principal subsidiaries, which includes Allegheny Energy Supply Co., LLC ("AE Supply"). See SEC Form 10-k Annual Report for FY ending 12/31/11, Ex. F attached to Pls.' Resp. to FEC's Concise Stmt. of Mat. Facts ("CSMF") (ECF No. 84-6 at 4). On February 25, 2011, AE merged with a subsidiary of FEC, with AE continuing as the surviving corporation and becoming a wholly owned subsidiary of FEC. See SEC 10-k Annual Report at 1 (ECF No. 84-6 at 4); AE Supply Co., LLC & Subsid. Consol. Fin. Stmts. for the Years Ended Dec. 31, 2017 and 2016 ("AE Supply Consol. Fin. Stmts."), Ex. C to Pls.' Resp. to FEC's CSMF (ECF No. 84-3 at 3). AE was subsequently merged with and into FEC on January 1, 2014. See AE Supply Consol. Fin. Stmts., id. at i (ECF No. 84-3 at 3).

According to James A. Arcuri, Senior Corporate Counsel for FirstEnergy Service Company, FEC does not own or operate any power stations. Aff. of James A. Arcuri,¹ ¶ 4, Ex. A to FEC's CSMF (ECF No. 60-1 at 5).

AE Supply is an unregulated, indirect wholly owned, generation subsidiary of FEC. See AE Supply Consol. Fin. Stmts. at 6 (ECF No. 84-3 at 4); SEC Form 10-k Report at i & 1 (ECF No. 84-6 at 3-4); SEC 8-k Report dated 7/8/13, Ex. G to Pls.' Resp. to FEC's CSMF (ECF No. 84-7 at 3). See also Arcuri Aff., ¶¶ 2-3, (ECF No. 60-1 at 4). AE Supply provides energy-related products and services to wholesale and retail customers. AE Supply Consol. Fin. Stmts. at 6 (ECF No. 84-3 at 4); SEC Form 10-k at 2 (ECF No. 84-6 at 5). AE Supply also owns and operates fossil generation facilities in Pennsylvania, West Virginia, and Virginia. AE Supply Consol. Fin. Stmts. at 6 (ECF No. 84-3 at 4).

The Hatfield's Ferry Power Station provided coal combustion residuals to Canestrale in 2007, 2008 and 2009, when Hatfield's was owned by AE Supply. See Aff. of David L. Hoone,² ¶ 3, Ex. B to FEC's CSMF (ECF No. 60-1). The Mitchell Power Plant provided coal combustion residuals to Canestrale from 1998 through 2006, and from 2009 through 2013. Hoone Aff., ¶ 4; Supp. Aff. of Hoone, ¶ 3, Ex. A to FEC's Supp. Mem. in Supp. of Summ. J. (ECF No. 78-1). From 1998 until November 17, 1999, the Mitchell Power Station was owned by West Penn Power Company. Supp. Aff. of Hoone, ¶ 3. Thereafter, Mitchell was owned by AE Supply. Id. ; Hoone Aff., ¶ 4.

Purchase orders from 2003, 2006 and 2007 indicate that they were issued by Allegheny Energy Service Corp., an Allegheny Energy Company, as agent for buyer—AE Supply—for the purchase of the coal ash disposal service from the Mitchell Power Station. See Ex. A attached to Pls.' Resp. to FEC's CSMF (ECF No. 84-1 at 2-10). These purchase orders were issued pursuant to the agreement "between Allegheny Power Service Corp. (APSC), on behalf of the owners/operators of the Mitchell Power Station ("Allegheny Power"), and Matt Canestrale Contracting, Inc. ("Canestrale") [dated 4/21/99, and the amendments thereto] for the supply of coal combustion by-products ("CCBs") from Allegheny Power's Mitchell Power Station[.]" Id. ; see also Excerpt from Agreement between Allegheny Power & Matt Canestrale Contracting, Inc. LaBelle Beneficial Use Project ("1999 Beneficial Use Agreement"), Ex. B attached to Pls.' Resp. to FEC's CSMF (ECF No. 84-2).

From June 2012 through January of 2013, several emails were exchanged between various individuals whose email addresses ended with "@FirstEnergy", and between counsel for Canestrale, William Gorton, and Joseph Kalan and/or John Luecken, regarding the renewal of the Beneficial Use Agreement. See Ex. D to Pls.' Resp. to FEC's CSMF (ECF No. 84-4). Although the email addresses of Kalan and Luecken ended with "@FirstEnergycorp.com," both Kalan and Luecken appear to be employees of FirstEnergy Service Company ("FESC"). Id. ; see also Ex. E to Pls.' Resp. to FEC's CSMF (ECF No. 84-5 at 4); Decl. of James A. Meade, ¶ 4, Ex. B to FEC's Reply Br. (ECF No. 89-2). The address that appears after Luecken's name in his email indicates he is located at FESC. Ex. D (ECF No. 84-4 at 10-12). Kalan was acting in his capacity as an employee of FESC when he was involved in the negotiations of the renewal of the Beneficial Use Agreement with Canestrale in 2012 and 2013. Meade Decl., ¶ 4. FESC is a subsidiary of FEC and provides legal, financial and other corporate support services at cost, in accordance with its cost allocation manual, to affiliated FirstEnergy companies. Id. at ¶ 3.

On 6/27/13, a change to the purchase order ("change order") was issued by Kalan, as the authorized purchasing representative, for the removal of CCBs from the "FirstEnergy Mitchell Plant" for transport to the LaBelle Site. See Ex. E to Pls.' Resp. to FEC's CSMF (ECF No. 84-5 at 2-4). The change order was issued pursuant to the new CCB Beneficial Use Agreement effective 10/15/12 between "FirstEnergy Service Company, for itself and on behalf of its affiliates, FirstEnergy Generation Corp. and Allegheny Energy Supply Co., LLC (collectively, "FirstEnergy"), and Matt Canestrale Contracting, Inc., ...." Id. (ECF No. 84-5 at 2-5.) A subsequent amendment to the CCB Beneficial Use Agreement was executed on 1/18/13, again between FESC on behalf of its affiliates, FirstEnergy Generation, LLC and AE Supply, and Canestrale, to accommodate a greater quantity of CCB deliveries and provide additional assurance of continued performance. Id. (ECF No. 84-5 at 7.) The amendment was signed by Charles D. Lasky, V.P., Fossil Fleet Operations, on behalf of FESC. Id. (ECF No. 84-5 at 9).

On July 8, 2013, the officers of FEC and AE Supply committed to deactivating two coal-fired plants in Pennsylvania—Hatfield's Ferry and Mitchell—by October 9, 2013. See SEC Form 8-K Report dated 7/8/13, Ex. G to Pls.' Resp. to FEC's CSMF (ECF No. 84-7 at 3). Thereafter, FEC issued a news release announcing its plans to deactivate Hatfield's Ferry and Mitchell Power Stations on July 9, 2013. Id. (ECF No. 84-7 at 6-7). Subsequently, several news stories were published locally based on this news release. See Ex. H to Pls.' Resp. to FEC's CSMF (ECF No. 84-8).

B. NRG Energy

Plaintiffs allege that NRG Energy owns and/or operates the Elrama Power Plant. Am. Compl., ¶ 10. NRG Energy denied that it owns or operates the Elrama Power Plant, and denied that it disposed of coal ash waste as alleged. NRG Energy's Ans. with Affirmative Defenses to Am. Compl., ¶¶ 4-5 (ECF No. 48).

The record evidence supports the following relevant, undisputed facts. GenOn Power Midwest LP owned the Elrama Power Plant prior to December 14, 2012. Decl. of Bradley Kranz at ¶¶ 8-9, NRG Ex. B (ECF No. 74-2 at 2). GenOn Power Midwest LP operated the Elrama Power Plant until October 1, 2012, when it deactivated the power plant and...