United States v. Kernen Constr.

• Decision Date: 16 October 2018
• Docket Number: No. 2:17-cv-01424 WBS DMC,2:17-cv-01424 WBS DMC
• Citation: 349 F.Supp.3d 988
• Court: U.S. District Court — Eastern District of California
• Parties: UNITED STATES of America, Plaintiff, v. KERNEN CONSTRUCTION and Bundy & Sons, Inc. d/b/a Bundy & Sons Logging, Defendant.

349 F.Supp.3d 988

UNITED STATES of America, Plaintiff,

v.KERNEN CONSTRUCTION and Bundy & Sons, Inc. d/b/a Bundy & Sons Logging, Defendant.

No. 2:17-cv-01424 WBS DMC

United States District Court, E.D. California.

Signed October 16, 2018

Colleen M. Kennedy, David Taylor Shelledy, Benjamin Joseph Wolinsky, US Attorney's Office, Sacramento, CA, for Plaintiff.

Charles H. Horn, Erica Isabel De La Sierra, Michele C. Kirrane, LeClair Ryan LLP, San Francisco, CA, Phillip R. Bonotto, Rushford & Bonotto, Sacramento, CA, for Defendant.

MEMORANDUM AND ORDER RE: MOTIONS FOR PARTIAL SUMMARY JUDGMENT

WILLIAM B. SHUBB, UNITED STATES DISTRICT JUDGE

Plaintiff brought this action against defendants Kernen Construction ("Kernen") and Bundy & Sons, Inc. d/b/a Bundy & Sons Logging ("Bundy"), alleging claims of negligence under a theory of respondeat superior and trespass by fire, and seeking a declaratory judgment that California Health & Safety Code § 13009.2 (" Section 13009.2") is unconstitutional and inapplicable to the claims brought by the United States. (First Am. Compl. (Docket No. 43).) Before the court are plaintiff's (Docket No. 58) and intervenor defendant California Forestry Association's ("CFA") (Docket No. 63) cross Motions for Partial Summary Judgment as to the claim for declaratory relief, and plaintiff's Motion for Partial Summary Judgment as to defendants' Affirmative Defenses (Docket No. 60).¹

I. Factual and Procedural Background

This action stems from the Flat Fire, which ignited in July 2012 along a highway through the Shasta-Trinity National Forest. On July 10, 2017, plaintiff brought a complaint² against defendants Bundy and Kernen for damages resulting from the fire. (Compl. (Docket No. 1).) Plaintiff alleges that employees of defendants Bundy and Kernen negligently started the fire while transporting heavy logging equipment along the highway. (FAC ¶¶ 7, 12.)

After an investigation, National Forest Service investigators determined that the fire started when defendants' equipment came unsecured and dragged along the highway, creating sparks. (Id. ¶ 16.) Ultimately, the Flat Fire burned approximately 1,608 acres of National Forest System lands, and an additional 80 acres of private land. (Id. ¶ 17.)

In addition to its claims for damages, plaintiff seeks a declaratory judgment that Section 13009.2 is inapplicable as to claims brought by the United States.³ The California Legislature passed Section 13009.2 in 2012 as part of Assembly Bill 1492, a budget bill that addressed Timber Harvest Plans and imposed taxes on lumber products. 2012 Cal. Legis. Serv. 289 (A.B. 1492). Section 13009.2 applies to civil actions brought by public agencies seeking damages caused by fire. Under this statute, any pecuniary damages sought must be quantifiable and cannot be unreasonable in relation to the prefire market value of the property. Public agencies can recover ecological and environmental damages, but the prefire fair market value of the property is a relevant factor in assessing the reasonableness of those damages. Finally, if public agency plaintiffs claim environmental damages, they cannot seek to enhance their pecuniary or environmental damages. The statute defines public agencies to include both the United States and California and any political subdivisions thereof. The statute does not apply to private plaintiffs.

II. Motions for Partial Summary Judgment

A. Legal Standard

Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A material fact is one that could affect the outcome of the suit, and a genuine issue is one that could permit a reasonable jury to enter a verdict in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The party moving for summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact and can satisfy this burden by presenting evidence that negates an essential element of the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Alternatively, the movant can demonstrate that the non-moving party cannot provide evidence to support an essential element upon which it will bear the burden of proof at trial. Id. Any inferences drawn from the underlying facts must, however, be viewed in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

B. Cross Motions as to Declaratory Relief ⁴

Plaintiff alleges that Section 13009.2 violates the United States Constitution because it discriminates against the United States by limiting the damages the United States may collect. It argues that Section 13009.2 violates the doctrine of intergovernmental immunities, U.S. Const. Art. VI, Cl. 2., and that Section 13009.2 is not an appropriate rule for federal common law.

CFA, in its motion for partial summary judgment, contends that (1) Section 13009.2 does not discriminate against the federal government and (2) Congress has provided clear and unambiguous authorization that California state acts may apply to the claims brought by the United States. CFA further argues that Section 13009.2 provides the basis for an appropriate rule of federal common law.

1. Intergovernmental Immunity

Under the doctrine of intergovernmental immunity, state law can violate the Supremacy Clause if it directly regulates the federal government or discriminates against it. North Dakota v. United States, 495 U.S. 423, 434, 110 S.Ct. 1986, 109 L.Ed.2d 420 (1990) ; Boeing Co. v. Movassaghi, 768 F.3d 832, 839 (9th Cir. 2014). Even though the doctrine has traditionally applied in tax cases, courts have extended its reach to other contexts. United States v. California, 314 F.Supp.3d 1077, 1089 (E.D. Cal. 2018) (Mendez, J.) (detailing the extension of the doctrine to other regulatory contexts). Plaintiff does not contend that it is directly regulated by Section 13009.2, so the focus of the inquiry is whether the statute discriminates against the federal government.

a. Discrimination against Federal Interests

A state statute discriminates against the federal government if it "treats someone else better than it treats them." North Dakota, 495 U.S. at 438, 110 S.Ct. 1986 (citing Washington v. United States, 460 U.S. 536, 544–45, 103 S.Ct. 1344, 75 L.Ed.2d 264 (1983) ). Courts inquire if the federal government is actually worse off compared to other similarly situated actors. See id. Regardless, even if the federal government is worse off, a regulation can survive if significant differences between the two classes justify the burden. Davis v. Michigan Dep't of Treasury, 489 U.S. 803, 816, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989).

Section 13009.2 applies to all public agencies, state and federal, so CFA argues that this section does not facially discriminate against the federal government.⁵ This argument misstates the relevant inquiry. A state regulation is discriminatory if it treats someone else, not just other public actors, better than the federal government. See North Dakota, 495 U.S. at 438, 110 S.Ct. 1986 (citation omitted). The doctrine of intergovernmental immunity is concerned with political checks. Because the federal government does not have a direct voice in state legislatures, states can unfairly burden its operations by subjecting it to disparate treatment. See Washington v. United States, 460 U.S. 536, 545, 103 S.Ct. 1344, 75 L.Ed.2d 264 (1983). As such, it is important that burdens also fall on private parties to ensure that there is a broad state constituency that can provide a political check against the abuse of a state's regulatory authority. See United States v. Fresno Cty., 429 U.S. 452, 463, 97 S.Ct. 699, 50 L.Ed.2d 683 (1977) (explaining that it is unfair to exempt private individuals with beneficial interests from regulatory burdens); United States v. Lewis Cty., 175 F.3d 671, 676 (9th Cir. 1999) (citing Washington, 460 U.S. at 545, 103 S.Ct. 1344 ) (finding that private citizens also must be affected by the exercise of a state's regulatory authority because they can use their votes to keep the State from acting excessively). It is simply insufficient that Section 13009.2 applies to all public entities, because it excludes private actors from its coverage.

Even though the statute only applies to public agencies, CFA argues that Section 13009.2 does not discriminate against the United States in practice. CFA contends that private plaintiffs face similar limitations in their recovery. This understanding of California law is incorrect for a few reasons.

First, Section 13009.2 uses prefire fair market value as an anchor for any measure of damages. Section 13009.2(a) requires any measure of pecuniary damages be quantifiable and not unreasonable in relation to the prefire fair market value of the property⁶ and Section 13009.2(c) uses that market value as a relevant factor in measuring ecological and environmental damages. That statutory language discriminates against claims brought by the United States because National Forest Land often has no market value. See United States v. CB & I Constructors, Inc., 685 F.3d 827, 834–35 (9th Cir. 2012) (citing Feather River Lumber Co. v. United States, 30 F.2d 642, 644 (9th Cir. 1929) ). Instead, the Ninth Circuit has emphasized that the necessary damages calculation requires measuring what is necessary to make the government whole. Id. at 835. By tying the measure of all damages to the prefire fair market value of the land, Section 13009.2 systemically undervalues damage to National Forest Land, a federal interest. See generally id.; see also 16 U.S.C. § 551 (giving the Secretary of Agriculture authority to make provisions for the protection of national forests from destruction by fire).

Second,...