Utah Physicians for a Healthy Env't Inc. v. Diesel Power Gear LLC
| Jurisdiction | United States,Federal,Utah |
| Parties | UTAH PHYSICIANS FOR A HEALTHY ENVIRONMENT INC., Plaintiff, v. DIESEL POWER GEAR LLC, et al., Defendants. |
| Decision Date | 19 January 2024 |
| Court | U.S. District Court — District of Utah |
| Docket Number | 2:17-cv-00032-RJS-DBP |
1
UTAH PHYSICIANS FOR A HEALTHY ENVIRONMENT INC., Plaintiff,
v.
DIESEL POWER GEAR LLC, et al., Defendants.
No. 2:17-cv-00032-RJS-DBP
United States District Court, D. Utah
January 19, 2024
Dustin B. Pead, Chief Magistrate Judge
MEMORANDUM DECISION AND ORDER
ROBERT J. SHELBY UNITED STATES CHIEF DISTRICT JUDGE
This case is on remand from the United States Court of Appeal for the Tenth Circuit. The Tenth Circuit directed this court to reconsider the SIP tampering penalties assessed against Defendants B&W Auto LLC d/b/a Sparks Motors (B&W Auto) and David W. Sparks.[1]The court reconsiders those penalties and reduces them by $25,000.
Also before the court is Defendants Diesel Power Gear LLC (DPG), B&W Auto, Sparks, and Joshua Stuart's Rule 60(b) Motion.[2]In this Motion, Defendants seek relief from the court's Order granting Plaintiff UPHE its attorney fees and costs.[3]For the reasons set forth below, Defendants' Rule 60(b) Motion is denied.
PROCEDURAL HISTORY
The court focuses on the facts most relevant to the SIP tampering penalties and the Rule 60(b) Motion. A more thorough review is in the court's Bench Trial Order.[4]
The Court Enters Judgment Against Defendants
In January 2017, UPHE initiated this citizen suit, alleging Defendants had committed various violations of the Clean Air Act (CAA) and Utah's state implementation plan (SIP).[5]UPHE sought declaratory, injunctive, and monetary relief.[6]
Extensive litigation ensued, including a Motion to Dismiss and multiple Motions for Summary Judgment.[7]UPHE also moved for a preliminary injunction enjoining B&W Auto and Sparks from violating the CAA.[8]The parties stipulated to a preliminary injunction, and the court enjoined B&W Auto and Sparks from violating the CAA during the pendency of the action.[9]
After resolving the Motions for Summary Judgment, the court held a three-day bench trial.[10] The court then issued the Bench Trial Order, detailing its findings of fact and conclusions of law.[11]Among other things, the Order outlined Defendants' violations of the CAA and Utah's SIP, and calculated the maximum penalties for each violation.[12]After identifying the maximum penalties, the court reduced the penalties by applying the statutory mitigating factors.[13]The
court's reductions resulted in the following penalties[14]:
Liable Parties Maximum Penalty Reduced Penalty CAA Tampering Violations B&W Auto and Sparks $30,000 $25,000 CAA Defeat Part Violations B&W Auto and Sparks $90,985 $80,000 CAA Defeat Part Marketing Violations B&W Auto and Sparks $111,290 $90,000 B&W Auto, Sparks, and DPG $109,130 $90,000 DPG, Sparks, and Stuart $1,136,090 $227,218 SIP Tampering Violations B&W Auto and Sparks $1,387,500 $138,700 SIP Owning or Operating Violations B&W Auto $114,425,625 $114,426
The court entered judgment against Defendants and in UPHE's favor, reflecting the reduced penalties.[15]The Judgment also permanently enjoined Defendants from, among other things, “removing or rendering inoperative federally-required emission control systems in diesel trucks.”[16]UPHE was awarded its litigation costs, including reasonable attorney fees.[17]
The Tenth Circuit Remands
Defendants appealed, raising various challenges to this court's ruling.[18]Most relevant here, they argued UPHE lacked Article III standing and this court erred in its penalty calculations.[19]The Tenth Circuit “largely affirm[ed],”[20] but remanded for the court to consider two issues.[21]
The first issue on remand concerns Article III standing.[22]The Circuit held UPHE lacked standing to pursue claims based on vehicles not operated in Utah, defeat parts sold to out-of-state customers, and defeat parts marketed but not sold.[23]On remand, the parties have stipulated all trucks were operated in Utah.[24]They have also stipulated to facts concerning the defeat parts sold to out-of-state customers or not sold.[25]These stipulations have resolved the Article III standing issue, and they result in a reduced penalty.[26]Specifically, the penalty assessed against DPG, Sparks, and Stuart for defeat part marketing violations is reduced from $227,218 to $27,546.[27]
The second issue on remand concerns the penalties assessed against B&W Auto and Sparks for their SIP tampering violations.[28]The Circuit held this court “abused its discretion in weighing the seriousness-of-the violation factor against Defendants in calculating penalties for
violations of the Utah SIP's anti-tampering provision.”[29]The Circuit thus vacated the penalties associated with the SIP tampering violations ($138,700) and directed this court to consider the penalties established by Congress for CAA tampering violations.[30] The parties have briefed this issue, providing their views on the seriousness of the violations.[31]
Defendants Allege Financial Reverses
On remand, the court may consider “any additional information” it deems relevant, including evidence of Defendants' financial reverses.[32]Defendants argue their financial situation justifies further penalty reductions, so the court outlines relevant events.
The court ordered Defendants to satisfy the Judgment within 120 days of its entry.[33]Defendants did not, and UPHE filed three motions in response. First, UPHE filed a Motion for Supplemental Discovery, seeking “all relevant documents related to income, property and other financial resources” available to satisfy the Judgment.[34]The court granted this Motion, permitting UPHE to proceed with supplemental discovery.[35]UPHE also filed a Motion for Bond for Costs on Appeal,[36]which the court granted.[37]Finally, UPHE requested the court issue an order to show cause why Defendants should not be held in contempt for failing to satisfy the
Judgment.[38]The court denied this request without prejudice, stating UPHE could refile its Motion after completing supplemental discovery.[39]
UPHE began other collection efforts, including obtaining writs of garnishment[40]and applying for a charging order.[41]In response to these efforts, Defendants filed an Emergency Motion to Stay Execution of Judgment.[42]The Motion was supported by declarations from Sparks, Stuart, and Hoskins, and they “paint[ed] a grim financial picture for the Defendants and their businesses due to the COVID-19 pandemic, tax liabilities, and UPHE's collection efforts.”[43]Defendants requested the court stay execution, and in exchange they offered to make certain payments.[44] The court granted Defendants' Emergency Motion on the condition that DPG make an initial payment of $50,000 and Defendants make the following monthly payments: $7,500 from DPG, $1,000 from Sparks, and $1,000 from Stuart.[45]
In its Opinion, the Tenth Circuit noted the conditional stay and authorized this court to reconsider penalties in light of evidence concerning Defendants' financial reverses.[46]After the Circuit issued its Opinion, DPG and B&W Auto filed a Notice of Reopening the Issue of Impecuniosity.[47]They did not request any relief from the court, and they further stated other
Defendants were not raising the issue of impecuniosity.[48]
DPG and B&W Auto also raised their financial reverses in their briefing on remand.[49]They “intend to demonstrate to this [c]ourt that their financial situation is dire,” and they requested an evidentiary hearing.[50]However, they did not provide any evidence of their alleged financial reverses.[51]
Meanwhile, UPHE has proceeded with supplemental discovery. During an August 2023 hearing, UPHE questioned Sparks and Stuart about their assets and liabilities.[52]And in November 2023, UPHE requested an order authorizing the withdrawal of $311,972 in sequestered civil penalties from the court's registry.[53]The Motion noted Defendants had stopped making their court-ordered monthly payments towards the Judgment after January 2023.[54]
The court granted UPHE's Motion, authorizing the disbursement.[55]The court also issued an Order to Show Cause why Defendants should not be held in contempt for failing to make the payments required by the Order Conditionally Granting Stay.[56]Defendants responded, arguing the Order Conditionally Granting Stay applied only until the appeal resolved, and it resolved in
January 2022 when the Tenth Circuit issued its Mandate.[57]They thus argue payments were not required after January 2022.[58]Defendants did not acknowledge they requested the stay as an alternative to satisfying the Judgment or posting bond.[59]
In their Response, Defendants also state they “could not continue” to make the monthly payments.[60]They explain that “DPG is no longer a functioning company” and “has filed articles of dissolution with the Utah Division of Corporations and is in the process of winding up its affairs.”[61]They also contend Sparks “has provided income information to Plaintiffs showing that his income is significantly reduced from when this case was initially filed.”[62]Defendants offered to discuss their financial situation at a hearing but also stated “no such hearing should be necessary.”[63]
To demonstrate their financial distress, Defendants provided a declaration from Caleb Perkins, DPG's manager.[64]Perkins states, “DPG faithfully paid the obligations of itself and the other Defendants to the [c]ourt treasury for as long as it reasonably could.”[65]He further states DPG “has been undergoing the process of bankruptcy” and cannot “presently make the payments required.”[66]Defendants did not provide other evidence of their alleged financial reverses,
beyond DPG's statement of dissolution.[67]
Uncertain whether Defendants still wanted an evidentiary hearing, the court set a deadline for Defendants to request a hearing.[68]...
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