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City of Seattle v. Monsanto Company

United States District Court, W.D. Washington, Seattle

May 3, 2019

MONSANTO COMPANY, et al., Defendants.



         This matter comes before the Court on plaintiff City of Seattle's “Motion to Dismiss Defendants' Counterclaims and to Strike Certain Defenses.” Dkt. #95.[1]


         A. Background

         This case concerns the presence of polychlorinated biphenyls (“PCBs”) in water bodies in and around the City of Seattle (“Seattle”). PCBs are man-made environmental contaminants that cause harm to humans, wildlife and the environment. Dkt. #31 (Compl.) at ¶¶ 42-53. They are used in many industrial and commercial applications, including paint, transformers, sealants and inks. Id. at 4. On January 1, 1979, Congress enacted the Toxic Substances Control Act, which banned the manufacture and most uses of PCBs. Id.

         PCBs have contaminated Seattle's drainage systems, stormwater and water bodies. Compl. at ¶¶ 5, 7. The Duwamish River comprises the final 12 miles of Washington State's Green River, which runs through Seattle. Id at ¶ 4; Dkt. #91 (Countercl.) at ¶ 33. Harbor Island is located at the mouth of the Duwamish, bounded on one side by the East Waterway and on the other side by the West Waterway. Beginning at the upstream end of Harbor Island and continuing for about six miles upstream is a section of the river known as the Lower Duwamish, [2] also designated as the Lower Duwamish Waterway Superfund Site (“LDW Site”). Id. at ¶ 6; Countercl. at ¶ 33. The East Waterway and the West Waterway empty into Elliott Bay, a bay of Puget Sound. Countercl. at ¶ 33. The Lower Duwamish and the East Waterway are listed on the Washington State Water Quality Assessment list of impaired water bodies, in accordance with the Clean Water Act (“CWA”). Id. at ¶ 86; see 33 U.S.C. § 1313(d)(1). They are also listed on the National Priorities List as Superfund sites. Id. at ¶¶ 10, 14; see 65 Fed. Reg. 75179, 75182 (Dec. 1, 2000).

         Seattle, King County, the Port of Seattle and the Boeing Company entered into an Administrative Order on Consent (“AOC”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) with the EPA and the Washington Department of Ecology (“Ecology”) in December 2000. Countercl. at ¶ 40. The AOC parties formed the Lower Duwamish Waterway Group (“LDWG”) and completed a Remedial Investigation in 2010 and a Feasibility Study in 2012 (collectively, “RI/FS”). Id. at ¶¶ 41-42. In November 2014, the EPA issued its Record of Decision (“ROD”) for the LDW Site. Its planned cleanup includes dredging, capping, and enhanced natural recovery. Id. at ¶ 43; see Ex. 6; Dkt. #76-6.[3]

         Seattle has three types of drainage systems: a municipal separated stormwater system (“MS4”), a partially separated system, and a combined sewer system that collects stormwater and sewage. Compl. at ¶ 18. Heavy rains cause the combined system to overflow through Combined Sewer Overflows (“CSOs”). Id. Seattle's MS4 system is subject to a Phase I Municipal Stormwater Permit (“MS4 Permit”) issued by Ecology. Id. at ¶ 19; Countercl. at ¶ 81; see Ex. 17, Dkt. #76-19. Seattle's other systems are subject to a Waste Discharge Permit (“Waste Discharge Permit”) WA0031682. Id. at ¶¶ 19-20; Countercl. at ¶ 64; see Ex. 8, Dkt. #76-10. Seattle also has a Construction Stormwater General Permit (“Construction Permit”) for the stormwater discharges associated with construction activity. Countercl. at ¶ 182; see Ex. 49, Dkt. #76-51.

         On April 16, 2013, the United States and the State of Washington jointly sued Seattle for violations of the CWA, see 33 U.S.C. § 1319(b), (d) and the Washington Water Pollution Control Act, see RCW §§ 90.48.037, 90.48.144 for the discharge of pollutants of raw sewage. Id. at ¶ 65; Ex. 11, Dkt. #76-13 at 2, 10-12. The suit was resolved by a consent decree (“Consent Decree”) that requires Seattle to reduce its CSOs. Id. at ¶ 66; see Dkt. #100-1.[4] Seattle was also required to pay a civil penalty of $350, 000. Id.; see Ex. 10, Dkt. #76-12 at 3.

         Monsanto[5] was a manufacturer of PCBs in the United States until the 1970's.[6] From 1946 to 1986, Monsanto owned and operated a plant that manufactured adhesives and vanillin on a site adjacent to the Lower Duwamish. Ex. A, Dkt. #94-1 at 4-5.[7] On March 25, 2008, the EPA issued a Notice of Potential Liability Pursuant to Section 107(a) and a Request for Information Pursuant to Section 104(e) of CERCLA, for the LDW Site (“EPA Notice”). See id.

         B. Procedural History

         On January 25, 2016, the City of Seattle (“Seattle”) filed a complaint against Monsanto. Dkt. #1. A First Amended Complaint (“FAC”) was filed on May 4, 2016. Dkt. #31. Seattle alleged that Monsanto, as the sole manufacturer of PCBs in the United States between 1935 and 1979, was responsible for the presence of these contaminants in the city waters. Id. at ¶ 3. It brought five claims against Monsanto: public nuisance, defective design, failure to warn, negligence, and equitable indemnity. Id. at ¶¶ 91-142. Monsanto filed a motion to dismiss on May 18, 2016. Dkt. #34. The Court granted it in part, dismissing Seattle's claims for defective design, failure to warn and equitable indemnity. Dkt. #60. Monsanto filed an answer to the FAC and counterclaims against Seattle on March 24, 2017. Dkt. #63.

         On April 28, 2017, Seattle filed a “Motion to Dismiss Counterclaims and Strike Certain Defenses and Allegations.” Dkt. #66. Monsanto filed a “Motion For Leave to Amend Answer and Counterclaims” on May 22, 2017. Dkt. #76. This was granted on September 6, 2017. Dkts. #90, #91. Seattle filed a “Motion to Dismiss Defendants' Counterclaims and to Strike Certain Defenses, ” Dkt. #92, along with a motion requesting judicial notice of certain documents. Dkt. #94. Seattle then filed a “Praecipe to Substitute Corrected City of Seattle's Motion to Dismiss Defendants' Counterclaims and to Strike Certain Defenses, ” Dkt. #95, including a corrected version of the motion. Dkt. #95-1. Monsanto filed a response on October 30, 2017, Dkt. #99, along with a request for judicial notice of certain documents. Dkt. #100. It also filed an “Objection to Plaintiff's Request for Judicial Notice in Support of Motion to Dismiss Counterclaims.” Dkt. #101. On November 13, 2017, Seattle filed a “Reply in Support of the Court Taking Judicial Notice of Exhibits C, D and E, ” Dkt. #102, and a reply in support of its motion to dismiss. Dkt. #103.

         C. Monsanto's Counterclaims and Affirmative Defenses

         Monsanto brings six counterclaims and asserts ninety affirmative defenses. Seattle's motion to strike is directed at fifteen of them. Defenses 69-72, 74-79, 80-81 and 86 pertain to provisions of CERCLA and the parallel state statute, the Model Toxics Control Act (“MTCA”). Dkt. #31 (Answer) at ¶¶ 69-72, 74-79, 80-81, 86; see RCW 70.105D.010 et seq. Defense 53 asserts that punitive damages are not available. Id. at ¶ 53. Defense 62 asserts that Seattle's contingency fee arrangement with its outside counsel violates Washington state law. Id. at ¶62.

         The counterclaims are based upon Seattle's discharge of pollutants into the Duwamish River, the East Waterway, the West Waterway, Elliott Bay, Puget Sound and Lake Washington (“Affected Water Bodies”). Countercl. at ¶¶ 19-20.[8] First, Monsanto brings a CERCLA claim for the recovery of necessary response costs and damages that it has incurred and will incur in investigating, removing, and/or remediating the hazardous substances released by Seattle. Id. at ¶¶ 160-162; see 42 U.S.C. § 9607(a). Second, it brings a claim for declaratory relief under CERCLA and the Declaratory Judgment Act. Id. at ¶¶ 164-165, 179; see 42 U.S.C. § 9613(g)(2); see 28 U.S.C. § 2201. Monsanto argues that it is entitled to a declaration that Seattle is jointly and severally liable to Monsanto for future response costs and damages incurred by it in connection with the Lower Duwamish and the East Waterway. Third, Monsanto brings a claim alleging that Seattle has violated the MS4 Permit, Waste Discharge Permit and Construction Permit (collectively, “the National Pollutant Discharge Elimination System (NPDES) Permits”), as well as provisions of the CWA, resulting in contingent liability and past and future injury to Monsanto. It contends that its costs and contingent liabilities would be reduced or would stop increasing if Seattle fully complied with the CWA. Id. at ¶¶ 189, 196, 204-208.

         Fourth, Monsanto brings a negligence claim, alleging a breach of the duties owed by Seattle to Monsanto. Id. at 211-221. Fifth, Monsanto brings an unjust enrichment claim, arguing that any costs incurred by Monsanto as part of a judgment rendered by the Court would confer a benefit upon Seattle that would be unjust and inequitable for it to retain. Id. at ¶¶ 227-230. Finally, Monsanto brings a contribution claim. It argues that the expenses it has incurred and will incur to address the contamination in the Affected Water Bodies are the result of Seattle's conduct and that it is entitled to contribution from Seattle for these expenses. See RCW 4.22.040. Seattle moves to dismiss all six counterclaims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.[9]


         A. Legal Standard

         To survive a motion to dismiss, Monsanto's counterclaims “must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.”” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility if the party pleads factual content that “allows the Court to draw the reasonable inference that [the opposing party] is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). It must contain “more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do.” Twombly, 550 U.S. at 545.

         The Court must accept all material allegations in the counterclaims as true and construe them in the light most favorable to Monsanto. Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 889-90 (9th Cir. 1986) (citing North Star International v. Arizona Corporation Commission, 720 F.2d 578, 580 (9th Cir. 1983)). However, the “tenet that a court must accept as true all of the allegations contained in a [claim] is inapplicable to legal conclusions.” Ashcroft, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

         B. Clean Water Act Counterclaims

         1. Article III Standing

         That a claimant must have standing to sue stems from the requirement in “Article III, § 2, of the Constitution, [that] the federal courts have jurisdiction over [a] dispute … only if it is a ‘case' or ‘controversy.'” Raines v. Byrd, 521 U.S. 811, 818 (1997). The elements for Article III standing are: (1) an injury in fact, (2) caused by the alleged wrongful conduct (3) that is likely to be redressed by a favorable decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (internal citations omitted). The party invoking federal jurisdiction bears the burden of establishing these elements. Id. (citing FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990), holding modified by City of Littleton, Colo. v. Z.J. Gifts D-4, L.L.C., 541 U.S. 774 (2004)). Seattle argues that Monsanto lacks standing for its CWA counterclaims because it has impermissibly lumped them together and fails to demonstrate causation and redressability.

         i. Standing for Each Counterclaim

         First, Seattle argues that Monsanto has lumped together approximately 31 CWA claims. Dkt. #95-1 at 14-15. Its counterclaims pertain to three different NPDES permits, see Countercl. at ¶¶ 182, 188-202, and six different water bodies. See Countercl. at ¶¶ 184-189, 197, 201, 212-221, 229, 233. “A plaintiff must demonstrate standing for each claim that he or she seeks to press and for each form of relief sought.” Ctr. For Biological Diversity v. U.S. E.P.A., 90 F.Supp.3d 1177, 1186 (W.D. Wash. 2015) (citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006)). Seattle argues that Monsanto has failed to do so.

         “At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim.” Maya v. Centex Corp., 658 F.3d 1060, 1068 (9th Cir. 2011) (quoting Defs. of Wildlife, 504 U.S. at 561) (internal quotation marks omitted). Monsanto's counterclaims address several activities by Seattle, including the operation of its sewage and stormwater conveyance systems and resultant CSO discharges into the Affected Water Bodies, its treatment of sewage, wastewater and stormwater at the West Point Treatment Plant (“West Point”), the operation of its separate sewer systems and resultant Separate Sewer Overflows (“SSOs”), construction and demolition activities, and the use of certain products containing PCBs. Countercl. at ¶ 22; see Dkt. #103 at 9. However, it would be unreasonable to require Monsanto to establish standing for each claimed discharge into each Affected Water Body at this stage. Sierra Club v. BNSF Ry. Co., No. C13-0967-JCC, 2014 WL 12029092, at *5 (W.D. Wash. Mar. 12, 2014). Monsanto has alleged multiple violations of the CWA, but it ultimately asserts “one central claim”: that Seattle is responsible for the discharge of various pollutants into the Affected Water Bodies through its conveyance systems and other sources. Id. While not ideal, at the pleading stage, these generalized allegations suffice. Defs. of Wildlife, 504 U.S. at 561.

         ii. Injury-In-Fact

         An injury-in-fact is an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Id. at 560. A claimant must allege an injury that is ‘distinct and palpable,' as opposed to merely ‘abstract.'” Whitmore v. Arkansas, 495 U.S. 149, 155 (1990) (internal citations omitted).

         Monsanto alleges that it has suffered injuries in the form of contingent liabilities, response costs and defense costs. Countercl. at ¶¶ 23, 139, 204. It argues that the contingent liability arises from lawsuits, including this one and an action instituted by the State of Washington, see State of Washington v. Monsanto Company et al., No. 2:17-cv-53 (W.D. Wash.), [10] as well as potential future federal, state, or local regulatory actions. Id. at ¶¶ 139-140; see Clinton v. City of New York, 524 U.S. 417, 430-31 (1998); San Diego Unified Port Dist. v. Monsanto Co., 309 F.Supp.3d 854, 866 (S.D. Cal. 2018) (“The Supreme Court has held that a contingent liability is sufficient to confer Article III standing where it presents a ‘significant immediate injury.'”) (quoting Clinton, 524 U.S. at 430-31). The response costs arise in connection with CERCLA cleanup processes at the Lower Duwamish, the East Waterway, and neighboring uplands outside the scope of the EPA's ROD and AOC. Id. at ¶¶ 46-52, 141-143. Monsanto contends that these response costs are consistent with the National Contingency Plan (“NCP”), meet CERCLA's goals for cost-effective remedial action, and are not costs of litigation. Id. at ¶ 53; see Maya, 658 F.3d at 1069 (finding that the allegation that “plaintiffs spent money that, absent defendants' actions, they would not have spent … [was] a quintessential injury-in-fact.”). Finally, Monsanto alleges that it has incurred defense costs in defending this lawsuit. Id. at ¶ 147. The lawsuit would not have been brought but for Seattle's discharge of contaminants into the Affected Water Bodies. Id. Alternatively, Seattle's activities have increased Monsanto's potential liability in this case and the State of Washington's lawsuit even if it would have been brought independent of the City's own conduct. Id. at ¶¶ 147-49.

         While Seattle's motion to dismiss focuses on causation and redressability, it briefly argues that potential future regulatory action is speculative and cannot support Article III standing. Dkt. #95-1 at 15-16. The City points out that in San Luis & Delta-Mendota Water Auth. v. Haugrud, the Ninth Circuit found that an “allegation that third-party agencies [would] eventually impose more regulations on [a party] [was] speculative at best.” 848 F.3d 1216, 1233 (9th Cir. 2017), as corrected (Mar. 23, 2017). The only evidence offered in that case was a declaration regarding past regulations, which the Court found “insufficient to show a ‘credible threat' that third-party agencies [would] increase regulations … at some point in the future.” Id. (quoting Hall v. Norton, 266 F.3d 969, 977 (9th Cir. 2001)). Similarly, Monsanto relies only on this lawsuit to argue that the City will be subjected to “more stringent future regulation” for its discharges that it may in turn seek to recover from Monsanto. Dkt. #99 at 19 n.8. That is not sufficient to show standing. An alleged harm must be actual or imminent, not conjectural or hypothetical. Whitmore v. Arkansas, 495 U.S. 149, 155 (1990) (citing Los Angeles v. Lyons, 461 U.S. 95, 101-102 (1983)).

         Seattle also argues that Monsanto's alleged response costs pertain only to the Lower Duwamish. Dkt. #95-1 at 15. Most of them do. However, Monsanto does contend that it incurred costs in connection with “neighboring uplands properties (outside of the EPA in-water sediment cleanup area in the LDW Site), including but not limited to the CERCLA cleanup process associated with the LDW Site and uplands source control.” Countercl. at ¶ 46.[11] This included costs incurred from the ÔÇťanalysis of ...

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