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noting that the OPA relies on the CWA and has adopted “Section 311's standard for liability of dischargers for cleanup costs for the discharge of oil, including economic damages, removal costs and natural resource damages[, which is] strict, joint and several”
Summary of this case from Murtaugh v. New YorkOpinion
CIVIL ACTION NO. 03-272, SECTION "K" (3)
September 25, 2003
ORDER AND REASONS
Before the Court is the Motion for Leave to File Third Party Complaint filed on behalf of the defendants, Charles Kahn Bodenger and Johnnie Jan Hunter Bodenger ("the Bodengers"). The United States of America (hereinafter "the Government") responded arguing that it is not opposed to the joinder of the prior mineral lessees as third party defendants provided that the proceedings are bifurcated or severed from the main claim for reimbursement of recovery costs pursuant to the Oil Pollution Act of 1990 ("OPA"), 33 U.S.C. § 2701, et seq. Pursuant to counsel's request, the matter was deemed submitted without oral hearing upon the conclusion of the briefing schedule.
See Minute Entry dated September 3, 2003.
For the following reasons, the Bodengers' Motion for Leave to File Third Party Claim is GRANTED. The Government's request for bifurcation of the third party proceeding is more appropriately addressed to the district judge in the form of a Motion to Sever and/or Bifurcate Proceedings, whether pursuant to Rule 20(b) or 42(b), at a later stage when the court may discern whether the goals of judicial economy, the convenience of the parties and fairness will be best sewed by one or separate trials.
I. FACTUAL AND PROCEDURAL BACKGROUND
The Government instituted the captioned proceeding against the Bodengers for recovery costs pursuant to the Oil Pollution Act of 1990 ("OPA"), 33 U.S.C. § 2701, et seq. The Coast Guard incurred costs in removing oil that was discharged into the waters of the United States and adjoining shoreline in Jefferson Parish, Louisiana. The Government's current demand for reimbursement of clean up costs amounts to 5185,000.00, plus interest.
The primary facts giving rise to the United States' complaint concern alleged discharges of oil from an abandoned production facility located on the Bodengers' property in Jefferson Parish. The alleged offending "facility" was a tank battery which allegedly leaked oil, necessitating the clean-up spearheaded by the Coast Guard. The Bodengers have identified the operators of the facility in question, which were various mineral lessees, sublessees and/or their assigns. The Bodengers submit via third party complaint that the operators may be liable to them in whole or in part for amounts that they may be tasked to pay the Government on the main claim.
The United States maintains that the alleged discharge occurred on or about August, 1999, clean up efforts commenced and were concluded shortly thereafter. Its position is that due haste is required in facilitating its recovery of funds and reimbursement of the Oil Spill Trust Fund. It submits that the third party proceedings may delay resolution of the main claim The Government further argues that the main claim is completely separate and independent from the Bodengers' third party contract state law claims.
The Bodengers note that the Government's argument regarding the third party proceedings delaying its recovery is disingenuous at best. Defendants highlight the fact that they were not contacted by the Government until the eve of the running of the three-year statute of limitations under the OPA. They explain that the Government did not issue a demand letter to the Bodengers until September 25, 2002. Subsequently, the Bodengers voluntarily entered into a tolling agreement with the United States, extending the time within which to file its claim until January 28, 2003. Most notably, the Government did not file its complaint in this matter until January 28, 2003, i.e., the last day of the limitations period as extended. The defendants submit that the Government's delay until beyond the eleventh hour in filing its OPA claim diffuses any argument in the nature of prejudicial delay due to the Bodengers' joinder of potentially liable third parties.
See Bodengers' Reply Memorandum, at p. 6.
See id.
The case is presently set for a non-jury trial seven months hence on April 19, 2004. The Bodengers employed due diligence and filed their motion to file third party claims well-within the deadlines set by the Court.
II. ANALYSIS 1. The Oil Pollution Act (OPA)
Analysis of the issues must begin with a brief review of the OPA and its key provisions. The Oil Pollution Act, 33 U.S.C. § 2701-61 ("OPA"), provides that
. . . each responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon navigable waters or adjoining shorelines . . . is liable for the removal costs . . . that result from such incident.33 U.S.C. § 2702(a).
The Oil Pollution Act of 1990 (OPA), signed into law by President Bush on August 18, 1990, established a comprehensive Federal oil spill response and liability legislative framework and ushered in several landmark reforms. First of all, it strengthened measures for oil spill prevention, requiring oil tankers over 5,000 gross tons constructed after 1990 to have double hulls and required the issuance of interim spill prevention rules applicable to single-hull vessels. Second, the OPA increased the financial consequences of oil spills by: (1) expanding the scope of polluter liability by imposing strict liability for the clean-up costs and resulting damages; (2) raising the liability limit for vessels, which could be superseded in the event of gross negligence, inter alia, on the part of a responsible party; (3) strengthening oil spill response capabilities and advance planning; and (4) facilitating access to funds to ensure prompt and complete recovery for damages arising from an oil spill.
Congress explicitly recognized that the existing federal and state laws provided inadequate cleanup and damage remedies, required large taxpayer subsidies for costly cleanup activities, and presented substantial barriers to victims' recoveries such as legal defenses, corporate forms, and burdens of proof unfairly favoring those responsible for the spills. See S. Rep. No. 94, 101st Cong., 1st Sess. (1989); 1990 U.S.C.C.A.N. 722. Congress also recognized that, pre-OPA, the costs of cleanup and damage from spill were not high enough to encourage greater industry efforts to prevent spills and develop effective techniques to contain spills that did in fact occur. Id. Congress' intention is manifest, that the new law would effect compensation for victims, quick and efficient cleanup with minimization of damages to natural resources, and the internalization of the costs of oil spills within the oil industry. Id.
Accordingly, liability of the "responsible party" for the removal costs and damages is strict. The terms "liable" or "liability" under the OPA are construed to be the same standard of liability under the Clean Water Act. The OPA continues to rely on the Clean Water Act (CWA) and adopted Section 311's standard for liability of dischargers for cleanup costs for the discharge of oil, including economic damages, removal costs and natural resource damages. "That standard of liability has been determined repeatedly to be strict, joint and several liability." S. Rep. 101-94, 11; 1990 U.S.C.C.A.N. 722, 732-733.
33U.S.C. § 2701(32), 2702.
The OPA provides that an action for recovery of removal costs "must be commenced within 3 years after completion of the removal action." By statute the government may recover all "removal costs" including 1) the cost of "containment and removal of oil or a hazardous substance from water . . . or the taking of other actions as may be necessary to minimize or mitigate damage to the public health or welfare . . . and 2) costs of directing and monitoring all actions to remove a discharge including monitoring activities. Third party fault may serve to exonerate a responsible party from liability. Section 2703(a) of Title 33 provides:
33U.S.C. § 2701(30), 2702.
A responsible party is not liable for removal costs or damages . . . if the responsible party establishes, by a preponderance of the evidence, that the discharge . . . of oil and the resulting damages or removal costs were caused solely by . . .
* * *
(3) an act or omission of a third party, other than an employee or agent of the responsible party or a third party whose act or omission occurs in connection with any contractual relationship with the responsible party . . . if the responsible party establishes, by a preponderance of the evidence, that the responsible party —
(A) exercised due care with respect to the oil concerned, taking into consideration the characteristics of the oil *128 and in light of all relevant facts and circumstances; and
(B) took precautions against foreseeable acts or omissions of any such third party and the foreseeable consequences of those acts or omissions . . .33 U.S.C. § 2703(a).
Thus, if the oil discharge and the resulting damages were caused solely by an act or omission of a third party and the responsible party was not himself negligent, it is a complete defense to the collection of removal costs. The responsible party's complete defense to liability is subject to certain preconditions, to wit: (1) the responsible party must show that reasonable care was exercised with the oil concerned; (2) precautions were taken against the foreseeable acts or omissions of the third party; and (3) that, in the aftermath of the spill, the responsible party provided "all reasonable cooperation and assistance requested by a responsible official in connection with the removal activities." Where the third party is an employee, agent or otherwise in a contractual relationship with the responsible party, however, that provision does not apply. Nor does that provision apply if the responsible party is himself negligent.
33 U.S.C. § 2703(a)(3)(A-B), 2703(c)(2).
Id.
The OPA permits a responsible party that has paid out removal costs and damages under the Act to bring a civil action for contribution against any other party "who is liable or potentially liable under this Act or another law." The OPA recognizes subrogation rights for a responsible party who has paid claimants pursuant to OPA as to "all rights, claims and causes of action" enjoyed by those claimants "under any other law." Finally, OPA's savings provisions expressly preserve state authority to impose additional liability and requirements "with respect to . . . the discharge of oil or other pollution by oil" within its boundaries, without reference to liability limits derived from either the OPA or the 1851 Limitation Act.
33 U.S.C. § 2718 (a), 2718(c).
2. Rule 14(a) Joinder of Third Party Claims
It is widely recognized that supplemental jurisdiction exists over a properly brought third party complaint. Impleader of parties through a third-party complaint is governed by Rule 14 of the Federal Rules of Civil Procedure, which provides, in pertinent part, "a defending party, as a third party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third-party plaintiff for all or part of the plaintiffs claim against the third-party plaintiff." Under the rule, liability must be directly alleged by the defendant/third-party plaintiff against the third party defendant. In determining whether a third-party complaint is properly brought under Rule 14, the court looks to whether the pleadings provide a basis for the third-party defendant's liability to the defendant/third party plaintiff. Rule 14 is designed to reduce the multiplicity of litigation and promote judicial efficiency by eliminating "circuitry of actions." The plaintiff in this case does not dispute that the third party complaint sets forth a number of potential bases for derivative or secondary liability.
Rule 14(a) of the Federal Rules of Civil Procedure provides that:
At any time after commencement of the action a defending party, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third-party plaintiff for all or part of the plaintiffs claim against the third-party plaintiff.
Fed.R.Civ.P. 14(a). The procedural device of impleader may only be used "when the third party defendant's potential liability is dependent upon the outcome of the main claim." Thus, "an entirely separate and independent claim cannot be maintained against a third party under Rule 14, even though it . . . arise[s] out of the same general set of facts as the main claim." For impleader to be proper, the third party's liability must depend upon the outcome of the main claim and the third party claim must attempt to pass on to the third party all or part of the liability of the defendant.
Southeast Mortgage Co. v. Mullins, 514 F.2d 747, 749 (5th Cir. 1975). See also United States v. Joe Grasso Son, Inc., 380 F.2d 749, 751-52 (5th Cir. 1967); San Francisco Estates, S.A. v. Westfeldt Brothers, Inc., 1997 WL 736694, * 2 (E. D. La.) (Vance, J.).
Joe Grasso Son, Inc., 380 F.2d at 751. See also Majors v. American Nat'l Bank of Huntsville, 426 F.2d 566, 568-69 (5th Cir. 1970).
See San Francisco Estates, S.A., 1997 WL 736694 (E. D. La.) ( citing Southern Mortgage Co. v. O'Dom, 699 F. Supp. 1223, 1225 (S.D. Miss. 1987) and Joe Grasso, supra).
This case presents the usual third-party complaint situation, in which the third-party defendant is potentially liable to the third-party plaintiff for all or part of the plaintiffs claim against the third-party plaintiff.
Fed.R.Civ.P. 14(a). See also Joe Grasso Son, 380 F.2d at 751.
In Joe Grasso Son, boat owners brought suit against the United States for a refund of employment taxes that they had paid on a group of crew members. The United States, realizing that certain boat captains could be alternatively liable for the employment taxes on the same group of crew members, sought to implead the boat captains as third-party defendants. Although, dismissing the third-party complaint on other grounds, the Fifth Circuit noted that for the Government to implead the boat captains as third party defendants, "it must appear that the liability of the two taxpayers [ i.e., the plaintiff boat owners and the third-party defendant boat captains] is an either/or proposition as a result of law or the facts." The Fifth Circuit explained the propriety of third party practice generally as follows, to wit:
Joe Grasso Son, Inc., 380 F.2d at 750.
Id. at 752.
The question whether a defendant's demand presents an appropriate occasion for the use of impleader or else constitutes a separate claim has been resolved consistently by permitting impleader only in cases where the third party's liability was in some way derivative of the outcome of the main claim. In most such cases it has been held that for impleader to be available the third party defendant must be "liable secondarily to the original defendant in the event that the latter is held liable to the plaintiff." Holtzoff, Entry of Additional Parties in a Civil Action, 31 F.R.D. 101, 106 (1962). -Accord, Cass v. Brown, 41 F.R.D. 284, 286 (D.Colo. 1966); National Fire Ins. Co. v. Daniel J. Keating Co., 35 F.R.D. 137, 139 (W.D.Pa. 1964). Stating the same principle in different words, other authorities declare that the third party must necessarily be liable over to the defendant for all or part of the plaintiffs recovery, 1A Barron Holtzoff, Federal Practice and Proc. Sec. 426, at 664-669, or that the defendant must attempt to pass on to the third party all or part of the liability asserted against the defendant, 3 Moore's para. 14.07, at 512; see Kohn v. Teleprompter, supra. Whichever expression is preferred, it is clear that impleader under Rule 14 requires that the liability of the third party be dependent upon the outcome of the main claim.
Id., at 751-752.
In the instant case, the Government seeks to collect a debt allegedly owed by the owners as the "responsible" party, when the third party defendants as operators may be liable for the same debt, either in part or in full. As such, the Bodengers' third-party complaint appears to be proper under Fed.R.Civ.P. 14(a).
While it is by no means automatic, leave to amend the pleadings "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). A motion for leave should not be denied "unless there is a substantial reason to do so." This determination is generally entrusted to the sound discretion of the district judge and requires consideration of the following factors: "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of the amendment." "A decision to grant leave is within the discretion of the court, although if the court lacks a substantial reason to deny leave, its discretion is not broad enough to permit denial."
See In re Southmark, 88 F.3d 311, 315 (5th Cir. 1996); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993).
See also Foman v. Davis, 371 U.S. 178, 182 (1962); Price v. Pinnacle Brands, Inc., 138 F.3d 602, 608 (5th Cir. 1998).
Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir. 1998); Lefalle v. Dallas Independent School District, 28 F.3d 521, 524 (5th Cir. 1994).
The court's discretion is not unbridled. Indeed, Rule 15(a) evinces a bias in favor of granting leave to amend, absent substantial reason for denying leave to amend. See Stripling v. Jordan Prod. Co., 234 F.3d 863, 872 (5th Cir. 2000); Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597-98 (5th Cir. 1981).
See Price, 138 F.3d at 608; see also Foman, 371 U.S. at 182; Chitimacha Tribe of Louisiana v. Harry L Laws Co., Inc., 690 F.2d 1157. 1163 (5th Cir. 1982).
Estate of Strange v. Commissioner of Internal Revenue, 293 F.3d 279, 281 (5th Cir. 2002).
None of the aforesaid factors weighs against allowing the proposed third party claims. There is no evidence of bad faith and the only delay to date is that of the Government in filing the instant action on the last day of the extended tolling period. The Government does not argue that the third party claims are futile. Moreover, the Government has failed to demonstrate that it will suffer any undue prejudice because of the filing of the third party claims. Discovery has barely commenced and the non-jury trial of this matter is set to commence in April, 2004. The joinder rules are interpreted to encourage "the broadest possible scope of action consistent with fairness to the parties" and, under the Federal Rules of Civil Procedure, "joinder of claims, parties and remedies is strongly encouraged." Fed.R.Civ.P. 14 joinder of claims against third parties for contribution and/or indemnity ( i.e., derivative or secondary liability) is no exception.
United Mine Workers v. Gibbs, 383 U.S. 715, 724 (1966).
Considering the foregoing, the Court GRANTS the Bodengers' motion for leave to file third party claims,
3. Severance and/or Bifurcation
The sum and substance of the Government's response is that the district court should bifurcate the proceedings and/or sever the Bodengers' third party claims so that their private contract disputes do not belabor the pace of its recovery action and reimbursement of the Fund." The Government emphasizes that the Bodengers do not oppose bifurcation of the proceedings and, in any event, seek to recover against third party mineral lessees only if the United States prevails on the main claim.
United States' Memorandum in Response, at p. 7.
Id.
After there has been an opportunity to engage in some discovery, and if it should be determined that justice is better served by severance of the third party claims, the district judge has the discretion to sever an action if it is misjoined or might otherwise cause delay or prejudice.
Applewhite v. Reichold Chemicals, Inc., 67 F.3d 571, 574 (5th Cir. 1995); Thomas v. Mobil Corporation, 1998 WL 614657, * 2 (E. D. La.) (Africk, ML).
As previously mentioned, the record in this case has yet to be developed to the stage where the district court may determine, with any precision, whether the third party claims are so separate and distinct from the Government's claim that separate proceedings may be had without injustice. Moreover, the decision to sever and/or bifurcate the proceedings rests in the sole discretion of the trial court.
Conkling v. Turner, 18 F.3d 1285, 1293 (5th Cir. 1994) ( quoting First Tex. Sav. Ass'n v. Reliance Ins. Co., 950 F.2d 1171, 1174, n. 2 (5th Cir. 1992)).
III. CONCLUSION
Granting leave to file third party claims in this case in no way reflects the undersigned's opinion that such claims are or are not meritorious. The Government has not demonstrated bad faith, undue delay or undue prejudice occasioned by the filing of the third party complaint and the third party claims against the alleged operators of the facility appear proper.
Accordingly,IT IS ORDERED that the Bodengers' Motion for Leave to File Third Party Claim is GRANTED.