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IN RE METHYL TERTIARY BUTYL ETHER PRODUCTS LIABILITY LITIG.

October 6, 2005.

IN RE: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION. This document relates to: Edith Quick, et al.
v.
Shell Oil Company, et al., 05 Civ. 7269.



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

I. INTRODUCTION

On August 3, 2005, United States Magistrate Judge David G. Bernthal filed a Report recommending that plaintiffs' motion to remand be denied.*fn1 Plaintiffs object to three of Judge Bernthal's determinations: first, that Shell Oil Company's ("Shell Oil") Notice of Removal was timely; second, that Shell Oil acted under federal direction, had a colorable federal defense, and had shown a sufficient causal nexus between the conduct directed by the federal agency and the harm about which plaintiffs complain; and, third, that "from approximately January 1995 to June 1995, Defendant transported gasoline containing MTBE through the North Line Pipe Line in Limestone Township, Kankakee, Illinois" and that "Defendant apparently did not use MTBE in its North Line gasoline until 1995."*fn2

  II. STANDARD OF REVIEW

  Rule 72(b) of the Federal Rules of Civil Procedure permits a party to object to the recommendations of a Magistrate Judge. The District Judge is then required to "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which" timely objections are made.*fn3

  III. BACKGROUND

  This case is one of dozens in a multi-district litigation ("MDL"), in which numerous plaintiffs are seeking relief from contamination, or threatened contamination, of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether ("MTBE").*fn4 This opinion relates only to Edith Quick, et al. v. Shell Oil Company, et al., 05 Civ. 7269.

  This case began in December 2001, when plaintiffs sued Shell Oil, Shell Pipe Line Corporation ("Shell Pipe Line"), Equilon Pipeline Company, LLC ("Equilon"), and Parsons Engineering Science, Inc., Richard M. Frendt, and Sasa Jazic (collectively "Parsons defendants") for nuisance and negligence arising out of a spill from the North Line Pipe Line ("Pipe Line"), allegedly controlled by Shell Oil, which contaminated the groundwater supply with MTBE and other additives.*fn5 Plaintiffs filed a First Amended Complaint and a Second Amended Complaint with essentially the same allegations.*fn6 These Complaints alleged that in 1988 an estimated 16,000 gallons of gasoline were released from the Pipe Line in Limestone Township, west of the City of Kankakee, in Kankakee County, Illinois.*fn7 Plaintiffs also alleged that gasoline continued to be found in the groundwater during the 1990s, either due to a subsurface spill at another location or because leakage from the original spill "was never permanently sealed off."*fn8 Plaintiffs alleged that Shell Oil transported MTBE-containing gasoline in the Pipe Line*fn9 and that it "maintained and controlled a continuing source of contamination into the waters of the State of Illinois."*fn10

  On March 11, 2005, plaintiffs obtained leave to file a Third Amended Complaint in order to add a products liability claim against Shell Oil, Shell Pipe Line, and Equilon.*fn11 In allegations added to the Third Amended Complaint, Plaintiffs stated that Shell Oil promoted the use of MTBE despite knowledge of the dangers it posed to the public health, and that MTBE pollution was inevitable unless proper precautions were taken.*fn12 Shell Oil breached its duty to test MTBE in order to determine whether it was environmentally safe and whether it posed significant risks to human health before selling MTBE-containing gasoline.*fn13 In addition, before adding MTBE to gasoline and selling it, Shell Oil should have taken special precautions, due to the fact that MTBE released into the environment would "mix easily with groundwater, move great distances, resist biodegradation and/or bioremediation, render drinking water unsafe and . . . threaten the public health and welfare."*fn14 Instead, according to plaintiffs, Shell Oil claimed that gasoline containing MTBE could be handled in the same manner as gasoline without MTBE, despite its knowledge that MTBE was a defective product and that the benefits of its use were outweighed by the costs imposed on society and the environment.*fn15

  Two days after the Third Amended Complaint was filed, Shell Oil filed a notice removing the case to federal court, asserting jurisdiction pursuant to both federal officer and federal question jurisdiction.*fn16 Shell Oil claimed that by adding the strict product liability claim, plaintiffs transformed their lawsuit into one that constituted an "attack on the comprehensive federal system that regulates the content of gasoline and that expressly authorizes and effectively requires the conduct that plaintiffs seek to prohibit."*fn17 Shell Oil further claimed that plaintiffs asserted for the first time in the Third Amended Complaint that Shell Oil was liable not only for negligently operating its pipeline when it released MTBE-containing gasoline, but also for the "design, manufacture, and formulation" of MTBE-containing gasoline.*fn18

  Shell Oil asserted that the Third Amended Complaint encompassed a time period when gasoline transported by Shell Oil "contained MTBE pursuant to a federal mandate embodied in the Reformulated Gasoline Program (`RGP') of the Clean Air Act."*fn19 Shell Oil claimed that this Third Amended Complaint was the first paper from which it could be ascertained that the action was removable pursuant to the procedural requirements of 28 U.S.C. § 1446(b).*fn20 Plaintiffs moved to remand, claiming that Shell Oil's Notice of Removal was untimely and that it had not established that removal was appropriate pursuant to section 1442(a).*fn21

  In his R & R, Judge Bernthal concluded that Shell Oil had "sufficiently established that it acted under federal agency direction when it added MTBE to its gasoline as alleged in Plaintiffs' strict liability claim."*fn22 The Judge further noted that plaintiffs' claims for public nuisance, strict liability for defective product, and negligence in the Third Amended Complaint, based on Shell Oil's decision to use MTBE-containing gasoline,*fn23 were similar to the claims addressed by this Court in MTBE III.*fn24 Finally, Judge Bernthal found that Shell Oil's only basis for removing the case was federal officer jurisdiction*fn25 and that removal was timely because Shell Oil had no notice of a claim that it acted at the direction of a federal officer until plaintiffs added the strict liability claim to the Third Amended Complaint.*fn26

  On August 11, 2005, the Judicial Panel on Multidistrict Litigation transferred this case to this Court for inclusion in In re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation, pursuant to Rule 7.4 of the Rules of the Judicial Panel ...


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