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Village of Stillwater v. General Electric Co.

October 13, 2010


The opinion of the court was delivered by: David R. Homer U.S. Magistrate Judge


Plaintiffs the Village of Stillwater, Town of Stillwater, Town of Waterford, Water Commissioners of the Town of Waterford, Village of Waterford, Town of Halfmoon, and County of Saratoga ("Plaintiffs") brought this action against General Electric Company ("GE") alleging violations under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., New York Navigation Laws, and the New York common law of negligence, nuisance, and trespass alleging that GE polluted their water supplies. Compl. (Dkt. No. 1). Presently pending is GE's motion for reverse bifurcation of the litigation. Dkt. No. 41. Plaintiffs oppose the motion. Dkt. Nos. 47, 52. For the following reasons, GE's motion is denied.

I. Background

GE owned and operated two facilities in Hudson Falls and Fort Edward, both of which are located next to the Hudson River. Compl. ¶¶ 17-18; Answer (Dkt. No. 9) ¶¶ 17-18. For approximately thirty years, GE used, stored, and disposed of Polychlorinated Biphenyls ("PCBs") at these sites. Compl. (Dkt. No.1) ¶¶ 23-24; Answer ¶¶ 23-24. PCBs constitute hazardous materials. Compl. ¶¶ 20-21; Answer ¶¶ 20-21. GE's use of PCBs at these sites resulted in the release of PCBs into the environment, which included the ground water and water at, in, and adjacent to the Hudson River. Compl. ¶ 24; Answer ¶ 24. Once discharged, the PCBs adhered to river sediment and settled downstream. Compl. ¶ 36; Answer ¶ 36. PCBs have been found as far downstream as the New York City harbor, approximately 150 miles south of the GE facilities. Compl. ¶ 37; Answer ¶ 37. These two facilities were the principal sources of PCBs in the upper Hudson River. Compl. ¶¶ 34, 38; Answer ¶¶ 34, 38.

Plaintiffs contend that their drinking water supplies were contaminated by GE's release of PCBs into the upper Hudson. Compl. ¶ 40. Plaintiffs are all located adjacent to the Hudson River and draw water from the river at an area downstream from the Hudson Falls and Fort Edward plants. Testing on plaintiffs' water supplies indicated there were PCBs present in the drinking water in 2008. Comp. ¶¶ 104-09, 112, 127-28, 147. It is undisputed that GE's use, storage, and disposal of the PCBs at their industrial sites led to measurable amounts of PCBs in the soil and groundwater, but GE denies that this resulted in contamination of the water column, water supply, or soil. Id. ¶¶ 25-26, 29-30, 38; Answer ¶¶ 25-26, 29-30, 38.

In 2009, GE began a remedial dredging program, under the supervision of the Environmental Protection Agency ("EPA"), to remove the PCBs from the upper Hudson river area. Engel Decl. (Dkt. No. 48) ¶¶ 6-7; Dkt. No. 51, Ex. 3.*fn1 Plaintiffs contended that this dredging would increase the amount of PCBs in the river sediment and further contaminate their water supplies. Compl. ¶¶ 111, 136-37, 152-53. During the dredging process, plaintiffs had arranged to receive their water supply from an alternate source, intending to resume production from their own water treatment plants once the dredging ceased. Engel Decl. ¶ 17.

The dredging released over twenty-five times more PCBs into the upper Hudson than was originally contemplated and the "drinking water standard of 500 parts per trillion was exceeded [ten] times." Dkt. No. 51, Ex. 3 at 5. After dredging concluded, the plaintiffs found increased PCB levels in their water supplies which resulted in their obtaining water from other sources. Engel Decl. ¶¶ 19-20, 22. GE denied that its PCB discharge was the direct or proximate cause of the drinking water contamination or that its dredging would result in further contamination to the municipalities' water supplies or property. Compl. ¶¶ 40, 42, 260-61; Answer ¶¶ 40, 42, 260-61. The benefits from the dredging project may not be realized until after 2050. Dkt. No. 51, Ex. 7.

II. Discussion

The Federal Rules provide that "[f]or convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues...." Fed. R. Civ. P. 40(b). The district court retains the discretion to decide whether such separation is appropriate. See, e.g., Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 283 (2d Cir. 1990) (citations omitted). Bifurcation is one such remedy. "The three allowable grounds for a bifurcation decision -- furthering convenience, avoiding prejudice and furthering expedition and economy -- are set out in the alternative, so that the presence of any one is sufficient to sustain such an order." Simon v. Philip Morris Inc., 200 F.R.D. 21, 27 (E.D.N.Y. 2001) (citations omitted); see also Lewis v. City of New York, 689 F. Supp. 2d 417, 429 (E.D.N.Y. 2010) ( "On a case-by-case basis, courts should examine, among other factors, whether bifurcation is needed to avoid or minimize prejudice, whether it will produce economies in the trial of the matter, and whether bifurcation will lessen or eliminate the likelihood of juror confusion.") (citations omitted). "The drafters of [the] Rule... commented that while separation of issues for trial is not to be routinely ordered, it is important that it be encouraged where experience has demonstrated its worth." Simon, 200 F.R.D. at 27 (internal quotation marks and citations omitted); see also Dallas v. Goldberg, 143 F. Supp. 2d 312, 315 (S.D.N.Y. 2001) ("Although bifurcation of trials is not unusual and may under appropriate circumstances be the preferred method, bifurcation remains the exception rather than the rule.") (citing cases).

"Bifurcation procedure has evolved to accommodate the modern emphasis on active judicial management of complex cases, particularly in the realm of mass tort disputes." Simon, 200 F.R.D. at 32 (citing cases and law review articles); see also Angelo v. Armstrong World Indus., Inc., 11 F.3d 957, 963 (10th Cir. 1993) (noting that reverse bifurcation is "commonly used... in asbestos cases.") (citing cases); Walker Drug Co., Inc. v. La Sal Oil Co., 972 P.2d 1238, 1245 n.7 (Utah 1998) ("[R]everse bifurcation is much less common and has been used only rarely in complex asbestos-related litigation."). "Reverse bifurcation, trying damages before liability... [may be appropriate] where the parties have excellent information about the likelihood of success on the issue of liability and the real sticking points are the individual issues of causation and damages." Simon, 200 F.R.D. at 32 (internal quotation marks and citations omitted).

However, "[p]iecemeal litigation is not favored and bifurcation is inappropriate in cases where the facts are so inextricably interwoven that separation is impossible or at least manifestly unfair." ABB Indus. Sys., Inc. v. Prime Tech., Inc., 32 F. Supp. 2d 38, 43 (D. Conn. 1998) (internal quotation marks and citations omitted); see also Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir. 1984) ("Bifurcation of the trial... was reasonable because the two phases involved different types of evidence."); In re Paoli R.R. Yard PCB Litigation, 113 F.3d 444, 452 n.5 (3d Cir. 1997) (explaining that "[t]he Seventh Amendment requires that, when a court bifurcates a case, it must divide issues between separate trials in such a way that the same issue is not reexamined by different juries.") (citations omitted).

In this case, reverse bifurcation is not supported for multiple reasons. First, it appears that issues of liability, damages, and causation are inextricably intertwined in significant respects. It is undisputed that to prove a CERCLA claim in the present case, plaintiffs must demonstrate that (1) the defendant falls within the statute; (2) the site in question qualifies as a facility; (3) the facility released hazardous substances; (4) as a result of such a release the plaintiffs' incurred response costs; and (5) those costs conformed to the National Contingency Plan. Anspec Co., Inc. v. Johnson Controls, Inc., 788 F. Supp. 951, 955 (E.D.Mi 1992) (citations omitted); see also Town of Oyster Bay v. Occidental Chem. Corp., 987 F. Supp. 182, 194 (E.D.N.Y. 1997) (citations omitted). It has been held that a prima facie case under CERCLA requires proof of what is typically a liability issue (such as who arranged for disposal of hazardous substances at the site) and proof of what is typically a damage issue (what were plaintiffs' costs and were they reasonable); the liability and damage issues are inextricably intertwined under the statutory scheme.

Anspec Co., Inc., 788 F. Supp. at 955; see also Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 131-32 (2d Cir. 2010) (explaining that CERCLA proceedings are generally bifurcated determining liability first and damages second because the liability discussion with regard to causation, is rather limited, but, "when damages are apportioned... the relative strength of the evidence of liability becomes a relevant factor... [evaluating] causation... through the backdoor...." and commenting that in this analysis courts "use their broad discretion... including consideration of the quality of the evidence that lead to liability.") (citations omitted). As such, there are overlapping issues with regard to causation, liability, and damages. Moreover, with GE proposing to proceed with damages before liability, evidence of causation will necessarily be relevant in both trials and thus lead to an overlap of issues.

Additionally, elements of plaintiffs' claims of nuisance, trespass, and negligence are also intertwined. Based on a New York case, GE has proffered that this is an inappropriate argument because, with regard to nuisance and trespass claims, there will only be "some minimal overlap between liability and damages, [thus] the liability standards... are severable from the proof of specific damages... both for ...

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