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In re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation

United States District Court, Second Circuit

December 30, 2013


Robin Greenwald, Esq., Robert Gordon, Esq., Weitz & Luxenberg, P.C., New York, NY, Liaison Counsel for Plaintiffs.

Michael Axline, Esq., Miller, Axline, & Sawyer, Sacramento, CA, Counsel for Commonwealth.

Peter John Sacripanti, Esq., James A. Pardo, Esq., McDermott Will & Emery LLP, New York, NY, Liaison Counsel for Defendants.

David Peter Langlois, Esq., Sutherland Asbil & Brennan, LLP, New York, NY, Counsel for Vitol Defendants.

David N. Lutz, Esq., Dustin Fossey, Esq., Mary T. Novacheck, Esq., Bowman & Brooke, LLP, Minneapolis, MN.

Robert Dickerson Wilson, Jr., Esq., Littleton Joyce Ughetta Park & Kelly, LLP, Purchase, NY, Counsel for IAC.


SHIRA A. SCHEINDLIN, District Judge.


This is a consolidated multi-district litigation (''MDL'') relating to contamination - actual or threatened - of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether ("MTBE") and/or tertiary butyl alcohol, a product formed by the breakdown of MTBE in water. In this case, the Commonwealth of Puerto Rico ("the Commonwealth") alleges that defendants' use and handling of MTBE has contaminated, or threatened to contaminate groundwater within its jurisdiction. Familiarity with the underlying facts is presumed for the purposes of this Order.

Currently before the Court are two motions for summary judgment brought by Vitol, Inc. and Vitol, S.A. (collectively "Vitol Defendants"), and by Idemitsu Apollo Corporation ("IAC"), on the ground that the Commonwealth's claims are time-barred. For the reasons stated below, the motions are GRANTED.


On June 12, 2007, the Commonwealth filed its initial complaint against gasoline suppliers for supplying or trading in gasoline products containing MTBE.[2] On October 31, 2007, the case was transferred to this Court as part of the MTBE MDL. On December 3, 2012, the Commonwealth filed its Third Amended Complaint ("TAC"), adding several defendants, including the Vitol Defendants and IAC as "Refiner/Supplier Defendants."[3] The TAC alleges that these defendants "refined, marketed and/or otherwise supplied (directly or indirectly) gasoline and/or other products containing MTBE that each such Defendant knew or should have known would be delivered into Commonwealth."[4] The TAC alleges five causes of action against the Vitol Defendants and IAC on grounds of (1) strict products liability for defective design and failure to warn; (2) public nuisance; (3) trespass; (4) negligence; and (5) violation of Puerto Rico Environmental Public Policy Act ("EPPA"), Water Pollution Control Act, and various underground storage tank control regulations.[5]

On July 16, 2013, I dismissed Counts I through V of the TAC alleged against Defendants Trammo Petroleum, Inc. and Trammo Caribbean, Inc. ("Trammo Defendants") as time-barred.[6] On August 2, 2013, I denied the Commonwealth's Motion for Reconsideration.[7]

A. Vitol Defendants

Vitol, Inc. was formed in Delaware on October 16, 2006.[8] On November 15, 2006, Vitol, Inc. filed an application for a certificate of authorization to do business as a foreign corporation in the Commonwealth.[9] The application listed "purchase and sale of petroleum products" as its stated purpose.[10] In its application, Vitol, Inc. reported one thousand dollars in assets.[11] In January 2007, the Puerto Rico Department of State issued the Certificate of Authorization, and Vitol, Inc. began its operations.[12] Vitol, Inc. has never owned, operated, or leased an underground storage tank in the Commonwealth.[13]

Vitol, S.A. is an international trading company.[14] In December 2006, Vitol, S.A. closed its branch office in Houston, Texas and discontinued its business in North America.[15] On May 18, 1994, Vitol, S.A. filed an application for a certificate of authorization to do business as a foreign corporation in the Commonwealth.[16] The application stated that Vitol, S.A.'s purpose is "to purchase, distribute, and sell all kinds of fuel, refine oil products of any kind and similar products. The Company may also participate in industrial and commercial enterprises."[17] On May 24, 1994, the Puerto Rico Department of State issued a Certificate of Authority to Vitol, S.A.[18] Vitol, S.A. has never owned, operated, or leased an underground storage tank in Puerto Rico at any time.[19]

The Energy Information Administration ("EIA")[20] website lists gasoline import activities by Vitol, S.A. in May 2003.[21]


IAC was involved in the distribution of gasoline in the Commonwealth from 1992 through 2001.[22] From 1992 until 1997, IAC was a gasoline wholesaler and owner of 131 service stations in the Commonwealth.[23] From 1992 to 2001, IAC purchased over ten million barrels of gasoline from various suppliers or refiners.[24]

By its own admission, the Commonwealth first learned of MTBE contamination at fourteen sites linked to IAC between March 1998 and May 2008.[25] In response to the Commonwealth's 2008 interrogatories, ConocoPhillips stated that IAC was a gasoline wholesaler in the Commonwealth.[26] Additionally, ConocoPhillips noted that it had sold IAC close to eight million barrels of gasoline from 1992 to 2001, some of which may have contained MTBE.[27]


A. Summary Judgment

Summary judgment is appropriate "only where, construing all the evidence in the light most favorable to the non-movant and drawing all reasonable inferences in that party's favor, there is no genuine issue as to any material fact and... the movant is entitled to judgment as a matter of law.'"[28] "A genuine dispute exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party."[29] "A fact is material if it might affect the outcome of the suit."[30]

"The moving party bears the burden of establishing the absence of any genuine issue of material fact."[31] To defeat a motion for summary judgment, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts, '"[32] and "may not rely on conclusory allegations or unsubstantiated speculation.'"[33]

In deciding a motion for summary judgment, "[t]he role of the court is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried."[34] "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.'"[35]

B. Puerto Rico Law

1. Statute of Limitations for Tort Claims

In Puerto Rico, Article 1802 of the Civil Code, L.P.R.A.[36] section 5141, governs obligations that "arise from fault or negligence."[37] "The statute of limitations for these actions is one year as provided by Art. 1868 of the Civil Code, 31 L.P.R.A. sec[tion] 5298."[38] In Puerto Rico, the limitations period runs from the time the aggrieved party has "notice of the injury, plus notice of the person who caused it."[39] "This does not require actual knowledge; it is enough that the would be plaintiff had notice that would have led a reasonable person to investigate and so uncover the needed information."[40] The one year statute of limitations for a continuous tort "begins to run when the tortious conduct ceases, not when it first takes place."[41]

2. Tolling of the Statute or Limitations

In 1992, the Supreme Court of Puerto Rico held that plaintiffs could add jointly and severally liable defendants to a complaint that was timely filed.[42] In explaining the 1992 decision, the Fraguada court stated:

[W]e decided [in Arroyo v. Hosp. La Concepcion ] that timely filing of a complaint by an injured party against a joint and several co-tortfeasor automatically tolls the statute of limitations against all of the other co-tortfeasors. We stated that the alleged joint and several co-tortfeasors can be incorporated into the litigation through an amendment to the complaint or a third-party complaint, and that claimant merely must allege well and sufficiently that the new defendant is jointly and severally liable for the harm.[43]

In 2008, the Supreme Court expanded the reach of the Arroyo rule, holding that it allowed a plaintiff to add a joint and severally liable defendant who would otherwise be barred by the statute of limitations even though the "plaintiff knew beforehand the identity and elements necessary to exercise his cause of action against [that defendant]."[44]

In 2012, the Supreme Court of Puerto Rico abrogated Arroyo and its progeny, holding that "the timely filing of a complaint against a supposed cotortfeasor does not toll the statute of limitations against the rest of the alleged cotortfeasors."[45] In considering the retroactivity of the new rule, the court decided that it should have prospective effect.[46] The court reasoned:

The foregoing [decision that Fraguada should have prospective effect] is based on the fact that the rule is a new rule and so applying it to this case would have substantially unfair results for the respondents, who relied on the prior rule that has been set aside by the new rule that we are establishing today. Public policy and social considerations have made us decide that this rule shall have prospective effects, since the purpose sought is to award fair and equitable relief resulting in a better social coexistence.[47]

The court concluded by stating that, "[A]ll causes of action filed according to Art. 1802 of the Civil Code [] shall be adjudicated in accordance with the rules established herein."[48] Thus, the Fraguada rule should apply to cases filed after August 13, 2012, the date of the court's opinion.[49]


A. Notice of Vitol Defendants

In support of their motion, the Vitol Defendants offer the following documents:[50] (1) a 2006 certificate authorizing Vitol, Inc. to do business in Puerto Rico, [51] (2) a 1994 certificate authorizing Vitol, S.A. to do business in Puerto Rico, [52] and (3) an EIA website report stating that Vitol, S.A. was importing gasoline into Puerto Rico as early as May 2003.[53] The certificates - official documents issued by the Puerto Rico Department of State - are substantially the same as the certificate issued to Trammo Operating in 2002.[54] As with the Vitol Defendants and IAC, the Commonwealth first asserted claims against the Trammo Defendants in 2012 when it filed the TAC.[55] In granting the Trammo Defendants' motion to dismiss, this Court held that "knowledge of Trammo Operating's business is imputed to the Commonwealth" because a reasonable investigation by the Commonwealth would have revealed these certificates.[56] Thus, the Commonwealth had actual knowledge that MTBE caused an injury and constructive knowledge of the Trammo Defendants as alleged tortfeasors when it filed its initial Complaint in 2007.[57] Applying the Fraguada rule, I dismissed the Commonwealth's suit against the Trammo Defendants as time-barred.[58]

The Commonwealth offers no compelling reason why I should not apply the law of the case here.[59] The Vitol Defendants present the same persuasive evidence as the Trammo Defendants and more. The Commonwealth argues that Vitol Inc.'s certificate - which lists its assets as only $1000 - does not prove that Vitol Inc. was actually doing business.[60] But Trammo Operating's stated assets were the same.[61] By issuing the certificates, the Commonwealth had notice that the Vitol Defendants could be importing gasoline. Thus, the certificates are sufficient to connect the Vitol Defendants to the Commonwealth's injury.

Moreover, a review of the EIA website reports would have revealed that Vitol S.A. was importing gasoline in Puerto Rico as early as 2003.[62] The Commonwealth argues that the EIA reports are inadmissible, improperly authenticated, and irrelevant if, in fact, they were not publicly available before counsel for Vitol downloaded them in September 2013.[63] The Commonwealth is incorrect. Courts routinely take judicial notice of data on government websites because it is presumed authentic and reliable.[64] A search for the relevant EIA reports using an internet archive shows that they were available at least as early as November 2009.[65] As such, I take judicial notice of the EIA reports. Thus, the Commonwealth's claims against the Vitol Defendants are barred by the one year statute of limitations because the Commonwealth had sufficient knowledge of both the alleged injury and the identity of the alleged tortfeasors as of 2007.

B. Notice of IAC

In support of its motion, IAC offers: (1) the Commonwealth's own admission that it learned of MTBE contamination at fourteen sites attributed to IAC between March 1998 and May 2008;[66] and (2) ConocoPhillips' 2008 interrogatory response, stating that IAC was a gasoline wholesaler in the Commonwealth.[67] These documents show that the Commonwealth had knowledge of the alleged injury and of the identity of the alleged tortfeasor since at least 2008. Thus, as with the Vitol Defendants, the one year statute of limitations bars the Commonwealth's action against IAC, which was initiated four years too late.

The Commonwealth argues that its interrogatory response reveals only that it detected some de minimis amount of MTBE, which by itself fails to establish injury.[68] The Commonwealth relies on California and New York MTBE cases for support.[69] In Puerto Rico, however, the limitations period runs from the time the aggrieved party has "notice of the injury, plus [actual or constructive] notice of the person who caused it."[70] Here, the Commonwealth clearly knew of the MTBE contamination by 2007 when it filed its Complaint. Moreover, the Commonwealth knew that IAC was a gasoline wholesaler in November 2008 when it received the ConocoPhillips interrogatory response. Despite the Commonwealth's contentions, there was nothing ambiguous about ConocoPhillips' identification of IAC.[71] Because the Commonwealth was aware of both the injury and IAC's identity as an alleged tortfeasor at least four years before bringing suit, the claims are time-barred as well.

C. Applicability of the Statute of Limitations

Nevertheless, the Commonwealth contends that its claims are exempt from the statute of limitations as a matter of law.[72] First, the Commonwealth argues that Puerto Rico's law of "prescription" enables it to bring claims concerning public property at any time.[73] Under Puerto Rico law, the term "prescription" has dual meanings. Prescription can refer to the statute of limitations.[74] But in the real property context, prescription refers to acquiring title by adverse possession.[75] The Commonwealth relies on the nullum tempus ocurrit regi doctrine[76] - a common law doctrine adopted in Puerto Rico - which originally meant that prescription, or limitations periods, do not run against the government.[77] Although courts apply the doctrine narrowly today, the Commonwealth argues that nullum tempus still applies to its claims against the Vitol Defendants and IAC.[78]

However, the cases cited by the Commonwealth are inapposite. Ayala, Commonwealth v. Superior Court, and People v. Dimas all involve adverse possession claims made against the Commonwealth. For example, Ayala holds the Commonwealth is almost never immune from adverse possession claims.[79] But the cases say nothing about the statute of limitations for tort claims brought by the Commonwealth.[80]

Second, the Commonwealth argues that the statute of limitations does not apply to claims brought by the Commonwealth in its sovereign capacity.[81] The Commonwealth relies on non-binding federal cases that discuss either (1) general principles of sovereign immunity; or (2) the application of nullum tempus under federal law and certain states' laws.[82]

But sovereign immunity is not relevant because the Commonwealth is not being sued. Moreover, none of the cases addressing nullum tempus apply Puerto Rico law. Some hold that the statute of limitations does not bar the federal government's suit unless Congress expressly so states.[83] Others hold that the statute of limitations will not bar a suit by a state that applies nullum tempus. [84]

However, the question is whether Puerto Rico applies nullum tempus in the limitations context. It does not.[85] Puerto Rico's civil code provides that the statute of limitations shall run against "all kinds of persons."[86] Case law confirms that statutes of limitations apply to suits by the Commonwealth.[87]

Finally, the Commonwealth argues that, if nothing else, its claims for abatement and its claims under the EPPA should survive.[88] This argument is unavailing. First, the Commonwealth's argument that the limitations period begins only once abatement is complete is a repackaging of its continuing harm argument, which has been twice rejected by this Court.[89] In Puerto Rico, a defendant's last act triggers the statute of limitations.[90] To toll the limitations period, the Commonwealth must prove "ongoing unlawful conduct, not a continuing harmful effect."[91] The Commonwealth does not allege ongoing conduct, only that abatement is not complete.[92]

Second, this Court has already found that the one year-statute of limitations applies to Court V of the TAC, which encompasses the EPPA claim.[93] Nevertheless, the Commonwealth argues that its EPPA claim should not be subject to any limitations period.[94] The Supreme Court of Puerto Rico has held that where a statute is silent as to its limitations period, a court should borrow from analogous

statutes.[95] Here, the EPPA claim involves the tort of property damage.[96]Thus, the claim is governed by the one year statute of limitations under Article 1802, the most analogous statutory provision.[97] Like the other claims, it is time-barred.


For the foregoing reasons, both motions are GRANTED. The Clerk of the Court is directed to close these motions (Doc. Nos. 332 and 342).


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