Loeb & Loeb LLP represents a group of approximately 45 potentially responsible parties (PRPs) in the Rev 973 litigation, though the number is constantly changing as additional parties join the group. The following is an introduction to the case and a summary of its current posture. If you have any questions about this case or the group, please feel free to contact Albert M. Cohen at 310.282.2228 or firstname.lastname@example.org.
Rev 973, LLC v. John Mouren-Laurens, et al, 98-cv-10690 DSF (Ex) has been on the docket in the U.S. District Court for the Central District of California for about 17 years. Filed in 1998, the environmental litigation involves claims that two sites in Compton, California, known as the Mouren-Laurens Site (ML Site) and the Leach Oil Site, are environmentally impaired and, according to plaintiff Rev 973, the current owner of the ML Site, will cost in excess of $50 million to clean up. Rev 973 has filed claims against the original owners and operators of the two sites, as well as several thousand parties that it claims sent wastes (primarily used oil) to the two sites, to recover the costs of cleanup.
The court previously stayed the litigation, and under the third and current case management order (CMO 3), new parties that are served may not answer or file a motion to dismiss. Instead, they must enter an appearance by filing a completed PRP (Potentially Responsible Party) Appearance Notice with the court, as well as with the Special Master through JAMS on “CaseAnywhere.”
The ML Site operated as an oil processing and distribution business dating back to about the 1950s. It ceased operation in 1999. The Leach Oil Site, located next door, operated as a used oil processing and recycling business dating back to the 1960s. At some point, a pipeline connected the two sites, and oil from the Leach Oil Site reportedly was pumped to the ML Site for processing. Numerous businesses in the Los Angeles area sent oil or chemical additives to the ML Site, sent oil (allegedly used or “waste” oil) to the Leach Oil Site, or purchased oil from the Mouren-Laurens Oil Company. Relatively few records regarding the use of the ML Site exist – most reportedly were destroyed when the company ceased operations in 1999. Records relating to the Leach Oil Site do exist, including some records of shipments to the site dating from about the late 1970s through the late 1990s. These include manifests and other documents evidencing shipments to the site (see discussion below).
In about 1998, an entity related to Rev 973 purchased a pool of mortgages from the Resolution Trust Company that included a loan secured by the ML Site. While it was aware that the ML Site was contaminated, Rev 973 claims it was not aware of the extent of contamination. When Rev 973 was unable to work out payment terms with Mouren-Laurens, the owner of the ML Site, it foreclosed. Mouren-Laurens continued to operate on the site for about a year but was eventually evicted and ceased operating in 1999.
In addition to commencing eviction proceedings, Rev 973 sued the owners of both the ML Site and the Leach Oil Site, claiming that they were responsible for environmental contamination on the ML Site. Because the case has been pending for so long, the docket contains over 1,400 entries. In addition, many of the early documents are not available online.
Site Investigation and Cleanup History and Status
The sites are currently under the jurisdiction of the Los Angeles Regional Water Quality Control Board (RWQCB). Investigations conducted over the years have indicated that both sites are contaminated with various chemicals including petroleum hydrocarbons. A chlorinated solvent plume also reportedly extends off the site or sites to the south, although the plume seems not to have been completely delineated. Additional testing apparently is also necessary to confirm that contamination is not migrating on-site from the north. RWQCB issued a Cleanup and Abatement Order to the owners of both sites September 19, 2014. While Rev 973 apparently contends that the cleanup cost for both sites is in the range of $50 million, the original defendants believe the cleanup costs are in the range of $5 million to $10 million.
THE LITIGATION AGAINST THE PRPs
The Operative Complaint
Rev 973 originally sued the owner/operators of the two sites. While the history of the litigation is long and complex (and will not be summarized here), currently, the matter is pending before Judge Fisher, with Judge West acting as the Special Master and Tim Gallagher as the mediator. Active litigation apparently occurred in the early years of the litigation, before the filing of the Seventh and Eighth Amended Complaints, including numerous depositions and document productions. In recent years the parties have not actively litigated the case while Rev 973 and the original parties pursued settlement.
The operative complaint is the Eighth Amended Complaint (Document No. 1006), filed July 14, 2014 (although many of the defendants were first named in the Seventh Amended Complaint). The complaint includes six claims against several thousand alleged arranger, generator, and transporter defendants as PRPs:
- The twenty-seventh claim is for response costs under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act);
- The twenty-eighth claim is for contribution under CERCLA;
- The twenty-ninth claim is for declaratory relief under CERCLA;
- The thirtieth claim is for restitution under RCRA(Resource Conservation and Recovery Act)
- The thirty-first claim is for injunctive relief under RCRA ; and
- The thirty-second claim is for indemnity or contribution under the California Health & Safety Code.
As of March 2015, approximately 500 PRPs have appeared in the case. The deadline for serving PRPs was March 3, 2015, and as many as 1,000 PRPs may ultimately appear in the case.
Case Management Order No. 3
In early 2014, the court entered CMO 3, which sets forth some general procedures regarding the case, including procedures for holding status conferences with the Special Master and submitting documents to the document depository. It also governs the proceedings with respect to the original parties and stayed all active litigation with regard to the PRPs, meaning that the PRPs are not permitted to respond to or otherwise challenge the complaint at the present time. CMO 3 sets various discovery cutoffs for the original parties in 2015 and sets the case for trial against the original parties on January 25, 2016. The original defendants apparently do not have any significant resources other than their insurance policies.
The PRP Funding Order
On March 13, 2015, the court entered a PRP Funding Order that requires each PRP to pay $250 into an escrow fund to be used to fund joint PRP expenses that are in the common interests of the PRPs, including costs for the mediator and Special Master. These funds could be used for other purposes, such as retaining a joint environmental consultant to advise the PRPs regarding the environmental conditions at the sites. Pursuant to that order, each PRP that has entered the case is required to pay $250 into the fund within 30 days of the date of their appearance in the case or the entry of the Fund Order, whichever is later.
PRP Litigation Order No. 1
Because plaintiff does not know who sent how much to the site, it contends that it is not in a position to make any settlement offers to the PRPs at this time. The PRPs have been pushing Rev 973 to develop an accurate database and provide PRPs with a list of what they contend each PRP sent to the sites, copies of any records evidencing shipments to the sites, a waste-in list for all PRPs, and a settlement offer so that the parties can attempt to negotiate a resolution before spending too much money on litigation. On March 2, 2015, Rev 973 submitted a proposed PRP Litigation Order No. 1 (PRPLO 1) to the Special Master that includes terms agreed upon by Rev 973 and the PRPs who participated in the meet-and-confer and mediation sessions, as well as recommendations of the Special Master. The PRPLO 1 is expected to be submitted to the court for approval shortly. If approved, the PRPLO 1 would establish a framework for the case against the PRPs over the next year with the goal of attempting to settle the case before engaging in expensive, time-consuming litigation.
As of March 2015, no formal joint defense group had been formed for all the PRPs. Several counsel, including some such as Loeb & Loeb, who represent multiple PRPs, have been acting informally as coordinating counsel for the PRPs.