Court Opinion

ID: 2935951
Source: CourtListenerOpinion
Date Created: 2015-09-15 15:01:46.735126+00
Date Added: 2024-06-11T15:23:30.810245
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 14-2191
                        ___________________________

      Bruce Smith; JoAnne Smith; Walter Wunderlich; Victoria Wunderlich

                       lllllllllllllllllllll Plaintiffs - Appellees

                                           v.

                       ConocoPhillips Pipe Line Company

                      lllllllllllllllllllll Defendant - Appellant
                                      ____________

                    Appeal from United States District Court
                  for the Eastern District of Missouri - St. Louis
                                  ____________

                            Submitted: March 12, 2015
                            Filed: September 15, 2015
                                 ____________

Before MURPHY and SHEPHERD, Circuit Judges, and HARPOOL,1 District
Judge.
                         ____________

MURPHY, Circuit Judge.

      Phillips 66 (Phillips) owns a petroleum products pipeline which runs through
the town of West Alton, Missouri. After a leak in the line was discovered in 1963,

      1
       The Honorable Douglas Harpool, United States District Judge for the Western
District of Missouri, sitting by designation.
its source was repaired, but the contamination at the leak site was not remediated. In
2002 contaminants from the leak were discovered in a family residence in West
Alton. Phillips purchased and demolished this property as well as others affected by
the leak. In cooperation with the Missouri Department of Natural Resources, Phillips
fenced in the area around the leak site and set up monitoring wells to track any spread
of pollutants. While groundwater under the property owned by Phillips is
contaminated, the surrounding properties have tested clean.

       This action was filed in 2011 on behalf of a putative class of nearby
landowners alleging that the contaminated site is a nuisance. The district court
certified the class on the theory that possible pockets of contamination exist within
the identified area. Phillips appeals, and we reverse.

                                          I.

       West Alton is a small Missouri town with a population of some 500 people.
To carry petroleum products an underground pipeline was constructed in 1930 by
Ajax Pipeline Company. A part of it ran under West Alton. Ownership of the
pipeline was later transferred to Cherokee Pipe Line Company, and it documented a
leak along a pipeline section running beneath West Alton. An April 12, 1963 report
by Cherokee stated that 100 barrels of leaded gasoline had leaked and none had been
recovered. The report did not contain information on when the leaking had begun.
After the report was issued, the leaking section of the pipeline was repaired. In 1974
Cherokee merged into Continental Pipe Line Company, a predecessor to defendant
Phillips 66 Pipeline LLC.

       In 2002 West Alton resident Don Ellebracht noticed a strong odor of petroleum
in his home. He contacted Phillips about it, and the company sent a representative
to investigate. Since West Alton has no municipal water, well water is used by the
households. Testing was performed on the Ellebracht well which showed the

                                         -2-
presence of the toxic chemical benzene, a gasoline additive and carcinogen. The
concentration of the chemical was three times greater than allowable limits. Phillips
thereafter purchased the Ellebracht property, as well as two nearby family homes.

      After the discovery of benzene on these properties, Phillips began to work with
the Missouri Department of Natural Resources (MDNR) on a voluntary remediation
plan. The area around the Ellebracht home was identified as the epicenter of the
contamination, and Phillips fenced it in. In 2006 Phillips demolished the homes on
the contaminated properties it had purchased and removed approximately 4000 cubic
yards of that soil. After consulting with the MDNR, Phillips also set up monitoring
wells to test for the presence of chemicals of concern (COCs) in the area's
groundwater. The identified COCs included benzene, toluene, ethyl benzene, and
xylenes (collectively referred to as BTEX), and lead. Inside the fenced contamination
area in West Alton are thirteen monitoring wells which track pollutants; eight
monitoring wells are located outside the fence.

       During its discussions with MDNR in 2002, Phillips volunteered to provide
precautionary bottled water for household use for approximately 50 residents near the
contamination site. At that time sampling of the homeowner wells had not shown
COCs above allowable limits. In 2007 Phillips corresponded with MDNR about
discontinuing its supply of bottled water, which by then was only provided to 25
households. MDNR requested that Phillips test the wells of each family receiving
bottled water for COCs before ending its water supply program. Phillips chose
instead to continue its distribution of bottled water. Most of the families receiving
water live within 0.25 miles of the contamination site; the most distant is 1.1 miles
away.

                                         II.

      Walter and Vicki Wunderlich and Bruce and JoAnne Smith filed this class
action against Phillips in Missouri county court in October 2011, and Phillips

                                         -3-
removed the case to federal court the next month. Plaintiffs' complaint identified two
separate classes, each including property owners within a 1.1 mile radius of the
contamination site. The first class sought injunctive relief and damages on nuisance
and negligence theories. This class alleged that Phillips had undertaken unreasonable
uses of its land which diminished its property value by storing contaminants on site
where they had leaked, fencing in that area with posted warning signs, and
distributing drinking water instead of regularly testing neighboring wells and
remediating the contamination. The class sought money damages for the diminution
in property values and injunctive relief requiring Phillips to rid the area of leaked
petroleum products and to conduct testing for soil and water contamination on nearby
properties. The second proposed class sought compensation for ongoing expenses
of medical monitoring due to potential exposure to pollutants from the pipeline leak.

       The named class representatives were Walter and Vicki Wunderlich and Bruce
and JoAnne Smith. The Smith house is 125 feet from the epicenter Ellebracht
property, which is about 0.25 miles from the Wunderlichs. Both families began to
purchase bottled water for home use in the 1990s. The Wunderlichs testified that an
oily sheen was visible in their water; and the Smiths saw black flecks in theirs. The
class representatives also testified that their property value has decreased as a result
of the contamination.

       The class plaintiffs presented evidence by two experts. The expert most
relevant here is Dr. Patrick Agostino who earned a Ph.D in geology. Dr. Agostino
explained that leaked contamination is pulled downward by gravity and spreads out,
thus shifting over time. According to his testimony, the contamination in West Alton
spread both to the north and south of the leak site (up-gradient and down-gradient);
it was then pulled downward until it reached the water table and contaminated the
groundwater. Based on his analysis, Dr. Agostino concluded that the resulting plume
of contamination was "considerably larger" in the past than in 2013 and that it would
therefore have affected other properties outside the contamination site. He did not
offer an opinion on which of the surrounding properties could have been affected by

                                          -4-
the historical plume nor on the number or identity of West Alton residents who are
presently exposed to benzene, lead, or other COCs. Dr. Agostino also pointed out
that some properties which are down-gradient of the leak site face a threat of
contaminated drinking water, but he was unable to predict whether existing
contamination would migrate further.

        Phillips' expert was Phil Harvey, the project manager overseeing the company's
remediation effort. Harvey explained that Phillips is using a process of monitored
natural attenuation, by which biodegredation and other processes reduce the
concentration of pollutants in soil and groundwater over time. This process is
monitored by periodic testing of the wells inside and outside of the contamination
site; it has been approved by the MDNR. Harvey testified that he had not made a
determination about how long the natural attenuation process would take to remediate
the contamination site. His view was different from that of Dr. Agostino who
testified that more aggressive remediation techniques, such as "pump and treat" or
vapor extraction, would remediate the contamination site more effectively and
quickly than natural attenuation.

      Discovery also included sampling of the contamination site and nearby
properties. Of the thirteen wells on the remediation site, the highest benzene
contamination sampled in 2002 was 13,000 micrograms per liter (ug/L), which by
2008 had fallen to 10,800 ug/L. In contrast, the highest concentration sampled in
monitoring wells outside of the site was 1.4 ug/L in 2012, (below the cleanup
threshold set by the MDNR of 5 ug/L). The plaintiffs claim however that the
remediation effort has been ineffective, pointing to evidence that the most heavily
contaminated monitoring well outside of the Phillips property was sampled at less
than 1 ug/L in 2010 but had increased to 1.4 ug/L by 2012. They also note that the
highest on site concentration of BTEX increased from 18,000 ug/L in 2002 to 18,667
ug/L in 2008.

                                         -5-
       Plaintiffs conducted testing in 2011 of drinking water on eleven nearby
properties, including those belonging to class representatives Smiths and
Wunderlichs. In those tests no BTEX was sampled above detectable levels. While
the Smith property showed no contaminants, the Wunderlich property and one other
showed methyl tertiary butyl ether (MTBE) in a concentration below laboratory
reporting limits. MTBE is an additive to modern gasoline and diesel fuel. Phillips
conducted further testing of the contamination site for MTBE in 2002, and none was
detected.

      The district court ruled on a number of motions in the case at the end of March
in 2014. In their motion to certify the class plaintiffs modified the proposed class
boundaries to include property owners within 0.25 miles of the site, an area
containing 61 properties. Defendant moved to exclude the opinions of plaintiffs'
experts.

       The district court certified the class seeking nuisance based damages and
injunctive relief. In its certification order the court relied on evidence that
contaminants had been shown in the monitoring wells, that the pollution was
continually shifting, and that MTBE had been discovered at the Wunderlich residence
which is located roughly 0.25 miles away from the epicenter of the contamination.
The court concluded that this was sufficient preliminary evidence of contamination
to certify a class action with focus on the circular 0.25 mile area surrounding the
contamination site. It also observed that it could not "rule out the possibility that
pockets of contamination exist." The district court did not certify the medical
monitoring class, noting that plaintiffs had offered no evidence of actual exposure to
benzene or lead. The motion by Phillips to disqualify the experts offered by the class
was denied.

                                         -6-
       Phillips now appeals the certification2 of the class and the denial of its motion
to disqualify plaintiffs' experts.

                                          III.

       The district court has "broad discretion to decide whether certification is
appropriate." Prof. Firefighters Ass'n of Omaha, Local 385 v. Zalewski, 678 F.3d
640, 645 (8th Cir. 2012) (internal quotation marks omitted). We will nonetheless
reverse a certification where there has been an abuse of discretion or an error of law.
In re Zurn Pex Plumbing Products Liab. Litig., 644 F.3d 604, 616 (8th Cir. 2011).
In order to certify a class the district court must determine that it meets the "four
threshold requirements" of Rule 23(a), often referred to as numerosity, commonality,
typicality, and adequacy of representation, and one of the three subsections of Rule
23(b). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613–15 (1997). Here the
district court certified both a Rule 23(b)(2) class for possible injunctive relief and a
Rule 23(b)(3) class for possible money damages. Supreme Court precedent requires
district courts to undertake a "rigorous analysis" to ensure that all requirements of
Rule 23 have been met. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551
(2011) (internal quotation marks omitted).

      Plaintiffs base their action against Phillips on its alleged violation of the
Missouri state law torts of nuisance and negligence. In deciding matters of state law,
"we are bound by the decisions of the state's highest court." Eichenwald v. Small,
321 F.3d 733, 736 (8th Cir. 2003). Nuisance under Missouri law is "the
unreasonable, unusual, or unnatural use of one's property so that it substantially

      2
       Phillips asks that before reaching the issue of class certification we require a
full and conclusive district court inquiry under Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993), and that we abandon the rule adopted in
In re Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604, 614 (8th Cir.
2011) (requiring only a "focused Daubert analysis"). Zurn is a binding and well
decided precedent which we need not revisit here.
                                         -7-
impairs the right of another to peacefully enjoy his property." Frank v. Envtl.
Sanitation Mgmt., Inc., 687 S.W.2d 876, 880 (Mo. 1985). The focus in a nuisance
case “is defendant’s unreasonable interference with the use and enjoyment of
plaintiff’s land.” Id. at 880. The Missouri Supreme Court has also observed that
"[t]here is no exact rule or formula by which the existence of a nuisance or the
nonexistence of a nuisance may be determined," with each case depending upon its
own "special circumstances." Id. at 881, quoting Crutcher v. Taystee Bread Co., 174
S.W.2d 801 (Mo. 1943).

       To show the Rule 23 requirement of commonality, the plaintiff must
"demonstrate that the class members have suffered the same injury." Dukes, 131 S.
Ct. at 2551 (internal quotation marks omitted). Phillips argues that the lack of proof
of contamination spread throughout the class land shows there is no classwide injury.
Absent the injury of actual contamination, it argues, plaintiffs cannot meet the Rule
23 requirements of commonality or typicality. In certifying the class, the district
court observed that some contamination had reached 0.25 miles from the
contamination site, referring to a low level concentration of MTBE that had been
discovered on the Wunderlichs land. As testing shows, however, and as plaintiffs'
expert Dr. Agostino acknowledged, MTBE was not a chemical found at the Phillips
contamination site. The primary COCs identified from the spill are benzene, BTEX,
and lead, and these chemicals have not been shown to be on land owned by the class
members. The presence on only one property of a petroleum pollutant not found at
the leak site cannot prove that actual contamination exists on the class land. Plaintiffs
nevertheless argue that their nuisance claim does not depend on a showing of actual
physical invasion, for the presence of contaminants on one class site creates a "cloud
on the class' land" and diminishes its property value.

       A number of other courts have addressed the significant question of whether
nuisance law requires a physical invasion onto property. While applying the nuisance
law of Virginia, the Fourth Circuit questioned "whether property owners may recover
for the diminution in the value of their property and their reasonable fear of negative

                                          -8-
health effects resulting from the proximity of their property to an environmental
hazard such as an underground oil spill." Adams v. Star Enter., 51 F.3d 417, 421–22
(4th Cir. 1995). In Adams, the court decided that concerns that environmental
contamination might spread and cause property values to decrease were not enough
to overcome the legal requirement that a nuisance be visible or "capable of physical
detection from the plaintiff's property." Id. at 422, 423. Similarly, in a case involving
dumping of manufacturing waste materials, the Fifth Circuit concluded in applying
Mississippi law that the evidence "failed to show harmful levels of any toxic or
hazardous substance in the [plaintiff's] well water." Berry v. Armstrong Rubber Co.,
989 F.2d 822, 828–29 (5th Cir. 1993). The plaintiffs could not show any invasion of
their property entitling them to recovery on their nuisance claim. Id. at 829.

       Numerous state supreme courts have interpreted common law nuisance in a
similar manner as in the cited federal cases. In Adkins v. Thomas Solvent Co., the
Michigan Supreme Court held that plaintiffs seeking "[c]ompensation for a decline
in property value caused by unfounded perception of underground contamination"
had not made out a nuisance claim under state law. 487 N.W.2d 715, 717 (Mich.
1992). Like the plaintiffs in the case now before our court, the Adkins plaintiffs had
not shown contamination of their own well water. The Michigan court concluded that
"negative publicity resulting in unfounded fear about dangers in the vicinity of the
property does not constitute a significant interference with the use and enjoyment of
land." Id. at 721. Other state courts have reached similar conclusions. See Smith v.
Kan. Gas Serv. Co., 169 P.3d 1052 (Kan. 2007) (fact that leaked pollutant had not
physically interfered with or injured plaintiffs' land prevented recovery on nuisance
or negligence claims under Kansas law); Walker Drug Co., Inc. v. La Sal Oil Co., 972
P.2d 1238, 1244 (Utah 1998) (holding under Utah law that "unsubstantiated fears of
third persons regarding the contamination of an adjacent property are not the kind of
'substantial' and 'significant' interference with a landowner's use and enjoyment of his
property so as to allow recovery for nuisance") (emphasis in original); Chance v. BP
Chem., Inc., 670 N.E.2d 985, 990 (Ohio 1996) (affirming denial of nuisance claim

                                          -9-
under Ohio law where plaintiffs presented only "speculative opinion testimony that
problems may arise in the future" as a result of deepwell disposal of waste).

       Plaintiffs respond that the governing Missouri law does not require a showing
of physical invasion in order to state a claim for common law nuisance. They cite
examples from some old decisions of the Missouri Supreme Court, Clutter v.
Blankenship, 144 S.W.2d 119 (Mo. 1940) and Hayden v. Tucker, 37 Mo. 214 (Mo.
1866). In Clutter, the Missouri court decided that maintaining a funeral home in a
purely residential neighborhood was a nuisance, affirming an injunction against the
establishment. 144 S.W.2d at 966. The court commented that the constant reminder
of death would "tend to destroy the comfort, well-being, and the property rights of the
owners of homes' in the neighborhood." Id. at 965 (citation omitted). Previously in
an 1866 case, the Missouri Supreme Court had concluded that the breeding of horses
close to the plaintiff's home was "a revolting nuisance." Hayden, 37 Mo. at 224.
Neither case identified any particular elements of state nuisance law, and the Missouri
Supreme Court has subsequently instructed that nuisance is not a subject for
formulaic determination but rather is dependent on the factual circumstances of each
case, see Frank 687 S.W.2d at 881.

       A similar argument to that raised by the plaintiffs here was rejected by the
Fourth Circuit in Adams where landowners had claimed that nuisance law did not
require a physical invasion of their property, and cited a case in which the Virginia
Supreme Court had enjoined a landowner from storing junked automobiles on his
property. 51 F.3d at 422. In rejecting the landowners' argument, the Adams court
observed that the unsightly automobiles were visible from the neighboring properties,
yet the underground oil spill the plaintiffs feared for endangering their property was
"incapable of detection." Id. at 422–23. That is the same type of situation in the case
now before our court. Missouri nuisance law also focuses on the claimed
"interference with the use and enjoyment of plaintiff’s land." Frank, 687 S.W.2d at
880. While these plaintiffs are concerned about the possibility of contamination

                                         -10-
reaching their properties and harming them, the discovery and testing which has been
conducted in the class area has not shown those fears to be substantiated.

      In light of the contemporary consensus reached by persuasive authority on the
meaning of common law nuisance in the context of environmental contamination, we
conclude that the putative class fear of contamination spreading from the West Alton
leak site to harm their property is not a sufficient injury to support a claim for
common law nuisance in the absence of proof. See Adams 51 F.3d at 423.

                                         IV.

      Since it was an abuse of discretion to certify a class in the absence of evidence
showing class members were commonly affected by contamination on their property,
we reverse the class certification order by the district court and remand for further
proceedings not inconsistent with this opinion.
                       ______________________________

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