A New York court recently concluded that sampling data cannot be protected from disclosure under either the attorney client privilege or the attorney work product doctrine. In Abbo-Bradley v City of Niagara Falls, __ F.Supp.2d __ (W.D. N.Y. July 2013), plaintiffs instituted an action alleging that they had suffered personal injury and property damage as a result of releases of hazardous waste. Shortly thereafter, plaintiffs sought a temporary restraining order to require defendants to provide plaintiffs with advance notice of any sampling and an opportunity to take split samples. An agreement was reached regarding the language of such an order. Then, when plaintiff’s began sampling, defendants sought a similar order requiring plaintiffs to provide advance notice and an opportunity to split samples. Plaintiffs objected to the proposed order based on the attorney work product doctrine.
The court noted that the work product doctrine protects two types of materials that are prepared for litigation: (1)documents that contain the opinions or mental impressions of attorneys and (2) factual investigations and technical analyses. The court noted that attorney opinions and strategies receive more protection than factual analyses. Work product does not, however, protect the factual material that is the source of the work product (i.e.,facts used by the attorney to develop strategy or facts analyzed by techical experts). Here, the court noted that defendants were not seeking mental impressions or strategies or the results of plaintiffs’ technical analysis. They were merely seeking facutal information to assure that all parties have access to the same material. The court also noted that the attorney client privilege could not protect this information because that protects confidential communications from attorney to client and the source of this information is not the client.
This decision raises questions about the common practice of having the attorney retain the consultant so that the consutant’s findings will be protected. The decision suggests that any such protection will be limited. The factual data is likely not to be protected, but the analyses can be protected.
In Litgo New Jersey, Inc. v Commissioner of New Jersey Department of Environmental Protection, 2013 WL 3985003 (3d Cir. August 2013), the Third Ciruit Court of Appeals discussed the issue of when a party who has liability as current owner also has liability as current operator. While both the current owner and the current operator can be strictly liable under CERCLA for response costs, the issue has signifcance for allocation among responsible parties.
Appellants were parties who had purchased contaminated property with the intent to develop the proerty. They engaged in various investigation and remediation activities and sued a prior owner and the United States government to recover response costs. After a trial, the court found that the current owner and operator was liable for 70% of the costs. On appeal, one of the arguments raised by the appellants was that, while they could have liability as current owner, they could not have liability as current operator.
Appellants’ argument was based on language in the Supreme Court’s decision in United States v Best Foods, 524 U.S. 51 (1998), which could be read to indicate that to be liable as an operator one needs to be involved in activities at site that result in liability (such as generation and disposal of hazardsous waste). The Third Circuit rejected that interpretation, concluding that anyone who manages or conducts the affairs of a facility is an operator. Applellants argued that this would lead to unfair results by adding to the liability of “innocent” purchasers. The court, however, explained that the result was compelled by the language of CERCLA, which distinguishes between persons who have liability because they operated the facility at the time of disposal of hazardous substances and persons who are the current operator, without regard to whether they are there is any current disposal activity.
The decision helps clarify the meaning of the Best Foods decision. The issue often comes up in the context of lenders, who do not take title, but engage in activities that could be construed as operation. The common question, which made sense in light of Best Foods, was whether they could be liable as operator if their activities had nothing to do with hazardous substances. While most answered that question in the affirmative, this decision makes that more clear.
Earlier this summer, the Environmental Protection Agency published a report entitled “Our Built Environments: A Technical Review of the Interactions Among Land Use, Transportation, and Environmental Quality.” The document examines the interactions among these factors in a manner that is different from the way environmental impacts are often looked at. For example, the redevelopment of a contaminated site is looked at positively, not only because of the improvement to that site, but also based on the fact that such reuse means that a new site, undeveloped site will not be developed by this project. It also recommends developing more compactly because such development will reduce the need for transportation infrastructue and encourage walking instead of driving. The report describes numerous ways to reduce the environmental impacts of development projects and should be a valuable resource.
A recent decision by an appellate court in Florida (Miami-Dade County v Concrete Structures, Inc., May 15, 2013) raised the issue of the extent to which a regulator can inspect (search) the premises of a regulated party without a permit.
The Supreme Court has addressed the issue a number of times and in New York v Berger, 482 U.S. 691 (1987), the Supreme Court upheld a New York statute that allowed warrantless searches of automobile junkyards. The Court stated that a person who engages in commercial activity that is regulated has a reduced expectation of privacy and the government’s interest in highly regulated industries is heightened. The Court said that where the State has a substantial interest in regulating an industry or activity and the warrantless searches are reasonably necessary to further that substantial interest, then a warrantless search will be upheld as long as the statute contains an adequate substitute for a warrant. This latter requirement has been the subject of much discussion. In essence, the statute must put people on notice that they may be subject to inspection and must contain limits on the scope of the inspection.
In Concrete Structures, the Florida statute allowed warrantless administrative insptection searches only in cases in which there was “reasonable suspicion” that a violation existed and none existed. However, the court held that where the regulated party has a permit from the agency to conduct certain activities and the permit contains a right to inspect, the warrantless inspection can be performed pursuant to the permit, without reference to the statute.
Regulated parties often ask about the agencies “Can they do that?” Of the course the answer depends on who (which agency) wants to do what. It is important to note, however, that agencies often have the “right” to perform warrantless inspections. It also important to examine the wisdom of trying to require a warrant in a given case. In many cases such action is unwise, without regard to the legalities. The Concrete Structures case adds another wrinkle. Parties regulated by a permit often give up their right to object to inspections when they obtain their permit.
The Ninth Circuit Court of Appeals in Chubb Custom Insurance Co. v. Space Systems/Loral, Inc., 710 F.3d 946 (9th Cir. 2013), affirmed the dismissal of a CERCLA (Comprehensive Environmental Response, Compensation and Liability Act) cost recovery action by an insurer against parties alleged to be responsible for the contamination. The insurer brought its claim under both §107 and §112 of CERCLA, which address cost recovery and subrogation claims. The court explained that there was no right of subrogation because the insured was not a “claimant” as that term is used in CERCLA and §112 permits subrogation claims only on behalf of persons who have stated a CERCLA claim. The court further held that an insurer is limited to bringing a subrogation claim pursuant to §112 and cannot use §107 to avoid the requirements of §112.
In discussing how the CERCLA subrogation provision works and how the provision relates to common law rules of subrogation, the court provided guidance to future insurers regarding how to avoid the problem that resulted in dismissal of this claim. In response to plaintiff’s argument that allowing the claim to go forward would be consistent with the purposes of CERCLA, particularly, the goal of requiring responsible parties to pay for the cleanup, the court argued that the insured is in a better position to enforce such claims and insurers should require insureds to pursue claims against responsible parties.
In Menasha Corp. v United States Department of Justice (7th Cir. 2013), the court held that the work product privilege protects Department of Justice memoanda from discovery, even if Depatment of Justice lawyers appear to be adverse to each other. The suit arose out of a Superfund site in Wisconsin at which the United States filed an action against a number of entities that were alleged to have contributed to the contamination. In a consent decree with several defendants, the United States agreed to contribute $4.5 million dollars toward the remediation because of waste sent to the site by federal agencies. The consent decree was submmited to the court for approval and Menasha opposed the consent decree.
Menasha claimed that the consent decree was not fair because the United States was not paying its fair share. Menasha also counterclaimed against the United States. To support its claim, Menasha sought discovery (through a freedom of information request) of Justice Department memoranda regarding the negotiations within the Justice Department that led to the payment by the United States.
The court held that the work product privilege protected the memoranda. The court viewed the Justice Department as one law firm and explained that it was important for Justice Department attorneys to be able to be open with each other. The court said this was analogous to a debate within a corporate law department in which attorneys express opposing views. The expression of opposing views does not make the attorneys adverse to each other for discovery purposes.
The Court’s analogy to debate within a corporate law department seems way off point. A corporation cannot sue itself. The United States, on the other hand, is often on both sides of environmental litigation, both as envorcing agency and as a responsible party. In such cases, the govenment as law enforecment agency and the government as responsible party are adverse to each other and should not work together to the detriment of the other responsible parties. The court noted that the settling agencies were not parties to the litigation. If they were that should have created real adversity between the government lawyers and the outcome should in that case be differernt.
In Appleton Papers, Inc. v Environmental Protection Agency (7th Cir. Dec. 26, 2012), the Seventh Circuit Court of Appeals held that a defendant in an enforcement action could not obtain government expert reports under the Freedom of Information Law. After the government alleged taht seven companies were responsible for contamination in the Fox River, near Green Bay, Wisconsin, the government hired an expert to prepare a report on the companies’ responsibility for the contamination. Appleton sought the report as part of a challenge to a consent decree between the government and another party.
The Freedom of Informatin Act makes most government documents publicly available, but exempts nine categories of documents from disclosure. The government claimed the report at issue was exempt from disclosure based on the exemption for “inter-agency and intra-agency memorandums or letters which would not be available by law to a party in litigation.” The government’s claim was that the document would not be available to a party in litigation because of the work product doctrine, which protects from disclosure, documents produced in anticipation of litigation or for trial. Appleton argued that work product should protect theories, opinions and analysis, but not facts. The court held, however, that the entire report was protected. There is an exception to the work product doctrine for a party that has a special need for the information, but the court concluded that Appleton had made no showing of special need.
In most environmental matters, the facts are gathered by the potentially responsible parties and the basic information about the contamination is publicly available. This decision does not change that general rule of procedure. In this case, however, the governement report at issue was not an investigation report that sampled soil or groudwater and identified the contamination. Instead, it was a report on which parties are responsible for how much. Such reports are much more likely to include the governments opinions and theories prepared for litigation (as opposed to being prepared for remediation) and are therefore much more likely to be protected from disclosure.