Ninth Circuit Reverses USDC Ruling; Limits Polanco Act and Nuisance Liability (Breaking News)

In June 2011, in Redevelopment Agency of the City of Stockton v. BNSF Railway Company, the Ninth Circuit Court of Appeals reversed a decision of the district court and held that Polanco Act and nuisance liability do not extend to parties whose connection to a release of hazardous substances is remote and passive. 

Plaintiff Redevelopment Agency of the City of Stockton (RDA) sued two railroads for petroleum contamination in Stockton. The petroleum was spilled at a neighboring site, and flowed through a drainage pipe on to plaintiff’s land. The United States District Court for the Eastern District of California granted partial summary judgment for the RDA in June 2007. The district court held that the railroads were liable for nuisance because they knew of and approved the placement of the drainage pipe on plaintiff’s land, and then used railroad tracks there, even though they had no knowledge of or involvement in the spill of petroleum that contaminated that land. The district court held that because the drainage pipe redirected contamination from one place to another, the railroads “caused” the contamination and were liable.

After a trial on damages in February 2009, the district court incorporated its rulings into a judgment issued in July 2009. The Ninth Circuit’s June 2011 ruling held that the railroads’ conduct was not a cause of the release, overturned the district court’s judgment for the RDA, and directed the district court to enter judgment for the railroads. Based on the Ninth Circuit’s ruling, the railroads also obtained, in December 2011, summary judgment in a second action filed by the RDA based on the same facts.

The railroads were represented at trial by Barg Coffin partners John Barg and Morgan Gilhuly. Morgan Gilhuly argued the case on appeal.