Second Circuit Affirms Dismissal of Bethpage Water District Claims Against Northrop Grumman
On March 3, 2018, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal on summary judgment, as time-barred, of claims brought by the Bethpage Water District (“BWD”) against Northrop Grumman Corporation for the alleged contamination of its drinking water supply. Northrop Grumman was represented by SPR attorneys Mark A. Chertok, Elizabeth Knauer, Adam Stolorow, and Victoria Treanor.
The defense contractor’s predecessor, Grumman Corporation (also known at various times as Grumman Aircraft Engineering Corporation and Grumman Aerospace Corporation), manufactured heavy equipment, namely airplanes for the U.S. Navy, at its Bethpage, NY facility from the 1930s through the 1990s. In a 2013 diversity complaint filed in the Eastern District of New York, BWD asserted claims of negligence, nuisance and trespass based on allegations that Grumman’s operations gave rise to groundwater contamination affecting some of BWD’s wells.
The applicable statute of limitations, New York Civil Practice Law and Rules (“CPLR”) § 214‐c(2), provides that BWD was required to file suit within three years of “the date of discovery of the injury [to its property] by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier.” BWD sought compensation for the costs of installing treatment systems to address high levels of volatile organic compounds (“VOCs”) that had been detected upgradient of BWD’s wells. In response to these detections, BWD undertook what it characterized in late 2009 as emergency action to construct the systems at its Plant 4 facility, but did not file suit against Northrop Grumman until late 2013.
The question before the Court was whether BWD was injured and discovered its injury more than three years before it filed suit. BWD principally argued that it was not injured before this time because there was a dispute of fact as to whether VOCs from Operable Unit 3 of the State Superfund site encompassing contamination from the Bethpage facility had entered its Plant 4 wells more than 3 years before the suit was filed. Northrop Grumman argued that, under Second Circuit and New York State jurisprudence, BWD’s claims accrued more than three years prior to suit regardless of when the contaminants actually infiltrated the wells, as evidenced in a series of concrete steps BWD took that specifically addressed the threat it perceived to Plant 4. These steps included the design of supplemental wellhead treatment systems, the request of $15.5 million in bond financing to pay for the systems, and the declaration of a state of emergency allowing it to expedite the procurement of a vendor to install them.
In its decision, the Second Circuit revisited its holding in a previous case, In re Methyl Tertiary Butyl Ether (ʺMTBEʺ) Prod. Liab. Litig., 725 F.3d 65 (2d Cir. 2013). That case similarly presented the question of when injury accrued under CPLR § 214‐c(2) to a drinking water provider alleging contamination to its supply. There, it was not disputed that the plaintiff’s wells were contaminated with MTBE, and the critical question was the degree of such contamination necessary for the plaintiff to be injured. Recognizing that low levels of contamination might not present a concern for consumers or providers, the Court held that the injury accrued when ʺa reasonable water provider would have treated [the contaminated] groundwater.ʺ Id, 725 F.3d at 112.
Last week’s decision applies the In re MTBE holding to the scenario in which a contaminant threatens to reach, but may not yet have reached, the relevant drinking supply well. The Court considered “whether [BWD] was aware that the threat of contamination was sufficiently significant to warrant immediate or specific remediation efforts.” Given the factual record before it, the Court readily answered in the affirmative. Moreover, in rejecting BWD’s approach, the Court considered that requiring actual contamination of an intake well as a prerequisite to injury could result in the “odd result of encouraging water providers to allow contamination to reach the wells so that a cause of action could accrue.”