Case 7:10-cv ART Document 1 Filed 03/10/10 Page 1 of 12

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1 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 1 of 12 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF KENTUCKY SOUTHERN DIVISION AT PIKEVILLE TOTAL RENAL CARE, INC., ) ) Plaintiff, ) Case No. ) Judge v. ) Magistrate Judge ) Jury Demand CHILDERS OIL COMPANY and ) MOUNTAIN RAIL PROPERTIES, INC., ) ) Defendants. ) ELECTRONICALLY FILED COMPLAINT Plaintiff, Total Renal Care, Inc. ( Total Renal Care ), for its Complaint against Defendants, Childers Oil Company ( Childers Oil ) and Mountain Rail Properties, Inc. ( Mountain Rail ) (Childers Oil and Mountain Rail will be collectively referred to as the Defendants ), states as follows: SUMMARY 1. This case arises from the Defendants contamination of the local water supply of Whitesburg, Kentucky. As a consequence of Defendants contamination and Total Renal Care s resulting inability to use the public water system, Total Renal Care was forced to close temporarily its Whitesburg dialysis clinic on two separate occasions and suffered damages (including lost revenues and expenses incurred in ensuring the safety of its patients) in an amount to be proven at trial but in excess of $119,

2 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 2 of 12 THE PARTIES 2. Total Renal Care is a California corporation with its principal place of business in California. 3. Childers Oil is a Kentucky corporation with its principal place of business in Kentucky. Mountain Rail is a Kentucky corporation with its principal place of business in Kentucky. JURISDICTION AND VENUE 4. This Court has jurisdiction over this civil action pursuant to 28 U.S.C There is complete diversity of citizenship between Total Renal Care on the one hand and Defendants on the other as neither is incorporated in nor has its principal place of business in the same state as the other. The amount in controversy exceeds $75,000, exclusive of interest and costs. 5. This Court is a proper venue for this civil action pursuant to 28 U.S.C The tortious conduct at-issue in the lawsuit occurred in this judicial district and Defendants are subject to personal jurisdiction in this judicial district. FACTS The City of Whitesburg and Its Water Supply 6. The city of Whitesburg is located in Letcher County, Kentucky. Whitesburg has a population of approximately 7, Whitesburg is served by Veolia Water, which runs Whitesburg s drinking water treatment plant (the Plant ). The Plant uses water from the North

3 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 3 of 12 Fork of the Kentucky River (the River ). A large portion of Letcher County, including many homes, a hospital and various schools are served by the Plant. Total Renal Care s Business 8. Total Renal owns and operates dialysis clinics throughout the nation including the Whitesburg Dialysis Clinic (the Clinic ) located in Whitesburg. 9. Dialysis is the process of cleansing the blood by passing it through a special machine. Dialysis is necessary when the kidneys are not able to filter the blood on account of injury or disease. Dialysis allows patients with kidney failure a chance to live productive lives. 10. Water is a key component of the dialysis process. During dialysis, water in large amounts bypasses the normal protective mechanisms of the gastrointestinal tract and is in nearly direct contact with the patient s blood. For this reason, it is critically important to the safety of the patient that the water used in connection with the dialysis process be of the highest quality and purity and that the system and equipment associated with the dialysis process be free of contamination. 11. The Clinic relies on water from the Plant that it then processes to further purify it. The Defendants Business 12. Childers Oil is a petroleum vendor and operator of convenience stores. Upon information and belief, Mountain Rail is affiliated with Childers Oil and property owned by Mountain Rail is used by Childers Oil in connection with

4 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 4 of 12 Childers Oil s business. Defendants own and/or otherwise use real property located in and around Whitesburg in connection with Childers Oil s petroleum vending business. Upon information and belief, Don Childers is the President and Director of Childers Oil and a principal of Mountain Rail. The First Contamination 13. Some time on or shortly before November 1, 2008, Childers Oil dumped sludge removed from oil water separators at a Childers Oil plant into a plastic-lined pit (the Pit ) located behind the Whitesburg Wal-Mart. The real property where the Pit is located is owned and/or used by Childers Oil and/or Mountain Rail. The sludge and/or materials contained in the sludge escaped the Pit and seeped into the River. 14. The Pit is located upstream from the Plant and in the floodplain of the River. On or about November 1, 2008, a representative of Veolia Water detected the strong smell of gasoline inside and outside the Plant and realized that the water at the Plant had been contaminated. The Plant was shut down. 15. After the Plant was shut down, investigators walked the River to attempt to determine the source of contamination. The investigators discovered waste petroleum product seeping into the River approximately one mile above the Plant s raw water intake. The investigators subsequently discovered the Pit. 16. One of the inspectors contacted Mr. Childers. Mr. Childers informed an inspector that the sludge had come from Childers Oil, that Childers Oil had hauled the materials to the site, dug the Pit, lined it with plastic and put the

5 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 5 of 12 materials in the Pit. Mr. Childers, when asked if he had a permit to place the materials in the Pit, stated that he did not. 17. Given the contamination of the water supply, the Commonwealth of Kentucky Energy and Environment Cabinet (the Cabinet ) issued a consumer advisory on or around November 1, 2008 informing the public that the Plant s water should not be used for anything other than flushing. The advisory was lifted five (5) days later on or around November 6, On November 7, 2008, the Kentucky Department for Environmental Protection ( DEP ) issued a Notice of Violation to Mr. Childers setting forth various violations of state law associated with the first contamination (the November 7, 2008 NOV ). A copy of the November 7, 2008 NOV is attached as Exhibit A. On November 18, 2008, DEP issued a duplicate Notice of Violation to Childers Oil (the November 18, 2008 NOV ). A copy of the November 18, 2008 NOV is attached as Exhibit B. On March 24, 2009, DEP issued another Notice of Violation to Mr. Childers setting forth additional violations of state law associated with the first contamination (the March 24, 2009 NOV ). A copy of the March 24, 2009 NOV is attached as Exhibit C. The Second Contamination 19. On or around February 15, 2009, the Plant began receiving numerous customer complaints of a diesel fuel odor in the water. 20. On or around February 16, 2009, a sheen was observed on the River. Investigators discovered the source of the sheen approximately four (4) miles

6 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 6 of 12 upstream of the Plant s water intake. The site was a staging area used by Childers Oil and Owned by Mountain Rail (the Site ). The Site is owned by Childers Oil and/or Mountain Rail. The Site was a staging area used by Childers Oil to house approximately one hundred (100) underground and aboveground storage tanks. 21. The investigators inspected the Site and located a leaking tank. Childers Oil employees at the Site stated that a pipe had broken off of the leaking tank causing the discharge of diesel fuel. The Site had visibly contaminated soil. 22. Materials from the leaking tank seeped into the River. 23. Given the contamination of the water supply, the Cabinet issued a second consumer advisory on or around February 16, 2009, informing the public that the Plant s water should not be used for anything other than flushing. The advisory was lifted nine (9) days later on or around February 25, On February 19, 2009, DEP issued a Notice of Violation to Mr. Childers setting forth various violations of state law associated with the second contamination (the First February 19, 2009 NOV ). A copy of the First February 19, 2009 NOV is attached as Exhibit D. On February 19, 2009 DEP also issued a Notice of Violation to Childers Oil setting forth various violations of state law associated with the second contamination (the Second February 19, 2009 NOV ). A copy of the Second February 19, 2009 NOV is attached as Exhibit E. On February 20, 2009, DEP issued another Notice of Violation to Mr. Childers setting forth other violations of state law associated with the second contamination (the First February 20, 2009 NOV ). A copy of the First February 20, 2009 NOV is attached

7 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 7 of 12 as Exhibit F. On February 20, 2009, DEP also issued a Notice of Violation to Childers Oil setting forth other violations of state law associated with the second contamination (the Second February 20, 2009 NOV ). A copy of the Second February 20, 2009 NOV is attached as Exhibit G. On May 7, 2009, DEP issued another Notice of Violation to Childers Oil setting forth other violations of state law associated with the second contamination (the May 7, 2009 NOV ). A copy of the May 7, 2009 NOV is attached as Exhibit H. The Impact on Total Renal Care 25. Given the contamination of the water supply associated with the first contamination, Total Renal could not provide dialysis services at the Clinic between November 1, 2008 and November 6, Total Renal Care was forced to close the Clinic during this period and relocate its patients. 26. Given the contamination of the water supply associated with the second contamination, Total Renal could not provide dialysis services at the Clinic between February 16, 2009 and February 25, Total Renal Care was forced to close the Clinic during this period and to relocate its patients. 27. As a result of the water contamination and in order to deal with the contamination in such a way as to ensure that the safety of Total Renal Care s patients was not compromised, Total Renal Care incurred significant expenses, including but not limited to expenses associated with cleaning the Clinic s dialysis system and equipment. Total Renal Care also lost certain revenues at the Clinic

8 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 8 of 12 Total Renal Care s expenses and lost revenues are set forth on the document attached as Exhibit I. CLAIMS Count I Negligence Associated with the First Contamination 28. Total Renal Care incorporates the factual averments set forth in Paragraphs 1 through 27 above. 29. Defendants owed a duty to Total Renal Care to exercise reasonable care in the disposal of sludge removed from Childers Oil s oil water separators. 30. Defendants failed to use reasonable care in the disposition of sludge removed from Childers Oil s oil water separators. 31. As a direct and proximate result of Defendants negligence in disposing of sludge, the River was contaminated. As a direct and proximate result of Defendants contamination of the River, the Plant s water was contaminated and the Clinic was damaged. 32. As a result of Defendants negligence, Total Renal Care has been damaged in an amount to be proven at trial but in excess of $85,000. In addition, Defendants negligence in connection with the first contamination was so gross and excessive as to justify an award of punitive damages in an amount to be proven at trial

9 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 9 of 12 Count II Negligence Associated with the Second Contamination 33. Total Renal Care incorporates the factual averments set forth in Paragraphs 1 through 27 above. 34. Defendants owed a duty to Total Renal Care to exercise reasonable care in the handling and disposal of materials and in the use of their underground and aboveground storage tanks and/or a duty to properly construct and/or maintain a holding area for the underground and aboveground storage tanks. 35. Defendants negligently failed to use reasonable care in the handling and disposal of materials and in the use of their underground and aboveground storage tanks and/or in the construction and maintenance of a holding area for the underground and aboveground storage tanks. 36. As a direct and proximate result of Defendants negligence relating to the underground and aboveground storage tanks, the River was contaminated. As a direct and proximate result of Defendants contamination of the River, the Plant s water was contaminated and the Clinic was damaged. 37. As a result of Defendants negligence, Total Renal Care has been damaged in an amount to be proven at trial but in excess of $34,000. In addition, Defendants negligence in connection with the second contamination was so gross and excessive as to justify an award of punitive damages in an amount to be proven at trial

10 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 10 of 12 COUNT III Negligence Per Se As to Both Contaminations 38. Total Renal Care incorporates the factual averments set forth in Paragraphs 1 through 27 above. 39. Defendants owed a duty to Total Renal Care to exercise reasonable care in the disposal of sludge from Childers Oil s oil water separators and in the handling and disposal of materials and in the use of their underground and aboveground storage tanks and/or in the construction and/or maintenance of a holding area for underground and aboveground storage tanks. 40. Defendants violated Kentucky state law in their disposal of sludge from Childer Oil s oil water separators including but not limited to the violation of 401 KAR 10:031 Section 2(1)(b) and (c) (degrading waters of the Commonwealth), failing to obtain proper permits in violation of 401 KAR 5:055 Section 1 (including the violation of performance standards 401 KAR 5:050 through 5:090), failing to prevent the direct or indirect discharge of a pollutant into waters of the Commonwealth in violation of KRS , the failure to abide by permit conditions in violation of KAR 5:065 Section 1(1)(a), the failure to abide by environmental performance standards in violation of 401 KAR 30:031 Section 4(1), the failure to dispose of waste at a waste facility in violation of KRS (1) and placement of waste in a 100-year floodplain in violation of 401 KAR 30:031 Section Defendants violated Kentucky state law in their handling of underground and aboveground storage tanks including but not limited to the

11 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 11 of 12 violation of 401 KAR 10:031 Section 2 (degrading waters of the Commonwealth), the failure to prevent the direct or indirect discharge of a pollutant into waters of the Commonwealth in violation of KRS , the failure to properly dispose of regulated substances from UST systems in violation of 401 KAR 42:070 Section 5(3) and the failure to dispose of waste at a permitted waste site in violation of KRS (1). 42. Defendants violation of Kentucky state law constitutes negligence per se and Total Renal Care is entitled to recovery under KRS As a direct and proximate result of Defendants negligence, the River was contaminated. As a direct and proximate result of Defendants contamination of the River, the Plant s water was contaminated and the Clinic was damaged. 44. As a result of Defendants negligence, Total Renal Care has been damaged in an amount to be proven at trial but in excess of $119,000. In addition, Defendants negligence in connection with the first and second contaminations was so gross and excessive as to justify an award of punitive damages in an amount to be proven at trial. PRAYER FOR RELIEF WHEREFORE, Plaintiff, Total Renal Care, respectfully requests the following relief: 1. A trial by jury; 2. Damages in the amount of at least $85,000 for the first contamination and at least $34,000 for the second contamination;

12 Case 7:10-cv ART Document 1 Filed 03/10/10 Page 12 of Punitive damages in an amount to be awarded at trial and as determined by the jury but of no less than three (3) times the actual damages; 4. An award of pre-judgment and post-judgment interest in the maximum amount and to the fullest extent allowed under law; and 5. Any other general and equitable relief to which Total Renal Care may be entitled in the interest of justice. WALLER LANSDEN DORTCH & DAVIS, LLP /s J. Steven Kirkham W. Travis Parham (pending pro hac vice admission) J. Steven Kirkham Michael T. Harmon (pending pro hac vice admission) 511 Union Street, Suite 2700 Nashville, Tennessee Telephone: (615) travis.parham@wallerlaw.com steve.kirkham@wallerlaw.com michael.harmon@wallerlaw.com Attorneys for Plaintiff, Total Renal Care, Inc