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Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 1 of 28 UNTEJP ST ATES DSTRCT COURT SOUT$RN DSTRCT OF NEW YORK ---------J ------------------------------------------ )( N RE: /lvj.ethyl TERTARY BUTYL ETHE~ ("MTBE") PRODUCTS LABUTY LTGATON ---------+~------------------------------------------ Ths d~tument relates to: New Je~$ey Dep t of Envtl. Prat. v. Atlantc Rchfel~ Co., 08 Cv. 0312 r- -~ - - 1 l..;~v l~y t : t<,,, "tt ;.,, c~:rr ;...... J..L:.l ~.. ""\HYr A. T 1 V T""t ; ~.~... ~ \....:.:-..11,1~1 t ~ Dth.:: #: ----+-T-+--:-- DATB F.LED: OPNON AND ORDER Master Fle No. 1:00-1898 MDL 1358 (SAS) M21-88 ---------+..------------------------------------------- )( SHRA) A. SCHENDLN, U.S.D.J.:. *TRODUCTON Ths s a consoldated mult-dstrct ltgaton ("MDL") relatng to contamftaton - actual or threatened - of groundwater from varous defendants use of t»e gasolne addtve methyl tertary butyl ether ("MTBE") and/or tertary butyl a~~ohol, a product formed by the breakdown of MTBE n water. n ths case, the Ne* Jersey Department of Envronmental Protecton ("NJDEP"), the Comm~ssoner of the NJDEP, and the Admnstrator of the New Jersey Spll ; Compe».saton Fund allege that Defendants use and handlng of MTBE has contattj~nated, or threatened to contamnate groundwater at servce statons, refner~es, and termnals throughout New Jersey. Famlarty wth the facts of ths 1

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 2 of 28 case s ~resumed for the purposes of ths Order. Currently before the Court s Plantffs moton for judcal approval of the Jµdcal Consent Order ("JCO"), whch rectes the terms of ther settlement wth Ctgo Petroleum Corporaton ("Ctgo"). The JCO resolves all clams aganst Ctgo f~r $23.25 mllon. Several Defendants ("Non-Settlng Defendants") 1 oppose/the JCO on the grounds that t does not account for Ctgos proportonate share of lablty. 2 For the reasons stated below, Plantffs moton s DENED.. $ACKGROUND A. Plantffs Clams Plantffs fled ths lawsut to recover damages for alleged MTBE,. Non-Settlng Defendants nclude Chevron U.S.A., nc.; Coastal Eagle Pont ~~. 1 Company; Cumberland Farms, nc.; El Paso Corporaton (n/k/a El Paso LLC); $qulon Enterprses LLC; Exxon Mobl Corporaton; Getty Petroleum Marke~tng, nc.; Gulf Ol Lmted Partnershp; Lyondell Chemcal Company; Motv~;Enterprses LLC; Shell Ol Company; Shell Ol Products Company LLC; Shell Jttadng (US) Company; Sunoco, nc.; Sunoco, nc. (R&M); and Unocal Corpo~aton. ~ BP Products North Amerca, nc. and Atlantc Rchfeld Company ("BP") submt a separate opposton to the JCO on the grounds that BP and Ctgo were t~e only defendants targeted at the Fve Ponts Ste - a tral ste for whch Plantffs clamed $15.2 mllon n damages. See BPs Memorandum n Oppos~t.. on to Plantffs Moton for Approval of the Ctgo JCO ("BP Mem.") at 4. f the <bourt approves the JCO and Plantffs preval at tral, BP worres that t would ]be allocated most, f not all, of the damages alleged at that ste. See d. Lke the other Non-Settlng Defendants, BP contends that the JCO does not farly accou* for Ctgos share of lablty. See d. at 1. 2

1 Plantffs Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 3 of 28 conta~naton n groundwater at 5,045 stes throughout New Jersey. Plantffs Fourth Amended Complant ("Complant") alleges two statutory clams under the New Jtjrsey Spll Compensaton and Control Act ("Spll Act") and four common law claµns aganst all Defendants. 3 Plantffs request ( 1) the costs of restorng MTBE~contamnated groundwater ("restoraton costs"), (2) the costs of past and future ~TBE testng of all publc water supples, (3) the costs of past and future treatm~rtt of all drnkng water supples contanng detectable levels of MTBE, ( 4) the cos~~ of past and future montorng of other waters to detect MTBE, ( 5) the costs o~past cleanup and removal costs, and (6) attorneys fees and costs. 4 B. The Focus Stes each s~lected ten focus stes. 6 Plantffs experts submtted reports offerng 31 common law clams nclude strct lablty, neglgence, nusante, and trespass. See Complant 111-174. See d. ~ See Memorandum of Law n Support of Plantffs Moton to Approve the JC~ as to Ctgo Only ("Pl. Mem.") at 6. ~ Plantffs dsmssed ther clams at one of Defendants selected stes durng fact dscovery. See Non-Settlng Defendants Memorandum n Opposton to Pla*tffs Moton for Approval of the Proposed JCO as to Ctgo ("Def. Mem.") 3

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 4 of 28 damage& opnons for the ten Plantff-selected stes and one Defendant-selected ste. 7 A$ to the remanng Defendant-selected stes, Plantffs experts concluded that the costs of assessng damages would exceed the damages ncurred. 8 Plantffs allege that Ctgo s responsble for MTBE contamnaton at four of ~e ten Plantff-selected stes: (1) the Skylne Servce Center, (2) the Maple Shade qtgo, (3) the 5-Ponts Ste, and ( 4) the HP Delta Servce Staton. 9 As such, Ctgo stargeted at more Plantff-selected stes that any other Defendant. 10 C. The Terms of the JCO After sx months of negotaton, Plantffs settled wth Ctgo. Under the JCq,, Ctgo would pay $23.25 mllon for contrbuton protecton and a release at 6. 7 See d. at 7. 8 See Report of Plantffs Expert, Robert Unsworth ("Unsworth Report1), Ex. B to the Declaraton of Lsa A. Gerson, Defendants Counsel, ("Gersq~ Deel."), at 42. 1. 9 See Case Management Order ("CMO") 107, Ex. C to Gerson Deel., at 1 ~ Other than Ctgo, no Defendant has been dentfed at more than three of the Blantff-selected stes. See d. 4

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 5 of 28 from l~blty at all 5,045 stes n ths case. 11 The JCO also enttles Non-Settlng Defenqants to a settlement credt to be appled at tral. 12 The JCO adopts the Spll Acts qredt scheme for Plantffs Spll Act clams and the common law credt schem for Plantffs common law clams. 13 n addton, the JCO grants Ctgo contrtjuton protecton under the Jont Tortfeasors Contrbuton Law, the Comp~ratve Neglgence Act, and common law prncples. 14 D. Non-Settlng Defendants Objectons Non-Settlng Defendants objectons are based on the unque way that settlenents are treated under the Spll Act. 15 Under the Spll Act credt scheme, non-s4tlng defendants receve a credt n the dollar amount of the settlement. 16 Howe~er, under the common law credt scheme, non-settlng defendants receve a 11 See JCO, Ex. A to the Declaraton of Leonard Z. Kaufmann, Plantprs Cousnel, ("Kaufmann Deel.")~~ 5-6. 12 See d. ~ 1 7. ) 3 See d. See also P. Mem. at 19-20. ) 4 See JCO ~ 17. 1 5 See Def. Mem. at 1. 1 6 See N.J.S.A. 58:10-23:1 lf.a(2)(b) ("The settlement... shall reduce the po~ ntal lablty of any other dscharger... by the amount of... the settlenent. "). 5

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 6 of 28 credt b~sed on the settlng partys percentage of lablty as determned by the trer of fact. q Hypothetcally, a jury could award Plantffs three hundred mllon dollars tpr ther common law clams and ten mllon dollars for ther Spll Act clams. f the jury fnds Ctgo to be responsble for one-thrd of the total damages, Ctgo wpuld be lable for $103.33 mllon. Non-Settlng Defendants would pay $210 m~llon - the entre $10 mllon for the Spll Act clams and $200 mllon for ther cojnbned share of the common law clams. But they would receve a settlem~nt credt of $23.25 mllon. n that scenaro, Non-Settlng Defendants would tjave no objecton because the $23.25 mllon settlement credt exceeds the $10 ml}on they would have to pay for the Spll Act clams. f, however, the hypothetcal s reversed, and the jury awards Plantffs ten mllon dollars for ther common law clams and three hundred mllon ~ollars for ther Spll Act clams, damages for the Spll Act clams would far out\tegh the settlement amount. Even though Ctgo s found to be lable for one-th~d of the total damages, agan $103.33 mllon, Non-Settlng Defendants 1t See Town of Kearny v. Brandt, 214 NJ. 76, 100 (2013) ("n the wake of a pla~ntff s settlement wth one defendant... a non-settlng defendants rght to a cre~t [based upon an allocaton of fault at tral] takes the place of contrbuton rghts ektngushed by the settlement.") (quotng Young v. Latta, 123 N.J. 584, 595 (1~91) (ctng N.J.S.A. 2A: 15-5.2(a))). -6-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 7 of 28 would have to pay $306.67 mllon dollars of the $310 mllon verdct. Even wth the $231.23 mllon settlement credt, Non-Settlng Defendants would be out of pocket $283.42 mllon dollars, whch s far more than two-thrds of the total damag~s award. 18 E. Plantffs Damages Calculatons On October 21, 2013, Plantffs publshed notce of the JCO n the New Jetsey Regster. 19 Non-Settlng Defendants then provded comments to the NJDEPj They objected to the JCO on the grounds that Plantffs had faled to dsclos~ ( 1) ther total alleged damages, (2) how they determned Ctgo s far share : : of lablfty, and (3) how Ctgos payment would be allocated among the four dentfclf Ctgo stes or any of the other stes. 20 On December 20, 2013, Plantffs formally responded to the commel)ts. Frst, Plantffs estmated ther total damages for the 5,045 stes to be 18.. As a compromse, Non-Settlng Defendants have offered to wave 1 ther ob ectons to the JCO f Plantffs agree to ncorporate the common law scheme or all of ther clams. See Def. Mem. at 4-5. Plantffs have declned ths offer, w ch would effectvely requre them to overrde the Spll Act. See Plantf s Reply to Defendants Oppostons to Plantffs Moton for Approval of the ProBosed Ctgo JCO ("Pl. Reply Mem.") at 4-5. 19 See New Jersey Regster at 45 NJR 10(2), Ex. G to Kaufmann Deel. 20 : See 11/20/13 Exxon Mobl Comments (on behalf of multple defenda~ts), Ex. H to Kaufmann Deel.; 11/20/13 Shell Comments, Ex. to Kaufmam Deel.; 11/19/13 BP Comments, Ex. J to Kaufmann Deel. -7-

1 See Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 8 of 28 between$1.99 and $3.32 bllon, plus out-of-pocket costs. 21 To arrve at ths estmate~ Plantffs experts frst calculated the average cost of restoraton at the ten Plantff}selected stes to be $4,657,608 per ste. 22 Plantffs then multpled that cost by 498 because - accordng to Plantffs recent groundwater samplng - 498 ~f the 5,045 stes contaned MTBE above 700 parts per bllon ("ppb"). 23 Thus, djmages at the 498 stes totaled approxmately $2.32 bllon. 24 Plantffs then assgned an average damages value of $50,000 to each of the remanng 4,547 stes, re~ultng n an addtonal $227.35 mllon n damages. 25 Plantffs further estmat~d that compensatory damages at these stes - outsde of restoraton costs -woul~ total approxmately $104 mllon. 26 fve per~ent contngency factor to "account for uncertanty." 27 Second, Plantffs explaned how they determned that $23.25 mllon 2l 12/20/13 NJDEP Response to Exxon Mobl Comments, Ex. L to Kaufmapn Deel., at 3. 22 See d. 231 See Pl. Mem. at 6. 241 See d. 2s See d. at 7. 26 See d. 21 d. Fnally, Plantffs assgned a twenty -8-

1 Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 9 of 28 represtjnted Ctgo s far share of lablty. Plantffs found Ctgo to be lable at only 128 oflthe 5,045 stes. 28 They also consdered Ctgos lmted busness operatons n New Jersey, the number of Ctgo-branded stes n New Jersey, the quantty of MTBE.. contanng gasolne n New Jersey, Ctgos potental defenses, Ctgos wlln~ness to settle early, the tme-value of money, and the publc nterest n settlen1ent. 29 The fnal JCO was approved by the Commssoner of the NJDEP and the Ne~ Jersey Attorney General. 30. ~PPLCABLE LA W 31 Under New Jersey law, a court wll not "second-guess those judgmtnts of an admnstratve agency," lke the NJDEP, whch "fall squarely wthn lthe agencys expertse." 32 n fact, a court "wll reverse the decson of an admn~stratve agency only f t s arbtrary, caprcous, or unreasonable, or f t s See 12/20/13 NJDEP Response to Exxon Mobl Comments at 4. See P. Mem. at 9-10. ~o See 217 /14 Declaraton of George Schlosser, New Jersey Deputy Attom~y General ("Schlosser Decl."),f 8. ~ 1 New Jersey law apples to ths case. See Menowtz v. Brown, 991 F.2d 36, 40 (2d Cr. 1993) (Pursuant to secton 1407 of ttle 28 of the Unted States Code Checton 1407"), a transferee dstrct court "apples the substantve state law... of fhe jursdcton n whch the acton was fled."). h Dv. 2 08). n re Steam Encroachment Permt, 402 N.J. Super. 587, 597 (App. -9-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 10 of 28 not sup~0rted by substantal credble evdence n the record as a whole." 33 Despte ths def~tence, the courts revew of an agency decson s "not smply a proforma exercsen whch [the court] rubber stamp[s] fndngs that are not reasonably support~d by the evdence." 34 A court wll approve an agencys decson to settle as long as the settlemd111t s "far, reasonable, and adequate." 35 The standard to be appled "s not whetherj the settlement s one whch the court tself mght have fashoned, or consdets as deal, but whether the proposed decree s far, reasonable, and fathful to the o~jectve of the governng statute." 36 The court cannot smply "rubber stamp"~ settlement based on the arguments and recommendatons of counsel. 37 Rather, l[t]o make ths determnaton, the factual record before the dstrct court must bej suffcently developed." 38 3 ~ New Jersey Dep t of Envtl. Prot. v. Gloucester Envtl. Mgmt. Servs. nc., 5911 F. Supp. 2d 744, 753 (D.N.J. 2008) (ctng P.F. on Behalf of B.F. v. New Jersey bv. of Dev. Dsabltes, 139 N.J. 522, 529-30 (1995)). 3t 3 n re Taylor, 158 N.J. 644, 657 (1999) (nternal ctatons omtted). Alves v. Man,-Fed. Appx-, 2014 WL 1063957, at *2 (3d Cr. Mar. 2Q, 2014) (ctng n re Prudental ns. Co., 148 F.3d 283, 316 (3d Cr. 1998)). 3~ 1990). 3f 38 Unted States v. Cannons Engneerng Corp., 899 F.2d 79, 84 (1st Cr. n re Matzo Food Prods. Ltg., 156 F.R.D. 600, 604 (D.N.J. 1994). d. (ctng Grsh v. Jepson, 521F.2d153, 159 (3d Cr. 1975)). -10-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 11 of 28 When a court revews a settlement that nvolves a Spll Act clam, t should ~ook to the federal case law nvolvng the Comprehensve Envronmental Respon~e, Compensaton, and Lablty Act ("CERLA") for gudance. 39 n fact, CERCDA has been called the "federal analogue to the Spll Act." 40 Under CERC4A case law, "[a] court should approve a consent decree f t s far, reasondble, and consstent wth CERCLAs goals." 41 "n evaluatng the farness of a consent decree, a court should assess both prpcedural and substantve consderatons." 42 "Procedural farness requres that set~ement negotatons take place at arms length." 43 "A court should look to the negjotaton process and attempt to gauge ts candor, openness and barganng balanc~~" 44 "Substantve farness requres that the terms of the consent decree are 1 9 See, e.g., Rechhold, nc. v. US. Metals Refnng Co., 655 F. Supp. 2d 400, 414 (D.N.J. 2009); New Jersey Dep t of Envtl. Prat. v. Gloucester Envtl. Mgmt. 1 Servs., nc., 821 F. Supp. 999, 1009 (D.N.J. 1993). Plantffs and Non Settln~ Defendants agree that the Court should look to CERCLA case law for gudanpe. See BP Mem. at 9; PL Mem. at 14-15; Def. Mem. at 12-13. to New Jersey Dept. of Envtl. Prat. v. Dmant, 418 N.J. Super. 530, 542 (App. pv. 2011), affd as modfed, 212 N.J. 153 (2012). ~ 2003). n re Tutu Water Wells CERCLA Ltg., 326 F.3d 201, 207 (3d Cr. d. ~3 d. d. (quotng Cannons, 899 F.2d at 86). -11-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 12 of 28 based on comparatve fault and apporton lablty accordng to ratonal estmat~s of the harm each party has caused. " 45 The court must "compare the proporton of total projected costs to be pad by the settlors wth the proporton of lablt~ attrbutable to them, and then to factor nto the equaton any reasonable dscoutjts for ltgaton rsks, tme savngs, and the lke that may be justfed." 46 "As lotjg as the measure of comparatve fault on whch the settlement terms are : based ~ not arbtrary, caprcous, and devod of a ratonal bass, the dstrct court should pphold t." 47 V. ~SCUSSON Non-Settlng Defendants do not dspute the procedural farness of the JCO, wbch was the product of sx months of arms-length negotaton. 48 nstead, they ob~ect to ts substantve farness on the grounds that Plantffs have faled to adequa~ely evaluate Ctgos proportonate share of lablty. 49 Defendants object to 4~ 2000)). d. (quotng Unted States v. SEPTA, 235 F.3d 817, 823 (3d Cr. 4 t Unted States v. Montrose Chem. Corp., 50 F.3d 741, 747 (9th Cr. 1995) (ptng Unted States v. Charles George Truckng, nc., 34 F.3d 1081, 1087 (1st C~. 1994) ). 4t SEPTA, 235 F.3d at 824 (nternal ctatons and quotaton marks omttecp. 4~ See Pl. Mem. at 9. 4~ See Def. Mem. at 4. -12-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 13 of 28 Plantffs calculaton of total damages and to Plantffs calculaton of Ctgos share tjf those damages. wll dscuss each objecton n tum. ~ Plantffs Calculaton of Total Damages s Arbtrary, Caprcous, and Unreasonable Frst, Non-Settlng Defendants object that Plantffs total damages :, estma~e of $1.99 to $3.32 bllon s unreasonable because of ts large range. 50 Non-S~tlng Defendants assert that Ctgos proportonate share oflablty would, be vasth dfferent f the judgment were $1.99 bllon than ft were $3.32 bllon. 51 Even t+ough Ctgo s dentfed at more Plantff-selected stes than any other defend~nt, Ctgos payment of $23.25 mllon would amount to only 0.7% of a $3.32 ~llon judgment. 52, Second, Non-Settlng Defendants object to the methodology Plantffs used tol calculate total damages. Plantffs calculaton s based on a lst of 498 stes th~t s flled wth nconsstences. 53 For example, the lst ncludes only three of the t~n Plantff-selected tral stes. 54 But t also ncludes one Defendant 5p See d. at 2. 511 See d. 5~ See d. 5~ See d. at 15-16. 5 l See Plantffs MTBE Stes wth "Most Recent Maxmum MTBE," Ex. E t~ Gerson Deel., at 10. 13

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 14 of 28 selected ste where Plantffs experts declned to conduct dscovery. 55 Furthertjlore, the lst ncludes only stes were MTBE was supposedly detected above 7?0 ppb durng the latest round of groundwater samplng, but Plantffs fal to dscl~se when that round occurred, the concentraton of MTBE at any of the stes, or the pervasveness of the contamnaton. 56 Asde from the lst, Plantffs fal to support ther assumpton that the restoratl~n costs at the remanng 4,54 7 stes - where MTBE was detected below 700 ppbl, f at all - would be $50,000 per ste. 57 Because Plantffs have not even calculat~d damages at nne of the ten Defendant-selected stes, Non-Settlng Defend4nts assert that Plantffs offer no bass for ths assumpton. 58 Thrd, Non-Settlng Defendants argue that Plantffs gnore the damage~ calculatons of one of ther own experts, Kevn Boyle. 59 Boyle used a 55 See d. 5, See Def. Mem. at 16-17. BP contends that Plantffs use of 700 ppb as a thr~shold s arbtrary, and n any event, fewer than 498 stes meet that thresho~. See BP Mem. at 17-20; Declaraton of Robert Powell ("Powell Deel."), BPs ex ert, Ex. G to the Declaraton of Andrew R. Runnng ("Runnng Deel."),,-r 13. Alt ough he used the same database as Plantffs and conducted the broadest search ~ossble, BPs expert dentfed only 401 stes wth MTBE concentratons over 700 ppb. See Powell Deel.,-r 13. 5~ See Def. Mem. at 16-1 7. 58 See d. 5~ See d. at 3-4. -14-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 15 of 28 dffere~t methodology than Plantffs other experts and calculated damages to be, on avetage, $7.32 mllon per ste for the ten Plantff-selected stes. 60 However, Plantffs other experts, Anthony Brown and Robert Unsworth, calculated damag~s at those stes to be $4.66 mllon per ste. 61 Thus, Non-Settlng Defen4ants argue that Plantffs have underestmated ther damages by relyng on Brown1 and Unsworth, rather than Boyle. 62 Fourth, Non-Settlng Defendants contend that Plantffs total damagf s estmate s based solely on "restoraton costs" at the ten Plantff-selected tral s~es. 63 Plantffs have faled to account for all other categores of damages allege1 n the Complant, ncludng (1) the costs of past and future MTBE testng of all tjublc water supples, (2) the costs of past and future treatment of all drnktjg water supples contanng detectable levels of MTBE, (3) the costs of past and fu~ure montorng of other waters to detect MTBE, ( 4) the past cleanup and removfl costs, and (5) attorneys fees and costs. 64 1 See 11/7112 Expert Report of Kevn J. Boyle ("Boyle Rep."), Ex. D to the Ge~on Deel., at 3. 1 See, e.g., 1/9/13 Expert Report of Anthony Brown ("Brown Rep."), Ex. B ~o Kaufmann Deel., at 1. t 2 See Def. Mem. at 15. 4 3 See d. at 14-15. 4 See Complant f f 111-17 4. -15-

1 1 See Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 16 of 28 Plantffs respond that ther total damages calculaton s reasonable. Under the "bellwether" approach to dscovery, the partes focused on nneteen tral stes as 1 1a bass for ther damages calculatons. 65 Plantffs contend that t was mpract~cal and unnecessary to conduct ste-specfc dscovery at all 5,045 stes,. gven t~at CERCLA case law does not requre precse damages estmates as a condtqn to settlement. 66 Next, Plantffs assert that they were allowed to gnore Boyles damagef estmate because t merely provded a context for ther clams. 67 Because Plantffs do not ntend to rely on hs estmate at tral, they dd not rely on t durng the settl~ment process. 68 Fnally, Plantffs contend that t was unnecessary to consdet all potental damages categores lsted n the Complant before estmatng total da~ages. 69 Plantffs explan that most of the categores are "complementary" 651 See Pl. Mem. at 2. 66 Pl. Reply Mem. at 1; 12-15 (ctng Cannons, 899 F.2d at 88 (statng ~at admnstratve agences must be gven "leeway to construct the barome~r of comparatve fault"); Montrose, 50 F.3d at 745 ("[P]recse data relevant to determnng the total extent of harm caused and the role of each [potent~lly responsble party] s often unavalable.")). 671 681 69 See Pl. Reply Mem. at 8. See d. See d. at 9. -16-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 17 of 28 contaml.nated groundwater, the cost of testng and treatng the drnkng water s dmn~hed. 71 Smlarly, f Defendants restore the groundwater, the cost of montotng s reduced. 72 As an ntal matter, Plantffs are free to gnore Boyles damages calculatons, especally snce they wll not rely on them at tral. 73 Plantffs are also correct ]that they need not calculate damages that fall nto overlappng or redundant 1p See d. 7~ See d. 7 f See d. Plantffs also argue that ther total damages estmate s reason~ble n lght of other MTBE ltgaton. See Pl. Mem. at 8. For example, n New H~ mpshre, a jury determned total damages to be $816,768,018. See Specal Verde Form ("Specal Verdct Form"), State of New Hampshre v. Hess Corp., et al., 03- -0550, Ex. D to Kaufmann Deel. Because New Jersey has 3.25 tmes as many cpntamnated stes as New Hampshre, Plantffs argue that New Jerseys total dajmage estmate should be 3.25 tmes that of New Hampshres - or, about $2.65 ~llon. See Pl. Mem. at 8. However, n the New Hampshre case, seventy fve pe. ent of Plantffs damages conssted of past cleanup or samplng and treatm. t costs. See Specal Verdct Form. Here, Plantffs have not calculated such c sts or ncorporated them nto ther total damages estmate. Even f they had, thy may not blndly assume that New Hampshres damages are drectly compatjable to New Jerseys, but on a smaller scale. 1 } See PL Reply Mem. at 8. See Neverson v. Farquharson, 366 F.3d 32, 45 (1st lcr. 2004) ("[W]hether to call a partcular expert s normally the sort of strategp decson that s reserved for tral counsel."); Kelly v. Hendrcks, No. 03 Cv. 25~6, 2005 WL 2897499, at *9 (D.N.J. Oct. 31, 2005) ("[C]ounsels decson not to ~all the expert wtnesses was a strategc decson."). to restqraton damages. 7 For example, f Defendants clean up and restore MTBE- -17-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 18 of 28 categotes for settlement purposes. At tral, Plantffs experts may not testfy beyoncj the scope of ther reports, whch nclude calculatons for restoraton damag~s only. 74 Because they are precluded from ntroducng new calculatons, Non-S~ttlng Defendants wll not be prejudced. 75 However, Non-Settlng Defendants remanng objectons rase serou~ concerns about the farness and reasonableness of the JCO. Whle total damag~s estmates need not be precse, Plantffs estmate spans $1.33 bllon. More t~oublng are the nconsstences wth Plantffs lst of 498 stes, whch serve as the ~ass for ther damages estmate. Seven of the ten Plantff-selected stes are exclud~d from the lst. 76 Meanwhle, the lst ncludes at least one ste where Planttrs experts conducted no dscovery. 77 Plantffs offer no explanaton for 4 See Allen v. Parkland Sch. Dst., 230 Fed. Appx 189, 195 (3rd Cr. 2007) ~[A] llowng [plantffs expert] to ntroduce an expert opnon beyond the scope ~f hs treatment would have prejudced the defendants and delayed the procee~ngs."); Rockemore v. Amba Corp., No. L-1491-09, 2013 WL 1798739, at *3 (NJ Super. Ct. Apr. 30, 2013) ("t s well settled that an experts testmony at tral m~y be lmted to opnons expressed wthn the experts report provded as part ofldscovery."). 1 5 Nevertheless, there may be some rsk of prejudce f Plantffs can prove ~on-overlappng categores of damages, such as attorneys fees, at tral wthouf elctng testmony from any expert. 10. l6 1 7 See d. See Plantffs MTBE Stes wth "Most Recent Maxmum MTBE" at -18-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 19 of 28 these *consstences, whch rase doubts about the relablty of the entre lst. Nor do the)( explan how they determned that the average restoraton costs at the reman~ng 4,547 stes to be $50,000. Based on the record, t s unclear how many of thesr stes - f any- are contamnated at all. As a result, the $50,000 estmate appear$ arbtrary. Wth such an ncomplete record, t s mpossble for me to determ~ne whether the settlement s far and reasonable. $. Plantffs Calculaton of Ctgos Share of Lablty s Arbtrary, Caprcous, and Unreasonable Non-Settlng Defendants also contend that the $23.25 mllon settlentnt amount does not farly or reasonably account for Ctgos lablty. 78 Frst, trey assert that Plantffs lst of 128 stes assocated wth Ctgo s nconslstent and unrelable. 79 For example, the lst ncludes only one of the four Plant,f-selected stes assocated wth Ctgo. 80 As such, Plantffs assessed Ctgos lablt~ wthout consderng damages at the Skylne Servce Staton ste, the HP : Delta she, or the Fve-Ponts ste. Ths s especally problematc because Ctgos lablt~ at those three stes alone ranges from $16 mllon to $24.5 mllon 7 \ See Def. Mem. at 17-18. 7 : f See d. 8 ~ See MTBE Stes Afflated wth Ctgo, Ex. F to Gerson Deel. -19-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 20 of 28 accordpg to Plantffs experts. 81 Therefore, Ctgos lablty at just those three stes co~ld potentally exceed the $23.25 mllon settlement amount. Second, BP contends that Plantffs used napproprate databases to generatf ther 128 ste lst. 82 Specfcally, they reled on an Envronmental Manag~ment System ("EMS") database, whch s desgned to allow "mappng" of release 1,stes, and summarze the stes regulatory status, "dscharge parameter," "progr~m nterest," and regulatory volatons. 83 The EMS database does not dentf)j hstorc supplers of gasolne to stes or lnk those supplers wth MTBE releasd. 84 Smlarly, Plantffs HazStes database merely stores sol and groundf ater laboratory test results. 85 t does not store nformaton that dentfes partes tesponsble for MTBE releases or dentfy the statons supplers. 86 BP argues ~hat relance on these databases caused defcences n Plantffs lst. 87 8 1 See Brown Rep. at 1; 11/8/12 Expert Report of Robert Unsworth, Ex. C to K~~fmann Deel., at 41; Boyle Rep. at 3. See BP Mem. at 11. d. See Powell Deel. ff 5-13. See d. rr 9-13 8~ 8~ See BP Mem. at 12. See d. -20-

1 Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 21 of 28 Plantffs should have prepared a complete lst by examnng the NJDEPs ste fles and dehtfyng MTBE releases and the supplers durng those release perods. 88 Plantffs respond that they reled on "ste-specfc dscovery" as well as nform.aton from the databases to create ther lst. 89 Plantffs conducted dscov~ry on the ten Plantff-selected stes and one Defendant-selected ste. They then "a~count[ ed] for such nformaton on a statewde bass [] n the absence of ste-sp~cfc dscovery on the 5,000+ other stes" by consderng Ctgos "market share" }or gasolne sold n New Jersey. 90 Plantffs argue that ths approach was a reason,ble alternatve to conductng ste-specfc dscovery at all 5,045 stes. 91 Next, Plantffs argue that Non-Settlng Defendants mproperly assume~ that Ctgo s one hundred percent lable at all 128 stes. 92 n fact, many of the ste~ are assocated wth both Ctgo and other defendants. 93 For example, 8~ See d. 8~ PL Reply Mem. at 11. 9~ d. 9) See d. 9t See d. at 12. 91 See d. -21-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 22 of 28 becausd BP and Ctgo both suppled MTBE at the Fve Ponts Ste, Plantffs suggestthat they should share lablty there. 94 Fnally, Plantffs contend that the settlement amount s also based on relevan~ factors, such as the relatvely small number of stes assocated wth Ctgo, Ctgos mnor market share n New Jersey, Ctgos wllngness to settle early, the lablty of remanng Defendants, ltgaton rsks, the certanty provded n settlem~nt, the tme value of money, the publc nterest n settlement, and Ctgos potent11 defenses. 95 As for ts potental defenses, Ctgo argues that unlke other Defend~ts, t dd not own, lease, or operate any servce staton n New Jersey. 96 nstead~ t merely suppled MTBE-contanng gasolne that was refned by others. 97 9~ See d. 9 ~ See Pl. Mem. at 1, 9-10. Plantffs reled on the Unted States Energy nform1ton Admnstraton ("EA") Prme Suppler data, whch ndcates that Ctgos_market share n New Jersey s four percent. See Ctgos Reply n Support of Pla9tffs Moton for Approval of the JCO ("Ctgo Reply Mem.") at 3. 91 See Ctgo Reply at 2. 9t See d. Ctgo also nssts t has a unque "ethanol defense" because t sold ga~olne blended wth ethanol untl 1986. See Ctgos Memorandum n Suppotj:of Plantffs Moton for Approval of the Judcal Consent Order ("Ctgo Mem."~ at 11-12. Although t ntended to contnue sellng ethanol-blended gasoln~, t was forced to swtch to MTBE-contanng gasolne n 1986 because t could nb longer obtan a steady supply of ethanol. See d. -22-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 23 of 28 On the record before me, cannot determne whether the $23.25 mllon settlement amount represents Ctgo 1 s far share of lablty. Plantffs reache~ths amount based on a 128 ste lst that s replete wth problems. Frst, the lst om~s three of the four Plantff-selected stes where Plantffs clam Ctgo s lable. 3ecause Ctgos lablty at these three stes alone could exceed $23.25 mllonj Plantffs have severely underestmated Ctgos lablty. Second, the lst was generated from databases ncapable of dentfyng hstorc supplers of MTBE specfg knowledge by relyng on Ctgo s reported market share of four percent. But as ~tgo admts, f ts share of lablty was four percent of the total damages, t would ~e lable for $88 mllon. 98 Plantffs nsst that they gave Ctgo a dscount because "other defend4nts n addton to Ctgo" were dentfed at some of the 128 stes. 99 But they fa~] to dentfy whch stes Ctgo suppled at the tme of the MTBE releases, 9 ~ See Ctgo Mem. at 6-7. BP also contends that Ctgo s market share s rrelevf.nt to ts lablty under the Spll Act. Under New Jersey law, such lablty must b based on a nexus to the ste-specfc dscharges at the 5,045 stes at ssue, not on arket share. See New Jersey Dept. of Envtl. Prat. v. Dmant, 212 NJ. 153, 177 (2 12) (holdng that lablty requres a "nexus" that "tes the dscharger to the dscharge that s alleged to be the, or a, culprt n the envronmental contamnaton n ssu~). 9 ~ Pl. Reply Mem. at 12. at the t~e of the releases. Plantffs attempt to compensate for ther lack of ste- -23-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 24 of 28 whch qther Defendants suppled those stes at those tmes, or how to allocate lablt~ among Defendants. Plantffs also clam that they consdered the number of stes jassocated wth Ctgo, Ctgos market share, Ctgos wllngness to settle early, t~e lablty of remanng defendants, ltgaton rsks, the certanty provded n settltjment, the tme value of money, the publc nterest n settlement, and Ctgosj arguments regardng ts potental defenses. 100 Whle these are all reason11ble factors to consder, the Court cannot approve the settlement wthout frst evmuatng "the measure of comparatve fault on whch the settlement terms Wthout a reasonable measures of both total damages and Ctgos share, rl cannot determne whether the settlement s far and reasonable. are bas~d." 101 t. Plantffs Cannot Justfy the Settlement as an "Aggregate Settlement" Fnally, Plantffs nsst that the Court can stll approve ther settlemrnt as an "aggregate settlement," even wthout ste-specfc nformaton on 1 Po See Pl. Mem. at 1, 9-10. 1 P 1 SEPTA, 235 F.3d at 824 (quotatons omted). Accord Montrose, 50 F.3d atl747 (A court should "compare the proporton of total projected costs to be pad b~ the settlors wth the proporton of lablty attrbutable to them, and then to factor hto the equaton any reasonable dscounts for ltgaton rsks, tme savngs, and thel lke that may be justfed."). 1 b 2 Pl. Mem. at 20. over 5,~00 stes. 102 Plantffs note that ths Court prevously approved a mult- -24-

1 Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 25 of 28 defend~t, mult-ste settlement as an "aggregate settlement" n n re MTBE. 103 There,~ found that "the estmate of each defendants share of lablty s not relevatjt where allocaton of lablty under the settlement was done on an aggreg~te and not on a case-by-case bass, and where any non-settlng defendant that su~tans an adverse judgment at tral wll receve the beneft of the entre aggre(jte amount pad n settlement as a setoff." 104 Plantffs nsst that the JCO s smlarlbecause Non-Settlng Defendants wll be enttled to prove how the Ctgo settle~t;mt proceeds should be allocated at tnal. n fact, the two settlements are dramatcally dfferent. The settlement n n r4 MTBE arose out of global settlement dscussons that ncluded approx~mately seventy percent of the named defendants. 105 Ths Court held that plant~fs dd not need to estmate each settlng defendants share of lablty, as long a~ the aggregate settlement amount reasonably represented "the settlng defend~nts estmated combned share of lablty." 106 Here, however, Ctgo s the only sf lng defendant, and Plantffs are requred to farly estmate Ctgo s share., 1 1 3 d. (ctng n re Methyl Tertary Butyl Ether (MTBE) Prods. Lab. Ltg., f178 F. Supp. 2d 519 (S.D.N.Y. 2008)). 1 1 4 n re MTBE, 578 F. Supp. 2d at 529 (emphass n orgnal). l,05 See d. at 521. 1 1 6 d. at 534. -25-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 26 of 28 Furthermore, n n re MTBE, plantffs used reasonable and relable methods to calculate the settlng defendants proportonate share. For example, durng ~ettlement negotatons, plantffs provded detaled, ste-specfc explan~tons regardng ther damages estmates. 107 They also explaned how ther settlem~nt proceeds would be allocated across the stes. 108 n calculatng total damag~s, Plantffs frst reled on a study by the Amercan Petroleum nsttute ("AP"~ that calculated "hgh, low, and mean costs of treatng wells contamnated wth MTBE for a ten-year perod." 109 They then talored the AP estmates to the specf~ contamnated wells n these cases, usng "a standard lnear regresson analysp to derve the estmated AP cost for treatment at each wells flow rate." 110 Fnall~, plantffs assessed the characterstcs of each well, and assgned each a "grade1~ based on a number of ste-specfc factors, ncludng flow rate, level of detect?ns, the length of tme over whch the detectons occurred, how recently detectpns have occurred, and the relatonshp of the detectons to applcable 101 See d. at 5 22 See d. d. at 524. j10 d. -26-

Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 27 of 28 regulat~ry standards. 111 Here, Plantffs have conducted no ste-specfc analyss beyond eleven ~al stes. nstead, they created an unrelable lst of 498 stes to determne total d~tnages. Wthout conductng any analyss of the remanng 4,54 7 stes, they assgn9d a an arbtrary $50,000 damages value. Plantffs have sued Defendants at 5,045 ~tes about whch lttle or nothng s known. The fact that Plantffs consder t "mphactcal" to conduct ste-specfc dscovery at these stes does not excuse them f~om ensurng that the JCO s far and reasonable. V. CONCLUSON For the foregong reasons, Plantffs moton s DENED. The Clerk of the ourt s drected to close ths moton (Doc. No. 344). Plantffs may resubn1t the JCO for approval when they develop and present a more complete record ~upportng the settlement. Shra A. Schendln U.S.D.J. Dated: New York, New York June 11, 2014 ~ 11 See d. at 523. -27-

. Case 1:00-cv-01898-SAS-DCF Document 4015 Fled 06/11/14 Page 28 of 28 - Appearances - For Pl~ntffs: George F. Schlosser Assstapt Attorney General Offce ~f the Attorney General of the State otnew Jersey 24 Mar~et St. P.O. B~x 093 Trentoq, NJ 08625 ( 609) 2~2-4925 Leonartt Z. Kaufmann, Esq. Cohn, kfland, Pearlman, Herrmann &KnopfLLP Park 8Q West, Plaza One Saddle fl3rook, NJ 07663 (201) 8~5-9600 Mcha~l Axlne, Esq. Tracey ORelly, Esq. Mller, Axlne & Sawyer 1050 Fplton Ave., Sute 100 Sacra~:nto, CA 95825 (916) 4188-6688 LasoJ Counsel for Plantffs: Robn ~ 1 reenwald, Esq. Robert Gordon, Esq. Wetz Luxenberg, P.C. 180 M4den Lane New Ybrk, NY 10038 (212) 5158-5500 For Ctgo: Nathan P. Emer, Esq. Pamela R. Hanebutt, Esq. Emer Stahl LLP 24 South Mchgan Ave., Sute 100 Chcago, L 60604 (312) 660-7600 For BP: Andrew R. Runnng, Esq. J. Andrew Langan, Esq. Slva N. Wnston, Esq. Krkland & Ells LLP 300 North LaSalle Dr. Chcago, L 60654 (312) 862-2000 Lason Counsel for Defendants: Peter John Sacrpant, Esq. James A. Pardo, Esq. Stephen J. Rccardull, Esq. Lsa A. Gerson, Esq. McDermott Wll & Emery LLP 340 Madson Ave. New York, NY 10017 28