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Pacificorp v. Gas Transmission Northwest Corporation

United States District Court, Ninth Circuit

January 14, 2014

PACIFICORP, an Oregon corporation, Plaintiff,
v.
GAS TRANSMISSION NORTHWEST CORPORATION, a California corporation, Defendant.

OPINION AND ORDER

PAUL PAPAK, Magistrate Judge.

Plaintiff PacifiCorp brings this action against defendant Gas Transmission Northwest Corporation ("GTN") arising out of the alleged contamination of natural gas causing damage to PacifiCorp's Hermiston power plant. The matters before the court are: (1) GTN's second motion for summary judgment (#478); and (2) PacifiCorp's motion for leave to file an amended complaint (#489). For the reasons set forth below, the motion for summary judgment and the motion for leave to file an amended complaint are denied.

BACKGROUND

I previously outlined the relevant facts, viewed in the light most favorable to PacifiCorp, in the July 16, 2012 opinion and order, and I find it unnecessary to repeat them here. See July 16, 2012 Opinion and Order, #361, at 2-13; see also December 23, 2013 Opinion and Order, #499, at 2-3 (outlining the relevant procedural history following the July 16, 2012 opinion and order). At issue now is GTN's second motion for summary judgment, which GTN filed on October 30, 2013. On November 25, 2013, PacifiCorp filed a resistance (#493). On December 9, 2013, GTN filed a reply (4497).

PacifiCorp filed the motion for leave to file an amended complaint on November 14, 2013. On November 26, 2013, GTN filed a resistance (#496). On December 13, 2013, PacifiCorp filed a reply (#498). The matters are fully submitted and ready for decision.

ANALYSIS

I. GTN's Motion for Summary Judgment

A. Standard

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, "show[] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Summary judgment is not proper if material factual issues exist for trial. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). The substantive law governing a claim or defense determines whether a fact is material. See Moreland v. Las Vegas Metro. Police Dept, 159 F.3d 365, 369 (9th Cir. 1998). In evaluating a motion for summary judgment, the district courts of the United States must draw all reasonable inferences in favor of the nonmoving party and may neither make credibility determinations nor perform any weighing of the evidence. See, e.g., Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Lytle v. Household Mfg., Inc., 494 U.S. 545, 554-55 (1990).

B. Discussion

In its motion for summary judgment, GTN argues that the court should grant summary judgment in GTN's favor on three grounds. First, GTN argues that PacifiCorp has failed to generate a genuine issue of material fact regarding the presence of compressor oil in the Hermiston plant turbine. Second, GTN argues that it is entitled to summary judgment because the Hermiston plant was not operating in the ordinary course of business, as evidenced by its lack of industry-standard equipment such as a coalescing filter and heater. Finally, GTN argues that it is entitled to summary judgment on those claims that the Hermiston Generating Company, L.P. ("HGC") "assigned" to PacifiCorp because the assignment is invalid.

1. Evidence of Compressor Oil

First, GTN moves for summary judgment on the ground that "PacifiCorp simply has no direct physical evidence of liquid compressor oil being present at the contractual delivery point or in the turbines at the [Hermiston] plant." GTN's Memo. in Support of Motion for Summary Judgment, #479, at 11. Specifically, GTN argues that PacifiCorp should not be allowed to rely on the "highly questionable" testimony of Frank Glasgow and Terry Journot because PacifiCorp failed to preserve the oil that Glasgow and Journot allegedly observed. Id. at 12. Moreover, GTN contends that there is no evidence of "coking" that would support PacifiCorp's theory that compressor oil was the cause of the damage. Finally, GTN requests that the court reconsider its prior spoliation sanction and dismiss PacifiCorp's claim in its entirety based on recent districtcourt decisions.

a. Glasgow and Journot's Observations of Oil

Although GTN styles its motion as a motion for summary judgment, a substantial portion of the motion is, in essence, a request for spoliation sanctions. That is, GTN argues that "PacifiCorp should not be allowed to rely on [Glasgow and Journot's] prejudicial and unconfirmed testimony when the physical evidence that could have been used to disprove the testimony was willfully destroyed." Id. at 14. Specifically, GTN takes issue with Glasgow and Journot's testimony regarding six instances in which they observed oil either upstream or downstream of the fuel gas scrubbers. See id. at 12-14. Because PacifiCorp did not preserve samples of the oil, GTN contends that the court should not permit Glasgow and Journot to testify regarding their alleged observations of the oil.

In response, PacifiCorp argues that the disposal of the oil that Glasgow and Journot observed does not warrant a dismissal sanction. First, PacifiCorp argues that the court already resolved this issue in the July 16, 2012 opinion and order when it concluded that no sanction was appropriate for PacifiCorp's willful destruction of the gas samples McHale & Associates collected in August and October 2007. Second, PacifiCorp notes that GTN has its own oil samples from that period "that, for reasons known only to GTN, it destroyed or failed to produce." PacifiCorp's Resistance to GTN's Motion for Summary Judgment, 4493, at 6. Third, PacifiCorp argues that, even if the court were to find that PacifiCorp willfully destroyed the oil that Glasgow and Journot observed, dismissal is not the appropriate sanction because there is no evidence that PacifiCorp "deliberately engaged in deceptive practices." Id. at 7.

In the July 16, 2012 opinion and order, I discussed at great length the standard applicable to motions for spoliation sanctions. See July 16, 2012 Opinion and Order, #361, at 22-23. Such sanctions include dismissal of claims, exclusion of evidence, and adverse jury instructions permitting a jury to draw an inference that the destroyed evidence would have been adverse to the party responsible for its destruction. Unigard Sec. Ins. Co. v. Lakewood Eneg & Mfg. Corp., 982 F.2d 363, 368-70 (9th Cir. 1992). Before a court imposes the "harsh sanction" of dismissal, "the conduct to be sanctioned must be due to willfulness, fault, or bad faith." Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995) (citation omitted) (internal quotation marks omitted). Even when a court imposes a lesser evidentiary sanction than outright dismissal, it must find that the party willfully destroyed the evidence. Unigard, 982 F.2d at 368 & n.2; Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993); see also Akiona v. United States, 938 F.2d 158, 161 (9th Cir. 1991). A party's destruction of evidence is considered "willful" if the party "has some notice that the [evidence was] potentially relevant to the litigation before [it was] destroyed." Leon v. IDX Sys. Corp., 464 F.3d 951, 959 (9th Cir. 2006) (citation omitted) (internal quotation marks omitted). Circuit courts describe the duty to preserve evidence as attaching when a party should know that evidence may be relevant to litigation that is "anticipated, " or "reasonably foreseeable." Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590, 591 (4th Cir. 2001) (citing Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998), and West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999)).

Thus, the first step in the spoliation analysis is to determine whether PacifiCorp's destruction of the oil was willful-that is, whether PacifiCorp had a duty to preserve the oil that Glasgow and Journot observed. In the July 16, 2012 opinion and order, I concluded that litigation was reasonably foreseeable in this case as of August 2, 2007. See July 16, 2012 Opinion and Order, #361, at 26 ("Consequently, PacifiCorp was obligated to preserve any potentially relevant evidence relating to gas quality litigation as of August 2, 2007."); id. ("Evidence that PacifiCorp destroyed before [August 2, 2007, ] cannot form the basis for spoliation sanctions."). In the instant motion, GTN notes that Glasgow and Journot claim in their respective declarations that they observed oil either upstream or downstream of the scrubbers on six different occasions. One such incident occurred sometime between January and July 2007. See Declaration of Terry Journot ("Journot Declaration"), #256, ¶ 4 (noting that, sometime between January and July 2007, he saw "roughly a gallon of oil pour out of the filter housing and onto the ground"). As I previously found, PacifiCorp was under no duty to preserve evidence prior to August 2, 2007, Thus, PacifiCorp's failure to preserve the oil that Journot observed sometime between January and July 2007 was not willful and cannot form the basis of a spoliation sanction.

The second incident that GTN identifies occurred in September 2007. See Declaration of Francis Glasgow ("Glasgow Declaration"), #257, ¶ 10 ("In September 2007, I... saw oil pooled in the bottom of Cascade's filter housing at the [Hermiston plant]."). Although Glasgow took photographs of the oil, he apparently did not keep a sample of the oil he claims he saw. See id. (noting that he took photographs of the inside of the Cascade filter housing); see also Ex. 3, Glasgow Declaration, #257-3, at 1 (photographs). In its resistance, PacifiCorp does not contest that ...


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