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New Jersey Department of Environmental Protection v. Exxon Mobil Corp.

Superior Court of New Jersey, Appellate Division

February 12, 2018

NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff-Respondent,
v.
EXXON MOBIL CORPORATION, Defendant-Respondent.

          Argued September 11, 2017

         On appeal from Superior Court of New Jersey, Law Division, Union County, Docket Nos. L-3026-04 and L-1650-05.

          Raymond J. Lesniak, amicus curiae-appellant, argued the cause pro se, individually and as New Jersey State Senator in A-0668-15 (Richard L. Rudin and Julia O. Donohue, on the briefs).

          Edward Lloyd (Columbia Environmental Law Clinic, Morningside Heights Legal Services, Inc.) argued the cause for amicus curiae-appellants New Jersey Sierra Club, Clean Water Action, Environment New Jersey, and Delaware Riverkeeper Network in A-0810-15 (Edward Lloyd, attorney; Edward Lloyd and Susan J. Kraham, on the briefs).

          Theodore V. Wells, Jr. (Paul, Weiss, Rifkind, Wharton & Garrison, LLP) of the New York bar, admitted pro hac vice, argued the cause for respondent Exxon Mobil Corporation (Archer & Greiner, and Theodore V. Wells, Jr., attorneys; Marc A. Rollo, Arthur H. Jones, Jr., Theodore V. Wells, Jr., John F. Baughman (Paul, Weiss, Rifkind, Wharton & Garrison, LLP) of the New York bar, admitted pro hac vice, Daniel J. Toal (Paul, Weiss, Rifkind, Wharton & Garrison, LLP) of the New York bar, admitted pro hac vice, and Jaren Janghorbani (Paul, Weiss, Rifkind, Wharton & Garrison, LLP) of the New York bar, admitted pro hac vice, on the brief).

          Allan Kanner (Kanner & Whiteley, LLC) of the Louisiana bar, admitted pro hac vice, argued the cause for respondent New Jersey Department of Environmental Protection (Christopher S. Porrino, Attorney General, and Allan Kanner, attorneys; Richard F. Engel, Deputy Attorney General, Jeffrey Jacobson, Chief Counsel, David Apy, Assistant Attorney General, Elizabeth B. Petersen (Kanner & Whiteley, LLC) of the Louisiana bar, admitted pro hac vice, Allison M. Shipp (Kanner & Whiteley, LLC) of the Louisiana bar, admitted pro hac vice, and Allan Kanner, of counsel and on the brief).

          Before Judges Messano, O'Connor, and Vernoia.

          OPINION

          MESSANO, P.J.A.D.

         In 1991, the New Jersey Department of Environmental Protection (DEP) and Exxon Mobil Corporation (Exxon) entered into two administrative consent orders (ACOs), requiring Exxon to remediate polluted sites it owned and operated at the Bayway Refinery in Linden (Bayway) and the Bayonne Facility (Bayonne). In addition to requiring Exxon to pay a civil penalty, the ACOs required the company to: undertake remedial investigations; prepare work plans and feasibility studies; undertake all additional investigations and actions necessary to remediate the sites under DEP's supervision; submit quarterly progress reports; and reimburse DEP for all oversight costs and costs incurred in investigating and responding to Exxon's discharges. See N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 393 N.J.Super. 388, 391-93 (App. Div. 2007) (Exxon I) (providing historical background regarding operation of these two sites and the ACOs).

         Under the ACOs, the State of New Jersey reserved its right to recover additional "natural resource damages" (NRD), i.e., compensation for the injury and destruction of natural resources and the public's loss of the use and enjoyment of those resources. In August 2004, DEP filed two complaints against Exxon seeking NRD at Bayway and Bayonne, and asserting claims under the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 to -23.24 (Spill Act), and common law theories of public nuisance and trespass.

         We need not discuss in detail pretrial rulings and controversies, except to note that in 2006, the trial court granted DEP summary judgment holding Exxon was strictly liable for NRD and restoration costs under the Spill Act. It also dismissed DEP's NRD claim for "loss of use damages." We granted DEP leave to appeal - Exxon did not seek interlocutory review - and, in Exxon I, 393 N.J. Super, at 410, we reversed and restored DEP's claim for "loss of use" NRD damages. In New Jersey Department of Environmental Protection v. Exxon Mobil Corp., 420 N.J.Super. 395, 397-98 (App. Div. 2011) (Exxon II), we reversed the trial court's dismissal of DEP's strict liability claim, which was added in an amended complaint, on statute of limitations grounds. In 2014, Judge Michael J. Hogan presided over a sixty-six day bench trial.

         Both DEP and Exxon moved pre-trial to bar the testimony of all or most of their adversaries' experts. Rather than conduct pre-trial hearings to determine admissibility, see N.J.R.E. 104(a), with the judge's approval, all experts testified while the parties preserved their objections. Utilizing a complex, mathematical methodology known as "Habitat Equivalency Analysis" (HEA), DEP's experts estimated that NRD damages at both sites totaled $8.9 billion. Exxon's experts challenged the admissibility of any opinions based on HEA in the first instance, although, as Judge Hogan noted in his written decision, Exxon's experts, utilizing HEA, estimated NRD damages to be between $1.4 and $3 million.[1]

         After two days of summations and the submission of written closing arguments, Judge Hogan set about to render a written decision on the reserved N.J.R.E. 104(a) motions and the case in chief. Before he did, however, the parties advised they had reached a settlement.

         Under the terms of the proposed consent judgment, Exxon agreed to pay $225 million to the state treasurer, and the State agreed to place that money in a segregated account within the Hazardous Discharge Site Cleanup Fund, where the monies "shall earn interest and may not be used for any purpose" until the consent judgment "becomes final and non-appealable." The State also agreed to: release Exxon from all NRD claims based on the discharge of contaminants onto the soil and sediments of Bayway and Bayonne; dismiss surface water NRD claims without prejudice to raising them, under certain conditions, in a future action; release Exxon with prejudice and covenants not to sue for all NRD claims relating to more than one thousand Exxon retail gas stations in New Jersey, excluding those where methyl tertiary butyl ether (MTBE)[2] had been discharged; release Exxon with prejudice from all NRD claims relating to sixteen other statewide facilities (designated as Attachment C facilities), including the former Paulsboro Terminal, which had been the subject of ongoing litigation since 2007, but excluding those facilities where MTBE had been discharged; and defer the final remedy determination and remediation of Morses Creek near Bayway until Exxon ceased refining operations at the site.

         The parties further agreed that: the consent judgment would not alter, suspend, or otherwise impact Exxon's obligations under any ACO, except for the Morses Creek deferral; the State would retain full authority and sole discretion to require Exxon to take any action to "address an immediate environmental concern, an imminent and substantial endangerment to public health, welfare or the environment, or an emergency response arising from or related to" Bayway, Bayonne, the gas stations and Attachment C facilities; and, the court would retain continued jurisdiction and enforcement of the consent judgment's terms. Lastly, the consent judgment declared that nothing contained therein "shall be considered an admission by [Exxon], " and it granted Exxon contribution protection "to the fullest extent possible" pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601-675, the Spill Act, and any other statute, regulation, or common law principle that allowed contribution rights against Exxon.[3]

         DEP provided notice of the proposed consent judgment in accordance with N.J.S.A. 58:10-23.Ile2. See Cumberland Farms, Inc. v. N.J. Dep't of Envtl. Prot., 447 N.J.Super. 423, 441 (App. Div. 2016) ("[U]nder N.J.S.A. 58:10-23.Ile2, the DEP and a potentially responsible party may not agree to a settlement of NRD liability until after the DEP has published notice of the terms of the settlement."), certif. denied, 229 N.J. 149 (2017). DEP received 16, 013 public comments, mostly objections, including comments from Raymond J. Lesniak, a resident of the Bayway section of Elizabeth and State Senator for the 20th Legislative District, (appellant in A-0668-15), and the New Jersey Sierra Club, Clean Water Action, Environment New Jersey, and Delaware Riverkeeper Network (collectively, the Environmental Groups) (appellants in A-0810-15).

         Before DEP responded to the comments and indicated whether it intended to seek approval of the consent judgment or not, Lesniak and the Environmental Groups moved to intervene in the lawsuit. In a written opinion, Judge Hogan denied those motions without prejudice.

         The same day, DEP issued its response to the public comments, portions of which we summarize. DEP stated the proposed judgment was the second largest NRD settlement with a single corporate defendant in United States' history, and the largest NRD settlement in New Jersey's history. DEP asserted that Exxon had already spent more than $130 million remediating Bayway and more than $12 0 million remediating Bayonne, and that the proposed consent judgment would not change or cap Exxon's continued obligation to "spend whatever amount of money is necessary to fully remediate all of its contaminated sites in accordance with DEP's regulatory standards."

         DEP also noted "numerous and significant" legal and evidentiary issues in the lawsuit were still unresolved, with no assurance DEP would ultimately succeed. For example, early pre-trial decisions in the State's favor as to liability could be subject to appeal and ultimately reversed. Additionally, Judge Hogan had not yet ruled on the admissibility of DEP's experts' opinions, or determined the amount of NRD, if any, actually proven by the State. Under the proposed settlement, Exxon gave up its right to appeal all issues. DEP further noted that the proposed consent judgment did not settle claims against Exxon at gas stations and other facilities where MTBE was discovered.

         With Exxon's support, DEP subsequently moved before Judge Hogan for approval of the settlement. Judge Hogan permitted the Environmental Groups and Lesniak to appear as amicus curiae. They filed extensive briefs and orally argued against approval.

         In a written decision and conforming order filed August 25, 2015, Judge Hogan approved the consent judgment, holding it was fair, reasonable, faithful to the Spill Act's goals, and in the public interest. He concluded that DEP had applied "rational methods" to estimate total damages and to determine what Exxon's fair payment would be for those damages, and that $225 million represented "a reasonable compromise given the substantial litigation risks the DEP faced at trial and would face on appeal." The court filed a fully executed consent judgment on August 31, 2015; Exxon tendered payment a few weeks later.

         The Environmental Groups and Lesniak renewed their requests to intervene, arguing in part that intervention was appropriate so they could appeal Judge Hogan's approval of the consent judgment. By orders dated October 9, 2015, accompanied by a comprehensive written decision, Judge Hogan denied both applications with prejudice. These appeals followed. We have consolidated them now for purposes of issuing a single opinion.

         I.

         Appellants argue Judge Hogan erred in concluding standing was a prerequisite to their intervention in the lawsuit, and, even if he was correct, they established standing both to intervene at trial and to challenge the court's approval of the consent judgment on appeal. We first consider whether standing is a prerequisite to intervention at trial, and, if so, whether appellants had standing to intervene.

         A.

         Our Rules of Court govern intervention at trial, and the trial court's interpretation of those rules is subject to our de novo review. Washington Commons, L.L.C. v. City of Jersey City, 416 N.J.Super. 555, 560 (App. Div. 2010). "We apply familiar canons of statutory construction to interpret the court rules[, ] . . . look[ing] first to the plain language . . . and giv[ing] the words their ordinary meaning." Robertelli v. N.J. Office of Att'y Ethics, 224 N.J. 470, 484 (2016) (citations omitted). "We also read the language of a rule 'in context with related provisions so as to give sense to the [court rules] as a whole.'" Ibid, (quoting Wiese v. Dedhia, 188 N.J. 587, 592 (2006)) .

         Rule 4:33-1 governs intervention as of right. To satisfy the rule, a moving party must

(1) claim "an interest relating to the property or transaction which is the subject of the transaction, " (2) show [that the movant] is "so situated that the disposition of the action may as a practical matter impair or impede its ability to protect that interest, " (3) demonstrate that the "[movant's] interest" is not "adequately represented by existing parties, " and (4) make a "timely" application to intervene.
[Am. Civil Liberties Union of N.J., Inc. v. Cty. of Hudson, 352 N.J.Super. 44, 67 (App. Div. 2002) (ACLU) (quoting Meehan v. K.D. Partners, L.P., 317 N.J.Super. 563, 568 (App. Div. 1998)).]

         "As the rule is not discretionary, a court must approve an application for intervention as of right if the four criteria are satisfied." Meehan, 317 N.J. Super, at 568.

         On the other hand, Rule 4:33-2 (emphasis added) permits intervention "[u]pon timely application . . . if the claim or defense and the main action have a question of law or fact in common." The rule must be "liberally construed . . . with a view to whether intervention will unduly delay or prejudice the adjudication of the rights of the original parties[, ]" ACLU, 352 N.J. Super, at 70, "and whether intervention will eliminate the need for subsequent litigation." Zirger v. Gen. Accident Ins. Co., 144 N.J. 327, 341 (1996) (citation omitted). The decision to grant or deny permissive intervention "vests considerable discretion in the trial court[, ]" Evesham Township Zoning Board of Adjustment v. Evesham Township Council, 86 N.J. 295, 299 (1981), thus we review the court's determination of a permissive intervention motion under an abuse of discretion standard. City of Asbury Park v. Asbury Park Towers, 388 N.J.Super. 1, 12 (App. Div. 2006).

         Whether permissible intervention or intervention as of right, a party must comply with the procedure set out in Rule 4:33-3 (emphasis added):

A person desiring to intervene shall file and serve on all parties a motion to intervene stating the grounds therefor and accompanied by a pleading setting forth the claim or defense for which intervention is sought along with a Case Information Statement pursuant to R. 4:5-1(b)(1).

         This procedure is "mandatory, " Pressler & Verniero, Current N.J. Court Rules, cmt. on R. 4:33-3 (2018), although courts should liberally permit movants "reasonable opportunities to cure procedural defects in their motions to intervene." ACLU, 352 N.J. Super, at 66-67 (emphasis added).

         Rule 4:33-3 requires the movant to set forth a "claim or defense" in its pleading to intervene. Rule 4:33-2, the more liberal permissive intervention rule, provides the standard to guide the motion court's exercise of discretion, i.e., intervention is appropriate "if [the movant's] claim or defense" presents "a question of law or fact in common" with the pending action. Ibid. Under the plain language of these two Rules, intervention is not appropriate unless the putative intervenor can assert its own "claim or defense." See Pressler & Verniero, cmt. 1 on R. 4:33-2 ("Clearly those without standing in the first instance are also without sufficient interest to warrant intervention."). If the moving party must have standing to assert its own claim or defense before the court exercises its discretion and permits intervention, it seems illogical that in some situations a court must grant intervention under Rule 4:33-1, even if the movant cannot assert its own claim or defense.

         Appellants argue that none of our reported cases has squarely held that a putative intervenor must establish standing in order to intervene successfully under either Rule 4:33-1 or 4:33-2. We do not necessarily disagree.

         However, when considering whether a third party may become directly involved in pending litigation or administrative action, our courts have repeatedly used the phrase "standing to intervene" as conceptually equivalent to "standing." See, e.g., State v. N.J. Zinc Co., 40 N.J. 560, 576-78 (1963) (holding that the holder of an unexercised option to buy land lacked standing to intervene or participate in a condemnation proceeding); N.J. Div. of Youth & Family Servs. v. P.P., 422 N.J.Super. 583, 602-03 (App. Div. 2011) (concluding resource parents, statutorily-barred from becoming parties to a Title Nine proceeding, lacked "standing to intervene"); In re A.S., 388 N.J.Super. 521, 524-26 (App. Div. 2006) (holding adoption agency lacked standing to intervene in Title Nine action); Loigman v. Twp. Comm. of Middletown, 297 N.J.Super. 287, 297 (App. Div. 1997) (citing with approval Woodbridge State School Parents Ass'n v. American Federation of State, County & Municipal Employees, 180 N.J.Super. 501, 503 (Ch. Div. 1981), holding parents' association lacked "standing to intervene in a labor dispute between employees . . . and the governmental entity responsible for the school's operation"); State v. Jan-Mar, Inc., 210 N.J.Super. 236, 240-41 (Law Div. 1985) (holding that option holder lacked "standing to intervene" in condemnation action, and relying on N.J. Zinc), aff'd in part on other grounds, 236 N.J.Super. 28 (App. Div. 1989).

         Rule 4:33-1 tracks the language of Fed.R.Civ.P. 24(a)(2) verbatim. Allstate N.J. Ins. Co. v. Neurology Pain Assocs., 418 N.J.Super. 246, 254 (App. Div. 2011); Pressler & Verniero, cmt. 1 on R. 4:33-1. The federal rule and our Rule mandate intervention if the intervenor's status is comparable to that of a party that must be mandatorily joined in the action by the court, with the additional requirement that the party's interest is not otherwise adequately represented by existing parties. Ibid. Compare Fed.R.Civ.P. 19(a)(1)(B)(i) (requiring joinder "if . . . th[e] person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may . . . as a practical matter impair or imped the person's ability to protect the interest"), and the nearly identical language of R. 4:28-l (a) (2) (i) (requiring joinder "if . . . the person claims an interest in the subject of the action and is so situated that the disposition of the action in the person's absence may . . . as a practical matter impair or impede the person's ability to protect that interest"), with Fed.R.Civ.P. 24(a)(2) (stating for "Intervention of Right . . . the court must permit anyone to intervene who . . . claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest"), and the nearly identical language of R. 4:33-1 (mandating intervention "if the applicant claims an interest relating to the property or transaction which is the subject of the action and is so situated that the disposition of the action may as a practical matter impair or impede the ability to protect that interest") .

         In other words, a court must grant intervention if the putative intervenor is on the same footing as someone the court must otherwise "join[] as a party to the action." R. 4:28-1(a). As one federal court explained, "[t]he only difference between intervention of right under [the analogous federal rule] and joinder under [the analogous federal rule] is which party initiates the addition of a new party to the case." New York State Ass'n for Retarded Children, Inc. v. Carey, 438 F.Supp. 440, 445 (E.D.N.Y. 1977). It is, therefore, entirely understandable our courts routinely recognize that a successful intervenor is a party to the litigation. Williams v. State, 375 N.J.Super. 485, 530 (App. Div. 2005), aff'd sub nom. In re P.L. 2001, Chapter 362, 186 N.J. 368 (2006).

         In 1986, the United States Supreme Court noted in Diamond v. Charles, 476 U.S. 54, 68 n.21 (1986), that "[t]he Courts of Appeals have reached varying conclusions as to whether a party seeking to intervene as of right must himself possess standing." Compare Brennan v. N.Y. City Bd. of Educ, 260 F.3d 123, 131 (2d Cir. 2001) ("[W]here a proposed intervenor's interests are otherwise unrepresented in an action, the standard for intervention is no more burdensome than the standing requirement."), Wade v. Goldschmidt, 673 F.2d 182, 185 n.5 (7th Cir. 1982) (A proposed intervenor must demonstrate a direct, significant and legally protectable interest in the property at issue in the law suit. The interest "must be based on a right which belongs to the proposed intervenor rather than to an existing party in the suit.") (emphasis added), and Solien v. Miscellaneous Drivers & Helpers Union, 440 F.2d 124, 132 (8th Cir. 1971) ("Intervention as of right presupposes that the applicant has a right to maintain a claim for the relief sought"), with United States v. Imperial Irrigation Dist., 559 F.2d 509, 521 (9th Cir. 1977) ("A party seeking to intervene pursuant to [Fed. R. Civ. P.] 24 . . . need not possess the standing necessary to initiate the lawsuit."), rev'd and vacated on other grounds, 447 U.S. 352 (1980). ...


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