[00:00:02] Speaker 04:
Good morning.

[00:00:03] Speaker 04:
Welcome to the Ninth Circuit.

[00:00:04] Speaker 04:
Before we start with the argument calendar, there are several cases we have submitted.

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Soto versus Bondi is or one case we've submitted.

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Soto versus Bondi is submitted.

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We have two cases on the argument calendar.

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The first is Moreland Properties versus Goodyear and council whenever you are ready.

[00:00:28] Speaker 03:
Good morning.

[00:00:29] Speaker 03:
May it please the court.

[00:00:30] Speaker 03:
I'm Dominic Dray, and with Stuart Kimball, I represent the appellant Moreland Properties.

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I'll try to reserve four minutes for rebuttal.

[00:00:37] Speaker 03:
There is no doubt that Goodyear misled state regulators, its neighbors, and the eventual buyer of its arsenic soaked property.

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The only question is whether it can dodge responsibility through two sleights of hand.

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One, misreading the statute of limitations for fraud, and two, leveraging immaterial departures from the National Contingency Plan to avoid reimbursement under CERCLA.

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The first of these is a straightforward issue because the Supreme Court of the United States has already interpreted identical language in the Securities Exchange Act.

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That's the Merck decision.

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The quote unquote facts constituting fraud include Cienta because

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Without Syenter, Moreland doesn't have a cause of action for fraud.

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The first point at which a reasonable person would have known or could have discovered with exercise of diligence, excuse me, the existence of Syenter was the 2020 Synergy Report that explained that Goodyear just didn't do the step-out sampling it was required to.

[00:01:43] Speaker 01:
But that was triggered by Moreland getting that report, which it could have gotten five years earlier.

[00:01:49] Speaker 03:
Well, it's not an inquiry standard, Your Honor.

[00:01:52] Speaker 01:
I thought it is an inquiry standard.

[00:01:54] Speaker 03:
No, Judge.

[00:01:56] Speaker 03:
That's a good clarification.

[00:01:57] Speaker 01:
Well, I understand that you said that the statute says otherwise, but I thought it was interpreted as an inquiry statute.

[00:02:03] Speaker 03:
No, ma'am.

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So I'll call the court's attention to the Gust Rosenfeld case, in which the Arizona Supreme Court said this.

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Discovery means, quote, plaintiff knows, or in the exercise of reasonable diligence, should know the facts, end quote.

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And the facts constituting fraud, the Arizona's Court of Appeals, we cite the Leninger case for Syendra as a required element.

[00:02:23] Speaker 01:
I don't understand.

[00:02:24] Speaker 01:
Why isn't it should have known an inquiry standard?

[00:02:27] Speaker 03:
So should have known is different from would have investigated.

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In fact, see page 651 of the Supreme Court's decision in Merck in which it expressly says that this language is not an inquiry standard.

[00:02:39] Speaker 01:
Well, whatever it is, it doesn't require that they knew it.

[00:02:44] Speaker 01:
It requires that they should have known it, meaning they should have found it out.

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So I don't understand the difference between that and an inquiry standard.

[00:02:51] Speaker 01:
verbal difference as far as I can tell.

[00:02:53] Speaker 03:
No, Judge, I actually want to spend a moment on that because the Supreme Court explains, for example... What page are you on?

[00:02:59] Speaker 03:
651 of Merck.

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The Court says, if by inquiry you mean the moment at which a person would have investigated, that is not the same as when you should know or with diligence would have known.

[00:03:11] Speaker 01:
Well, but that's a different question.

[00:03:13] Speaker 01:
I mean, that's whether they

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whether we're looking from one date in 2015 or a later date in 2015.

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In other words, that seems to me to be saying you don't look at the day that they found out enough that they should have known, but when they eventually

[00:03:34] Speaker 01:
found it out, but still when they went to find out it took a couple of months, so why couldn't they have done that five years earlier?

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So Judge, bear in mind that there are two parts to your Honor's question.

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The first is

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What the report says in 2015.

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We're talking about the WTI report.

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WTI 2015, and this is the sole basis on which the district court granted summary judgment.

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Summary judgment, by the way, when every fact is taken in our favor.

[00:04:02] Speaker 03:
At that point, the report says, quote, it's possible that the, quote, estimates upon which the doer has been established may be underestimated.

[00:04:10] Speaker 04:
But that's not all that it says.

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If you look at page nine of the report, SCR 296,

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they talk about the results.

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If you compare the results to what the prior description was of what they did, it seems to me that however it's characterized a little bit later on page 11, the actual results when compared to what was said by the alleged fraudster

[00:04:42] Speaker 04:
I'm having a hard time seeing how that wouldn't put somebody on inquiry notice, given the numbers on page nine, the type of notice that Judge Berzon described.

[00:04:55] Speaker 03:
Okay, so that is not the legal standard in Arizona.

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If there's any question about that, I beg you to certify the question.

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But as to Your Honor's question about the facts, no, that would merely tell you that there's a misstatement.

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And so the doer is based on sampling, remember.

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So you could have different samples that produce different numbers.

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The error in the doer doesn't tell you that it's actionable.

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Here's Merck, quote, discovery of the facts constituting the violation, quote, does not automatically tell us whether the speaker deliberately lied or just made an innocent and therefore non-actionable error, end quote.

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So in your view, your client could get this report

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and could deliberately choose to do nothing to investigate whether there was a science and then the statute would never run?

[00:05:52] Speaker 03:
Well, yes, Judge.

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I mean, frankly, that's correct because they had no reason to think that this was purposeful misrepresentation.

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That's a monumentally important difference in this case.

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And remember, this is on summary judgment.

[00:06:05] Speaker 01:
It was another dispute.

[00:06:07] Speaker 01:
in the briefs about whether one of your, Mr. Moreland, I think, apparently said something in a deposition, but you say he did say it about there being, about whether there was,

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fraud and misrepresentation.

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Do you say he didn't say it?

[00:06:28] Speaker 03:
So, Judge, yeah.

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I mean, they say this.

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We point out at note three, reply brief page 13.

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I read that.

[00:06:37] Speaker 01:
That's why I just asked the question.

[00:06:38] Speaker 01:
Yes.

[00:06:38] Speaker 03:
And maybe this morning they'll treat us to the actual citation, but it's not there.

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You can take a look for yourself.

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I mean, maybe he said something later about what he now believes to be true, but those citations simply don't say what they say they do.

[00:06:53] Speaker 03:
So, but I do want to dwell for a moment longer on the summary judgment standard.

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Here's the Arizona Supreme Court in Doe versus Roe.

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Quote, the jury must determine at what point plaintiff's knowledge, understanding and acceptance in the aggregate provided sufficient facts to constitute a cause of action, end quote.

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It should be for the jury to decide.

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It is not impossible that a reasonable jury at the very least could say that when you saw

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that it was quote unquote possible that the numbers on which the doer were based were underestimated, that that would only tell you that there was an error.

[00:07:27] Speaker 04:
So, counsel, you know, I have to say I wasn't looking so much at somebody's footnote as opposed to Mr. Moreland's actual testimony and I'm looking at SCR 361-362.

[00:07:39] Speaker 04:
What I remember, we had Western Technology do whatever they did and they came back saying that the property is not as stated in the doer

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I couldn't sell it saying there's a doer as I bought it and this doer is misrepresented or it's fraudulent.

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I couldn't do it.

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That's irrelevant?

[00:07:57] Speaker 03:
That is A, irrelevant as a legal matter, but B, not what he's testifying to.

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What he's saying there is what he knows at the time.

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You know, Mr. Moreland is a layman.

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He's commenting on what he thinks is true at the time.

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And all he's really saying... That's exactly the point.

[00:08:11] Speaker 01:
I mean, that's what a lay person would think was true at the time sufficiently.

[00:08:16] Speaker 03:
I'm sorry, at the time of the deposition, Your Honor.

[00:08:18] Speaker 01:
I'm sorry?

[00:08:18] Speaker 03:
At the time of the deposition, Your Honor.

[00:08:20] Speaker 01:
Not at the time of 2015.

[00:08:22] Speaker 01:
As just read, he seemed to be saying, I thought such and such, i.e.

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at the time.

[00:08:26] Speaker 03:
So first of all, he says, I thought it was erroneous or fraudulent.

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He's not using fraudulent.

[00:08:32] Speaker 04:
No, he says misrepresented or fraudulent.

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So remember, here's how this error happened in the lower court.

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And I don't mean to cast aspersions, good judges make mistakes.

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There were several tort claims, three tort claims that Moreland pressed.

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One of them was negligent misrepresentation.

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The summary judgment order does not distinguish between them.

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That's the genesis of the error.

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And all of the questioning, and frankly, my friends on the other side repeat this in their brief where they talk about the quote unquote tort claims.

[00:09:01] Speaker 03:
The only tort claim that we're appealing is fraud.

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Fraud is the only one that has Cienta, and the district court simply didn't differentiate.

[00:09:09] Speaker 01:
You can see it for yourself.

[00:09:10] Speaker 01:
They also say, as I recall, that you never actually raise the Cienta question in the district court.

[00:09:15] Speaker 03:
Yeah, provably false.

[00:09:16] Speaker 03:
ER 632 is our opposition to their summary judgment where we make exactly this argument.

[00:09:22] Speaker 03:
In fact, it's in bold.

[00:09:23] Speaker 01:
Citing Merck?

[00:09:24] Speaker 03:
I beg your pardon?

[00:09:25] Speaker 01:
Citing Merck.

[00:09:26] Speaker 03:
Not citing Merck.

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We cited Merck in the motion for reconsideration.

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But as you know, we need not cite a particular case to preserve the point.

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If you apply Merck faithfully to these facts, it is a very easy case on the fraudulent misrepresentation.

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And if there's any question about what Arizona requires at the summary judgment stage against our client, please certify the question.

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I'll turn briefly now to the CERCLA question, where I think there are three off ramps where our client or any private party remediating somebody else's pollution can obtain relief.

[00:10:02] Speaker 03:
I kind of think of this like an old-fashioned law school flowchart.

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The first is whether it's a removal or a remedial action.

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If it's a removal action, no one disputes that we're eligible for reimbursement.

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If it's a remedial action under CERCLA, then the question is whether there was sufficient state oversight.

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And then the question, if there wasn't sufficient state oversight, then the question is did we substantially comply even at that point?

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If we prevail on any of those,

[00:10:29] Speaker 02:
I would like to ask you to address the question of consistency with the NCP and whether the nature of the not following the particular procedures disqualifies your client from recovering.

[00:10:52] Speaker 03:
Sure.

[00:10:54] Speaker 03:
The short answer is no, because although we did follow these procedures with substantial compliance, that's all that the statute requires.

[00:11:03] Speaker 03:
I'm not sure which procedure exactly the court has in mind, but the state certification here, and this is one of the statutes that we call the court's attention to, it's ARS 49285B.

[00:11:13] Speaker 03:
The state, it's a cooperative federalism.

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CIRCLE is a cooperative federalist statute where you cooperate with the

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the state authorities and they have the ability to conclude that you've substantially complied.

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In Arizona, that's governed by 49-285B, never mentioned in the answering brief, I might add.

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That statute concludes that when ADEQ approves, it is, quote, reasonable, necessary, cost-effective, that the cleanup action has been reasonable, necessary, and cost-effective.

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We obtained that with our settlement agreement with ADEQ.

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The only way in which the district court came to a different conclusion was by pointing out that there is a second path to state approval in Arizona called the VRP.

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And the court concluded that the VRP was somehow more rigorous and that therefore you had to do that.

[00:12:07] Speaker 03:
Well, there's nothing in CERCLA that says that compliance has to be with the state's most rigorous protocol and it happens also to be inaccurate.

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that the VRP is more rigorous.

[00:12:19] Speaker 03:
So the district court aired both as a factual, but more importantly, as a legal matter.

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This court reviews substantial compliance de novo, by the way.

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And there are three circuits.

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We cite the cases in our briefs.

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Nutris Tweet in the Seventh Circuit, Niagara Mohawk,

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I actually forget which circuit that is.

[00:12:39] Speaker 03:
And the city of Bangor, all three of those say that if you get state oversight and approval for your cleanup, that you have substantially complied with the national contingency plan.

[00:12:51] Speaker 01:
The only case in this court that has held that agency involvement can satisfy the public participation requirement is Santa Clarita.

[00:13:00] Speaker 01:
Is that right?

[00:13:01] Speaker 03:
Santa Clarita, I believe, spoke to the issue.

[00:13:04] Speaker 03:
I don't think that, candidly, Your Honor, I don't think this court has come down on one side or the other.

[00:13:08] Speaker 01:
Well, I thought Santa Clarita did, but the language was substantial and extensive government agency involvement.

[00:13:16] Speaker 01:
As I understand what happened here, perhaps because of the route they chose, I don't know, is there were ADQ, is that what it's called?

[00:13:26] Speaker 01:
Yes.

[00:13:26] Speaker 01:
Looked, sort of looked at the plan at the beginning and looked at

[00:13:30] Speaker 01:
certification at the end.

[00:13:32] Speaker 01:
Did they do anything else?

[00:13:34] Speaker 03:
Yes.

[00:13:36] Speaker 03:
ADEQ was incredibly involved in this case.

[00:13:38] Speaker 03:
Really?

[00:13:39] Speaker 03:
I'll call the court's attention to pages 61 through 63 of the opening brief as well as the chart at page 50.

[00:13:44] Speaker 01:
It's better if you just answer the question.

[00:13:46] Speaker 03:
I'm going to answer it.

[00:13:48] Speaker 03:
They developed the sampling strategy.

[00:13:50] Speaker 03:
They negotiated the administrative settlement, reviewed and commented on Synergy's work plan.

[00:13:54] Speaker 03:
spent months reviewing the work plan before approving compliance and reviewing the work.

[00:13:58] Speaker 01:
Spent months meaning they didn't do it for months but they didn't spend months doing it.

[00:14:02] Speaker 03:
No, they did.

[00:14:02] Speaker 03:
Take a look at the timeline on page 51.

[00:14:05] Speaker 03:
You can see I think it's I want to say on the order of three or four months that they spent reviewing the work after it was done.

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That is by the way on top of the 1993 Marsh Consent Decree,

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and the 2004 fraudulent Dewar.

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So they have been involved in this cleanup site for decades.

[00:14:24] Speaker 03:
It is very substantial involvement.

[00:14:26] Speaker 03:
Here's Ms.

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Malone from ADEQ on the subject, quote, in the administrative settlement, there's still oversight.

[00:14:32] Speaker 03:
There's still oversight.

[00:14:33] Speaker 03:
We review reports.

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We provide comments.

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That's 152, the following page.

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I don't want to lead you to believe there's no oversight.

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There's a lot of oversight in the administrative settlement, end quote.

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This was an error by the district court based on the fact that there's a secondary path available.

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The only reason that we chose the settlement agreement as opposed to the VRP is that the administrative settlement gets you a release from liability.

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It's a better outcome.

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And we didn't have to redo anything.

[00:15:05] Speaker 03:
The only risk that the DEQ testified to was that there was a risk that you might have to redo something.

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That wasn't the case.

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We were never ordered to reduce something because it was a very professional cleanup.

[00:15:17] Speaker 03:
So in sort of long answer to Judge Graber's question, yes, we obtained an actual release from the state of Arizona saying that we had substantially complied with the NCP.

[00:15:30] Speaker 03:
And we traced that out at page 28 of the reply brief, but the relevant statutes are ARS.

[00:15:36] Speaker 01:
Can I ask a procedural question?

[00:15:40] Speaker 01:
circular claim was tried to the district judge in a rather lengthy trial, is that right?

[00:15:45] Speaker 03:
Yes.

[00:15:46] Speaker 01:
So we're reviewing for any factual findings, which many of these it seems are, for what, clear error?

[00:16:00] Speaker 03:
No.

[00:16:00] Speaker 03:
The determination, and we cite Bedford Affiliates, the Second Circuit case for this at page 427, the court reviews for substantial compliance by a private party

[00:16:10] Speaker 03:
Now, in this case, there are three legal errors.

[00:16:14] Speaker 03:
The classification as remedial rather than a rule.

[00:16:17] Speaker 01:
But that can't be in the sense that we're reviewing findings by a district judge, and there's no particular reason the statute should be different than any other in terms of how we review a district judge's factual findings.

[00:16:30] Speaker 01:
Why would we review De Novo when the district judge concluded, for example, that there was not

[00:16:38] Speaker 01:
substantial oversight, why would we be reviewing that to no, though?

[00:16:41] Speaker 03:
Well, because substantial compliance is a legal question.

[00:16:45] Speaker 02:
Well, I understand that, but her... It also sounds to me as if, just harkening back to what you said a moment ago, that your argument in the alternative seems to be that there was clear error in view of what happened.

[00:16:56] Speaker 03:
That's certainly true, Your Honor, and I don't want to abandon that, so thank you.

[00:17:02] Speaker 03:
But most of these rest on legal errors about what the standard is, and including that standard of imposing a requirement that a person use the higher.

[00:17:09] Speaker 04:
Counsel, going back to Judge Berzon's question, you agree that if part of the determination by the district court as to substantial compliance is making factual determinations,

[00:17:23] Speaker 04:
plaintiff says it was 10 gallons, defendant says it was 50 gallons, I find it was 10, we're reviewing the underlying factual findings.

[00:17:31] Speaker 03:
Sure, the underlying fact questions, yes sure, that's right.

[00:17:34] Speaker 03:
With that I'm going to save the remaining three.

[00:17:43] Speaker 00:
Good morning judges.

[00:17:44] Speaker 00:
My name is Jason Kovault of the law firm, May Patenza Baron Gillespie.

[00:17:48] Speaker 00:
I'm here on behalf of the Goodyear Tire and Rubber Company and Goodyear Farms LLC with me as my partner, Andy Harnish and a client representative is in the back of the room.

[00:17:59] Speaker 00:
May it please the court at page 13 of the reply brief plaintiff acknowledges for the first time the existence of a duty to investigate and admits that that inquiry turns on what the plaintiff recently knows.

[00:18:12] Speaker 00:
That's the sentence immediately above the footnote.

[00:18:14] Speaker 01:
Can you speak up a little bit?

[00:18:15] Speaker 01:
I'm going to speak further into the mic.

[00:18:17] Speaker 01:
Thank you.

[00:18:18] Speaker 00:
Yes.

[00:18:18] Speaker 00:
Thank you, your honor.

[00:18:19] Speaker 00:
So that's immediately above the footnote that you were talking about a moment ago.

[00:18:23] Speaker 00:
And there, the analysis becomes a review of all the facts upon which the district court granted partial summary judgment.

[00:18:29] Speaker 00:
And those were facts that were undisputed.

[00:18:32] Speaker 00:
And the vast majority of the facts that Goodyear cited to in its motion for partial summary judgment were unequivocally admitted.

[00:18:39] Speaker 00:
And among them was a dispositive and binding party admission by Moreland to the effect that the 2004 DOER was misrepresented or it was fraudulent after Moreland received the 2015 DOER.

[00:18:55] Speaker 00:
The DOER, excuse me, the 2015 Western Technologies Report.

[00:18:59] Speaker 00:
The reason why that report is also important is what it says in sum and substances

[00:19:05] Speaker 00:
you need to do more investigation to the plaintiff.

[00:19:08] Speaker 00:
It identifies that there are a number of problems.

[00:19:11] Speaker 00:
It was a cursory overview.

[00:19:13] Speaker 00:
It was not a full characterization of the property trying to figure out the precise 95% UCL calculation.

[00:19:21] Speaker 00:
It was an overview to see how difficult it would be to move the land from a legal commercial standard to a legal residential standard that was lower.

[00:19:32] Speaker 00:
And as a result of that,

[00:19:35] Speaker 00:
The aim of the report was actually nothing like what the plaintiff contends its case was, which was to return the land to 10 milligrams per kilogram.

[00:19:44] Speaker 00:
Many of the arguments that you have heard presume that there is something wrong with the land, but there was no showing that there was anything wrong with the land.

[00:19:53] Speaker 01:
I don't understand that.

[00:19:54] Speaker 01:
I mean, there was a showing that there was much higher concentrations than the at least standard

[00:20:06] Speaker 01:
As I understand it, there is a generic standard, and then there are specialized standards if the agency... Sure.

[00:20:14] Speaker 00:
I'm happy to explain, Your Honor.

[00:20:16] Speaker 00:
The way that Arizona law provides is that there's three lawful levels.

[00:20:20] Speaker 00:
Arizona happens to have extremely high natural concentrations of arsenic.

[00:20:25] Speaker 00:
So background levels is one acceptable level, just naturally occurring.

[00:20:30] Speaker 00:
Then there's an off-the-shelf SRL that's extremely conservative.

[00:20:34] Speaker 00:
That's the 10 milligrams per kilogram.

[00:20:36] Speaker 00:
That's so safe that the agency typically doesn't reevaluate.

[00:20:41] Speaker 00:
And then the third one is the site specific.

[00:20:45] Speaker 00:
And there you would get a risk assessor to come in and make a specific analysis of the site.

[00:20:50] Speaker 00:
And there could be a lawful level that's higher than the off the shelf.

[00:20:54] Speaker 00:
And that's this commercial level.

[00:20:56] Speaker 00:
And that's restricted by a doer.

[00:20:57] Speaker 00:
And that wasn't pursued here.

[00:20:59] Speaker 00:
So the short answer to your question, Your Honor, is you have to recalculate a 95% UCL that's higher than 10 to show that Goodyear did something wrong.

[00:21:08] Speaker 00:
The plaintiff was never able to do that calculation because it's math and statistics and methodology.

[00:21:14] Speaker 00:
were not accepted by the district court because they were unreliable.

[00:21:19] Speaker 02:
Council, this seems to be counter to your argument that they should have understood at the time of the initial report saying that the amounts of arsenic and the other substance were vastly understated.

[00:21:40] Speaker 02:
It mattered that they were vastly understated because the amount that existed was unacceptable for any development of the land.

[00:21:49] Speaker 02:
And now you seem to be saying it sort of doesn't matter because they didn't show anything.

[00:21:54] Speaker 02:
Those two things don't mesh in my mind.

[00:21:58] Speaker 00:
OK, so what the plaintiff does as a rough proxy for trying to show there's something wrong with the land and there's arsenic on it.

[00:22:05] Speaker 02:
There was something wrong with the land.

[00:22:08] Speaker 02:
I mean, the way it looks to me, your client made a mess and then lied about it and didn't clean it up.

[00:22:17] Speaker 02:
So I think that piece seems unassailable.

[00:22:23] Speaker 00:
Okay, we disagree with that for this reason, your honor.

[00:22:26] Speaker 00:
First of all, you'd have to calculate a real number that the district court accepted, showing that Goodyear's number was wrong.

[00:22:32] Speaker 00:
Hold on, counsel.

[00:22:33] Speaker 01:
You didn't answer Judge Graber's first question.

[00:22:35] Speaker 00:
Yes, please.

[00:22:36] Speaker 00:
I'm sorry.

[00:22:36] Speaker 00:
Would you please repeat it?

[00:22:37] Speaker 01:
I'm not meaning to... If, in fact, there is no clear requirement that was violated by the first D-U-E-R, then how are they supposed to be on

[00:22:53] Speaker 01:
How could they, why should they have known from the discrepancy that there was a problem?

[00:23:05] Speaker 01:
disputes that there was any fraud, but we have to assume what the plaintiff... We're talking about the statute of limitations problem now and how it interacts with the merits.

[00:23:12] Speaker 00:
No, I understand that, but what I'm saying is the very first step in the analysis is a necessity, and the necessity could be with the risk analysis.

[00:23:19] Speaker 00:
The necessity could be with math showing the good years... Necessity is a circle of concept.

[00:23:24] Speaker 02:
I don't understand why that affects the fraud claim.

[00:23:27] Speaker 02:
The way that you're describing it, it seems to me you're

[00:23:34] Speaker 02:
conflating the statutory issue with the tort.

[00:23:37] Speaker 00:
I'm not trying to conflate the two and I was trying to answer the different questions.

[00:23:41] Speaker 00:
I'm sorry.

[00:23:42] Speaker 01:
It was one question, okay, as I understand it.

[00:23:44] Speaker 00:
Yes.

[00:23:47] Speaker 01:
To prevail on the fraud claim.

[00:23:50] Speaker 00:
Yes.

[00:23:53] Speaker 01:
What do you need to demonstrate?

[00:23:56] Speaker 01:
I'm sorry, on the limitations period?

[00:23:58] Speaker 00:
Yes.

[00:23:58] Speaker 01:
Yes.

[00:23:59] Speaker 01:
What is your burden on that?

[00:24:01] Speaker 00:
Our burden on that is to show that the plaintiff learned enough information that it triggered the duty to reasonably investigate.

[00:24:07] Speaker 01:
OK.

[00:24:07] Speaker 01:
And now you're saying that that information, when you get to the merits, doesn't show what they think it shows.

[00:24:13] Speaker 04:
Right.

[00:24:14] Speaker 04:
So their position.

[00:24:17] Speaker 04:
So I'm having, I think, the same problem as my colleagues.

[00:24:21] Speaker 04:
When I was looking at your briefs and looking at this 2015 report, it struck me that this was pretty clearly saying,

[00:24:30] Speaker 04:
there's something really, really, really bad here.

[00:24:33] Speaker 04:
And it sounds to me that what your argument is is, no, this isn't really showing anything really bad.

[00:24:40] Speaker 04:
I mean, in order to even find out whether it's bad, you'd need to do more.

[00:24:46] Speaker 04:
So if that's what it is, how can the statute start to run in 2015 if the report isn't even putting them on notice that

[00:24:56] Speaker 04:
that there was likely fraud because it may well be that these are immaterial.

[00:25:02] Speaker 01:
Or even likely a mistake or a problem with the property.

[00:25:07] Speaker 00:
Well, Mr. Moreland, on behalf of Moreland Properties LLC, admitted that he was thinking about fraud and misrepresentation.

[00:25:14] Speaker 01:
Yeah, but you're saying that he shouldn't have been thinking that because in fact there's no problem.

[00:25:16] Speaker 00:
No, I'm not saying he could legitimately think about it because there were occasional very high numbers.

[00:25:21] Speaker 00:
But what the plaintiff would do is point to a high number, which is not a UCL.

[00:25:26] Speaker 00:
or the plaintiff would say 12 out of 17 results were an exceedance, but that's not a 95% UCL.

[00:25:31] Speaker 00:
So the plaintiff could superficially see information that would lead the reasonable person to investigate further and file timely claims, but when you get to the end of the day and you look at the environmental science, the way the 95% UCL is calculated is not the way that the plaintiffs did it, it's the way that the district court affirmed.

[00:25:51] Speaker 04:
What in the 2015 report?

[00:25:53] Speaker 04:
would you specifically point us to that would put the reasonable person on notice that there was something that,

[00:26:05] Speaker 04:
Goodyear did that was fraudulent with Syanter.

[00:26:12] Speaker 00:
So the results show inconsistencies or seeming inconsistencies with the 2004 Dewar.

[00:26:19] Speaker 00:
The report as many of these environmental reports do starts with a recitation of the history of the parcel.

[00:26:25] Speaker 00:
It walks through who the owners were including Goodyear.

[00:26:28] Speaker 00:
It talks about the Dewar

[00:26:29] Speaker 00:
It talks about transfer of the property and then subsequent amendments to the doer and other changes to the property.

[00:26:35] Speaker 00:
Then there's all of the results that you were talking about Judge Bennett and then at the end it says you need more testing.

[00:26:41] Speaker 00:
This is preliminary.

[00:26:42] Speaker 00:
That report was doing things like taking simple averages rather than a 95% UCL.

[00:26:48] Speaker 02:
All of what you said doesn't sound like it would put anybody on notice of potential fraud.

[00:26:53] Speaker 00:
But then when you look at all of the other undisputed facts upon which summary judgment was granted, there were a number of statements by agents of Moreland talking about the effect that that had on their mind.

[00:27:04] Speaker 00:
They lost a buyer.

[00:27:06] Speaker 00:
The buyer had been scared away.

[00:27:07] Speaker 00:
They had liability.

[00:27:08] Speaker 01:
Is the standard a subjective standard?

[00:27:10] Speaker 01:
I thought should have known is an objective standard.

[00:27:13] Speaker 00:
Should have known is, but it can become objective with the duty to inquire if the plaintiff never inquires, and then later on we learn how long the inquiry would have been, to the extent Merck adds anything to... That's subjective, that's subjective.

[00:27:26] Speaker 00:
I'm sorry, I don't hear you, Judge Prezant.

[00:27:27] Speaker 01:
That's subjective, not subjective.

[00:27:30] Speaker 00:
It's not subjective.

[00:27:31] Speaker 01:
Whether or not... It's not subjective, exactly.

[00:27:33] Speaker 01:
So therefore the question is not what they thought, but what a reasonable person would have thought in your standing.

[00:27:40] Speaker 01:
surprised by all this, but you've been standing up here telling us that anybody who knew anything would know there wasn't really a problem here.

[00:27:48] Speaker 00:
Yes, if you go to an environmental engineer and you do a lot of tests, you will eventually, and you use the correct environmental science like the district court listened to for days.

[00:27:57] Speaker 01:
Can you tell me something else?

[00:27:58] Speaker 01:
Why does your Maris argument on CERCLA depend on any of this notion about that you've been standing up and telling us about the fact that there wasn't really a problem?

[00:28:08] Speaker 01:
What difference does that make?

[00:28:10] Speaker 01:
To the CERCLA, to your prevailing on CERCLA.

[00:28:13] Speaker 01:
I mean, go ahead.

[00:28:16] Speaker 00:
Sure.

[00:28:16] Speaker 00:
So for CERCLA, they've identified four issues, remedial versus removal, necessity, feasibility study, meaningful public participation.

[00:28:26] Speaker 00:
They would have to run the gauntlet on all four.

[00:28:27] Speaker 01:
You don't have to prevail on all of them.

[00:28:28] Speaker 01:
You only have to prevail on some of them, right?

[00:28:30] Speaker 01:
Correct.

[00:28:32] Speaker 01:
So the argument seems to go to the necessity issue.

[00:28:35] Speaker 01:
It doesn't go to anything else, right?

[00:28:36] Speaker 00:
Correct.

[00:28:36] Speaker 00:
But that's additive of the rest.

[00:28:38] Speaker 00:
Carson Harbor 3 resolved this same kind of case on summary judgment because of the failures of the lack of feasibility study and the lack of meaningful public participation.

[00:28:48] Speaker 00:
But we have an additional grant.

[00:28:49] Speaker 01:
And both of those have nothing, don't depend in any way on whether there was, in fact, a major problem with this land.

[00:28:58] Speaker 00:
It does, because in the feasibility study, it evaluates reasonable alternatives across three different factors.

[00:29:04] Speaker 00:
Cost, effectiveness in terms of health benefit, and engineering feasibility.

[00:29:09] Speaker 00:
So if there's a no action, it'll tell you your baseline risk, then for every reasonable alternative after that, risk is gonna be one of the components that's evaluated.

[00:29:19] Speaker 00:
There's competing interests.

[00:29:21] Speaker 00:
The defendant is entitled to a cost-effective cleanup, so as cheaply as possible, but with good health outcomes.

[00:29:27] Speaker 00:
And then, of course, there needs to be an effectiveness evaluation.

[00:29:30] Speaker 01:
But in this instance, as I understand it, you say there was no feasibility study, and there's a lot of argument about, well, there was one a long time ago or whatever.

[00:29:40] Speaker 01:
But if there was no feasibility standard, although your opponents say that the only issue was a no-action alternative, you say, well, no, there were other alternatives.

[00:29:48] Speaker 00:
That's correct.

[00:29:49] Speaker 01:
All right.

[00:29:50] Speaker 01:
And isn't that issue divorced from the question of

[00:29:55] Speaker 01:
whether there was actually a major problem with this land or not.

[00:30:00] Speaker 00:
No, because if there's no problem with the land, you wouldn't need to do any of the alternatives to clean it up.

[00:30:04] Speaker 01:
But the practice, they didn't do the... Your position is or should be they just didn't do it.

[00:30:11] Speaker 01:
What they would have found if they did do it isn't the question.

[00:30:15] Speaker 00:
I'm sorry, I don't understand.

[00:30:16] Speaker 01:
As to the feasibility studies.

[00:30:18] Speaker 01:
They just didn't do it.

[00:30:19] Speaker 01:
They didn't do it, and if they had done it... Right, and therefore what they would have found if they did do it is really not

[00:30:25] Speaker 01:
our problem as to that criteria?

[00:30:29] Speaker 00:
Not at all.

[00:30:29] Speaker 00:
I don't think that the court can determine whether the project was cost effective without looking at the feasibility study.

[00:30:35] Speaker 02:
Well, was there an earlier feasibility study or not?

[00:30:39] Speaker 00:
There was not an earlier feasibility study as to arsenic, as to this piece of property as it existed when the plaintiff did its remediation.

[00:30:47] Speaker 00:
So the plaintiff tries to say that there were historical evaluations.

[00:30:51] Speaker 02:
What you're saying is there was a feasibility study, but you think it's not relevant.

[00:30:56] Speaker 02:
Is that what you're saying?

[00:30:57] Speaker 00:
No, I'm not, because there wasn't an earlier CIRCLA project.

[00:31:00] Speaker 00:
Goodyear wasn't doing a CIRCLA project.

[00:31:01] Speaker 00:
There was no cost shifting.

[00:31:03] Speaker 00:
Marsh was under a consent decree.

[00:31:05] Speaker 02:
So for a feasibility study to be done, does it have to be done pursuant to CIRCLA, or could you just decide you want to do it?

[00:31:15] Speaker 02:
and then have a feasibility study.

[00:31:17] Speaker 02:
So you seem to be hedging a lot on your answer.

[00:31:21] Speaker 00:
No, not at all.

[00:31:23] Speaker 00:
but we're we're we're managing your honor well it seemed to me that uh... i said was there an earlier feasibility study and you said well not with respect to this piece of property and not with respect to that so that sounds to me like there was one but i'd like to point there wasn't one they could have named something he's building study and did it i don't think that they did but the reason why i was talking about the differences in the land was to emphasize this point

[00:31:48] Speaker 00:
When Goodyear had the property, when Marsh had the property, it was in the middle of nowhere, thousands of acres of farmland.

[00:31:53] Speaker 00:
Now it's completely surrounded by residential properties.

[00:31:56] Speaker 00:
The parcel is a different size.

[00:31:58] Speaker 00:
There's a different contaminant of concern that's being examined in the past, toxaphene and other things like DDE.

[00:32:05] Speaker 00:
and it's an arsenic cleanup now.

[00:32:07] Speaker 00:
So that difference is the reason why you can't take that older study because it doesn't tell you on a similar footing to today how this project is gonna affect all the people that surround the project site.

[00:32:19] Speaker 02:
So, okay, that's fine.

[00:32:23] Speaker 00:
Okay, so just briefly to turn to the other elements of the NCP, lack of feasibility study, lack of meaningful public participation.

[00:32:30] Speaker 00:
There was no attempt to put together a community plan

[00:32:33] Speaker 00:
We're saying very broadly, substantial compliance.

[00:32:36] Speaker 00:
What the plaintiff needed to do is say some kind of notice, some kind of meeting, and some kind of opportunity for the public to weigh in on the alternative that was ultimately selected.

[00:32:46] Speaker 00:
Again, as a matter of fact, the district court said none of that happened.

[00:32:51] Speaker 02:
So after... Do you agree or disagree with the proposition that we examine the district court's findings such as they didn't do X, Y, and Z?

[00:33:03] Speaker 02:
for clear error, but that the question whether the absence of X, Y, and Z does or does not equal substantial compliance is either a mixed question or a question of law that we reviewed de novo.

[00:33:21] Speaker 00:
We agree.

[00:33:22] Speaker 00:
And Carson Harbor talks about NCP compliance being a question of fact.

[00:33:25] Speaker 00:
I believe that's Carson Harbor one.

[00:33:28] Speaker 00:
But we agree that it's a mixed question when it comes to substantial compliance of NCP.

[00:33:33] Speaker 00:
And so the fact findings of the district court are considered, and then it's the legal conclusion of this court as to whether that was correct.

[00:33:39] Speaker 01:
But what about, for example, what it was that ADEQ did and whether it was substantial and extensive?

[00:33:48] Speaker 00:
Yes, so the district court made a fact finding that the ADEQ involvement was very similar to the Carson Harbor three regulators involvement and found that it was not significant, was not substantial and did not rise to the level where it could be a substitute for public participation.

[00:34:05] Speaker 02:
That sounds like a legal conclusion in a way.

[00:34:08] Speaker 02:
They did A, B and C.

[00:34:10] Speaker 02:
But it wasn't good enough because of some other case.

[00:34:13] Speaker 02:
So it's illegal.

[00:34:14] Speaker 02:
So we get to look at whether what the state agency did equates to substantial compliance.

[00:34:21] Speaker 00:
Yes, Your Honor.

[00:34:21] Speaker 01:
What did the state agency do?

[00:34:23] Speaker 00:
Sorry?

[00:34:24] Speaker 01:
So what did the state agency do?

[00:34:26] Speaker 00:
So the state agency reviewed the projects.

[00:34:30] Speaker 00:
It approved them.

[00:34:31] Speaker 00:
Carson Harbor 3 has mere approval.

[00:34:33] Speaker 00:
The plaintiff's reports.

[00:34:35] Speaker 01:
I'm sorry.

[00:34:36] Speaker 04:
Council, please wait till Judge Berzon finishes her question.

[00:34:40] Speaker 01:
I actually have something to say, so you may listen.

[00:34:43] Speaker 01:
My apologies, Your Honor.

[00:34:45] Speaker 01:
Although I know I don't remember what it is anymore.

[00:34:47] Speaker 01:
They reviewed it, meaning that Moreland

[00:34:55] Speaker 01:
that they had a, that Goodyear gave them a plan and they looked at it?

[00:35:01] Speaker 00:
Moreland gave ADEQ a plan and they looked at it.

[00:35:04] Speaker 01:
But they didn't make the plan?

[00:35:06] Speaker 00:
They didn't make the plan, they didn't run the plan, they didn't do any testing, and they didn't verify any of plaintiff's math or statistics.

[00:35:12] Speaker 00:
They literally rubber stamped it and said they looked at it, but they didn't give it close scrutiny, they didn't have licensed professionals look at the statistics.

[00:35:18] Speaker 01:
And when he said it took them months, does that just mean you gave it to them?

[00:35:21] Speaker 01:
one day and four months later they gave you an answer or that for months they were doing something?

[00:35:25] Speaker 00:
I'm not aware of any evidence in the record that they were doing things for months.

[00:35:32] Speaker 02:
You're assuming that they didn't.

[00:35:34] Speaker 02:
Why is that a fair assumption?

[00:35:36] Speaker 00:
I'm not assuming that they didn't.

[00:35:37] Speaker 00:
Based on the testimony at trial that the district court cited, they said that they didn't do the analysis to check the plaintiff's work.

[00:35:44] Speaker 00:
And so because of that, the district court was examining the plaintiff's work and the plaintiff's environmental consultant's work for the first instance during the CERCLA trial.

[00:35:57] Speaker 00:
If the panel has no other questions, I will sit down.

[00:36:01] Speaker 00:
All right.

[00:36:01] Speaker 00:
Thank you, counsel.

[00:36:02] Speaker 00:
Thank you very much.

[00:36:03] Speaker 04:
And you have some time left.

[00:36:09] Speaker 03:
Thank you.

[00:36:10] Speaker 03:
A few quick points on rebuttal.

[00:36:12] Speaker 03:
The first is, the discussion of statute of limitations, I couldn't think of a better illustration of why this is a jury question and not properly disposed on summary judgment.

[00:36:21] Speaker 03:
My friend on the other side noted that the WTI report in 2015 was, quote, not a full characterization and discussed seeming inconsistencies.

[00:36:30] Speaker 03:
That is exactly the sort of thing that you can't decide as a matter of law.

[00:36:35] Speaker 03:
their alleged smoking gun of the testimony that Moreland gave later, that it involved misrepresentation or fraud, a jury could conclude that he was saying that it was misrepresentation or fraud.

[00:36:49] Speaker 03:
At that time, I didn't know that it was not just an innocent misrepresentation.

[00:36:54] Speaker 03:
That is not helpful to you, because if he thought it was one or the other, he could easily... No, Your Honor, I disagree, because all of these circumstances, that's why I read the Doe v. Roe case from Arizona,

[00:37:04] Speaker 03:
This is why juries make these determinations.

[00:37:06] Speaker 03:
Likewise, losing a buyer because the ground is polluted, and I can't believe they continue to fight this, because the ground is polluted, is just as consistent with a negligent statement on the doer.

[00:37:17] Speaker 03:
Remember, you don't know that they've engaged in fraud at this point.

[00:37:20] Speaker 03:
You have a negligent statement on the doer that says it's 10, maybe because they just did a sloppy job.

[00:37:27] Speaker 03:
That is just as consistent with losing a buyer or losing a buyer is just as consistent with negligence on Goodyear's part as it is with Syenter.

[00:37:35] Speaker 03:
All of these things militate in favor of sending it back to the district court.

[00:37:41] Speaker 03:
The insistence on an investigatory standard

[00:37:43] Speaker 03:
is inconsistent, again, Merck 651.

[00:37:45] Speaker 03:
On the subject of CERCLA, I'd like to focus on the state involvement, which I think is one of the easiest ways for the court to dispose of this.

[00:37:54] Speaker 03:
Goodyear continues to say that the state did not develop the work plan, that it didn't make the plan, was my colleague's words.

[00:38:02] Speaker 03:
That's true, but the law doesn't require that they make the plan.

[00:38:05] Speaker 03:
This court and others say that it is review and oversight.

[00:38:09] Speaker 03:
That's what's involved.

[00:38:10] Speaker 01:
We have almost no law on this.

[00:38:12] Speaker 01:
What case are you relying on?

[00:38:14] Speaker 01:
As we established before, I thought Santa Clarita was the only case that actually held that there is such a substitution.

[00:38:23] Speaker 03:
And I'm fairly sure that the language in that case, although it'll take me too long to find it.

[00:38:29] Speaker 01:
It's language, though.

[00:38:30] Speaker 01:
It's not any particular

[00:38:34] Speaker 03:
Okay, but then let me direct the court to the other cases.

[00:38:36] Speaker 03:
I mean, the three that I cited, Nutrasuite, Niagara, Mohawk, and Bangor, all of which are in the brief, those explain that it is review and oversight.

[00:38:45] Speaker 03:
I'll also add that during the time that ADEQ had the work plan,

[00:38:49] Speaker 03:
It was not just twiddling its thumbs.

[00:38:51] Speaker 03:
It actively asked questions.

[00:38:53] Speaker 03:
It was scrutinizing the work plan and asked questions of Moreland Properties, which we responded to, eventually got their approval, and most importantly, ARS 49285 obtained, Part B, obtained an approval from the state which underscored that it was necessary

[00:39:12] Speaker 03:
cost effective and substantially complied with the requirements of the state law.

[00:39:17] Speaker 03:
So we asked the court to reverse on the subject of, on the statute of limitations, send this case back for a trial on that and clarify a few of these legal issues that we flagged in connection with CERCLA for the lower court to reassess.

[00:39:31] Speaker 04:
All right, thank you.

[00:39:32] Speaker 03:
We thank counsel for their arguments and the case just argued is submitted.