In one of many litigations to arise from alleged contamination at the Fayetteville Works chemical manufacturing plant, the Business Court recently decided that a “been there, done that” motion to dismiss should not stop the State of North Carolina from pursuing past and future costs of pollutant discharges.
In North Carolina ex rel. Stein v. EIDP, Inc., 2023 NCBC 18, the defendants argued that key claims advanced by the State were barred by res judicata because of a consent order that resolved a 2017 Bladen County suit brought by the state Department of Environmental Quality against defendant The Chemours Company FC, LLC. There, DEQ alleged Chemours FC had been discharging per- and polyfluoroalkyl substances (“PFAS”) from the Fayetteville facility into the Cape Fear River since the early 1980s and didn’t “timely disclose such discharges.” Id. ¶ 25. The earlier suit resolved by a consent order that required abatement and remediation of discharges, and monetary damages.
In North Carolina, “a final judgment on the merits in one action precludes a second suit based on the same cause of action between the same parties or their privies.” When applicable, the rule bars “relitigation of all matters . . . that were or should have been adjudicated in the prior action.” Whitacre P’ship v. BioSigna, Inc., 358 N.C. 1, 15 (2004).
Defendants claimed that at least as to Chemours FC and The Chemours Company, the State had lost its opportunity to bring its negligence, trespass, public nuisance, and fraud claims because it should have joined them in the 2017 suit. Judge Robinson looked to the text of the prior consent order and concluded otherwise. The Court noted that the consent order expressly disclaimed a primary factor that underlies a successful res judicata claim (Stein, ¶ 27):
“[t]his Consent Order . . . is not, and shall not be construed to be, a determination on the merits of any of the factual allegations or legal claims advanced by any party in this action.”
“The plain language of the Consent Order demonstrates,” Judge Robinson held, “that it was not a determination on the merits, and without such a determination, res judicata cannot apply.” Id., citing See State ex rel. Tucker v. Frinzi, 344 N.C. 411, 413-14 (1996).
Statute of Limitations
The Court also declined to dismiss a group of claims to which a three-year statute of limitations applied based on application of the nullum tempus doctrine. That rule “applies to exempt the State and its political subdivisions from the running of time limitations unless the pertinent statute expressly includes the State[.]” Stein, ¶ 29 (quoting Rowan Cty. Bd. of Educ. v. U.S. Gypsum Co., 332 N.C. 1, 8-9 (1992). The State also must be acting in a governmental, as opposed to proprietary, capacity.
Defendants argued that the State’s interest was proprietary because its suit “is precisely the kind that private individuals have brought and continue to bring against Defendants throughout North Carolina.” Id. ¶ 30. The Court rejected defendants’ contention that the State’s role was proprietary, similar to the State owning timber rights or operating and maintaining a sewer system. Instead, it sided with the State’s assertion that it acted in a governmental capacity “by seeking to promote and protect the welfare of North Carolina citizens and natural resources from contamination emanating from Fayetteville Works.” Id. ¶¶ 30-31.
Judge Robinson also noted the state Supreme Court’s guidance in a similar setting that (Id. ¶ 34):
“the discharge of pollutants into a state’s soil, water and air injures a state’s quasi-sovereign interests, and that when acting as parens patriae, ‘the State has an interest independent of and behind the titles of its citizens.”
- The Court’s ruling draws special attention to the drafting of consent agreements with the government in environmental settings, and the client expectations that arise from commitments to remedial action and monetary contributions.
- Stein v. EIDP was remanded back to the Business Court after the state Supreme Court’s ruling last year that jurisdiction could lie over defendants Corteva, Inc. and Du Pont de Nemours, Inc. by imputing defendant EIDP’s liabilities to them. State ex rel. Stein v. E.I. du Pont de Nemours & Co., 382 N.C. 549, 565 (2022).
Brad Risinger is a partner in the Raleigh office of Fox Rothschild LLP.