Search results for: EIDP

Sometimes a discovery molehill turns into a mountain (of documents) quicker than you can type the word warehouse.

Back in January, in North Carolina ex rel. Stein v. EIDP, Inc., the State raised a discovery dispute regarding the defendants’ reluctance to search the files of additional custodians in a long-running litigation arising from alleged contamination at the Fayetteville Works chemical manufacturing plant. This case, and others, centered on alleged discharge of per- and polyfluoroalkyl (“PFAS”) from the Fayetteville facility into the Cape Fear River. We wrote earlier about the Business Court’s refusal to bar the State from pursuing recovery based on a consent order that had resolved a different PFAS suit brought by the Department of Environmental Quality in 2017.

Here, the defendants had produced responsive documents previously gathered in other PFAS litigations, but the State wanted a new search of select custodians. The Court-appointed Discovery Referee, former Superior Court Judge Anderson Cromer, agreed in a March 27, 2024 order (¶ 5):

“While Defendants have reproduced documents collected for other litigations, Plaintiff is entitled to have Defendants conduct a separate and thorough search for documents responsive to its discovery requests.”

The scuffle over whether to search 16 custodians identified by the State for responsive records turned out to be the mole hill. The mountain turned out to be a records facility that houses more than 100,000 boxes of documents: Iron Mountain. Defendants had records at Iron Mountain and received a one-month extension to retrieve, review and produce documents from the designated custodians. (July 29, 2024 Order, ¶ 2).

But the “mountain” had other tales to tell.  “At subsequent hearings and meet and confers,” defendant EIDP, Inc. advised it had learned Iron Mountain had an “electronic searchable index” that could track boxes and records stored there by an extensive list of identifying factors.  Referee Cromer noted the problem (Id. ¶¶ 3-4):

“The upshot of EIDP’s revelation is that the Iron Mountain repository of hard copies may contain documents responsive to State’s discovery requests, which were served in June 2023.”

Noting that the dispute over providing records for additional custodians had blossomed into questions about whether prior requests for production were complete, the Referee found “that EIDP has not provided reasonable assurances that it has adequately reviewed the documents from Iron Mountain to determine if the repository contains documents, not previously reviewed and produced, responsive to all of the State’s” prior requests. Id. ¶ 5.

The Referee deemed insufficient EIDP’s production to the State of “a limited excerpt” of the Iron Mountain index that provided information about 20 boxes. The problem he identified was that the index only provided information regarding the search for additional custodians but did not “represent the boxes that may contain documents responsive to the State’s [earlier] discovery requests.” Id. ¶ 7.

Referee Cromer ordered aggressive relief designed to downsize the discovery mountain, including swift production of responsive records from the additional custodians, disclosure of a full index of the initial 20 boxes, and a protocol for arriving at the search terms EIDP would use to search the remaining, vast bulk of Iron Mountain records for responsive documents.

Worth Noting

  • While it’s the stuff of legend for us older litigators to tell tales of reviewing boxes in warehouses with poor heat and dim lighting, the digitization of indices – and often underlying records – has changed the calculus for defining the scope and manner of searches of large document collections.

Brad Risinger is a partner in the Raleigh office of Fox Rothschild LLP.

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.”

Takeaways

  •  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.