Litigation Logic: Interview with Attorney Melissa Thorme

August 2019

The Rain Events Newsletter

An interview with Downey Brand partner Melissa Thorme is featured in the August 2019 The Rain Events Newsletter. The interview centers on potential third-party lawsuits brought against business owners under the Clean Water Act and what business owners can do to prevent and handle litigation.

Read the full interview below or check out the newsletter at WGR Southwest’s website.

Interview as it appears in The Rain Events August 2019 Newsletter:

You may have heard of the nightmare of Clean Water Act lawsuits of facilities under the Industrial General Permit. In fact, these third-party litigations are something that leaves many business owners awake at night worrying if their facility will be targeted next. This month, The Rain Events, interviewed Melissa Thorme of Downey Brand about what these third-party litigations look like, what to do when 60-day notice is given, and any preventative actions that can be established before trouble strikes.

RE: What is a little bit of the backstory of these third-party litigation incidents?

MT: Citizen Suits in California started in the late 1990s with a plaintiff’s lawyer named Alan Beaven, who represented Deltakeeper, and mostly sued over wastewater treatment plant issues. After Alan was killed on one of the planes on 9/11/2001, the suits took a hiatus only to start again in the mid-2000s with Sanitary Sewer Overflow (SSO) cases. Later that decade, industrial stormwater cases began against auto dismantlers, which were an easy target.

RE: Is this a new problem/trend within the storm water industry?

MT: Not a new thing, we have seen these suits for last 10+ years, we just have more plaintiff’s lawyers now trying to make money through settlements.

RE: When you receive a 60-day notice, what steps should be taken?

MT: Check the WDID number and allegations contained in the letter to see that it actually applies to your facility. Seek help from a QISP or lawyer to determine options for responding.

RE: Why is time of the essence?

MT: As the name 60-day notice implies, a recipient of a notice letter has just 60 days to come into compliance. If compliance is not possible, then trying to settle the matter quickly is the best option, although painful and irritating.

RE: How do the environmental groups obtain data about facilities?

MT: All data submitted to the State Water Board through the SMARTS database as well as ERA levels are visible to the public, making it easier for a potential plaintiff to find targets for the next case.

RE: Are there things that can be done to fight off litigation after receiving the 60-day notice?

MT: Compliance is the best and only real defense unless you can get out of needing a permit (by getting a Notice of Termination (NOT), Notice of Non-Applicability (NONA), or No Exposure Certification (NEC)); however, this is not as easy as it sounds. The new permit amendments that come into effect in July 2020 provide pathways to being deemed in full compliance so permittees would be well served to review those requirements and determine the feasibility of meeting those new requirements.

RE: What are things you can do to avoid or prevent unwanted litigation?

MT: Staying below the NALs certainly helps to lower the chance of becoming a target, but we have had letters sent to people that have never left Baseline status.

RE: What gives these environmental groups the ability to sue a facility?

MT: Section 505 of the federal Clean Water Act (33 U.S.C section 1365) authorizes citizens to sue in instances where the federal and state government has not taken enforcement action and extracted a penalty for the violations.

RE: How do events typically play out after receiving a 60-day notice?

MT: Most cases settle, but the terms depend on the issues alleged and the citizen suit threatening suit. Many settlements are pretty easy and less painful, but others can be very costly, particularly if a case gets filed in federal court as the prevailing party’s attorney and expert fees climb quickly once a lawsuit begins. Ignoring a Notice Letter is never a good idea as this normally results in a complaint being filed, a default judgment being entered, and a potential for millions of dollars in penalties being assessed by a federal court.

RE: What percentage of the time does it settle out of court as opposed to going to court?

MT: I would say 80% of the time cases settle without a lawsuit being filed. Another 15% settles after a complaint is filed, but before too much litigation ensues. The final 5% litigate, but rarely do cases result in a final judgment and even less get appealed. The cost of litigating a case can be between $500,000 and $1 million, so settlement is almost always the best option.

RE: What are the typical settlement terms?

MT: Normally, there are requirements for new BMPs and an updated SWPPP. Payment of attorneys’ fees, oversight costs, and mitigation costs (environmental project in lieu of penalties) are routine and can range from a few thousand dollars to over a hundred thousand depending on the allegations, length of alleged non-compliance, location and size of company.

RE: What relief, if any, is provided by the Industrial General Permit?

MT: There are some arguments that can be made based on the language of the permit, but these arguments have not been tested in court. As previously stated, there are new provisions that will be effective next year that may provide affirmative defenses to a suit after compliance with those new provisions is demonstrated.

RE: Of the different Level 2 ERA demonstrations, are any of them proving to be more susceptible to third-party litigation?

MT: We have seen cases threatened against companies in each level (Baseline, ERA Level 1, or ERA Level 2), so that does not necessarily mean a notice letter is more likely. However, companies in Level 2 have data exceeding NALs, so citizens tend to argue that this discharge is more problematic and must be managed more efficiently.

RE: Do NONAs or NECs experience third-party litigation?

MT: Less often, but we have still seen threats made against companies where third parties question the underlying premises of NECs or NONAs, so companies with these status levels should make sure they have good backup information supporting their status.

RE: What percentage of the time do you get a favorable settlement or decision for the discharger?

MT: That depends on how you define “favorable.” Most companies feel that a settlement requiring feasible BMPs and costs that do not break their budget to be better than the cost and business interference caused by litigation, including paper discovery, depositions, and the accompanying staff time needed to respond. Although no one wants to be enforced against, in many cases we see that companies end up with a better program after the wakeup call of threatened litigation or penalties from the Water Boards.

Hopefully, this information will help take some of the anxiety out of third party lawsuits. The most important “take away” is to be proactive about your pollution prevention program. The Rain Events would like to thank Melissa Thorme and her company Downey Brand for this informative interview.