Perlmutter v. Lehigh Hanson, Inc.

Background

Michael Perlmutter and Rhiannon sued Lehigh Hanson, Inc. on behalf of themselves and a proposed class of residential neighbors. The plaintiffs alleged that Lehigh Hanson owns and operates the Berkley Asphalt industrial facility in Berkeley, California, where it produces hot-mix asphalt and other construction materials. They alleged that odors and particles from the facility physically invaded nearby residential property, exposing residents to pollutants and nauseating odors, interfering with the use and enjoyment of their property, and reducing property values. They also alleged that Lehigh Hanson received multiple violation notices from the Bay Area Air Quality Management District.

Lehigh Hanson moved to dismiss the complaint. It argued that the plaintiffs lacked standing to bring a public-nuisance claim, had not adequately pleaded negligence or gross negligence because no duty of care existed, improperly brought redundant nuisance and negligence claims under California’s primary-rights doctrine, failed to support requests for injunctive relief and punitive damages, and should have their claims dismissed or stayed under the primary-jurisdiction doctrine because the air-quality agency was overseeing the emissions.

Rulings

The court applied the pleading standard under Federal Rule of Civil Procedure 12(b)(6), under which a complaint must contain enough factual allegations to make a claim plausible. It denied the motion as to the negligence and gross-negligence claims. The alleged physical invasion of property by odors and particles was an alleged property injury, not merely economic loss, so the economic-loss rule did not bar those claims.

The court denied the motion as to the public-nuisance claim. Although private parties generally must show a special injury to pursue a public-nuisance claim, the court held that this requirement did not apply because the plaintiffs alleged both private and public nuisance based on the same activity. Their allegations that they could not use their yards and had lost property value sufficiently connected their injuries to the use and enjoyment of their land.

The court also denied the motion as to the private-nuisance claim. It held that the plaintiffs alleged that Lehigh Hanson both created the nuisance through affirmative conduct and failed to control it. Because the claim was not based solely on a failure to abate a nuisance, the plaintiffs did not have to prove negligence to maintain the private-nuisance claim. The court further denied Lehigh Hanson’s argument that the nuisance and negligence claims violated California’s primary-rights doctrine, explaining that California law permits multiple counts presenting different grounds of liability for the same primary right in one lawsuit.

The court denied the motion as to injunctive relief, finding that allegations that the emissions forced the plaintiffs to remain inside rather than use their backyards, gardens, and neighborhood were enough at the pleading stage to plausibly allege irreparable injury and inadequate legal remedies. It also denied the motion as to punitive damages. The alleged continued emissions despite violation notices, neighborhood protests, and media attention could plausibly support a finding that Lehigh Hanson acted with willful and conscious disregard for the rights or safety of others. The court rejected Lehigh Hanson’s argument that the plaintiffs had to plead advance knowledge or ratification by an officer, director, or managing agent because the complaint sought to hold the company liable for its own conduct rather than solely for employees’ acts.

Finally, the court denied Lehigh Hanson’s request to dismiss or stay the surviving claims under the primary-jurisdiction doctrine. That doctrine allows a court to pause or dismiss a case without prejudice while an administrative agency resolves a matter within its special expertise. The court found that the nuisance and negligence claims were not so complex or technical that the agency had to address them first, and that pausing or dismissing the case would needlessly delay resolution.

Disposition

Judge Haywood S. Gilliam, Jr. denied Lehigh Hanson’s motion to dismiss. The court also set a telephonic case-management conference for September 14, 2021. The opinion did not decide whether the plaintiffs ultimately will prevail or certify the proposed class.