Document k6qXkMVVLZMjJbz7XXkLXj8EV

Telephone: (702) 385-4202 A cB/oRJAonDesL, EJoYnes&, CMloEseR&R BErLowLn 300LSaosuVthegFaosu, rNthevSatrdeaet,8S91ev0e1n-6th02F6loor Fax: (702) 385-1655 July 28, 1993 Professor Manning Warren Gravina 21, 1st Floor Calella de Palafrugell 17210 Girona, Spain Re: Nevada Power Company v. Monsanto Company, et al. USDC, District of Nevada Case CV-S-89-555-LDG (LRL) Dear Professor Warren: Greetings from stateside! Under cover of this letter, I am sending to you a rough outline of what we expect your areas of testimony to be in this case. Please feel free to add, delete or edit as you see fit. You did give me some helpful suggestions on how to write the statement, and if you have any more, please make them (this is my first attempt at these) . If you have any questions, my direct line is (702) 386-3369. I will be calling you in a few moments to let you know that this telefax is coming. I am also sending to you a copy of our proposed amended complaint in this matter. We will be withdrawing it in the next few days, but only to submit another because this, version inadvertently left out a few things such as our third party fraud allegations against Monsanto. The tenor of the new one will be much the same as this, however, so you will have a good idea of this case. Please review this amended complaint and add anything to the outline of your statement as you see fit, and if you would indicate which items in the complaint (if any) on which you would feel comfortable in issuing an opinion, I would appreciate it. In addition, note anything mentioned in the Amended Complaint which you would like us to send to you. If you could make any changes to this and either telefax it back to me or call me with the changes, hopefully by tomorrow, I would be grateful. Prof. Manning Warren July 28, 1993 Page 2 I appreciate the time you will be spending on this case in the next few weeks, and if there is any help which I can offer you, or any documents which I can send you, just let me know. I had planned to get this to you via-Federal Express, but due to some discovery problems, I find that I am having to telefax it to you. Sincerely, rj s :bms j:\nev\ijs\xprt\warren.106 ROBERTA J. PROF. MANNING WARREN. Ill DRAFT OUTLINE Background: We need Professor Warren's testimony to show that the defendants1 conduct at relevant times did not confrom to thencurrent standards of corporate behavior. The standard of proper business ethics is the main reason for our retention of Professor Warren. I. Professor Manning Warren, III A. University of Louisville School of Law Louisville, Kentucky 40292 B. Gravina 21, 1st Floor Calella De Palafrugell 17210 Girona Spain C. Currently the H. Edward Harter Chair of Commercial Law at the University of Louisville. Teaches Securities Regulation, European Community Law, Corporations and Commercial Transactions D. Bar Admissions: 1. District of Columbia 2. Alabama 3. Kentucky E. Advisory Committees: 1. U.S . Securities and Exchange Commission's Federal Advisory Committee on Market Transactions 2. U.S . Congress Office of Technology Assessment Consultant on International Securities Markets 3. Expert Witness on Shareholder Voting Rights, U.S. Senate Committee on Banking, Housing and Urban Affairs. 4. Consultant on U.S. and International Securities Transactions, European Community Law and Commercial Litigation 5. Drafter of the Revised Alabama Securities Act 6. Reporter for the Public Finance Committee, Alabama Law Institute F. Professor Warren's specialty lies in corporations, their operations, formations and their conduct in the communities in which they function. G. Professor Warren is a widely published author in the area of corporate conduct, corporate investments, securities regulation, corporate takeovers, and the European Economic Community. II. Professor Warren will testify that (Opinion): A. The defendants' conduct in disclosing the hazards of PCBs and related compounds was not on par with accepted business standards or ethics B. Defendants' decisionmaking on the PCB issue did not meet the standards for proper business ethics C. *** Professor Warren: can you think of any other topic that should be under this category? Please fill in if you have any ideas. III. Basis for Testimony A. Professor Warren will testify based on his education, his own research, the general literature, training, understanding of the current literature, and review of current literature on the subject. B. Professor Warren will also rely on publications which he has generated. C. Also rely on any current government publications? D. Any reliance on symposia and/or books? E. At the request of plaintiff's lawyers, Professor Warren will also review learned tratiese of other experts or any other documents related to the case which they will provide. F. Professor Warren may also be asked to explain and define any terms of art which he or the defendants may use in their documents. j:\nev\ijs\xprt\warreo.out I.k 1 J.' RANDALL JONES, ESQ. CHARLES H. McCREA, SR., ESQ. 2 DOUGLAS M. COHEN, ESQ. JONES, JONES, CLOSE 3 & BROWN, CHARTERED 700 Bank of America Plaza 4 300 South Fourth Street Las Vegas, Nevada 89101-6026 5 Telephone: (702) 385-4202 '^ti;,^'IA-i*', 7*1..." 6 RALPH A. BRADLEY, ESQ. PAUL E. MERRELL, ESQ. 7 BRADLEY & MERRELL c/o JONES, JONES, CLOSE 8 & BROWN, CHARTERED 700 Bank of America Plaza 9 300 South Fourth Street Las Vegas, Nevada 89101-6026 10 Telephone: (702) 385-4202 11 Attorneys for Plaintiff NEVADA POWER COMPANY 12 a Nevada corporation 13 14 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA IS 16 NEVADA POWER COMPANY, etc., ) ) 17 Plaintiff, ) 18 vs. ) ) ) 19 MONSANTO COMPANY, etc., et al., ) ) 20 Defendants. ) _____________________________________________ ) 21 CASE CV-S--89--555--LDG (LRL; PLAINTIFF NEVADA POWER COMPANY'S PROPOSED FIRST AMENDED COMPLAINT 22 COMES NOW plaintiff Nevada Power Company ("Nevada Power"), b> 23 and through its attorneys of record, Jones, Jones, Close & Brown. 24 Chartered, and for its claims for relief alleges as follows: 25 ALLEGATIONS COMMON TO ALL CLAIMS 26 1. Nevada Power is a corporation organized and existing 27 under the laws of the State of Nevada. 28 n i.L 1 2. Nevada Power is a public utility subject to the 2 jurisdiction of the Public Service Commission of Nevada ("PSC"). 3 Nevada Power supplies electric energy as a public utility to more 4 than 388,000 residential, commercial, industrial and other customers 5 located in Clark and Nye Counties, Nevada. 6 3. Defendant Monsanto Company, a foreign corporation, 7 ("Monsanto") has its corporate headquarters in St. Louis, Missouri. a At all times relevant hereto, Monsanto was the exclusive commercial 9 manufacturer and supplier of polychlorinated biphenyls (hereinafter 10 "PCBs") in the United States for use in capacitors and transformers. 11 Monsanto sold the PCBs to the other defendants, General Electric 12 Company, a foreign corporation ("General Electric") and Westinghouse 13 Electric Corporation, a foreign corporation ("Westinghouse") for use 14 as a dielectric fluid in transformers, capacitors and other 15 electrical equipment manufactured and sold by them. Monsanto was a 16 contributing member to the National Electrical Manufacturers 17 Association ("NEMA"). 18 4. General Electric has its corporate headquarters in 19 Fairfield, Connecticut. It is and at all times relevant hereto was 20 engaged in the manufacture of electrical equipment, including many 21 PCB containing transformers and capacitors that are the subject of 22 this action. General Electric is a member of NEMA. 23 5. Westinghouse has its corporate headquarters in Pittsburgh, 24 Pennsylvania. It is and at all times relevant hereto was engaged in 25 the manufacture of electrical equipment, including many PCB 26 containing transformers and capacitors that are the subject of this 27 action. Westinghouse is a member of NEMA. 28 A Pt. 1 6. The electrical equipment which is the subject of thi: 2 complaint contained and continues to contain varying amounts o: 3 mixtures known as Aroclor, Inerteen, and Pyranol sold by defendant: 4 Monsanto, Westinghouse, and General Electric, respectively. Aroclo: 5 is a primary ingredient of. Inerteen and Pyranol. These mixture: 6 contain, in varying proportions, the following: (1) man-made, toxic 7 and environmentally persistent chemical compounds known collectively 8 as polychlorinated biphenyls (PCB's), (2) trichlorobenzene, (3^ 9 tetrachlorobenzene, (4) preservatives, and (5) contaminants includinc 10 highly toxic substances known as "dioxins" and "chlorinatec 11 dibenzofurans." 12 7. PCBs are man-made chemica1 compounds known to product 13 severe adverse health effects including cancer and birth defects i: 14 humans and animals exposed to them. PCBs also have a devastatim 15 impact upon the environment. Since they are not biodegradable, thei: 16 adverse impact on humans, animals and the biosphere is long lastin' 17 and cumulative. PCBs have been determined to be a hazardou; 18 substance by Federal legislation and Federal regulations. 19 8. PCBs are the only chemical to be specifically banned, b; 20 name, by Congress. In October, 1976 Congress passed the Toxii 21 Substances Control Act (15 U.S.C.A. 2601 et seq.) by which i' 22 directed the Environmental Protection Agency ("EPA") to promulgati 23 regulations banning the manufacture, sale and distribution of PCBs 24 By 1979 the sale, manufacture and distribution of PCBs were banned 25 9. Nevada Power has incurred and will incur reasonable am 26 necessary expenses for the removal, replacement, refitting and/o: 27 disposal of the PCB-containing electrical equipment which r 28 purchased from defendants Westinghouse, General Electric, and othe: 3 Pi 1 companies, and which it placed at various locations throughout its 2 system. 3 10. Nevada Power has been forced to tear down and dismantle 4 portions of the real property comprising its utility plant by 5 removing, replacing, refitting and disposing of PCB-containing 6 electrical equipment and other PCB contaminated material. As a 7 direct consequence thereof, Nevada Power has suffered and will suffer 8 general and special damages in excess of $50,000, including future 9 damages to be determined at a later date. 10 11. That PCBs pose significant risks and dangers to humans and 11 the environment has been known to the defendants since the 1930s. 12 Nevertheless, defendants negligently, knowingly, and intentionally 13 deceived and misled the public, government agencies, and Nevada Power 14 in connection with Nevada Power's acquisition of the PCBs and PCB15 containing electrical equipment which are the subject of this action 16 by failing to warn that PCBs are unreasonably hazardous and unfit for 17 use as transformer and capacitor fluids, failing to disclose the 18 contents of the equipment, falsely representing that some equipment 19 contained only mineral oil, and falsely representing that PCBs are 20 not unreasonably hazardous and unfit for use as transformer and 21 capacitor fluids. Nevada Power relied upon the false representations 22 of the defendants, to its detriment. 23 12. General Electric and Westinghouse sold Pyranol and Inerteen 24 to Nevada Power to replace transformer fluid which was lost through 25 leakage, evaporation, spills, combustion and explosions. To whatever 26 extent those replacement fluids may be proven to have contaminated 27 Nevada Power's electrical equipment, the defendants are liable to 28 4 1 Nevada Power in punitive damages and for the cost of all proximately 2 resulting cleanup and repair and replacement expense. 3 13. From the early 1930s until 1977 (when the manufacture of 4 PCBs was banned) Monsanto produced approximately 1.4 billion pounds 5 of PCBs. 14. From 1954 to 1977, Monsanto sold approximately 267 millior 7 pounds of PCBs to General Electric and approximately 170 millior 8 pounds to Westinghouse. 9 15. General Electric and Westinghouse began using PCBs in the 10 manufacture of their transformers, capacitors, and other electrical 11 equipment in the 1930s and continued to do so into the 1970s. 12 16. In the 1930s, Monsanto's own in-house confidential 13 memoranda on material safety stated that PCBs were "highly toxic" 14 and caused severe adverse health effects to humans exposed to PCBs. 15 Monsanto became aware during the 1930s that PCBs had to be handled 16 and disposed of with extreme care to avoid human contact. 17 17. By 1938, Monsanto and Westinghouse had received warnings 18 from physicians that PCB exposure caused severe toxic results in 19 humans. At or about this time, twelve to fifteen scientific papers 20 were published that detailed the severe health risks to humans of 21 PCB exposure. These scientific studies were known to Monsanto, 22 General Electric and Westinghouse. 23 18. During the 1940s, scientific literature was published 24 warning the electrical industry, of which defendants are members, of 25 the severe toxic consequences to humans and animals of exposure tc 26 PCBs. 27 19. In 1947, Monsanto and Westinghouse were warned again by 28 medical experts that exposure to PCBs was severely toxic to humans, 5 1.1: 1 and that they should warn the public about the severe toxic 2 consequences of exposure to PCBs. 3 20. During the 1950s scientific articles were published 4 warning the electrical manufacturing industry including these 5 defendants of the severe toxic consequences to humans and animals 6 of exposure to PCBs. Both Monsanto and Westinghouse, as shown by 7 their own in-house confidential memoranda, were fully aware of the 8 contents of these articles warning of the adverse health 9 consequences of exposure to PCBs. 10 21. During the 1960s the international scientific community 11 published scientific studies that documented the global damage 12 resulting from the unchecked disposal and other releases of PCBs 13 into the environment. These studies were known to the defendants, 14 yet they continued to sell PCBs and products containing PCBs to 15 Nevada Power Company and to others, which sales substantially 16 contributed to the continued build-up of PCBs in the environment 17 and the cumulative hazard resulting therefrom, creating an 18 indivisible wrong. 19 22. In 1968, in Japan, hundreds of people ingested PCBs bj 20 mistake. The follow-up medical studies done on these people anc 21 their progeny document the severe adverse consequences to humans 22 exposed to PCBs. This incident and the resulting studies were knowr. 23 to Monsanto, General Electric and Westinghouse. 24 23. During the 1960s, General Electric, as shown by its own 25 in-house confidential memoranda, corresponded with Monsanto 26 concerning the dangerous environmental consequences attending 27 exposure to and disposal of PCBs. In October of 1969, General 28 Electric published a paper, circulated to all of the defendants as - 6- 1 members of the electrical industry, entitled "PCB: An Industry 2 Problem," which described in detail the severe consequences to 3 humans of exposure to PCBs and the problems attending disposal of 4 PCBs. 5 24. During the 1970s,-Monsanto warned all of the 6 co-defendants in this action of adverse consequences and dangers 7 associated with the exposure to and disposal of PCBs. Monsanto's 8 own in-house toxicologist, Dr. Kelley, warned Monsanto that PCBs 9 were dangerous and that Monsanto had a duty to warn about their 10 toxic effects. 11 25. In the 1970s, the Federal Government launched nationwide 12 hearings concerning the problems of PCBs. During these hearings, 13 NEMA, of which all defendants were members or contributing members 14 submitted to Federal agencies and hearing panels false documents 15 and false information in an effort to forestall a ban on PCBs. 16 More specifically, during the early to mid-1970s,-Monsanto engaged 17 the services of Industrial Bio-Test Laboratories to conduct animal 18 toxicological studies regarding PCBs. These studies were 19 supervised by Paul Wright and Joseph Calandra. 20 26. Wright and Calandra were subsequently convicted under 21 Federal law of felonies concerning the submission of false animal 22 studies and reports (requested by Monsanto) to Federal agencies 23 with regards to Trichlorocarbarilide, an ingredient in deodorant 2 4 soaps. U.S. v. Keplinqer. 776 F.2d 678 (7th Cir. 1985). 25 27. Both Wright and Calandra, at the behest of Monsanto, 26 falsified and forged PCB toxicological studies.that all the 27 defendants used in an attempt to deceive Congress and Federal 28 7 1 agencies among others into believing that PCBs were harmless 2 chemicals that should not be banned. 3 28. From the 1930's to the 1970's, the defendants, through 4 mass media advertising, represented to the public and Nevada Power 5 that PCBs were safe and posed little if no danger to humans or the 6 environment. 7 29. The foregoing actions as set out in paragraphs 26 through 8 29, undertaken by all the defendants, were intentional and 9 specifically designed to mislead Congress, Federal agencies, Nevada 10 Power and the public into believing that PCBs are harmless 11 chemicals and that electrical equipment containing PCBs is safe. 12 30. The aforementioned conduct of the defendants was intended 13 to prevent the public and Nevada Power from suspecting that PCB14 containing electrical equipment presented any toxic hazards, and 15 led Nevada Power to believe that there was no need to conduct 16 independent inquiry or investigation into the toxicity of PCBs or 17 the safety of PCB-containing electrical equipment. This conduct 18 also induced Nevada Power to purchase PCB-containing electrical 19 equipment from the defendants General Electric and Westinghouse. 20 31. Nevada Power used reasonable care and due diligence in 21 acquiring PCB-containing electrical equipment, was ignorant of the 22 defendants' fraudulent and deceitful conduct before 1988, and 23 previously had no reason to suspect that the defendants were 24 engaged in a campaign of deceit and fraud to conceal the toxic and 25 dangerous consequences of exposure to PCBs and the attendant PCB 26 disposal problems, that they knowingly, intentionally, and 27 negligently made false representations and failed to provide 28 adequate warnings at the time of purchase and sale. 8 t .t_S 1 32. Nevada Power relied on the defendant's misrepresentations 2 that the PCB-containing electrical equipment was safe and presentee 3 no significant danger to humans or the environment. Based upon 4 this reliance, Nevada Power purchased PCB-containing electrical 5 equipment from defendants General Electric and Westinghouse, and 6 from other companies. 7 FIRST CLAIM FOR RELIEF 8 (Fraudulent Misrepresentation) 9 33. Nevada Power restates and realleges the allegations in 10 paragraph 1-32 as if set forth fully herein and incorporates them 11 by this reference, and states this claim for relief in the 12 alternative to its other claims for relief. 13 34. As a direct and proximate result of Nevada Power's 14 reliance on the fraudulent misrepresentations of the defendants am 15 its resulting purchase of PCB fluids and PCB-containing electrical 16 equipment, Nevada Power has incurred general and special damages i: 17 excess of $50,000 for the testing, removal, replacement, refitting 18 cleanup, and/or disposal of PCBs, PCB-containing electrical 19 equipment, and material contaminated by PCBs due to leaks, spill, 2 0 explosions, and other mishaps involving PCBs obtained in reliance 21 upon the fraud of the defendants. 22 35. Defendants General Electric and Westinghouse knew that 23 mineral oil transformers they sold to Nevada Power were 24 contaminated with PCBs, yet they failed to warn Nevada Power that 25 the transformers were contaminated. 26 36. Defendants General Electric and Westinghouse sold PCBs 27 manufactured by defendant Monsanto to plaintiff Nevada Power for 28 the purpose of replenishing fluid lost from electrical equipment 9 C.f> 1 through evaporation and leakage, and for replacing degraded or 2 spilled fluids. The defendants are, each and every one of them, 3 jointly and severally liable to Nevada Power for costs entailed in 4 disposing of PCB fluids and material contaminated by them. To 5 whatever extent the evidence shows that the defendants1 failure to 6 warn Nevada Power of the dangerous and defective nature of PCBs 7 contributed to the contamination of Nevada Power1s electrical 8 equipment during servicing, the defendants are jointly and 9 severally liable to Nevada Power for its expenses incurred in 10 cleaning up spills from contaminated equipment, and in eliminating 11 contaminated equipment and fluids from service. 12 37. Because the defendants' conduct complained of herein was 13 fraudulent, malicious, or otherwise oppressive, Nevada Power shoulc 14 be additionally awarded punitive damages in excess of $50,000, the 15 actual amount commensurate with the evidence. 16 SECOND CLAIM FOR RELIEF 17 (Strict Liability) 18 38. Nevada Power restates and realleges the allegations in 19 paragraphs 1 through 32 and incorporates them herein by reference, 20 and states this cause of action as an alternative to its other 21 claims for relief. 22 39. Defendant Monsanto was negligent in failing adequately tc 23 warn plaintiff Nevada Power of the hazards of PCBs it either knew 24 about or should have known about. Defendants General Electric and 25 Westinghouse, as revendors of defectively hazardous PCB products 26 manufactured by defendant Monsanto, are strictly liable for damages 27 proximately resulting from the wrongdoing of defendant Monsanto in 28 general and special damages in excess of $50,000 for the testing, 10 t fv 1 removal, replacement, refitting, cleanup, and/or disposal of PCBs, 2 PCB-containing electrical equipment, and material contaminated by 3 PCBs due to leaks, spills, explosions, and other mishaps involving 4 PCBs obtained from the defendants. 5 40. Because the conduct of the defendants was fraudulent, 6 malicious or otherwise oppressive, Nevada Power should be awarded 7 punitive damages in excess of $50,000, the actual amount of which 8 to be determined at trial. 9 THIRD CLAIM FOR RELIEF 10 (Strict Products Liability) 11 41. Nevada Power restates and realleges the allegations in 12 paragraphs 1 through 32 and incorporates them herein by reference, 13 and states this claim for relief in the alternative to its other 14 claims for relief. 15 42. The electrical equipment and PCB fluids complained of 16 herein were defective in that they did not contain an adequate 17 warning. 18 43. The defendants are strictly liable to Nevada Power in 19 general and special damages in excess of $50,000 for the testing, 20 removal, replacement, refitting, cleanup, and/or disposal of PCBs, 21 PCB-containing electrical equipment, and material contaminated by 22 PCBs due to leaks, spill, explosions, and other mishaps involving 23 PCBs obtained from the defendants. 24 44. Because the conduct of the defendants was fraudulent, 25 malicious or otherwise oppressive, Nevada Power should be awarded 26 punitive damages in excess of $50,000, the actual amount of which 27 to be determined at trial. 28 11 1 FOURTH CLAIM FOR RELIEF 2 (Negligent Failure to Warn) 3 45. Nevada Power restates and realleges the allegations 4 contained in paragraphs 1 through 32 as though set forth fully 5 herein and incorporates them by this reference, and makes this 6 claim in the alternative to its other claims for relief. 7 46. Defendants knew or should have known that the PCBs and a the PCB-containing electrical equipment were inherently and 9 unreasonably dangerous and defective. Because of this, the 10 defendants had a duty to warn all users and potential purchasers 02 11 PCBs and PCB-containing electrical equipment, including Nevada 12 Power, of the defective and dangerous nature of such equipment. 13 47. Defendants breached this duty by failing to warn Nevada 14 Power and other users that this equipment was defective and 15 unreasonably dangerous. 16 48. Defendants' failure to warn Nevada Power was the direct 17 and proximate cause of Nevada Power's being damaged in excess of 18 $50,000 for the removal, replacement, refitting and/or disposal of 19 the PCB-containing electrical equipment, PCBs fluids, PCB20 contaminated equipment, and other material contaminated by the 21 defendants' products. These damages include future damages,, the 22 amount of which should be determined at trial. 23 49. Because the conduct of the defendants was fraudulent, 24 malicious or otherwise oppressive, Nevada Power should be awarded 25 punitive damages in excess of $50,000, the actual amount of which 26 to be determined at trial. 27 28 12 L . 13 1 REQUEST FOR RELIEF 2 WHEREFORE, plaintiff Nevada Power Company prays for judgment 3 as follows: 4 1. For general, special and punitive damages, including 5 future damages, in excess of $50,000 on its First Claim for Relief 6 (Fraudulent Misrepresentation). 7 2. For general, special and punitive damages, including 8 future damages, in excess of $50,000 on its Second 9 Claim for Relief (Strict Liability). 10 3. For general, special and punitive damages, including 11 future damages, in excess of $50,000 on its Third claim for Relief 12 (Strict Products Liability). 13 4. For general, special and punitive damages, including 14 future damages, in excess of $50,000 on its Fourth Claim for Relief 15 (Negligent Failure to Warn). 16 5. A finding that each defendant is jointly and severally 17 liable for all damages awarded to Nevada Power Company. 18 6. For such other and further relief as is just and 19 equitable. 20 DATED: June 7, 1993 BRADLEY & MERRELL 21 22 By: PAUL E. MERRELL 23 Coordinating attorney BRADLEY & MERRELL 24 c/o JONES, JONES, CLOSE & BROWfc 300 South Fourth St., Suite 70C 25 Las Vegas, Nevada 89101 (702) 385-4202 26 27 Attorneys for Plaintiff NEVADA POWER COMPANY 28 13 P1 1 Other Counsel for Plaintiff Nevada Power Company: 2 DAVID S. McCREA, ESQ. 3 McCREA & McCREA 119 South Walnut Street 4 Post Office Box 1310 5 Bloomington, Indiana 47402 Telephone: (812) 336-4840 6 FREDERICK M. BARON, ESQ. RUSSELL WILLS BUDD, ESQ. 7 JANE N. SAGINAW, ESQ. BRIAN D. WEINSTEIN, ESQ. 8 PAUL F. DONSBACH, ESQ. BARON & BUDD 9 3102 Oak Lawn Avenue, Suite 1100 Dallas, Texas 75219 10 Telephone: (214) 521-3605 11 MICHAEL T. GALLAGHER, ESQ. CRAIG LEWIS, ESQ. 12 JOHN H. KIM, ESQ. FISHER, GALLAGHER & LEWIS, L.L.P. 13 1000 Louisiana, 70th Floor Houston, Texas 77002 14 Telephone: (713) 654-4433 15 16 17 18 19 20 21 22 23 24 25 26 27 28 P :\USERS\LSG\PLD\AMEND.COM 14 c> 1 .1 1 CERTIFICATE OF SERVICE 2 I hereby certify that on the 7TH day of June, 1993, the foregoing PLAINTIFF NEVADA POWER COMPANY'S MOTION FOR LEAVE TO AMEN] 3 COMPLAINT was served on the following parties: 4 KEY: F - Via fax 5 FE - Via Federal Express H - Via hand delivery 6 FE Steven R. Kuney, Esq. 7 Williams & Connolly 725 12th Street, N.W. 8 Washington, DC 20005 Fax No.: (202) 434-5029 9 Attorneys for Defendants MONSANTO COMPANY, GENERAL ELECTRI* COMPANY and WESTINGHOUSE ELECTRIC CORPORATION 10 FE Arvin Maskin, Esq. 11 Konrad L. Cailteux, Esq. Weil, Gotshal & Manges 12 767 Fifth Avenue New York, NY 10153 13 Fax No.: (212) 310-8007 Attorneys for Defendant WESTINGHOUSE ELECTRIC CORPORATIOI 14 H J. Bruce Alverson, Esq. 15 Alverson, Taylor, Mortensen & Nelson 3821 West Charleston Boulevard 16 Las Vegas, NV 89102 Fax No.: (702) 385-7000 17 Attorneys for Defendant GENERAL ELECTRIC COMPANY 18 H 19 20 21 John L. Thorndal, Esq. Thorndal, Backus, Maupin & Armstrong 1100 East Bridger Avenue Las Vegas, NV 89101 Fax No.: (702) 366-0327 Attorneys for Defendants MONSANTO COMPANY and WESTINGHOUSE ELECTRIC CORPORATION 22 FE 23 24 25 Bruce A. Featherstone, Esq. Kirkland & Ellis 1999 Broadway, Suite 4000 Denver, CO 80202 Fax No.: (303) 291-3300 Attorneys for Defendant MONSANTO COMPANY 26 27 28 O C. 1 J .' RANDALL JONES, ESQ. CHARLES H. McCREA, SR., ESQ. 2 DOUGLAS M. COHEN, ESQ. JONES, JONES, CLOSE 3 & BROWN, CHARTERED 700 Bank of America Plaza 4 300 South Fourth Street Las Vegas, Nevada 89101-6026 5 Telephone: (702) 385-4202 6 RALPH A. BRADLEY, ESQ. PAUL E. MERRELL, ESQ. 7 BRADLEY & MERRELL c/o JONES, JONES, CLOSE 8 & BROWN, CHARTERED 700 Bank of America Plaza 9 300 South Fourth Street Las Vegas, Nevada 89101-6026 10 Telephone: (702) 385-4202 11 Attorneys for Plaintiff NEVADA POWER COMPANY 12 a Nevada corporation 13 14 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 15 16 NEVADA POWER COMPANY, etc., ) ) 17 Plaintiff, ) 18 v s . )) ) 19 MONSANTO COMPANY, etc., et al., ) ) 20 Defendants. ) _____________________________________________ ) 21 CASE CV-S-89-555-LDG (LRL' PLAINTIFF NEVADA POWER COMPANY'S BRIEF IN SUPPORT OF ITS MOTION FOR LEAVE TC AMEND COMPLAINT 22 I. 23 INTRODUCTION 24 Plaintiff Nevada Power Company ("Nevada Power") has movec 25 concurrently for leave to amend its complaint pursuant to Trial Rule 26 15 of the Federal Rules of Civil Procedure. This brief is intendec 27 to support and supplement that motion. The original complaint was 28 c 1 filed on July 7, 1989. Nevada Power has filed no previous motions to 2 amend its complaint. 3 II. 4 POINTS & AUTHORITIES 5 Foman v. Davis sets the bounds of judicial discretion in ruling 6 on a motion for leave to amend a complaint. In Foman. the Supreme 7 Court stated: 8 If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to 9 be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason - such as 10 undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by 11 amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, 12 futility of amendment, etc. - the leave sought should, as the rules require, be "freely given." 13 14 Foman v. Davis. 371 U.S. 178, 182, 9 L.Ed. 2d 222, 226 (1962). The 15 passage of time since the filing of the original complaint is not 16 grounds for denial of leave to amend in the absence of demonstrable 17 prejudice. Howev v. United States. 481 F2d 1187 (9th Cir. 1981) . 18 The authors of the treatise Federal Practice and Procedure state: 19 "Quite appropriately the courts have not imposed any arbitrary timing restrictions on a party's request for 20 leave to amend and permission has been granted under Rule 15(a) at various stages of the litigation: following 21 discovery; after a pre-trial conference; at a hearing on a motion to dismiss or for summary judgment; after a motion 22 to dismiss has been granted but before the order of dismissal has been entered; when the case is on the trial 23 calendar and been set for a hearing by the district court; at the beginning, during, and at the close of trial; after 24 a judgment has been entered; and even on remand following an appeal." 25 26 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d 27 1488 (citations omitted). 28 2 t.6 1 No trial date has been set in the case at bar. Defendant 2 Monsanto Company, General Electric Company, and Westinghouse Electri 3 Corporation have aggressively pursued discovery on all issues raise 4 in the proposed amended complaint. They did move for a protectiv 5 order regarding Nevada Power1s discovery into their knowledge o 6 certain PCB contaminants and combustion byproducts - the dioxins an 7 chlorinated dibenzofurans - but that matter was resolved in favor o 8 Nevada Power by the Magistrate Judge's Order of May 17, 1993, and th 9 time for seeking reconsideration has passed. 10 The defendants cannot plausibly argue that the propose11 amendments would be prejudicial. All damages accruing from th12 defendants' failure to warn and intentional misrepresentation, 13 (fraud) regarding the marketing and sale of PCBs have been at issu 14 from the onset of discovery following remand. Nevada Power gav 15 formal notice of its intent to seek damages in the range unde: 16 discussion in its interrogatory responses of October 16, 1992 fa17 including in its interrogatory responses the detailed report of it. 18 primary damages expert. Since that time, defendants have take: 19 extensive discovery of the facts underlying Nevada Power's theory o: 20 recovery, through fact and Rule 30(b)(6) depositions, througi 21 supplemental interrogatories, and through numerous requests fo: 22 production. Defendants are adequately prepared to present thf 23 relevant facts to the jury. 24 While the original complaint only specifies damages regardint 25 the United States Environmental Protection Agency's (EPA* s; 26 regulations requiring replacement of electrical, equipment containing 27 fluid with over 500 parts per million PCBs, it has been clear to all 28 defendants from the onset of this lawsuit that Nevada Power's damages 3 c* 1 proximately resulting from their conduct alleged in the original 2 complaint are more extensive than those presently regulated by EPA. 3 Equipment filled with fluids containing any detectable trace of PCE 4 is regulated to some extent. Moreover, EPA is only one source upor 5 which Nevada Power relies on for guidance on what measures are 6 prudent to minimize its potential liability; protect its customers 7 and their families, guests,, students, and patrons; and to preserve 8 the wholesomeness and integrity of the human environment, which is 9 already burdened by pollution caused by defendants' PCBs. 10 The Ninth Circuit, heeding the guidance of the U.S. Supreme 11 Court, has mandated that the district courts freely grant leave tc 12 amend pleadings in the absence of the so-called "Leighton factors," 13 which cannot be shown to substantially exist with respect to Nevada 14 Power's motion for leave to amend its complaint. These factors are 15 bad faith, undue delay, prejudice to the opposing party, futility of 16 amendment, and whether plaintiff has previously amended his 17 complaint. Ascon Properties. Inc., v. Mobil Oil Co.. 866 F.2d 1149, 18 1160 (9th Cir.1989), citing PCD Programs. Ltd, v. Leighton. 833 F.2d 19 183, 196 (9th Cir.1987). 2 0 Nevada Power is proceeding in good faith. It has not unduly 21 delayed filing its motion for leave to amend; indeed, it could be 22 argued that the motion would be more timely filed after the case has 23 had a few more months to evolve and gel. The extent to which the 24 defendants' fraud and failure to warn about PCBs and related 25 compounds has damaged Nevada Power becomes clearer as discovery 26 proceeds. The precise mechanism of harm is likewise being clarified 27 through discovery and preparation of the case for trial. For 28 example, the defendants have suggested during depositions that Nevada 4 f t C.6 1 Power may have added PCBs to mineral oil transformers during routine 2 maintenance. Nevada Power is not in a position to admit or deny this 3 allegation at the present time, but its proposed amended complaint 4 makes clear Nevada Power's position that the issue is moot. Nevada 5 Power can prove that it safeguarded against contaminating mineral oil 6 with PCBs as soon as it became aware that PCBs and related compounds 7 are harmful to human health and the environment. The complaint 8 alleges that if, because of the defendants' fraud or failure to warn, 9 Nevada Power added PCBs to any mineral oil transformer regardless of 10 brand name, the defendants are liable to Nevada Power for all 11 proximately resulting expense, and are also liable in punitive 12 damages. In other words, had any defendant shared its superior 13 knowledge of PCB hazards, Nevada Power would not have added PCBs to 14 its mineral oil transformers even if that is what happened. This is 15 just another way in which the defendants, through their fraud upon 16 the public, the government, and Nevada Power, and through their 17 failure to warn of hazards known to them, have damaged Nevada Power. 18 The defendants cannot plausibly contend that the proposed 19 amendments would substantially prejudice them. Their discovery has 2 0 incisively probed all the issues raised in the amended complaint. Nc 21 continuance or extension of discovery is necessary to accommodate the 22 amendments. Furthermore, no statute of limitations issue is 23 involved. In considering a motion to amend where the time for filing 24 an original action would have passed, district courts analyze the 25 current and proposed amended complaint "to determine whether the^ 26 share a common core of operative facts sufficient to impart fair 27 notice of the transaction, occurrence, or conduct called intc 28 question." Martell v. Trilogy Ltd., 872 F.2d 322 (9th Cir. 1989). 5 > CA 1 The core of operative facts in this case involve the defendants' 2 fraudulent misrepresentations, failure to warn, and fraudulent 3 concealment regarding the true nature of PCBs and related compounds, 4 and Nevada Power1s reliance thereon and proximately resulting 5 damages. The defendants have long been aware that they may be helc 6 liable for all damages accruing from their conduct, and have 7 conducted their discovery accordingly; so obviously, the facts 8 alleged in the original complaint were sufficient to impart such 9 notice. Actual knowledge is required when Rule 15(c)(3) is applied 10 to add defendants, but not when amendment is sought under Rule 11 15(c)(2). 12 Moreover, Nevada Power had no way of knowing that the defendants 13 knowingly and intentionally sold Nevada Power PCB-contaminatec 14 mineral oil transformers prior to 1976 (when they first admitted it) 15 until that fact was recently brought to Nevada Power1s attention 16 during collaboration with attorneys involved in lawsuits similar tc 17 the one at bar. 18 Concluding the analysis of the Leighton factors, Nevada Power 19 notes that the proposed amendments are not futile, and this is the 20 first time it has sought leave to amend it complaint. 21 22 23 24 25 26 27 28 6 ft C.ii 1 There being no sound reason, to deny plaintiff Nevada Power 2 Company's motion for leave to amend complaint, the motion should be 3 granted. 4 DATED: June 7, 1993 Respectfully submitted, 5 BRADLEY & MERRELL 6 RALPH A. BRADLEY PAUL E. MERRELL 7 8 PAUL E. MERRELL 9 Coordinating attorney BRADLEY & MERRELL 10 c/o JONES, JONES, CLOSE & BROWN 300 South Fourth St., Suite 700 11 Las Vegas, Nevada 89101 (702) 385-4202 12 Attorneys for Plaintiff 13 NEVADA POWER COMPANY 14 Other Counsel for Plaintiff Nevada Power Company: 15 DAVID S. McCREA, ESQ. 16 McCREA & McCREA 119 South Walnut Street 17 Post Office Box 1310 Bloomington, Indiana 47402 18 Telephone: (812) 336-4840 19 FREDERICK M. BARON, ESQ. RUSSELL WILLS BUDD, ESQ. 20 JANE N. SAGINAW, ESQ. BRIAN D. WEINSTEIN, ESQ. 21 PAUL F. DONSBACH, ESQ. BARON & BUDD 22 3102 Oak Lawn Avenue, Suite 1100 Dallas, Texas 75219 23 Telephone: (214) 521-3605 24 MICHAEL T. GALLAGHER, ESQ. CRAIG LEWIS, ESQ. 25 JOHN H. KIM, ESQ. FISHER, GALLAGHER & LEWIS, L.L.P. 26 1000 Louisiana, 70th Floor Houston, Texas 77002 27 Telephone: (713) 654-4433 28 P :\USERS\LSG\PLD\C0MB RF.HOT 7 O . 1 CERTIFICATE OF SERVICE 2 I hereby certify that on the 7th day of June , 1993, the foregoing PLAINTIFF NEVADA POWER COMPANY'S BRIEF IN SUPPORT OF IT 3 MOTION FOR LEAVE TO AMEND COMPLAINT was served on the followin parties: 4 KEY: 5 F - Via fax 6 FE - Via Federal Express H - Via hand delivery 7 FE 8 9 10 Steven R. Kuney, Esq. Williams & Connolly 725 12th Street, N.W. Washington, DC 20005 Fax No.: (202) 434-5029 Attorneys for Defendants MONSANTO COMPANY, GENERAL ELECTRIC COMPANY and WESTINGHOUSE ELECTRIC CORPORATION 11 FE 12 13 14 Arvin Maskin, Esq. Konrad L. Cailteux, Esq. Weil, Gotshal & Manges 767 Fifth Avenue New York, NY 10153 Fax No.: (212) 310-8007 Attorneys for Defendant WESTINGHOUSE ELECTRIC CORPORATIOI 15 H 16 17 18 H 19 20 21 22 FE 23 24 25 J. Bruce Alverson, Esq. Alverson, Taylor, Mortensen & Nelson 3821 West Charleston Boulevard Las Vegas, NV 89102 Fax No.: (702) 385-7000 Attorneys for Defendant GENERAL ELECTRIC COMPANY John L. Thorndal, Esq. Thorndal, Backus, Maupin & Armstrong 1100 East Bridger Avenue Las Vegas, NV 89101 Fax No.: (702) 366-0327 Attorneys for Defendants MONSANTO COMPANY and WESTINGHOUSE ELECTRIC CORPORATION Bruce A. Featherstone, Esq. Kirkland & Ellis 1999 Broadway, Suite 4000 Denver, CO 802 02 Fax No.: (303) 291-3300 Attorneys for Defendant MONSANTO COMPANY 26 27 VAn'employee' of BRADLEY & MERREL1 28 c/o JONES^ JONES, CLOSE & BROWN BRADLEY & MERRELL JONES, JONES, CLOSE & BROWN, CHARTERED Seventh Floor -- Bank of America Plaza 3 0 0 South Fourth Street Las Vegas, Nevada 8 9 1 0 1 -6 0 2 6 (702) 385-4202 MESSAGE FROM XEROX 7 0 2 4 : (702) 385-1 655 DATE: Jl? Il13 TO: u girren ffL 'Prtkesrf' Uarre-n tUVtncL Z \j \e-r flo w FROM: FAX#: O U 3 4 7 1 (,15542 PHONE#: OK 3411 i/4t W CLIENT/MATTER: Nevada Power v. Monsanto CLIENT/MATTER NO.: 11927.2 DOCUMENT(S) DESCRIPTION: l<dheJT )r6U^h droS^^jOm P UnjL ofiS4~aJesr\eyuh (J&VLZ^oLloL hnjdoLUlJ*. NUMBER OF PAGES (including cover page): MESSAGE: / Ur.(( Oe^ CMm^ oJotch 'fyj'S. THIS TELECOPY IS INTENDED ONLY FOR THE ADDRESSEE NAMED ABOVE. IT MAY CONTAIN INFORMATION THAT IS PRIVILEGED AND CONFIDENTIAL. IF YOU HAVE RECEIVED THE TELECOPY IN ERROR. PLEASE NOTIFY US IMMEDIATELY BY TELEPHONE, DESTROY ALL COPIES, AND DO NOT DISSEMINATE THE INFORMATION TO ANYONE. THANK YOU FOR YOUR ASSISTANCE. IF YOU EXPERIENCE PROBLEMS WITH THIS TRANSMISSION, please call (702) 3 8 5 -4 2 0 2 and ask for: Operator, Ext. 615 P* J - BRADLEY & MERRELL JO N E S, JONES. CLOSE tk BR O W N . CHARTI S e v e n th F loor -- Bank o f A m n r lc a PIm 3 0 0 South F ourth S treet Lue V e g e s , N e v a d a 89 1 0*1 - 6 0 2 8 (702) 38G -420Z M E S SA G E FFtOtVl X F ROX 7 0 2 4 : 7Q 2) 3 8 5 t1 6 5 5 DATE : ; /*7*7S TO: FROM: E"L ar*'*'- KL^ax n/n LJtw* r5.f-> <rMru.v>Via- 2.1, I*-" PPo, ^ -- -U FA X #: 0 / 7 3 ^ 7 ^ RHONE I: >// V V -2 . C LIENT/M ATTER: Nevada Power v. M onsanto GLIENT/ M ATTER N O . : 1 1 9 2 7 .2 DOGUMENT(S) DESCRIPTION: -- / * / / 1? 7 A u L c ^ lt NUMBER OF PAGES (in c lu d in g c o v e r p a g e ): MESSAGE: / (ur` e- &&iU.*3 -/Ti^sr ^21 TA hMtinG, TCSEOIYXNCPAOILPLCYNCITOBIPAiNILE.TSu.IBnAMYa uiOoUDo OnHlANyVOErTaKnDEITBCMGIIEfVMaUdIINdATiUTuGBg sTTUGCGBLEnICNaOFmOfeVRdMINAAHtTRDIOfvlNOb.ITI.iOtPmALENaAtYSOcEIoUNm.OtTTIHTMPAYNi VwKDoTInOUbOMaEFhMOoRAnTYiUOm.UVaGtAYlatMT*e>NLnfTM^A*tNlLBC{a*Ie.o' IP Y O U EXPERIENCE PROBLEMS W IT H TH IS T R A N S M IS S IO N , please c e ll (7 0 2 ) 3 8 6 - 4 2 0 2 a n d a s k fo r : O p e ra to r, E x t. 6*15 TRANSMISSION REPORT THIS DOCUMENT WAS CONFIRMED (REDUCED SAMPLE ABOVE - SEE DETAILS BELOW) ** COUNT ** TOTAL PAGES SCANNED : 28 TOTAL PAGES CONFIRMED : 28 *** SEND *** -- No. REMOTE STATION SI'ART TIME DURATION #PAGES MODE RESULTS 1 34- 972 301501 7-28-93 2:46PM 14 26" 28/ 28 COMPLETED 9600 TOTAL 0 : 1 4 '26" 28 NOTE : No. O P E R A T ION NUMBER 48 4800BPS SELECTED EC ERROR CORRECT G2 G2 COMMUNICATION PD POLLED BY REMOTE SP STORE & FORWARD RI RELAY IN IT IATE RS RELAY STATION MB SEND TO MAILBOX PG POLLING A REMOTE MP MULTI -POLLING RM RECEIVE TO MEMORY