honorable james l. robart
TRANSCRIPT
PLAINTIFF’S TRIAL BRIEF - 1
2:14-CV-00829JLR
Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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HONORABLE JAMES L. ROBART
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
PUGET SOUNDKEEPER ALLIANCE,
Plaintiff,
v.
RAINIER PETROLEUM CORP.,
Defendant,
___________________________________
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No. 2:14-cv-00829
PLAINTIFF’S TRIAL BRIEF
Plaintiff Puget Soundkeeper Alliance (“Soundkeeper”) respectfully submits this trial brief
in support of the evidence and arguments it will present at trial.
I. INTRODUCTION.
The Court has already found that Defendant Rainier Petroleum Corporation (“Rainier
Petroleum”) repeatedly violated numerous provisions of its Clean Water Act permit regulating
discharges of industrial stormwater from its Pier 15 facility to Elliott Bay. Dkt. 75. At trial,
Soundkeeper will prove the appropriate remedies for Rainier Petroleum’s persistent violations of
the Clean Water Act (“CWA”), focusing on penalties and injunctive relief.
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2:14-CV-00829JLR
Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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Rainier Petroleum’s conduct warrants a substantial civil penalty. Despite its significant
financial resources, Rainier Petroleum has flagrantly violated its CWA permit (the “Permit) ever
since it obtained permit coverage in 1996. Its violations contributed to water quality violations
and sediment pollution in one of our most important waterbodies and a key waterway for
migrating salmon. Its refusal to comply with the Permit’s secondary containment requirements
place Puget Sound at continuous risk of a catastrophic oil spill – an event that has been avoided
by mere luck and despite Rainier Petroleum’s disregard for the law. The motivation for these
violations is no mystery. Rainier Petroleum, a subsidiary of a lucrative multinational
corporation, enjoyed significant economic benefits from its noncompliance at the expense of the
environment.
Soundkeeper asks the Court to impose a penalty of $7 million. This penalty amount is
necessary to deter Rainier Petroleum and other large corporations that otherwise view penalties
as a mere cost of doing business. This penalty amount is also appropriate given Rainier
Petroleum’s recalcitrance and contempt for the law.
Soundkeeper also asks the Court to issue appropriate injunctive relief to ensure that
Rainier Petroleum ceases its illegal toxic discharges, complies with the Permit’s pollution
prevention and monitoring requirements, and immediately abates the catastrophic risk of an oil
spill by complying with the Permit’s secondary containment requirements. Rainier Petroleum’s
must bear the costs to finally come into compliance with the Permit in addition to the mandatory
civil penalty; anything less would reward Rainier Petroleum for its violations of the CWA.
Case 2:14-cv-00829-JLR Document 92 Filed 01/04/16 Page 2 of 25
PLAINTIFF’S TRIAL BRIEF - 3
2:14-CV-00829JLR
Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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II. THE COURT SHOULD ASSESS CIVIL PENALTIES TO DETER RAINIER
PETROLEUM FROM FURTHER VIOLATING THE CWA.
The central purpose of CWA penalties is deterrence—both to the specific violator and
generally to the regulated community. Catskill Mtns.. Ch. of Trout Unltd., Inc. v. City of New
York, New York, 244 F.Supp.2d 41, 48 (N.D. N.Y. 2003); and see Tull v. United States, 481 U.S.
412, 422 (1987) (“The legislative history of the [CWA] reveals that Congress wanted the district
court to consider the need for retribution and deterrence, in addition to restitution, when it
imposed civil penalties.”). If the regulated community perceives that violations are treated
lightly, the CWA regulatory program will be subverted. See United States v. Mun. Auth. of
Union Township, 929 F.Supp. 800, 809 (M.D. Pa. 1996).
Soundkeeper asks the Court to impose a minimum civil penalty of $7 million upon
Rainier Petroleum. While the evidence and law would justify a much higher penalty
Soundkeeper believes that a minimum $7 million penalty, coupled with injunctive obligations, is
sufficient to achieve the deterrence purposes of the Act.
A. The Court Should Conclude That a Minimum Civil Penalty of $7 Million is
Warranted.
The first step in a civil penalties analysis is for the Court to calculate the maximum
penalty authorized for the violations. The CWA authorizes civil penalties up to $37,500 per
violation per day. 33 U.S.C. §§ 1319(d), 1365(a); 40 C.F.R. § 19.4 (inflation adjustment
commencing January 12, 2009). The second step is for the Court to determine whether any
reduction from the maximum penalty is justified using the “penalty factors” listed in section
309(d) of the CWA.1 Atl. States Legal Found., Inc. v. Tyson Foods, Inc., 897 F.2d 1128, 1142
1 This approach—known as the “top-down approach”—is used by a majority of courts. E.g., Sierra Club v. Cedar
Point Oil Co., Inc., 73 F.3d 546, 573 (5th Cir. 1996); Ctr. for Biological Diversity v. Marina Point Dev. Assocs., 434
F.Supp.2d 789, 798-99 (C.D. Cal. 2006), rev’d on other grounds, 566 F.3d 794 (9th Cir. 2009); Catskill Mtns. Ch. of
Case 2:14-cv-00829-JLR Document 92 Filed 01/04/16 Page 3 of 25
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Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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(11th Cir. 1990). Some courts presume that the maximum penalty should be imposed. See
Pound v. Airosol Co., Inc., 498 F.3d 1089, 1095 (10th Cir. 2007) (applying similar provisions of
the Clean Air Act (“CAA”)).2 If a court chooses not to impose the maximum penalty, it should
clearly indicate the weight it gives to each of the penalty factors and the factual findings that
support its conclusions. Atl. States Legal Found., 897 F.2d at 1142.
1. A $7 Million Penalty is Only a Small Fraction of the Maximum Penalty for
Rainier Petroleum’s 5,500 Permit Violations.
The Court calculates the number of violations and the maximum penalty as a matter of
law using simple rules adopted by the federal courts, as described below. The maximum penalty
is determined by adding the number of daily violations for each distinct violation. See Borden
Ranch P’ship v. United States Army Corps of Eng’rs, 261 F.3d 810, 817-18 (9th Cir. 2001). A
separate penalty is imposed for each violation, even when multiple violations occur on the same
date. United States v. Smithfield Foods, Inc., 191 F.3d 516, 527-28 (4th Cir. 1999) (this rule is
critical to create “proper incentives,” since otherwise “[o]nce one effluent limit was violated,
there would be no reason for the permittee to heed the rest of the permit limits for that day.”)
i. Rainier Petroleum is liable for over 5,500 distinct violations found
in the Court’s summary judgment Order.
Trout Unltd, Inc. v. City of New York, New York, 244 F.Supp.2d at 48; Cmty. Ass’n for Restoration of the Env’t v.
Henry Bosma Dairy, No. CY-98-30110EFS, 2001 U.S. Dist. LEXIS 3579, at *24-25 (E.D. Wash. Feb. 27, 2001);
Hawaii’s Thousand Friends v. City & County of Honolulu, 821 F.Supp. 1368, 1394-95 (D. Haw. 1993). However, a
minority of courts apply what is known as the “bottom-up approach.” E.g., United States v. Smithfield Foods, Inc.,
972 F.Supp. 338, 354 (E.D. Va. 1997), rev’d on other grounds, 191 F.3d 516 (4th Cir. 1999). Under the bottom-up
approach, the economic benefit to the violator resulting from the violations is determined first, and then the other
penalty factors are applied to adjust that amount as appropriate. Smithfield Foods, 972 F.Supp. at 354. 2 See also Sierra Club v. Khanjee Holdings (US), Inc., 655 F.3d 699, 707 (7th Cir. 2011) (also applying similar
provisions of the CAA). Courts commonly interpret similar statutory provisions contained in the several federal
environmental statutes consistently. See, e.g., Sackett v. United States Envtl. Prot. Agency, 622 F.3d 1139, 1144
(9th Cir. 2010) (noting that the CWA enforcement provisions were modeled on those contained in the CAA).
Case 2:14-cv-00829-JLR Document 92 Filed 01/04/16 Page 4 of 25
PLAINTIFF’S TRIAL BRIEF - 5
2:14-CV-00829JLR
Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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Rainier Petroleum is subject to a separate penalty assessment for each day within the
statute of limitations “that Rainier has violated the Permit by failing to install an impervious
floor in its tank farm,” Dkt. 75 at 31-32 (citing 2010, 2015 and 2002 Permits). Thus, Rainier
Petroleum is subject to 2,470 days of penalty assessments for its tank farm violation. See Sierra
Club v. City & County of Honolulu, No. 04-00463 DAE-BMK, 2007 U.S. Dist. LEXIS 80452, at
*6, 33-34 (D. Haw. Oct. 30, 2007) (assessing separate daily penalty for each day defendant failed
to install a pollution control device beyond the permit deadline).
Rainier’s violation of the permit requirement that it monitor all distinct points of
discharge offsite on a quarterly basis and report the findings to Ecology accrue on a quarterly
basis. See Dkt. 75 at 33 (citing 2010 Permit at 20-22; 2015 Permit at 18-20.) Multiplying Rainier
Petroleum’s eleven unmonitored outfalls by the twenty three quarters it failed to monitor and
report between first quarter 2010 and third quarter 2015 yields a total of 253 distinct violations
subject to penalty assessment. Similarly, Rainier violated the Permit by failing to collect
samples from the one outfall it designated as its monitoring point in at least fifteen quarters,
which result in another 15 distinct violations subject to penalty assessment See Dkt. 75 at 34-35.
Rainier Petroleum’s failure to submit 2013 and 2014 annual reports, Dkt. 75 at 37, failure
“to document monthly inspections in 2010, 2011, 2012, 2013, and September 2015,” and failure
to sign and certify its monthly inspection reports for January 2014 through August 2015, Dkt. 75
at 36, constitute at least 71 distinct violations subject to penalty assessment, employing the most
conservative method of counting one violation per missing or deficient report. Compare
Smithfield Foods, 965 F. Supp. at 782 (finding each day a report was late constitutes a separate
violation).
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PLAINTIFF’S TRIAL BRIEF - 6
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Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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The Court found Rainier Petroleum liable for failing to complete 6 distinct Level 1
corrective actions: zinc in 2009, zinc in 2012, copper in 2013, zinc in first quarter 2015, copper
in first quarter 2015, and copper in second quarter 2015. The copper and zinc Level 1 violations
in first quarter 2015 are appropriately treated as two separate violations though they were
triggered by the same sample. See Idaho Conservation League v. Atlanta Gold Corp., 879 F.
Supp. 2d 1148, 1166 (D. Idaho 2012) (It is “appropriate to treat the violations for the effluent
limitations of arsenic and iron separately.”); Smithfield Foods, Inc., 191 F.3d at 527 (“If multiple
violations of the Permit occur on the same day, defendants are liable for a separate day for each
violation of the Permit.’”) This, again, is the most conservative method of counting distinct
violations. See, e.g., City & County of Honolulu, 486 F.Supp.2d at 1191-92.
Rainier Petroleum’s violations of the Permit’s prohibition on discharges that contribute to
violations of water quality standards, Dkt. 75 at 41, accrue at least each day that stormwater
discharges from the Pier 15 facility. See Puget Soundkeeper Alliance v. Rainier Petroleum Corp.,
No. 2:14-cv-00831RSM, 2015 U.S. Dist. LEXIS 135709, at *30 (W.D. Wash. Oct. 5, 2015)
(“Each discharge constitutes a separate violation” of Permit condition S10). Soundkeeper will
prove at trial that stormwater discharged from the Pier 15 facility on at least 566 days within the
statute of limitations period.
Finally, Rainier Petroleum’s failure to prepare and implement a SWPPP according to
permit requirements3 is subject to separate daily penalty assessments for each day the violations
continued. See Natural Res. Def. Council v. Southwest Marine, Inc., 236 F.3d 985, 991-1002
(9th Cir. 2000) (upholding a penalty assessment for 799 days of violations related to the failure
3 See Dkt. 75 at 41 (SWPPP lacks BMPs necessary to ensure that discharges do not violate water quality standards),
42 (SWPPP not modified and recertified in response to benchmark exceedances), 43 (SWPPP site map and sampling
plan deficient), 44 (SWPPP deficient as to employee training).
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PLAINTIFF’S TRIAL BRIEF - 7
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Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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to prepare and implement an adequate SWPPP). Rainier’s SWPPP violations have persisted at
least since the 2010 Permit went into effect on January 1, 2010, i.e., 2,201 days. See Dkt. 81 at 8
(agreed fact 34) (2010 SWPPP unchanged).
In total, the Court found Rainier Petroleum liable for at least 5,582 distinct violations
each subject to a maximum penalty of $37,500, totaling over $200 million.
Violation Number of
violations
Pervious tank farm bottom 2,470
Failure to monitor 9 pier discharge points. 207
Failure to monitor 2 roof discharge points. 46
Quarters failed to sample at outfall 001 15
Failure to submit annual reports 2
Failure to documenting monthly inspections 49
Deficient monthly inspection reports 20
Failure to complete 2009 Level 1 1
Failure to complete 2012 Level 1 1
Failure to complete 2013 Level 1 1
Failure to complete 1st quarter 2015 Level 1 (Cu) 1
Failure to complete 1st quarter 2015 Level 1 (Zn) 1
Failure to complete 2nd quarter 2015 Level 1 1
Water quality standards violations 566
Deficient SWPPP 2,201
Total 5,582
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2. Application of the CWA Penalty Factors Warrants a Reduction of the
Maximum Penalty to No Less Than $7 Million.
The CWA directs the Court to consider the “penalty factors” addressed below when
determining whether to reduce the maximum penalty amount. See 33 U.S.C. § 1319(d).
Application of these factors here reinforces the need for a substantial penalty, but mitigating
factors justify reducing the maximum penalty to $7 million.
i. Rainier Petroleum’s violations are serious.
“To determine the seriousness of a defendant’s violations, the Court should consider ‘the
frequency and severity of the violations as well as their effect on the environment.’” Catskill
Mtns.. Ch. of Trout Unltd, Inc., 244 F.Supp.2d at 49-50. However, actual harm to the
environment need not be proven to justify substantial penalties. See Mun. Auth. of Union
Township, 929 F.Supp. at 807; United States v. Gulf Park Water Co., 14 F. Supp. 2d 854,
861 (S.D. Miss., 1998).
Rainier Petroleum’s violations are serious on virtually every level.
Rainier’s discharges of heavy metals contribute to violations of water quality standards in
Elliott Bay, in violation of the bedrock CWA prohibition on discharges of toxic pollutants in
toxic amounts. See, e.g., Defs. of Wildlife v. Browner, 191 F.3d 1159, 1165 (9th Cir. 1999). As
Soundkeeper’s expert Dr. Horner will testify, Rainier’s recent discharges show copper
concentrations that are more than ten times the level toxic to salmon. Soundkeeper’s members
have witnessed and will testify that salmon gasp for air and die because of stormwater pollution
in Puget Sound waterways, frequently before those fish are able to spawn.
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Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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Rainier’s toxic discharges continue unabated because Rainier has not completed any of
the six required corrective actions it has triggered in past years. Even after a year of litigation,
Rainier continues to demonstrate at best a casual and at worst a contemptuous regard for Permit
requirements when it ignored the Level 1 corrective action requirements its polluted discharges
compelled over the last several months. When a permittee does not promptly address violations
when it is being scrutinized in federal litigation, it needs strong incentives to comply when it is
not being watched.
Rainier’s longstanding violation of the Permit’s most basic spill prevention requirement –
secondary containment for its 82,250 gallon lube oil and oil-contaminated stormwater tank farm
– is extremely serious because of the daily catastrophic risk it poses to the immediately adjacent
Elliott Bay. See Gulf Park Water Co., 14 F. Supp. 2d at 862 (court may justifiably impose a
significant penalty if it finds there is a risk or potential risk of environmental harm, even absent
proof of actual deleterious effect). Soundkeeper will prove at trial that Rainier’s tanks are at the
end of their serviceable life, that accidental overtopping of the tanks could result in lube oil
spilling at a rate of 200 gallons per minute, and that any lube oil spill in the tank farm would
quickly reach Puget Sound given the gravel base of the tank farm and its connection to Elliott
Bay, at which point it would be too late to protect marine life from the oil’s toxic effects. As the
Ninth Circuit has recognized, just the risk of an oil spill in Puget Sound is serious. Ocean
Advocates v. U.S. Army Corps of Eng'rs, 361 F.3d 1108, 1119-20 (9th Cir. 2004) (risk of an oil
spill jeopardizes a wide variety of interests and must be analyzed as “[a]n oil spill would cause a
markedly decreased opportunity” for wildlife observation and recreation).
However, Soundkeeper recognizes that the seriousness of Rainier’s spill containment
violations is partially mitigated through Rainier Petroleum’s sheer luck that a spill has not yet
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Seattle, Washington 98112 (206) 860-2883
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occured. Had Rainier Petroleum’s tank farm ruptured, causing a catastrophic oil spill,
Soundkeeper would undoubtedly be calling for the maximum penalty. That this has not yet
occured brings Soundkeeper to the requested $7 million penalty.
Rainier Petroleum’s extensive violations of the Permit’s monitoring requirements are also
very serious because they flout the core of the entire regulatory scheme and enabled Rainier to
evade the Permit’s corrective action requirements. Courts recognize that the NPDES permit
program fundamentally relies on accurate self-monitoring and self-reporting by dischargers.
Sierra Club v. Union Oil Co. of Cal., 813 F.2d 1480, 1491-92 (9th Cir. 1987), vacated on other
grounds, 485 U.S. 931 (1988), reinstated with minor amendment, 853 F.2d 667 (9th Cir. 1987)4
Rainier has never monitored eleven of its twelve discharge points and failed to monitor even its
single monitoring point in seventy percent of the quarters during the statute of limitations period.
This is a record of a permittee who is not trying, does not care, and is treating its permit as a
regulatory nuisance. Before Soundkeeper filed suit, Rainier’s historically poor sampling
practices showed a worsening trend. Tellingly, after Soundkeeper filed suit and for the first time
in over a decade Rainier finally sampled its one monitoring point in three consecutive quarters,
and it immediately triggered the Permit’s highest corrective action requirement of installing
stormwater treatment.
4 See also Sierra Club v. Simkins Industries, Inc., 847 F.2d 1109, 1115 (4th Cir. 1988) (finding that the reporting
requirements of a NPDES permit “are central to adequate administration and enforcement of limits on substantive
discharges” and upholding a $130,000 penalty for monitoring and recordkeeping violations); Save Our Bays &
Beaches v. City & County of Honolulu, 904 F.Supp. 1098, 1105 (D. Haw. 1994) (“A critical part of the regulatory
scheme is a strict self-reporting system requiring permittees to monitor carefully their permit compliance…”).
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ii. Rainier Petroleum is enjoying a significant economic benefit from its
violations.
In the CWA penalty factor context, economic benefit means the financial gains that
accrue through delayed and/or avoided compliance expenditures. Idaho Conservation League v.
Atlanta Gold Corp., 879 F. Supp. 2d at 1167. Extracting the economic benefit of non-
compliance is an important first step to ensure that a company cannot simply write off the
penalty as a cost of doing business. See, e.g., id. at 1169.
As Soundkeeper’s economic expert Mr. Shefftz will testify, even assuming Rainier
Petroleum immediately implements the measures necessary to correct its violations and comply
with the Permit, it will have enjoyed a nearly $1 million economic benefit as a result of the
expenditures it delayed or avoided through its Permit violations. Soundkeeper will prove that its
estimate of economic benefit is conservative, because, among other things, it does not include
the cost of every applicable compliance measure, and because it only accounts for the economic
benefit during the statute of limitations period, while Rainier Petroleum’s violations date much
further back than the statute of limitations allows the Court to reach for liability.5
Rainier’s million dollar economic benefit from illegal activity warrants no more of a
reduction from the maximum penalty than the $7 million penalty Soundkeeper requests. This is
approximately seven times the economic benefit. As Mr. Shefftz will explain, a penalty that
does more than extract the economic benefit is necessary to create an economic deterrent against
future violations, which is a key purpose of civil penalties. Tull v. United States, 481 U.S. at
422.
5 “Since it is difficult to prove the precise economic benefit to a polluter, a reasonable approximation of economic
benefit is sufficient.” Smithfield Foods, 972 F. Supp. at 348.
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iii. Rainier Petroleum’s long history of violations.
In evaluating the “history of violations” penalty factor, the Court should consider both
past violations and the duration and continuity of present violations. See, e.g., Catskill Mtns, 244
F.Supp.2d at 52. The Court should also consider the history of similar violations at Rainier
Petroleum’s other Seattle facility and at its sibling company’s facility in California. Pub. Interest
Research Grp. v. Hercules, Inc., 830 F. Supp. 1525, 1545 (D.N.J. 1993) (the “history of
violations” factor “easily includes” violations at defendant’s other facilities) rev’d in part on
other grounds, 50 F.3d 1239 (3rd Cir. 1995). The Court may consider the history and seriousness
of Rainier Petroleum’s violations together, and in doing so the Court may weigh all of the
violations in the record, not just those for which liability is determined. See Mun. Auth. of Union
Township, 929 F. Supp. at 807. Specifically, the Court’s inquiry is not confined to violations
within the statute of limitations period. United States v. Allegheny Ludlum Corp., 187 F.Supp.2d
426, 445-6 (W.D. Penn. 2002) (penalty calculation considering nearly 20 years of compliance
history because “[t]he permittee’s complete history of compliance with the Act affords the most
useful picture for setting a current penalty”).
Soundkeeper will introduce evidence of Rainier’s Pier 15 facility’s very long history of
Permit violations, including SWPPP violations dating back to 1997, and water quality standards
violations dating back to the time the Permit began requiring permittees to sample.
Soundkeeper’s evidence will show that Rainier’s other Seattle facility’s history of similar
CWA violations dates back to the start of Rainier’s operations there.
In addition, Soundkeeper will show that Rainier Petroleum’s sister company has a history
of CWA violations relating to unpermitted discharges of industrial stormwater from its dockside
fueling and petroleum storage facility and inadequate secondary containment, in a pattern
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Seattle, Washington 98112 (206) 860-2883
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depressingly similar to its conduct at Pier 15. This evidence will show that Rainier’s violations
are part of a long, company-wide history of casual disregard for the CWA – even when penalized
by federal enforcement authorities.
Application of this factor does not justify reducing the penalty below $7 million.
iv. The economic impact of the penalty on Rainier Petroleum.
Rainier’s financial resources do not warrant any reduction in a penalty on account of the
company’s inability to pay. Rather, the company’s size warrants a substantial penalty to
adequately deter such a large corporation, as a penalty must be big enough to deter the company
from future violations. Catskill Mtns., 244 F.Supp.2d at 48; and see Tull, 481 U.S. at 422. “To
achieve the goal of deterrence, a penalty must be high enough so that the discharger cannot
‘write it off’ as an acceptable environmental trade-off for doing business.” Hawaii’s Thousand
Friends, 821 F.Supp. at 1394.
The defendant bears the burden of demonstrating “that the impact of a penalty would be
ruinous or otherwise disabling.” Gulf Park Water Co., 14 F. Supp. 2d at 868. "Where a violator
cannot show that a penalty will have a ruinous effect, the economic impact factor under [33
U.S.C. § 1319] will not reduce the penalty." Id.
Rainier Petroleum is owned by Maxum Petroleum and Pilot Thomas Logistics. Dkt. 81 at
18 (agreed fact 91). Under unanimous precedent, the Court should look to the parent companies’
financial health in determining Rainier’s ability to pay. Atlanta Gold Corp., 879 F. Supp. 2d at
1170 (“…the assertion that a parent corporation’s assets cannot be considered in assessing a
[CWA] penalty is contrary to every case of which this Court is aware.”); United States v. Mun.
Auth. of Union Township, 150 F.3d 259, 268 (3rd Cir. 1998). The defendant in Union Township
argued that the district court committed legal error in considering the financial condition of its
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parent corporation because the parent was not a party to the lawsuit, did not violate the CWA,
and there was insufficient evidence to pierce the corporate veil. Id. The Third Circuit rejected
these arguments, noting that the district court did not pierce the corporate veil and assess a
penalty directly against the parent. Id. Rather, the court appropriately considered the parent’s
assets in evaluating the defendant’s ability to pay a penalty—i.e., in considering the economic
impact of the penalty. Id.; see also United States v. Allegheny Ludlum Corp., 187 F.Supp.2d 426,
445-46 (W.D. Pa. 2002) (consideration of parent company’s assets and stockholder’s equity is
appropriate in CWA lawsuit); PIRG v. Powell Duffryn Terminals, Inc., 720 F.Supp. 1158, 1166
(D. N.J. 1989) (rejecting defendant’s argument in a CWA suit that it is in poor economic
condition given the financial condition of defendant’s parent), rev’d in part on other grounds,
913 F.2d 64 (1990).
Rainier has withheld financial information regarding its parent companies.
Notwithstanding Rainier discovery non-compliance, Soundkeeper will show that Maxum
Petroleum recently reported $4.5 billion in revenue. See Dkt. 81 at 20. Evidence at trial will also
show that Rainier Petroleum and Maxum are essentially a single entity, that Maxum routinely
provides Rainier with financial support, and that Rainier’s parent company or insurer will pay
the penalty imposed upon Rainier.
v. Good-faith efforts to comply and other matters as justice requires.
The final two CWA penalty factors, “good faith efforts to comply” and “other matters as
justice requires,” provide the Court with broad discretion to consider other issues it deems
relevant to civil penalties. Such matters may include the bad-faith conduct of the violator and its
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attitude towards achieving compliance. Smithfield Foods, Inc., 972 F.Supp. at 353.6
Consideration of such matters here strongly supports the $7 million penalty request.
a. Rainier Petroleum’s lack of good-faith efforts to comply.
Although Rainier Petroleum’s entire business is handling high-risk petroleum products
and it is part of a very large and sophisticated corporate enterprise that controls dockside
distribution of such toxic products nationwide, its efforts to comply with the CWA have been
substandard for even the tiniest mom-and-pop outfit. Evidence at trial will show that prior to
2014, Rainier Petroleum made almost no effort to comply with the Permit.
Even after Soundkeeper filed a lawsuit, Rainier Petroleum made no effort to correct even
the violations to which it readily admitted. Rainier Petroleum only hired a stormwater consultant
because of this suit – it never sought professional help before – but then it largely ignored its
own consultant’s recommendations to do basic things like train its employees, who were
admittedly “confused” about how to comply with the permit.
Most disturbing is that Rainier’s parent company, Maxum, made one employee, Robert
Barnes, responsible for Permit compliance at two Rainer facilities but gave him absolutely no
training or support. Evidence will show that Mr. Barnes was simply overwhelmed when he was
handed the SWPPP with no further instruction, much less the training required by the Permit. To
Mr. Barnes’s credit, in October 2015 he took a helpful class in Permit compliance, after over a
year of trying to fit it in with his other obligations. But this is not Mr. Barnes’s Permit; CWA
compliance is the company’s responsibility and it has not tried to comply. Indeed, at the class
Mr. Barnes learned that Rainier Petroleum needs serious help, and repeatedly implored Maxum
6 See also Piney Run Pres. Ass’n v. County Comm’rs of Carroll County, 82 F.Supp.2d 464, 472 (D. Md. 2000), rev’d
on other grounds, 268 F.3d 255 (4th Cir. 2001).
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executives to hire full time personnel dedicated to Permit compliance. Despite the pending
litigation and two Court orders finding both Rainier Petroleum facilities liable for a litany of
significant violations, despite its own consultant’s recommendations, and the pleas from Mr.
Barnes, Rainier’s parent company’s executives have not even responded to Mr. Barnes’s
repeated requests for help.
b. Rainier Petroleum’s contempt for the law.
Throughout this litigation Rainier Petroleum has displayed contempt for the CWA,
citizen enforcement, and the Court by remaining willfully ignorant of its CWA obligations,
concealing information, and lying about its activities and the cost of the simple measures
required to bring the facility into compliance.
Most egregious is that Rainier Petroleum repeatedly lied to the Court and to Soundkeeper
so as to obstruct an efficient resolution of this case. Early on in the case, Rainier refused to
implement Soundkeeper’s proposed remedies for the facility’s tank farm and pier, claiming they
would cost “more than $2 million dollars.” Dkt. 17 at 17.
This case is heading to trial because Rainier sabotaged the Court-ordered mediation.
Soundkeeper told Rainier that the mediation would be futile unless Rainier came to mediation
with an understanding of the costs to remedy its violations at the tank farm and pier. Dkt. 55, ¶
3. Rainier refused to obtain an actual bid, causing the mediation to fail and forcing this case to
be resolved at trial – wasting the resources of this Court and the parties. Id.
Rainier then sought to delay trial based on its claim to the Court that Soundkeeper’s
expert’s “proposed solution is under-engineered and the cost is grossly under estimated.” Dkt.
60 at 2. See also Dkt. 48 at 2; Dkt. 49, ¶ 5 (Bilanko Decl.). Rainier offered no evidence
supporting its claims at the time it made these representations to the Court. See id.
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Indeed, Rainier misled the Court in claiming that Soundkeeper’s paving proposal was
“under-engineered” and its costs “grossly under estimated.” When Rainier final got a bid, the
cost was roughly comparable to Soundkeeper’s estimate and a pittance compared to Rainier’s
false cry of $2 million. Had Rainier had timely obtained this bid rather than playing games and
exaggerating to the Court, this case could have settled many months ago.
Rainier’s conduct underscores that it has treated CWA compliance more like a game in
which one can cheat than an important federal requirement. Indeed, at trial Soundkeeper expects
Rainier to argue that Soundkeeper’s compliance cost estimates – which are considerably lower
than $2 million – are overstated! The penalty should take into account the need to deter
polluters from wasting party and judicial resources instead of directly addressing and funding
CWA compliance.
Rainier’s misrepresentations are not limited to remedies. In a futile attempt to avoid
responsibility for the stormwater that discharges from Rainier’s pier to Elliott Bay without any
treatment, Rainier repeatedly misrepresented that the pier is “utilized solely for pedestrians.”
Dkt. 29 at 5. See also id. at 2, 8, 15; Dkt. 31 at ¶ 6 (Rainier’s parent company’s vice president
averring that the pier is “utilized for pedestrians only.”); Dkt. 32 at 10. Evidence at trial will
show that Rainier knew these statements were false because Rainier drives its pallet jack and
forklift on the pier. That Rainier puts its desire to shirk responsibility for its polluted discharges
above its duty of candor speaks volumes to its attitude toward compliance.
Evidence at trial will further show that, even under the supposed microscope of litigation,
Rainier and its parent company paid little attention to CWA compliance. Two years into his
position, the individual tasked with Permit compliance for the facility – Mr. Barnes – has not
even read the entire Permit. Similarly, Rainier’s excuse for withholding information about
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Seattle Public Utilities’ inspections is that Rainier never bothered to open SPU’s letters
demanding corrective action for the tank farm and other problems, and Rainier’s counsel never
asked their client for documents that were responsive to Soundkeeper’s discovery requests.
Weeks after the Court’s order on summary judgment issued, when counsel conferred, Rainier’s
counsel had not even read the entire order, and at the Court’s hearing on Soundkeeper’s motion
for discovery sanctions Rainier’s counsel demonstrated a similar unfamiliarity with Judge
Martinez’s order in Soundkeeper’s companion case. In over a decade of enforcing this Permit,
Soundkeeper has not encountered greater indifference and willful ignorance from a discharger.
c. The public good demands a penalty with broad deterrent
value.
Stormwater pollution “is one of the most significant sources of water pollution in the
nation.” Envtl. Def. Ctr., Inc. v. United States Envtl. Prot. Agency, 344 F.3d 832, 840 (9th Cir.
2003). Evidence at trial will show that stormwater is the largest source of toxic loading to Puget
Sound, and that controlling stormwater discharges is essential to prevent recontamination of the
Lower Duwamish Waterway Superfund site following cleanup. That cleanup is expected to cost
taxpayers $342 million. Dkt. 81 at 6 (agreed fact 24).
However, as Soundkeeper will demonstrate, Permit violations are pervasive in western
Washington, and public resources for enforcement are stretched thin. As a result, the probability
that individual violators will be caught, prosecuted, and appropriately penalized is low.
Soundkeeper’s economist Mr. Shefftz will explain that in this enforcement context a penalty
must be substantially higher than Rainier’s economic benefit to have a deterrent effect and to
send a strong deterrence message to the many other stormwater polluters in Puget Sound.
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Taking these factors into account, Soundkeeper believes a $7 million penalty is
reasonable and the minimum the Court should impose given that the maximum penalty is $209
million. Considering the significant economic benefit to Rainier from non-compliance, Rainier’s
misconduct with respect to permit compliance and in this case, and Rainier’s likely argument
that a $209 million penalty would be ruinous, a minimum $7 million penalty is plainly justified,
if not required in this circumstance in order to serve Congress’s goals of restitution, retribution,
and deterrence. Tull v. United States, 481 U.S. at 422.
III. THE COURT SHOULD ORDER COMPEHENSIVE INJUNCTIVE RELIEF.
The Court has broad statutory authority to fashion an appropriate equitable remedy under
the CWA. See 33 U.S.C. §§ 1365(a) and (f) (the Court has authority to enforce “a permit or
condition thereof”). As the Supreme Court has observed, the CWA “permits the district court to
order that relief it considers necessary to secure prompt compliance with the Act.” Weinberger v.
Romero-Barcelo, 456 U.S. 305, 320 (1982).
To be granted injunctive relief, “‘[a] plaintiff must demonstrate: (1) that it has suffered an
irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate
to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff
and defendant, a remedy in equity is warranted; and (4) that the public interest would not be
disserved by a permanent injunction.’” Monsanto Co. v. Geertson Seed Farms, 130 S. Ct. 2743,
2756 (2010) (quoting eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006)).
The Court will hear testimony that Soundkeeper’s members derive aesthetic and
recreational enjoyment from their use of Elliott Bay and the Duwamish River estuary, and are
harmed by Rainier’s ongoing violations of the CWA. Such “[e]nvironmental injury, by its
nature, can seldom be adequately remedied by money damages and is often permanent or at least
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of long duration, i.e., irreparable.” Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 545
(1987).
If injury to the environment is sufficiently likely, the balance of harms will usually favor
the issuance of an injunction. Amoco Prod., 480 U.S. at 545. The Ninth Circuit has affirmed that
“the public interest in preserving nature and avoiding irreparable environmental injury outweighs
economic concerns.” Lands Council v. McNair, 537 F.3d 981, 1005 (9th Cir. 2008).7 Thus the
Ninth Circuit will uphold the grant of even costly or difficult injunctive relief where, as here,
swift corrective action is needed to protect a fragile and degraded marine environment. Nat. Res.
Def. Council v. Sw. Marine, Inc., 236 F.3d at 1001.
Finally, the public interest is served by an injunction designed to further the objectives of
the CWA—“to restore and maintain the chemical, physical, and biological integrity of the
Nation’s waters.” See 33 U.S.C. § 1251(a); Atlanta Gold Corp., 879 F. Supp. 2d at 1162
(meeting state water quality standards “is a critical public interest that profoundly outweighs a
company’s bottom line.”)
Soundkeeper’s stormwater engineering experts Dr. Horner and William Lider will testify
in support of several components of this request for comprehensive injunctive relief.
1. Upgrading tank farm secondary containment. Mr. Lider will testify that it is
necessary and entirely feasible and affordable for Rainier to pave the tank farm containment area
with Portland cement, as well as to install an impervious liner and cleanup any contaminated
soils before paving.
7 See also Atlanta Gold Corp., 879 F. Supp. 2d at 1161- 63 (““Harm to [the] environment outweighs a defendant's
financial interests, particularly where violations are of a longstanding and continual nature . . . Compliance with the
Clean Water Act is not dependent upon whether the polluter has actually begun to turn a profit. The statute contains
no qualification for the profitability of an enterprise . . .”)
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2. Secondary containment for storage of portable liquid containers. The Court will
hear testimony that it is easy and inexpensive for Rainier Petroleum to store all portable
containers of liquids and petroleum products in secondary containment, and that doing so is
necessary to comply with the Permit and prevent a spill.
3. Consolidating, monitoring, and treating pier runoff. Soundkeeper’s experts will
testify that the most economical way for Rainier to address the numerous points of unmonitored
and untreated stormwater discharges from its pier is to install piping to bring the stormwater to
one consolidated location for monitoring and high quality treatment.
4. Monitoring roof runoff. Rainier Petroleum must either begin sampling the roof
drain outfalls or divert the roof drains to a consolidated monitoring location to comply with the
Permit.
5. Oil/water separator. Soundkeeper will show that Rainier Petroleum’s existing
below-ground oil/water separator is already undersized and will need to be upgraded to prevent
the discharge of slugs of oil to Elliott Bay, to handle additional flows from the pier, tank farm
once it is paved, and potentially the roof runoff, and to provide pretreatment to remove oil and
prevent fouling the enhanced treatment system that Rainier must install.
6. Installation of enhanced filtration by September 30, 2016. As Dr. Horner and Mr.
Lider will explain, installing a Chitosan enhanced sand filtration system is necessary to bring the
facility into compliance with the Permit’s water quality protections and corrective action
requirements, and doing so is entirely feasible. Accordingly, Soundkeeper will demonstrate that
it is appropriate to order Rainier Petroleum to complete the required engineering report for such
treatment by May 15, 2016 for Department of Ecology review and approval, and to install a
Chitosan-enhanced sand filter to treat all of its discharges by September 30, 2016, the deadline
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for the Level 3 corrective action that Rainier Petroleum triggered this fall with its polluted
discharges.
7. Corrected and enhanced sampling plan. To remedy its violations of the Permit’s
discharge monitoring requirements Rainier Petroleum will need to revise the sampling plan in its
SWPPP, sample any additional discharge points unless and until they are consolidated, conduct
enhanced sampling, and conduct an employee training on sampling and reporting. Specifically,
appropriate equitable relief for Rainier’s long history of monitoring failures includes conducting
enhanced sampling by sampling discharges from each outfall during at least two different storm
events (i.e., separated by at least 24 hours without precipitation) in the first, second, and fourth
quarters of 2016, and first and second quarters of 2017, to better characterize its stormwater and
the efficacy of new best management practices (“BMPs”).
8. SWPPP. Rainier Petroleum will need to revise its SWPPP to rectify the
deficiencies identified in the Court’s order on summary judgment, and to incorporate any
changes to its BMPs as a result of the injunctive relief ordered by the Court.
9. Employee training. Finally, Soundkeeper will present evidence at trial that the
employees with stormwater responsibilities at the facility should promptly attend a seminar on
Permit compliance and stormwater management put on by the Environmental Coalition of South
Seattle. This is the same seminar that Mr. Barnes recently attended and found very helpful.
IV. CITIZEN SUIT PROVISIONS AND STANDING.
“The citizen plaintiffs in a [CWA] suit are suing as private attorneys general, and they
seek enforcement of federal law… Any benefit from the lawsuit, whether injunctive or
monetary, inures to the public or to the United States.” Sierra Club v. Chevron U.S.A., Inc., 834
F.2d 1517, 1522 (9th Cir. 1987) (quoting Chesapeake Bay Found. v. Bethlehem Steel Corp., 608
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F.Supp. 440, 449 (D. Md. 1985)). Congress and the courts have recognized that citizen suits are
an integral part of the overall enforcement scheme of the CWA that have deterred violators and
achieved significance compliance gains. Save Our Bays & Beaches v. City & County of
Honolulu, 904 F.Supp. 1098, 1125-26 (D. Haw. 1994). Accordingly, the Ninth Circuit treats
citizen enforcement actions “liberally, because they perform an important public function….
[C]itizens should be unconstrained to bring these actions and the courts should not hesitate to
consider them.” Sierra Club v. Chevron U.S.A., Inc., 834 F.2d 1517, 1525 (9th Cir. 1987).
As the Court implicitly found in granting summary judgment, Soundkeeper has met all
requirements to bring this case. First, Soundkeeper complied with all pre-suit notice provisions,
and mailed copies of the Complaint to the EPA and the United States Department of Justice. Dkt.
81 at 18 (agreed facts 87 and 89).8 Second, Rainier Petroleum’s violations are “ongoing” and
therefore subject to citizen suit because they continued after the complaint was filed and because
Rainier had not taken any actions to eradicate its violations by that date. Gwaltney of Smithfield,
Ltd. v. Chesapeake Bay Found., Inc., 484 U.S. 49, 64-65 (1987).9
Finally, Rainier Petroleum has not contested Soundkeeper’s standing.10 As the Court will
see at trial, Soundkeeper has suffered “injury in fact.” Its members derive aesthetic and
8 “[A] party who wishes to sue under the CWA’s citizen enforcement provisions may not commence an action until
at least 60 days after giving notice of intent to sue” and serving copies of said notices upon the Attorney General and
EPA. Southwest Marine, Inc., 236 F.3d at 992; 33 U.S.C. § 1365(b)(1)(A); 40 C.F.R. § 135.2(a)(1); 33 U.S.C. §
1365(c)(3); and 40 C.F.R. § 135.4. The complaint must be served pursuant to 505(c)(3) of the CWA, 33 U.S.C. §
1365(c)(3). 9 Intermittent or sporadic violations do not cease to be “ongoing” until the date when there is no real likelihood of
repetition. Natural Res. Def. Council v. Southwest Marine, Inc., 236 F.3d 985, 998 (9th Cir. 2000). 10 To establish standing, a plaintiff must show: 1) it has suffered an “injury in fact;” 2) the injury is fairly traceable
to the challenged action; and 3) it is likely, as opposed to speculative, that the injury will be redressed by a favorable
decision. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000). Further,
the interests at stake must be germane to the purpose of the organization for it to have standing to sue on behalf of its
members. See id. at 528 U.S. at 181. Soundkeeper will demonstrate at trial that these requirements are satisfied.
Soundkeeper also meets the lenient “zone of interests” test for prudential standing because the objective of the CWA
is environmental protection, which is aligned with Soundkeeper’s interests. See Ocean Advocates, 402 F.3d at 861.
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recreational enjoyment from Puget Sound and connected water bodies, and their use and
enjoyment is diminished by Rainier Petroleum’s violations and by their reasonable concerns
regarding the effects those violations have on water quality. Ecological Rights Found. v. Pac.
Lumber Co., 230 F.3d 1141, 1147, 1151 (9th Cir. 2000); Ocean Advocates, 361 F.3d at 1119-20
(increased risk of oil spill in Puget Sound gives rise to injury in fact); Laidlaw, 528 U.S. at 183-
84. These injuries are “fairly traceable” to the violations at issue because Rainier Petroleum
discharges stormwater and other pollutants that causes and contributes to the environmental
harms of concern, and its violations pose a risk of an oil spill. See Southwest Marine, 236 F.3d
at 994-95; and see Ecological Rights Found., 230 F.3d at 1152. The injuries complained of are
redressable by an order from the Court enjoining Rainier Petroleum from violating the CWA and
imposing sufficient civil penalties to affect a credible deterrent against future violations. See
Covington v. Jefferson County, 358 F.3d 626, 639 (9th Cir. 2004); and see Laidlaw, 528 U.S. at
185-88.
V. SOUNDKEEPER IS ENTITLED TO AN AWARD OF FEES AND COSTS.
Soundkeeper is entitled to a full award of fees and costs in this case. 33 U.S.C. §
1365(d); see also Resurrection Bay Conservation Alliance v. City of Seward, 640 F.3d 1087,
1091 (9th Cir. 2011) (“fee awards should be the rule rather than the exception…[A] [district]
court’s discretion to deny a fee award to a prevailing plaintiff is narrow and a denial of fees on
the basis of ‘special circumstances’ is ‘extremely rare.’” (internal quotation marks and citations
omitted)). Soundkeeper will seek fees and costs by separate motion.
VI. CONCLUSION.
The duration and scope of Rainier Petroleum’s CWA violations demonstrate an abiding
disregard for environmental regulations, resulting in demonstrable harm to the fragile and
Case 2:14-cv-00829-JLR Document 92 Filed 01/04/16 Page 24 of 25
PLAINTIFF’S TRIAL BRIEF - 25
2:14-CV-00829JLR
Smith & Lowney, p.l.l.c. 2317 east john street
Seattle, Washington 98112 (206) 860-2883
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imperiled Elliott Bay, posing a significant threat of catastrophic harm to the environment, and
undermining the regulatory system. Substantial civil penalties and comprehensive injunctive
relief should be imposed against Rainier Petroleum to address its conduct, abate the ongoing
illegal discharges, and affect a sufficient deterrent against any such future actions.
RESPECTFULLY SUBMITTED this 4th day of January, 2016. SMITH & LOWNEY, PLLC
By: /s/ Knoll Lowney
Knoll Lowney, WSBA No. 23457
By: /s/ Claire E. Tonry
Claire E. Tonry, WSBA No. 44497
Attorneys for Plaintiff
2317 E. John St., Seattle, WA 98112
Tel: (206) 860-2883; Fax: (206) 860-4187
Email: [email protected], [email protected]
Case 2:14-cv-00829-JLR Document 92 Filed 01/04/16 Page 25 of 25