City of Pomona v. Sqm North America Corporation , 750 F.3d 1036 ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CITY OF POMONA, No. 12-55147
Plaintiff-Appellant,
D.C. No.
v. 2:11-cv-00167-
RGK-VBK
SQM NORTH AMERICA
CORPORATION,
Defendant-Appellee.
CITY OF POMONA, No. 12-55193
Plaintiff-Appellee,
D.C. No.
v. 2:11-cv-00167-
RGK-VBK
SQM NORTH AMERICA
CORPORATION,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted
October 11, 2013—Pasadena, California
Filed May 2, 2014
2 CITY OF POMONA V. SQM
Before: Harry Pregerson and Richard C. Tallman, Circuit
Judges, and Michael H. Simon, District Judge.*
Opinion by Judge Simon
SUMMARY**
Expert Testimony
The panel affirmed in part and reversed in part the district
court’s order, and remanded for trial in a case involving
perchlorate contamination found in the City of Pomona’s
water system.
The City of Pomona alleged that SQM North America
Corporation’s importation of sodium nitrate for fertilizer was
the primary source of Pomona’s perchlorate contamination.
The district court denied SQM’s motion for summary
judgment, and following a pre-trial Daubert hearing, granted
SQM’s motion in limine to exclude the expert testimony of
Dr. Neil Sturchio, Pomona’s expert witness on causation.
The parties stipulated to a conditional dismissal and sought
review of the district court’s order excluding the testimony,
and other rulings.
*
The Honorable Michael H. Simon, District Judge for the U.S. District
Court for the District of Oregon, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
CITY OF POMONA V. SQM 3
Reversing the district court’s exclusion of the expert
testimony, the panel held that facts casting doubt on the
credibility of an expert witness and contested facts regarding
the strength of a particular scientific method are questions
reserved for the fact finder. Affirming the district court’s
denial of SQM’s motion for summary judgment, the panel
held that there was a genuine factual dispute as to whether the
City of Pomona’s claims were barred by California’s
economic loss rule or by the applicable statute of limitations.
The panel remanded for a trial.
COUNSEL
Victor M. Sher (argued), and Todd E. Robins, Esther L.
Klisura, and Jed J. Borghei, Sher Leff, LLP, San Francisco,
California; Arnold M. Alvarez-Glasman and Andrew L.
Jared, Alvarez-Glasman & Colvin, City of Industry,
California, for Plaintiff-Appellant/Cross-Appellee.
Michael K. Johnson (argued), and R. Gaylord Smith, Malissa
Hathaway McKeith, and Lisa Willhelm Cooney, Lewis
Brisbois Bisgaard & Smith, LLP, San Franscisco, California,
for Defendant-Appellee/Cross-Appellant.
4 CITY OF POMONA V. SQM
OPINION
SIMON, District Judge:
After excessive levels of the chemical perchlorate were
found in a city’s water system, the city undertook to
investigate the source of that contamination and remediate.
Using a methodology known as “stable isotope analysis,” a
scientist hired by the city determined that the most likely
dominant source of the perchlorate found in the city’s
groundwater was sodium nitrate that had been used as
fertilizer. The sodium nitrate had been imported in large
quantities from Chile several decades earlier and had been
used as fertilizer over a substantial period of time. The city
sued the company that imported the sodium nitrate into the
United States. Before trial, the district court held an
evidentiary hearing under Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993), and excluded the
city’s expert witness. The parties then entered into a
conditional stipulated dismissal to facilitate the appeal of the
district court’s evidentiary ruling, among other issues.
Because the district court abused its discretion by not
allowing a jury to resolve contested but otherwise admissible
expert testimony, we reverse the district court’s order of
exclusion, affirm the district court’s denial of the defendant’s
motion for summary judgment on other issues, and remand
for trial.
BACKGROUND
The City of Pomona, California (“Pomona”), administers
a public water system. Pomona receives its water from the
Chino Basin aquifer using a set of 14 wells that connect to
Pomona’s groundwater treatment facility. In 2007, the Chino
CITY OF POMONA V. SQM 5
Basin aquifer was found to have levels of the chemical
perchlorate in excess of the Maximum Contaminant Level
(“MCL”) of six parts per billion (“ppb”) permitted by the
California Department of Public Health (“CDPH”).
CDPH regulates contaminants in drinking water through
several standards, including MCLs and Action Levels. MCLs
are legally enforceable numerical standards, statutorily
defined as “the maximum permissible level of a contaminant
in water.” Cal. Health & Safety Code § 116275(f). CDPH
has the power to suspend or revoke a municipality’s water
system operating permit for failure to comply with an MCL.
Id. § 116625(a). Action Levels (known as “Notification
Levels” after 2004) are non-regulatory advisory levels for
contaminants. Id. § 116455(c)(3). The only action required
when a contaminant exceeds an Action Level, but remains
below an MCL or when no MCL has been set, is notification
to CDPH. Id. § 116455(a)(2).
In 1999, the CDPH set the perchlorate Action Level at 18
ppb. At this time, consistent with its responsibility under
California law, Pomona began monitoring perchlorate levels
in its groundwater and reporting these levels to the CDPH. In
2002, the CDPH reduced the perchlorate Action Level to four
ppb. Pomona continued to monitor perchlorate levels. In
2007, CDPH established a perchlorate MCL of six ppb. In
response to the MCL, Pomona immediately took steps
towards compliance, including shutting off wells, purchasing
water from other sources, and blending well water with non-
well water to reduce the levels of perchlorate. Pomona also
began shifting its existing nitrate removal processes to
perchlorate removal and hired an engineer to identify a long-
term solution for compliance with the MCL.
6 CITY OF POMONA V. SQM
On October 15, 2010, Pomona filed this lawsuit against
SQM North America Corporation (“SQMNA”) to recover the
cost of investigating and remediating perchlorate
contamination in the groundwater in and around Pomona,
California. Pomona alleges that SQMNA’s importation of
natural sodium nitrate from the Atacama Desert in Chile for
use as a fertilizer was the primary source of Pomona’s
perchlorate contamination.
On October 31, 2011, SQMNA moved for summary
judgment on two grounds. First, SQMNA argued that
Pomona had not suffered a compensable injury under strict
products liability law based on California’s “economic loss
rule.” Second, SQMNA argued that even if Pomona had
suffered a compensable injury, Pomona’s claim was barred
by the applicable three-year statute of limitations. The district
court denied SQMNA summary judgment on both arguments.
The case then proceeded toward trial.
On January 6, 2012, the district court held a Daubert
hearing to consider SQMNA’s pretrial motion in limine to
exclude the testimony of Dr. Neil Sturchio, Pomona’s expert
witness on causation. Dr. Sturchio is the director of the
Environmental Isotope Geochemistry Laboratory at the
University of Illinois at Chicago. Dr. Sturchio began working
on Pomona’s perchlorate case in April 2011, using a
methodology known as “stable isotope analysis.”1
1
An atom is a basic unit of matter that consists of a central or core
nucleus surrounded by a cloud of negatively charged electrons. Inside the
nucleus are positively charged protons and, typically, electrically neutral
neutrons. An isotope is a form of a chemical element that has the same
number of protons in the nucleus (i.e., the same atomic number) as that
element but a different number of neutrons in the nucleus (i.e., a different
atomic weight). Isotopes that are not subject to nuclear decay are known
CITY OF POMONA V. SQM 7
Acting under the direction of Dr. Sturchio, Wildermuth
Environmental, Inc. (“Wildermuth”) collected well water
samples from Pomona using methods based on the Guidance
Manual for Forensic Analysis of Perchlorate in Groundwater
using Chlorine and Oxygen Isotopic Analyses (“Guidance
Manual”). Wildermuth shipped those samples to Dr. Sturchio
with blind labels. Dr. Sturchio analyzed the isotopic
composition of the perchlorate in Pomona’s groundwater
using stable isotope analysis and compared the resulting
information with a reference database of known perchlorate
sources.
Dr. Sturchio used a four-step methodology with multiple
sub-parts. Dr. Sturchio disclosed this methodology in his
expert report filed in this litigation. It was also published in
2011 in the Guidance Manual, which was commissioned by
the Environmental Security Technology Certification
Program (“ESTCP”) of the United States Department of
Defense. The four steps described in the Guidance Manual
are: (1) collection of groundwater samples; (2) extraction and
purification; (3) oxygen and chlorine isotopic analyses on the
purified samples; and (4) determination of probable sources
by comparing the resulting isotope data to a reference
database. Before the publication of the Guidance Manual,
peer-reviewed articles provided abbreviated descriptions of
the fundamental methods used for stable isotope analysis by
Dr. Sturchio and his colleagues.
as “stable isotopes,” whereas isotopes that are subject to nuclear decay are
known as “radioactive isotopes.” Isotope analysis is the study of the
nucleus of an atom. Stable isotope analysis is based on the proposition that
stable isotopes of a given chemical element (e.g., perchlorate) can have
distinct isotopic compositions that may indicate the origin or source of a
molecule containing that element.
8 CITY OF POMONA V. SQM
Based on this analysis, Dr. Sturchio opined that the
dominant source of perchlorate in the Pomona groundwater
is from the Atacama Desert in Chile and that the samples also
contained minor amounts of perchlorate from other
non-Atacama sources, including synthetic or indigenous
natural sources. Based largely upon Dr. Sturchio’s findings,
Pomona argued that the perchlorate found in its groundwater
had the same distinctive isotopic composition as the
perchlorate imported into southern California from Chile by
SQMNA between 1927 and the 1950s.
SQMNA moved to exclude Dr. Sturchio’s opinions,
arguing that “stable isotope analysis” failed to satisfy
Daubert and was insufficiently reliable to be received in
evidence under Rule 702 of the Federal Rules of Evidence.
After an evidentiary hearing, the district court granted
SQMNA’s motion in limine to exclude Dr. Sturchio’s
testimony. The district court excluded Dr. Sturchio’s opinions
as unreliable on the grounds that: (1) the opinions were
subject to future methodological revisions and not yet
certified; (2) the procedures he used had not yet been tested
and were not subject to retesting; and (3) the reference
database used by Dr. Sturchio was too small. Shortly
thereafter, Pomona and SQMNA stipulated to a conditional
dismissal with prejudice in order to facilitate review of the
district court’s order excluding Dr. Sturchio’s testimony,
among other rulings.2
2
Pomona also argued that the district court abused its discretion by
failing expressly to apply the factors considered in Daubert v. Merrell
Dow Pharmaceuticals, Inc., 43 F.3d 1311 (9th Cir. 1995) (“Daubert II”).
“[W]hether Daubert’s specific factors are, or are not, reasonable measures
of reliability in a particular case is a matter that the law grants the trial
judge broad latitude to determine.” Kumho Tire Co., Ltd. v. Carmichael,
526 U.S. 137, 153 (1999). The district court cited Daubert as the
CITY OF POMONA V. SQM 9
STANDARDS OF REVIEW
We review evidentiary rulings for abuse of discretion and
reverse if the exercise of discretion is both erroneous and
prejudicial. Nevada Dept. of Corr. v. Greene, 648 F.3d 1014,
1018 (9th Cir. 2011) (citation omitted). We review underlying
factual determinations for clear error. United States v.
Lukashov, 694 F.3d 1107, 1114 (9th Cir. 2012). We review a
district court’s order granting or denying summary judgment
de novo. Ford v. City of Yakima, 706 F.3d 1188, 1192 (9th
Cir. 2013).
DISCUSSION
A. Exclusion of Pomona’s Expert Witness Dr.
Sturchio
1. Legal Standards
Rule 702 of the Federal Rules of Evidence provides that
expert opinion evidence is admissible if: (1) the witness is
sufficiently qualified as an expert by knowledge, skill,
experience, training, or education; (2) the scientific, technical,
or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue;
(3) the testimony is based on sufficient facts or data; (4) the
testimony is the product of reliable principles and methods;
and (5) the expert has reliably applied the relevant principles
and methods to the facts of the case. Fed. R. Evid. 702.
controlling rule of law in evaluating SQMNA’s motion to exclude Dr.
Sturchio’s testimony. The district court did not abuse its discretion by not
explicitly reciting the factors analyzed in Daubert II. See United States v.
Preston, 706 F.3d 1106, 1118 (9th Cir. 2013).
10 CITY OF POMONA V. SQM
Under Daubert and its progeny, including Daubert II, a
district court’s inquiry into admissibility is a flexible one.
Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d
960, 969 (9th Cir. 2013). In evaluating proffered expert
testimony, the trial court is “a gatekeeper, not a fact finder.”
Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010) (citation
and quotation marks omitted).
“[T]he trial court must assure that the expert testimony
‘both rests on a reliable foundation and is relevant to the task
at hand.’” Id. at 564 (quoting Daubert, 509 U.S. at 597).
“Expert opinion testimony is relevant if the knowledge
underlying it has a valid connection to the pertinent inquiry.
And it is reliable if the knowledge underlying it has a reliable
basis in the knowledge and experience of the relevant
discipline.” Id. at 565 (citation and internal quotation marks
omitted). “Shaky but admissible evidence is to be attacked by
cross examination, contrary evidence, and attention to the
burden of proof, not exclusion.” Id. at 564 (citation omitted).
The judge is “supposed to screen the jury from unreliable
nonsense opinions, but not exclude opinions merely because
they are impeachable.” Alaska Rent-A-Car, 738 F.3d at 969.
Simply put, “[t]he district court is not tasked with deciding
whether the expert is right or wrong, just whether his
testimony has substance such that it would be helpful to a
jury.” Id. at 969–70.
The test of reliability is flexible. Estate of Barabin v.
AstenJohnson, Inc., 740 F.3d 457, 463 (9th Cir. 2014) (en
banc). The court must assess the expert’s reasoning or
methodology, using as appropriate criteria such as testability,
publication in peer-reviewed literature, known or potential
error rate, and general acceptance. Id.; see also Primiano, 598
F.3d at 564. But these factors are “meant to be helpful, not
CITY OF POMONA V. SQM 11
definitive, and the trial court has discretion to decide how to
test an expert’s reliability as well as whether the testimony is
reliable, based on the particular circumstances of the
particular case.” Primiano, 598 F.3d at 564 (citations and
quotation marks omitted); see also Barabin, 740 F.3d at 463.
The test “is not the correctness of the expert’s conclusions but
the soundness of his methodology,” and when an expert
meets the threshold established by Rule 702, the expert may
testify and the fact finder decides how much weight to give
that testimony. Primiano, 598 F.3d at 564–65. Challenges
that go to the weight of the evidence are within the province
of a fact finder, not a trial court judge. A district court should
not make credibility determinations that are reserved for the
jury.
2. Methodology and certification
The district court concluded that Dr. Sturchio’s
procedures are not reliable because they are not generally
accepted in the scientific community. The court gave two
reasons: (1) the Quality Assurance/Quality Control
(“QA/QC”) parameters were still being refined; and (2) the
Environmental Protection Agency (“EPA”) has not yet
certified stable isotope analysis for organic or inorganic
compounds. These reasons are insufficient to exclude Dr.
Sturchio’s testimony.
First, scientific methods that are subject to “further testing
and refinement” may be generally accepted and sufficiently
reliable. There are “no certainties in science.” Daubert, 509
U.S. at 590. For scientific evidence to be admissible, the
proponent must show the assertion is “derived by [a]
scientific method.” Id. Opinion based on “unsubstantiated and
undocumented information is the antithesis of . . .
12 CITY OF POMONA V. SQM
scientifically reliable expert opinion.” Cabrera v. Cordis
Corp., 134 F.3d 1418, 1423 (9th Cir. 1998). The existence of
ongoing research, however, does not necessarily invalidate
the reliability of expert testimony. See Metabolife Int’l, Inc.
v. Wornick, 264 F.3d 832, 843 (9th Cir. 2001) (holding that
it was “plain error to hold that the Columbia study was not
finished—while the overall project was ongoing, all of the
relevant data had been gathered in final form, and Metabolife
presented an expert interpretation of that data”). For example,
during the “raging controversy” surrounding the new
technique of DNA testing, the Ninth Circuit rejected the
argument that “the FBI’s DNA testing and statistical
procedures may warrant review and revision” as an adequate
reason to exclude expert testimony. United States v.
Chischilly, 30 F.3d 1144, 1152–53 (9th Cir. 1994).
The controlling standards published in the Guidance
Manual are subject to further evolution. A “disagreement
over, not an absence of, controlling standards” is not a basis
to exclude expert testimony. Chischilly, 30 F.3d at 1154. The
methods described in the Guidance Manual are the product
of 12 peer-reviewed publications on stable isotope analysis of
perchlorate. The Guidance Manual is a product of inter-
laboratory collaboration that began before the initiation of
this litigation. Further, all the methods that Dr. Sturchio used
were fully disclosed in his expert report from October 2011.
There is no record evidence that Dr. Sturchio’s opinion is the
product of a hasty, incomplete effort.3
3
SQMNA argues that Dr. Sturchio’s analysis is incomplete and was
previously excluded by another court. In 2003, the Northern District of
Illinois excluded the expert testimony of Dr. Sturchio in a matter that, at
best, is tangentially related to the analysis he completed for Pomona.
Mejdrech v. Lockformer Co., No. 01 C 6107, 2003 WL 22078388, at *1
CITY OF POMONA V. SQM 13
Second, the district court noted that because “there are no
USEPA-certified methods for CSIA of organic or inorganic
compounds,” Dr. Sturchio’s methods were not reliable.
Pomona, however, may satisfy its burden of establishing that
the evidence is scientifically valid by “pointing to some
objective source to show that the conclusions are based on
‘scientific method, as it is practiced by (at least) a recognized
minority of scientists in the[] field.’” Southland Sod Farms v.
Stover Seed Co., 108 F.3d 1134, 1141 (9th Cir. 1997)
(quoting Daubert II, 43 F.3d at 1318–19 (alteration in
original)). Thus, EPA certification of the isotopic analysis of
perchlorate is not a precondition to admissibility.
Dr. Sturchio and two other laboratories compiled the
Guidance Manual, which shows that the methods Dr.
Sturchio employed were reviewed by other laboratories and
subject to inter-laboratory calibration. In particular, Dr.
Sturchio has collaborated on the methodology used in this
case with Dr. J.K. Böhlke, who is among the world’s leading
authorities on the measuring and reporting of isotope ratios.
(N.D. Ill., Sept. 5, 2003). Although both Mejdrech and this case involve
the science of stable isotope analysis, they are factually distinct. In
Mejdrech, Dr. Sturchio testified about chlorine isotope ratios between
volatile organic compounds taken from the plaintiff’s locations and the
trichloroethylene (TCE) found on the defendant’s property. Id. at *1. The
district court found Dr. Sturchio’s opinion to be unreliable due to a risk of
sample contamination because he departed from peer-reviewed
methodologies, because the chlorine isotopes that Dr. Sturchio purported
to measure could not be measured on a compound-specific basis (such that
he could identify or source specific TCE), and based on the allegation that
Dr. Sturchio had failed to address unfavorable results in his expert report.
Id. at *2–3. Dr. Sturchio is using different methodologies in this case, and
SQMNA raises unique challenges that are not analogous to the facts of
Mejdrech. Thus, the Mejdrech decision has little or no bearing on the
analysis here.
14 CITY OF POMONA V. SQM
This demonstrates that Dr. Sturchio’s method is “practiced by
(at least) a recognized minority of scientists in the[] field.” Id.
at 1141. SQMNA attempts to discredit Dr. Sturchio’s
perchlorate techniques by quoting from an EPA manual on
the stable isotope analysis of organic compounds at hazardous
waste sites. The statements in the EPA manual relating to
hazardous waste sites do not relate to the methodologies
employed by Dr. Sturchio to analyze Pomona’s groundwater.
EPA’s warning regarding the application of isotope analysis
to new, untested areas is a valid basis to require additional
indicia of reliability for those new areas of application. See
Att’y Gen. of Okla. v. Tyson Foods Inc., 565 F.3d 769,
780–81 (10th Cir. 2009) (rejecting a new application of PCR
method DNA typing where there was no testing or peer-
reviewed publications specific to the application). In this
case, however, the stable isotope study of chlorine and
oxygen in perchlorate found in groundwater has been tested,
analyzed, and subjected to peer review for at least ten years.
Thus, despite the fact that there is no EPA-certified
method of analysis, the record shows that Dr. Sturchio’s
methodology and report are based on the scientific method,
practiced by recognized scientists in the field, and have a
basis in the knowledge and experience of the relevant
discipline, thereby rendering the report reliable. See
Southland Sod Farms, 108 F.3d at 1141. Dr. Sturchio’s expert
report details how he analyzed the relevant data and applied
the data to reach his conclusions. The Federal Rules of
Evidence do not require an endorsement from the EPA
approving Dr. Sturchio’s results. The district court’s
conclusion to the contrary was an abuse of discretion. See
Preston, 706 F.3d at 1118.
CITY OF POMONA V. SQM 15
3. Testing and retesting
The district court also excluded Dr. Sturchio’s testimony
because his methods “have not been tested by other
laboratories and are not subject to retesting given the failure
to take dual samples.” In order for a scientific technique to be
reliable, there must be evidence in the record indicating the
methodology “can be or has been tested.” Cooper v. Brown,
510 F.3d 870, 880–81 (9th Cir. 2007). The question is
whether an expert’s methodology can be “challenged in some
objective sense, or whether it is instead simply a subjective,
conclusory approach that cannot reasonably be assessed for
reliability.” Fed. R. Evid. 702 Advisory Committee’s Note to
2000 Amendments. Daubert described the “testability” prong
in the context of a hypothesis that is falsifiable. 509 U.S. at
593. Testability “assures the opponent of proffered evidence
the possibility of meaningful cross-examination (should he or
someone else undertake the testing).” United States v.
Mitchell, 365 F.3d 215, 238 (3d Cir. 2004). The district court
incorrectly applied this standard.
The district court’s conclusion was erroneous for three
reasons: (1) other laboratories have tested the methodologies
from the Guidance Manual used by Dr. Sturchio; (2) Dr.
Sturchio’s procedures are subject to retesting by another
laboratory; and (3) challenges to the results obtained by using
the techniques from the Guidance Manual go to the weight of
the evidence and are a question for the fact finder, not the
trial court.
First, Dr. Sturchio’s methods were fully disclosed in the
Guidance Manual and are the same methods that Dr. Sturchio
16 CITY OF POMONA V. SQM
used in his analysis of Pomona’s groundwater.4 The Guidance
Manual represents the latest compilation of QA/QC processes
for any laboratory engaged in stable isotope analysis of
perchlorate. The test under Daubert is whether the method
“can be or has been tested.” Cooper, 510 F.3d at 880 (citation
omitted). In Cooper, for example, the court excluded expert
testimony because there was “no evidence in the record that
application of mass spectrometry to forensic analysis of blood
evidence to determine EDTA levels can be or has been
tested.” Id. Unlike in Cooper, here several laboratories have
used and tested the methodologies described in the Guidance
Manual, including the U.S. Geological Survey, the Oak Ridge
National Laboratory, and the University of Illinois at Chicago
where Dr. Sturchio works. Although Dr. Sturchio operates the
only commercial laboratory using this methodology, testing
at governmental laboratories demonstrates that Dr. Sturchio’s
methods can be objectively challenged.
Second, Dr. Sturchio’s processes are subject to retesting.
Under Daubert’s testability factor, the primary requirement
is that “[s]omeone else using the same data and methods . . .
be able to replicate the result[s].” Zenith Elecs. Corp. v. WH-
TV Broad. Corp., 395 F.3d 416, 419 (7th Cir. 2005). The
district court stated that the “failure to take dual samples”
meant that Dr. Sturchio’s “methods” could not be retested.
SQMNA argues that the district court did not err because
there were two relevant defects in Dr. Sturchio’s sampling
procedures: (1) Dr. Sturchio failed to use duplicate columns
4
SQMNA contends that Dr. Sturchio’s methods are not fully disclosed.
Dr. Sturchio, however, provided a detailed description of the Pomona
analysis in his expert report, which correlates with the processes described
in the Guidance Manual.
CITY OF POMONA V. SQM 17
in collecting groundwater samples; and (2) Dr. Sturchio failed
to take split samples in order to compare analytical results.
SQMNA’s defense of the district court’s ruling is
unpersuasive because both grounds for exclusion are without
adequate support in the record. Neither of the alleged
“defects” are “required” analytical steps for stable isotope
analysis and, hence, neither are necessary for retesting to
occur. The use of duplicate columns during sampling is not
mandatory. The basic diagram of the technique employed by
Dr. Sturchio shows that the duplicate ion exchange column is
“optional.” The Guidance Manual also explains that “[i]n
many instances, single IX columns are collected from each
well.” Duplicate columns are recommended for use on wells
that have low levels of perchlorate, not for all sampling. In
addition, the sample splitting mentioned in the Guidance
Manual also is not mandatory. Dr. Sturchio contends that he
ran duplicate analyses of his samples, verifying the Pomona
results. Dr. Sturchio’s Pomona results were also consistent
with the pre-litigation Chino Basin Watermaster study.
SQMNA correctly notes that Dr. Sturchio failed
independently to verify his test results with a separate lab.
This point, however, may serve to undermine or impeach the
weight that should be afforded to Dr. Sturchio’s testimony,
but it does not refute the scientific reliability of his analysis.
Third, it is a question for the jury, not the court, to
determine what weight to afford Dr. Sturchio’s testimony.
SQMNA argues that Pomona did not follow the Guidance
Manual protocols and that Pomona’s collection and
extraction procedures were “makeshift.” Daubert, however,
“does not forbid admission” of a report where the weight of
the conclusions are subject to challenge. United States v.
Brannon, 146 F.3d 1194, 1196 (9th Cir. 1998) (permitting the
18 CITY OF POMONA V. SQM
admission of breathalyzer evidence where the scientific
technique was not challenged, but rather, the results
obtained).
SQMNA’s argument relates to adherence to protocol,
which typically is an issue for the jury. See Chischilly, 30
F.3d at 1154. SQMNA urges the Court to take a guarded
approach to the issue of an expert’s adherence to protocol.
See, e.g., In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 745
(3d Cir. 1994) (holding that “any step that renders the
analysis unreliable . . . renders the expert’s testimony
inadmissible. This is true whether the step completely
changes a reliable methodology or merely misapplies that
methodology.”). In the Ninth Circuit, however, expert
evidence is inadmissible where the analysis “is the result of
a faulty methodology or theory as opposed to imperfect
execution of laboratory techniques whose theoretical
foundation is sufficiently accepted in the scientific
community to pass muster under Daubert.” Chischilly, 30
F.3d at 1154 & n.11 (citations omitted). The rationale of this
approach is that “[a] minor flaw in an expert’s reasoning or
a slight modification of an otherwise reliable method” does
not render expert testimony inadmissible. Amorgianos v.
Nat’l R.R. Passenger Corp., 303 F.3d 256, 267 (2d Cir.
2002). A more measured approach to an expert’s adherence
to methodological protocol is consistent with the spirit of
Daubert and the Federal Rules of Evidence: there is a strong
emphasis on the role of the fact finder in assessing and
weighing the evidence. Daubert, 509 U.S. at 594–95.
The district court did not provide an explanation as to
why Dr. Sturchio’s alleged failure to adhere to the protocols
in the Guidance Manual were significant enough to render his
entire analysis unreliable. SQMNA argued to the district
CITY OF POMONA V. SQM 19
court that there was insufficient documentation of the
sampling and extraction procedures. Dr. Sturchio’s testimony,
however, belies this conclusion. He explained that he had
documentation verifying that the sampling procedures were
followed pursuant to the Guidance Manual. He also verified
in his expert report and during the Daubert hearing that he
followed the very detailed standard operating procedure for
every sample that was analyzed. The district court did not
apply the correct rule of law: only a faulty methodology or
theory, as opposed to imperfect execution of laboratory
techniques, is a valid basis to exclude expert testimony.
Chischilly, 30 F.3d at 1154. Ignoring a controlling rule of law
constitutes an abuse of discretion. See Preston, 706 F.3d at
1118. Moreover, given that Dr. Sturchio refuted SQMNA’s
assertion that the Guidance Manual protocols were not
followed, the district court’s application of the Chischilly
standard is “without . . . inferences that may be drawn from
the facts in the record.” See id.
SQMNA’s arguments challenging Dr. Sturchio’s expert
testimony are not uncontroverted, and they go to the weight
that a fact finder should give to his expert report. The district
court erroneously ruled that Dr. Sturchio’s methodologies
have not been and cannot be tested.
4. Reference database
The district court ruled that Dr. Sturchio’s “reference
database is too limited in order for him to reliably comment
on the exclusiveness of the location of the potential source of
perchlorate in Pomona’s water with an acceptable rate of
error.” The district court, however, was presented with
conflicting expert evidence. SQMNA’s expert Dr. Ramon
Aravena (“Dr. Aravena”) contended that the perchlorate
20 CITY OF POMONA V. SQM
reference database was too small. Dr. Sturchio, on the other
hand, explained that the database was sufficiently large to
permit him reasonably to draw a connection to the Atacama
perchlorate.
At the Daubert hearing, the trial court was presented with
Dr. Sturchio’s analysis that the “dominant source of
perchlorate in the Pomona groundwater is from Atacama
(Chile)” and that the samples contained “minor amounts of
perchlorate from other non-Atacama sources including
synthetic and/or indigenous natural sources.” Dr. Aravena’s
expert report cautioned that “not all the potential perchlorate
sources have been characterized.” Dr. Sturchio, however,
responded to Dr. Aravena’s contention by arguing that Dr.
Aravena’s opinion was based on disclosures and quotations
from old and outdated publications. Dr. Sturchio also
explained that when the Pomona study was conducted,
synthetic and Atacama sources of perchlorate were well
known and well characterized. At most, this battle among
experts merely shows that Dr. Sturchio may not know the
isotopic composition of every source of perchlorate in the
world with a certainty. Under Daubert, however, such a
“certainty” is not required, thus making this an invalid basis
to exclude expert testimony. 509 U.S. at 590.
The Supreme Court has stated that “[t]rained experts
commonly extrapolate from existing data.” General Elec. Co.
v. Joiner, 522 U.S. 136, 146 (2007). It is where expert
opinion is “connected to existing data only by the ipse dixit
of the expert” that there may be “too great an analytical gap
between the data and the opinion preferred” to support
inclusion of the testimony. Id. Joiner requires an expert to
justify a foundational assumption or refute contrary record
evidence.
CITY OF POMONA V. SQM 21
Chischilly is illuminating on this point. In that case, the
defendant challenged the use of the FBI’s ethnic-specific
database for Native Americans (the “I-3 database”). 30 F.3d
at 1155. The court considered whether the FBI’s I-3 database
was too small and may have contained too few Navajos to be
reliable. Id. Both sides of the debate could find “support in
the journals and research, and both sides [had] prominent
spokespeople.” Id. Under Daubert’s liberal standard, this sort
of debate functioned more as an adverse admission and
proved deadlock on both sides of an issue. Id. at 1555–56.
The Chischilly court found that this evidence disproved a lack
of “general acceptance” in the scientific community. Id.The Chischilly analysis also demonstrates how trial courts
ought to treat conflicting expert testimony. A factual dispute
is best settled by a battle of the experts before the fact finder,
not by judicial fiat. Where two credible experts disagree, it is
the job of the fact finder, not the trial court, to determine
which source is more credible and reliable. United States v.
Sandoval-Mendoza, 472 F.3d 645, 654 (9th Cir. 2006).
The district court’s resolution of this debate was an abuse
of discretion and sufficient grounds for reversal. See Preston,
706 F.3d at 1118. Under Rule 702, it is reasonable for the
jury to be presented with conflicting expert testimony.
Sandoval-Mendoza, 472 F.3d at 654. Even if Dr. Sturchio’s
conclusions were “shaky,” they should be attacked by “cross
examination, contrary evidence, and attention to the burden
of proof, not exclusion.” Primiano, 598 F.3d at 564. The
district court abused its discretion in concluding that the
reference database was too small. This is a matter for the jury.
22 CITY OF POMONA V. SQM
B. Denial of SQMNA’s Motion for Summary
Judgment
1. Legal Standards
A party is entitled to summary judgment if the “movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). The moving party has the burden of
establishing the absence of a genuine dispute of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court
must view the evidence in the light most favorable to the non-
movant and draw all reasonable inferences in the non-
movant’s favor. Clicks Billiards Inc. v. Sixshooters Inc., 251
F.3d 1252, 1257 (9th Cir. 2001). Although “[c]redibility
determinations, the weighing of the evidence, and the
drawing of legitimate inferences from the facts are jury
functions, not those of a judge . . . ruling on a motion for
summary judgment,” the “mere existence of a scintilla of
evidence in support of the plaintiff’s position [is]
insufficient. . . . ” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 252, 255 (1986). “Where the record taken as a whole
could not lead a rational trier of fact to find for the non-
moving party, there is no genuine issue for trial.” Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986) (citation and quotation marks omitted).
The substantive law governing both the economic loss
rule and the statute of limitations in this case is California
law. See Neely v. St. Paul Fire & Marine Ins. Co., 584 F.2d
341, 345 (9th Cir. 1978). Whether evidence on a particular
issue is sufficient to raise a question of fact for the jury, on
the other hand, is governed by federal law. Id.CITY OF POMONA V. SQM 23
2. Economic loss rule
SQMNA argues that the damages sought by Pomona are
barred by the economic loss rule. Under California law,
“economic loss” consists of damages for inadequate value,
cost of repair, cost of replacement of defective products, and
lost profit. Robinson Helicopter Co., Inc. v. Dana Corp., 102
P.3d 268, 273 (Cal. 2004). California’s economic loss rule
provides that the recovery of economic loss under strict
products liability is appropriate only when there has been
physical harm to persons or property other than the allegedly
defective product itself. Id.Pomona is not seeking to recover economic loss for an
allegedly defective product. Instead, Pomona claims that the
allegedly defective product and the damaged property are
distinct. The allegedly defective product at issue is SQMNA’s
fertilizer, and the damaged or physically harmed property is
Pomona’s groundwater. Because Pomona has presented a
genuine dispute of material fact regarding property damage
to the affected groundwater, the economic loss rule does not
bar the recovery of economic damages.
SQMNA relies on two cases for its argument that
Pomona’s claims are barred by the economic loss rule. These
cases are distinguishable from the facts here. First, SQMNA
cites County of Santa Clara v. Atlantic Richfield Company for
the holding that costs incurred for “abatement, removal,
replacement and/or remediation” of lead paint were non-
recoverable economic loss. 40 Cal. Rptr. 3d 313, 335–37
(Cal. Ct. App. 2006). In Santa Clara, however, the plaintiff
made no allegations that the defective lead paint had caused
any damage to persons or property outside the defective
24 CITY OF POMONA V. SQM
product itself. Id. at 337 n.10. In this case, Pomona asserts
damage to property independent of the fertilizer.
The second case SQMNA cites is California Department
of Toxic Substances Control v. Payless Cleaners, No. CIV02-
2389 LKK/DAD, 2007 WL 2580626 (E.D. Cal. Aug. 17,
2007) (“Payless”). SQMNA cites Payless for the proposition
that “the cost of removing hazardous substances and their
remediation are economic costs—not physical injuries to
property.” Id. at *6. The plaintiffs in Payless, a dry-cleaning
business and the original defendants in the action, had
improperly disposed of dry cleaning solvent, which leaked
into the ground and water supply. Id. at *1. Filing a third-
party complaint, the plaintiffs sued the manufacturers of the
dry-cleaning solvent, claiming strict liability and negligence
and seeking indemnity and contribution. Id. The court
dismissed the plaintiffs’ strict liability and negligence claims,
finding that they “failed to plead the existence of damage to
any physical component of their land, and they have not
shown that they could allege that [the contaminant] physically
injured their property.” Id. at *6. These facts make the case
distinguishable from the Pomona lawsuit because unlike the
plaintiffs in Payless, Pomona alleges damage to its
groundwater supply in which it has a property interest. In
addition, it appears that the Payless court’s application of the
economic loss rule is contrary to established California law.
The court in Payless appears to disregard the fact that there
were allegations of damage to property “other than” the
defective product itself. See Robinson Helicopter, 102 P.3d
at 273.
SQMNA also argues that Pomona is barred from recovery
under the economic loss rule because Pomona does not own
the water supply at issue and, therefore, is not the proper
CITY OF POMONA V. SQM 25
party to bring the action. Although California Water Code
§ 102 directs that all water within the state of California is the
property of the people of California, Pomona maintains a
usufructuary right to the water located in its wells. See Cal.
Water Code § 102. California and federal courts alike have
held that pollution of groundwater is damage to property and
that usufructuary rights confer sufficient standing to claim
damages caused by pollution. See, e.g., Tulare Lake Basin
Water Storage Dist. v. United States, 49 Fed. Cl. 313, 319
(Fed. Cl. 2001) (relying on California law); Aerojet-Gen.
Corp. v. Superior Court of San Mateo Cnty., 209 Cal. App. 3d
973, 229–30 (Cal. Ct. App. 1989), abrogated on other
grounds by AIU Ins. Co. v. Superior Court, 799 P.2d 1253(Cal. 1990).
Reviewing this portion of the district court’s opinion de
novo, SQMNA has failed to show that there is no genuine
factual dispute as to whether Pomona’s claims are barred by
the economic loss rule. Pomona provided evidence regarding
its possessory interest in the groundwater and damage to its
groundwater that is sufficient to survive summary judgment.
The district court’s analysis is correct.
3. Statute of limitations
Under California law, the statute of limitations for injury
to real property is three years. Cal. Civ. Proc. Code § 338(b).
The limitations period for tort actions commence with the
occurrence of the last element essential to the cause of action.
San Francisco Unified Sch. Dist. v. W.R. Grace & Co., 37
Cal. App. 4th 1318, 1326 (Cal. Ct. App. 1995). When the last
element to occur is damage, the limitations period starts upon
the occurrence of “appreciable and actual harm, however
uncertain in amount, that consists of more than nominal
26 CITY OF POMONA V. SQM
damages.” Id. (citation and quotation marks omitted).
Although the speculative or uncertain nature of the damages
will not toll the period of limitations, the “mere breach of
duty—causing only nominal damages, speculative harm or
the threat of future harm not yet realized—normally does not
suffice to create a cause of action.” Id.The test for when appreciable harm has occurred in water
contamination cases has not been well defined in the
California courts. In a relatively recent water contamination
case, a federal district court applying California law found
that appreciable harm occurs when the contamination “caused
or should have caused” the party to act in response to the
contamination. In re MTBE Prods. Liab. Litig., 475 F. Supp.
2d 286, 293–95 (S.D.N.Y. 2006). In In re MTBE, a
consolidated multi-district litigation case, the plaintiffs sought
relief from contamination of groundwater from the
defendants’ use of methyl tertiary butyl ether (“MTBE”), a
gasoline additive. Id. at 287. Because the plaintiffs had been
testing for MTBE for many years, the defendants argued that
their claims were time barred.
The court in MTBE held that when “the MTBE detected
in the groundwater was such that [the plaintiffs] took, or
should have taken, steps to investigate, clean up, abate, and/or
remediate the alleged contamination,” the appreciable harm
had occurred. Id. at 295 (quotation marks omitted). The court
noted that the inquiry regarding when a party “should” have
acted in response to contamination is a very fact intensive
inquiry that is not easily decided on summary judgment. Id.Notably, the court also found that the city’s actions in testing
the water for MTBE levels and reporting those levels to the
state did not, by themselves, establish appreciable harm. Id.at 292–94.
CITY OF POMONA V. SQM 27
Pomona contends that the statute of limitations
commenced when the state issued an MCL for perchlorate in
2007. SQMNA argues that Pomona’s actions in testing for
perchlorate and reporting perchlorate levels to CDPH in the
years before 2007 establish appreciable harm and trigger the
statute of limitations. In support of its argument, SQMNA
identifies a 2001 water permit contract with CDPH that
requires that “[a]ll water produced by the City shall meet all
Maximum Contaminant Levels (MCLs) and all Action Levels
established by [CDPH].” Although there was no existing
MCL for perchlorate in 2001, a perchlorate Action Level was
in place. Moreover, before 2007, some of the wells at issue in
this litigation had perchlorate levels above the established
Action Level.
Action Levels, unlike MCLs, however, do not legally
require Pomona to take action to reduce contaminants in the
water. In fact, before the adoption of the perchlorate MCL in
2007, the perchlorate suggested “response level” was set at 40
ppb, a number significantly higher than the perchlorate levels
in any of the Pomona wells. Therefore, despite the seemingly
inflexible text in Pomona’s water permit contract, Pomona’s
only “required” actions in response to perchlorate
contamination before 2007 consisted of testing and reporting.
The In re MTBE court found that testing and reporting
requirements, standing alone, do not constitute appreciable
harm under California law. 475 F. Supp. 2d at 292–94. The
court’s finding is persuasive, particularly considering that
municipalities across California are required to test and report
on hundreds of unregulated chemicals.
SQMNA also argues that Pomona either acted or should
have acted to reduce the perchlorate level in the water supply
before 2007, which also triggered the running of the statute
28 CITY OF POMONA V. SQM
of limitations. This claim is predicated on disputed facts.
Although SQMNA argues that Pomona actively treated
groundwater to reduce perchlorate before 2007, Pomona
presents testimony from employees who note that before the
perchlorate MCL in 2007, there was no program to remove
perchlorate from the water and that any removal that did
occur was “ancillary” to Pomona’s active nitrate treatment
program.
SQMNA also argues that Pomona knew about the
perchlorate contamination and therefore should have acted to
reduce the perchlorate levels; however, Pomona has provided
evidence that its failure to act was reasonable at the time,
given the scientific uncertainty regarding the safety of
perchlorate in drinking water and the fact that Pomona relied
on MCLs as “guideposts” for determining what levels of
contamination were safe.5
Other than Pomona’s testing and reporting, all of
SQMNA’s assertions regarding Pomona’s pre-2007 actions
in response to perchlorate contamination are based on
disputed facts. As such, determining when appreciable harm
5
SQMNA also argues that Pomona should be bound by its initial Rule
26 damages disclosures, which assert damages for perchlorate related
expenses before the adoption of the MCL. This argument is without merit.
Pomona’s amended Rule 26 disclosures eliminate the pre-October 2007
claim for damages. Although Ninth Circuit authority provides that initial
disclosures that have been later amended are admissible in evidence,
SQMNA cites no authority for the proposition that an original disclosure,
before being amended, is a “binding” admission. SQMNA implies that the
“sham affidavit” rule, see Nelson v. City of Davis, 571 F.3d 924, 927–28
(9th Cir. 2009), might apply in this context by analogy. There is, however,
no evidence that Pomona’s amended discovery disclosures and
calculations are a “sham.” Thus, SQMNA’s implied argument is
unavailing.
CITY OF POMONA V. SQM 29
may have occurred is inappropriate for resolution on
summary judgment. Viewing the evidence in the light most
favorable to Pomona, SQMNA cannot demonstrate as a
matter of law that Pomona’s claim is barred by the three-year
statute of limitations. Therefore, the district court did not err
in denying summary judgment to SQMNA on its statute of
limitations defense.
CONCLUSION
Expert testimony may be excluded by a trial court under
Rule 702 of the Federal Rules of Evidence only when it is
either irrelevant or unreliable. Facts casting doubt on the
credibility of an expert witness and contested facts regarding
the strength of a particular scientific method are questions
reserved for the fact finder. Accordingly, we reverse the
district court’s exclusion of Dr. Sturchio’s expert testimony.
In addition, viewing the evidence in the light most favorable
to the non-moving party, SQMNA has failed to show that
there is no genuine factual dispute as to whether Pomona’s
claims are barred by the economic loss rule or by the
applicable statute of limitations. Therefore, we affirm the
district court’s denial of SQMNA’s motion for summary
judgment.
AFFIRMED IN PART, REVERSED IN PART, and
REMANDED FOR TRIAL. The parties shall bear their own
costs on appeal.