Sanders v. Duke Energy Carolinas, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

CIVIL ACTION NO. 3:20-CV-00215-KDB-DSC

TERRIE SANDERS, ET AL.,

Plaintiffs,

v. ORDER

DUKE ENERGY CAROLINAS,

LLC,

Defendant.

THIS MATTER is before the Court on Defendant Duke Energy Carolinas, LLC’s

(“Duke”) Partial Motion to Dismiss Third Amended Complaint (Doc. No. 17), the Memorandum

and Recommendation of the Honorable Magistrate Judge David S. Cayer (“M&R”) entered

February 11, 2021, (Doc. No. 24) and Plaintiffs’ Objection to the M&R, (Doc. No. 25). The

Court has carefully considered this motion, the parties’ briefs and other pleadings of record in

this action. As discussed below, the Court concludes after its de novo review that the findings

and conclusions of the Magistrate Judge will be ADOPTED and the Partial Motion to Dismiss

will be GRANTED in part and DENIED in part. Specifically, the Court will dismiss Plaintiffs’

claim for Negligent Infliction of Emotional Distress, deny Duke’s motion to partially dismiss

Plaintiffs’ other claims as outside the scope of Federal Rule of Civil Procedure 12(b)(6), and

hold that Duke’s federal license to operate the hydroelectric project at issue and related federal

law sets the applicable standard of care for Plaintiffs’ negligence-based claims.

I. LEGAL STANDARD

A district court may designate a magistrate judge to “submit to a judge of the court

proposed findings of fact and recommendations for the disposition” of certain pretrial matters,

including motions to dismiss. 28 U.S.C. § 636(b)(1). Any party may object to the magistrate

judge’s proposed findings and recommendations, and the court “shall make a de novo

determination of those portions of the report or specified proposed findings or

recommendations to which objection is made.” 28 U.S.C. § 636(b)(1). Objections to the

magistrate’s proposed findings and recommendations must be made “with sufficient specificity

so as reasonably to alert the district court of the true ground for the objection.” United States v.

Midgette, 478 F.3d 616, 622 (4th Cir.), cert. denied, 551 U.S. 1157 (2007). However, the Court

does not perform a de novo review where a party makes only “general and conclusory

objections that do not direct the court to a specific error in the magistrate's proposed findings

and recommendations.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982). After reviewing

the record, the court may accept, reject, or modify, in whole or in part, the findings or

recommendations made by the magistrate judge or recommit the matter with instructions. 28

U.S.C. § 636(b)(1).

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for “failure to state a

claim upon which relief can be granted” tests whether the complaint is legally and factually

sufficient. See Fed. R. Civ. P. 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007); Coleman v. Md. Court of Appeals, 626 F.3d 187,

190 (4th Cir. 2010), aff'd, 566 U.S. 30 (2012). A court need not accept a complaint's “legal

conclusions, elements of a cause of action, and bare assertions devoid of further factual

enhancement.” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir.

2009). The court, however, accepts all well-pled facts as true and draws all reasonable inferences

in Plaintiff’s favor. See Conner v. Cleveland Cty., N. Carolina, No. 19-2012, 2022 WL 53977, at

*1 (4th Cir. Jan. 5, 2022); E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435,

440 (4th Cir. 2011). In so doing, the Court “must view the facts presented in the pleadings and

the inferences to be drawn therefrom in the light most favorable to the nonmoving party.” Pa.

Nat’l Mut. Cas. Ins. Co. v. Beach Mart, Inc., 932 F.3d 268, 274 (4th Cir. 2019). Construing the

facts in this manner, a complaint must contain “sufficient factual matter, accepted as true, to state

a claim to relief that is plausible on its face.” Pledger v. Lynch, 5 F.4th 511, 520 (4th Cir. 2021)

(quoting Ashcroft, 556 U.S. at 678). Thus, a motion to dismiss under Rule 12(b)(6) determines

only whether a claim is stated; “it does not resolve contests surrounding the facts, the merits of a

claim, or the applicability of defenses.” Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir.

1992).

II. FACTS AND PROCEDURAL HISTORY

In this action, 57 North Carolina Plaintiffs who own or rent property along the Catawba

River or Mountain Island Lake seek to recover damages allegedly caused by Duke’s negligence

in managing the flow of the river through hydroelectric dams on the Catawba-Wateree

Hydroelectric Project (“CWHP”) during an “extreme rain event” in June 2019. Specifically, in

their Third Amended Complaint Plaintiffs allege that Duke failed to heed forecasted warnings

and negligently opened dam floodgates instead of slowly releasing water prior to the rainstorms,

which they contend led to the flooding of their properties.

Plaintiffs assert claims for Negligence, Negligent Infliction of Emotional Distress

(“NIED”), and Trespass to Real Property alleging that Duke failed to comply with the Federal

Power Act, the requirements of its federal license to operate the CWHP, Federal Energy

Regulatory Commission regulations, and North Carolina common law. Duke seeks dismissal of

Plaintiff’s claim for NIED and its remaining claims to the extent they rely on standards of

conduct other than federal law pursuant to Fed. R. Civ. Proc. 12(b)(6). The M&R recommends

that the Court grant Duke’s motion.

III. DISCUSSION

A. Claim for Negligent Infliction of Emotional Distress

Plaintiffs’ first objection to the M&R argues that it wrongly recommends that the Court

dismiss Plaintiffs’ NIED claim. The Court disagrees, for two reasons. First, the M&R correctly

found that Plaintiffs’ conclusory allegations in support of their NIED claim fail to meet even the

generous “plausibility” standards of Iqbal and Twombly. Second, in these unique circumstances,1

Plaintiffs cannot establish, as a matter of North Carolina law, that “severe emotional distress”

was “reasonably foreseeable” as a consequence of the property damage that might be caused by

Duke’s allegedly negligent flooding of the Catawba River.

The Parties agree on the elements of a NIED claim under North Carolina law. To

properly assert a claim for negligent infliction of emotional distress, “a plaintiff must allege that

(1) the defendant negligently engaged in conduct, (2) it was reasonably foreseeable that such

conduct would cause the plaintiff severe emotional distress. . . and (3) the conduct did in fact

cause the plaintiff severe emotional distress.” Newman v. Stepp, 852 S.E.2d 104, 107 (N.C.

2020) (quoting Johnson v. Ruark Obstetrics & Gynecology Assocs., P.A., 395 S.E.2d 85, 97

(N.C. 1990)). In support of their NIED claim, Plaintiffs allege that Duke was negligent in

controlling the water levels as discussed above and make a bare allegation, without further

1 As discussed further below, this Order is limited to the particular facts of this case, and the

Court does not hold that conduct which negligently causes property damage may never lead to a

viable cause of action for NIED.

supporting facts, that “[i]t was reasonably foreseeable to Duke that its negligent conduct would

cause Plaintiffs severe emotional distress.” Doc. No. 15 at ¶ 64. As to Plaintiffs’ emotional

distress, the Third Amended Complaint (as well as the Second Amended Complaint, which

Plaintiffs were permitted to amend after Duke moved for its dismissal)2 alleged:

Duke’s conduct did, in fact, caused Plaintiffs to suffer severe emotional distress,

including mental anguish, depression, phobia, sleep deprivation, and other various

severe and disabling emotional and/or mental conditions.

Doc. No. 15 at ¶ 65. There are no further allegations as to the nature of the emotional distress

suffered by any particular Plaintiff, although the pleading does allege that “during the flood,

Plaintiffs watched helplessly as their valuable and sentimental property and family homes were

damaged and/or destroyed.” Id. at ¶ 63.

As noted above, a complaint attacked by a Rule 12(b)(6) motion to dismiss will survive if

it contains enough facts to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at

678 (quoting Twombly, 550 U.S. at 570). However, “[t]hreadbare recitals of the elements of a

cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly,

550 U.S. at 555). Thus, although the pleading requirements stated in “Rule 8 [of the Federal

Rules of Civil Procedure] mark[] a notable and generous departure from the hyper-technical,

code-pleading regime of a prior era ... it does not unlock the doors of discovery for a plaintiff

armed with nothing more than conclusions.” Id. at 678-79. “Where the well-pleaded facts do not

permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-

but it has not ‘show[n]’-‘that the pleader is entitled to relief,’” and therefore should be dismissed.

Id. (quoting Fed. R. Civ. P. 8(a)(2)).

2 Accordingly, Plaintiffs have now had four opportunities to allege their claims with the required

specificity, including after Duke moved to dismiss the NIED claim based, in part, on the

Twombly-Iqbal pleading standard. See Doc. 8 at 2; Doc. 9 at 15 n.6.

The Court agrees with the M&R that Plaintiffs’ NIED allegations, even generously

construed in their favor, are little more than a conclusory recitation of the elements of their claim

without specific supporting facts related to the circumstances. That is, while it is theoretically

“possible” that a person could suffer severe emotional harm as a consequence of residential

flooding (and the Court does not intend in any way to minimize the feelings of loss and harm

alleged by the Plaintiffs), here there is no factual allegation to support the alleged fact of severe

emotional harm as to all the Plaintiffs, other than the generalized, conclusory statement that the

harm occurred and was “reasonably foreseeable.” Further, this finding is strengthened by

Plaintiffs’ failure to include any particularized allegations describing the emotional distress

suffered by any one of the 57 different Plaintiffs; rather, the allegation is simply made for the

group as a whole, notably featuring vague allegations including “mental anguish” and “other

various severe … conditions.” In sum, the M&R correctly applied the governing pleading

standard in concluding that Plaintiffs have not sufficiently alleged their NIED claim. See

McKinney v. Cleveland County Board of Education, No. 3:20-CV-221-MOC-DSC, 2020 WL

6803846 (W.D.N.C. Nov. 19, 2020) (dismissing NIED claim pursuant to Rule 12(b)(6) where

plaintiff failed to allege sufficient facts to support a conclusory allegation of severe emotional

distress).

Also, even if the Court found that Plaintiffs’ NIED claim was plausibly alleged under

Iqbal and Twombly and accepted Plaintiffs’ allegations as true, it fails to state a claim under

North Carolina law, which requires that the Plaintiff establish that it was “reasonably

foreseeable” that “severe emotional distress” might result from the Defendant’s alleged wrongful

conduct. See Johnson, 395 S.E.2d at 97. While its full bounds are perhaps uncertain, North

Carolina courts clearly limit the scope of “reasonable foreseeability” in the context of NIED

claims to truly egregious and heart wrenching circumstances likely to cause severe emotional

distress3 such as the stillborn death of a fetus as a result of medical negligence, the death of a

two-year-old child shot with a shotgun at a home daycare or negligence occurring at the

gravesite of the plaintiff’s just-buried wife. See Id. (fetal death); Newman, 852 S.E.2d at 107

(daycare shooting); Matthews v. Forrest, 235 N.C. 281, 69 S.E.2d 553 (1952) (gravesite

negligence). Indeed, even in cases involving a mother witnessing unsuccessful attempts to

resuscitate her son after a car accident and parents grieving after their son was negligently

overserved alcohol and died in a car accident driving home, the North Carolina Supreme Court

has concluded that the plaintiff’s alleged emotional distress was not reasonably foreseeable. See

Sorrells v. M.Y.B. Hosp. Ventures of Asheville, 334 N.C. 669, 435 S.E.2d 320 (1993); Gardner v.

Gardner, 334 N.C. 662, 435 S.E.2d 324 (1993) (“While anyone should foresee that virtually any

parent will suffer some emotional distress—'temporary disappointment ... or regret’—in the

[death of a child], to establish a claim for NIED the law requires reasonable foresight of an

emotional or mental disorder or other severe and disabling emotional or mental condition.”

(emphasis in original)).

Although Plaintiffs allege in their complaint that they “watched helplessly as their

valuable and sentimental property and family homes were damaged and/or destroyed,” Id. at ¶

63, and while it would certainly be expected that a person might be emotionally upset by seeing

3 The “term ‘severe emotional distress’ means any emotional or mental disorder, such as, for

example, neurosis, psychosis, chronic depression, phobia, or any other type of severe and

disabling emotional or mental condition which may be generally recognized and diagnosed by

professionals trained to do so.” Waddle v. Sparks, 331 N.C. 73, 83, 414 S.E.2d 22, 27 (1992)

(emphasis in original) (quoting Johnson v. Ruark Obstetrics & Gynecology Assocs., P.A., 327

N.C. 283, 304, 395 S.E.2d 85, 97 (1990)). This is a “high standard,” and “[t]he law intervenes

only where the distress inflicted is so severe that no reasonable man could be expected to endure

it.” Waddle, 331 N.C. at 83-84, 414 S.E.2d at 27-28 (quoting Restatement (Second) of Torts § 46

cmt. j (1965)) (emphasis omitted).

their home flooded,4 based on the governing North Carolina Supreme Court authority discussed

above, it was not “reasonably foreseeable,” as a matter of law, that Plaintiffs would experience

“severe emotional distress” because of the flooding of their homes. Moreover, Plaintiffs have not

cited any North Carolina case that allowed a NIED claim prompted by similar property damage

to proceed.5 Accordingly, Plaintiffs’ NIED claim will be dismissed as recommended in the

M&R.

B. Applicable Standard of Care

The second prong of Duke’s motion similarly asks the Court to dismiss Plaintiffs’

remaining claims pursuant to Rule 12(b)(6), but only “to the extent that they are based upon state

law standards of care.” The M&R recommends that the Court grant Duke’s request. The Court

agrees with the substance of the M&R and will hold as discussed below that Duke’s federal

license to operate the CWHP (and related federal law as reflected in the Federal Power Act

(“FPA”) and Federal Energy Regulatory Commission (“FERC”) regulations) sets the applicable

standard of care for Plaintiffs’ negligence-based claims. However, as a matter of procedure,

4 Again, the Court emphasizes that it does not belittle the emotions of loss and disappointment

that Plaintiffs undoubtedly experienced during and after the flooding of their homes. However,

here the Court must follow North Carolina law, which clearly holds that “part of living involves

some unhappy and disagreeable emotions with which we must cope without recovery of

damages.” See Gardner, 334 N.C. at 667, 435 S.E.2d at 328.

5 Defendant cites Chappell v. Ellis, 123 N.C. 259, 31 S.E.2d 709 (1898), as evidence that North

Carolina categorically does not allow recovery for NIED arising out of property damages. In

Chappell, the Court “reject[ed] a claim for mental anguish arising from loss of property during a

lawful eviction.” Although Chappell and its citation in Johnson as an example of an improper

claim for NIED, see Johnson, 327 N.C. at 306, 395 S.E.2d at 98, support the Court’s conclusion

that NIED claims are limited to egregious circumstances, it proves too much to argue that

Chappell, which involved allegations of harm arising, at least in part, from lawful conduct, holds

that there can be no circumstances in which damage to property can lead to a proper NIED claim.

See Matthew, 235 N.C. 281, 69 S.E.2d 553 (NIED claim arising from damage to gravesite

allowed to proceed).

Duke’s motion as stated must be denied because Rule 12(b)(6) only applies to dismissal of

claims in their entirety.

Rule 12(b)(6) states that a party may assert a number of “defenses” by motion, including

“failure to state a claim upon which relief can be granted…” Fed. R. Civ. P. 12(b)(6). By its

plain language, the rule thus relates only to dismissal of “a claim” not a portion of a claim

(unlike Rule 56, which speaks specifically and separately of the court ruling on “a part of each

claim or defense”). Fed. R. Civ. P. 56(a). Therefore, Duke’s motion to dismiss Plaintiffs’ non-

NIED claims only “to an extent” is not properly brought under Rule 12(b)(6) and will be denied

without prejudice. See Koepplinger v. Seterus, Inc., No. 1:17CV995, 2018 WL 4055268, at *4

(M.D.N.C. Aug. 24, 2018), report and recommendation adopted, No. 1:17-CV-995, 2018 WL

4401738 (M.D.N.C. Sept. 14, 2018), citing Abraham P. v. Los Angeles Unified Sch. Dist., No.

CV 17-3105, 2017 WL 4839071, at *6 n.7 (C.D. Cal. Oct. 5, 2017) (“This [c]ourt's practice is to

not dismiss parts of claims at the [Rule] 12(b)(6) stage because – unlike Rule 56, for example –

[Rule] 12(b)(6) speaks of a motion to dis[mi]ss ‘a claim,’ not part of a claim. If the [asserted

defense] does not get rid of the entire claim, then it cannot be dismissed.”); see also Meeks v.

Emiabata, No. 7:14CV00534, 2015 WL 1636800, at *2 (W.D. Va. Apr. 13, 2015) (holing that

“Fed.R.Civ.P. 12(b)(6) does not provide a vehicle to dismiss a portion of relief sought or a

specific remedy, but only to dismiss a claim in its entirety”). Nevertheless, because (1) the

Parties have fully briefed the issue of the scope of the applicable duty of care as a matter of law

both to the Magistrate Judge and to this Court, (2) it was fully considered and ruled on in the

M&R and (3) its resolution may assist the Parties as the case proceeds, the Court will rule on the

merits of the question now rather than defer its ruling.

Duke operates the CWHP, including a number of dams and reservoirs along the Catawba

River, under a comprehensive 157-page federal license, issued in 1958, that governs its operation

of the complex, multistate hydroelectric project (which spans approximately 300 miles of the

Catawba and Wateree Rivers - stretching from Lake James in North Carolina to Lake Wateree in

South Carolina).6 The license is “subject to the terms and conditions of the [FPA], which is

incorporated by reference as part of [the] License, and subject to the regulations [FERC] issues

under the provisions of the FPA.” Doc. 8-1 at 85.

In California v. FERC, 495 U.S. 490, 499, 506–07 (1990), the Supreme Court made clear

that under federal law FERC has, consistent with the Supreme Court’s earlier holding in First

Iowa Hydro–Electric Cooperative v. FPC, 328 U.S. 152 (1946), “final authority to establish

license conditions (including those with terms inconsistent with the States' recommendations)”

for federally licensed hydroelectric power projects. Thus, state laws or measures are “pre-empted

to the extent [they] actually conflict[] with federal law, that is, when it is impossible to comply

with both state and federal law, or where the state law stands as an obstacle to the

accomplishment of the full purposes and objectives of Congress.” California v. FERC, 495 U.S.

at 506, quoting Silkwood v. Kerr–McGee Corp., 464 U.S. 238, 248 (1984) (holding that

California requirements for minimum in-stream flows could not be given effect and allowed to

supplement the federal flow requirements).

6 The issuance of the license was the culmination of an application and approval process that

involved the submission of a Comprehensive Relicensing Agreement signed by 70 entities,

including the North Carolina Department of Environment and Natural Resources (now the North

Carolina Department of Environmental Quality), the North Carolina Wildlife Resources

Commission, the South Carolina Department of Natural Resources, the Catawba Indian Nation,

29 local and county governments, and 26 conservation and other organizations. See Doc. No. 8-1

at 2-3.) The current license runs through 2055. Id. at 2, 85.

Later cases interpreting California v. FERC further support the conclusion that the FERC

license sets the operative duties, obligations, and standard of care for FERC licensees. See, e.g.,

Simmons v. Sabine River Authority, La., 732 F.3d 469, 476-77 (5th Cir. 2013), cert. denied, 134

S. Ct. 1876 (2014) (concluding that “FERC, not state tort law, must set the appropriate duty of

care for dam operators” and reasoning that “[a]pplying state tort law to set the duty of care for

the operation of FERC-licensed projects would ‘stand[ ] as an obstacle to the accomplishment

and execution of the full purposes and objectives’ of the FPA”); Carrington v. City of Tacoma,

Dep’t of Pub. Util., Light Div., 276 F. Supp. 3d 1035, 1041 (W.D. Wash. 2017) (“Plaintiffs’

negligence claim necessarily raises a federal question because [the dam operator’s] FERC license

established the applicable duty of care.”); see also Funderburk v. SCE&G Funderburk, 179 F.

Supp. 3d 569, 578-79 (D.S.C. 2016) (“Plaintiffs’ attempt to avoid reference to federal law [in

their negligence claim] through artful pleading is not compelling since the FERC ‘set[s] the

appropriate duty of care for dam operators.’” (quoting Simmons, 732 F.3d at 476-77)).

Applying this well-established authority, Duke’s license to operate the CWHP, along

with incorporated federal law and regulations under the FPA and FERC, govern and set the

standard for Duke’s operations, including the conduct that Plaintiffs challenge in this action.

Plaintiffs argue that they should be able to rely on both North Carolina common law and federal

law as the standard of care for their negligence claims because the two standards are allegedly

not in conflict. This argument, even if true, does not change the application of federal law.7 If the

license / federal law standard is truly the same as the state standard, then the state standard is

7 Plaintiffs’ arguments concerning the application of North Carolina law ignore the fact that the

CWHP reaches beyond North Carolina into South Carolina. The multistate nature of the project

only further emphasizes the importance of a federal standard of care. Otherwise, Duke might

potentially be held to a different standard for harm in South Carolina and North Carolina arising

from a single flooding event.

either duplicative or irrelevant, but in any event need not be relied upon. On the other hand, if the

federal and state standards are different then the federal standards must control under California

v. FERC.

In sum, the Court will accept the recommendation in the M&R and hold that Duke’s

license and the related federal law and regulations set the applicable standard of care for

Plaintiffs’ negligence based claims. To be clear, and as acknowledged by Duke, Plaintiffs may

assert a negligence claim under North Carolina law to hold Duke to its duties as a FERC

licensee. The ultimate merits of that claim (on which the Court has no opinion at this early stage

of the case) is yet to be determined. However, it is the relevant federal requirements and

standards, not North Carolina common law, that will determine if Duke breached any duty of

care to Plaintiffs.

IV. ORDER

NOW THEREFORE IT IS ORDERED THAT:

1. Defendant’s Partial Motion to Dismiss Third Amended Complaint (Doc. No. 17)

is GRANTED in part and DENIED in part;

2. Plaintiffs’ claim for Negligent Infliction of Emotional Distress is dismissed;

3. Defendant’s motion to partially dismiss Plaintiffs’ other negligence-based claims

is denied without prejudice;

4. Duke’s federal license to operate the CWHP together with related federal law

under the FPA and FERC regulations shall set the applicable standard of care for

Plaintiffs’ negligence-based claims; and

5. This case shall proceed towards a resolution of the merits of Plaintiffs’ remaining

claims in the absence of a voluntary resolution of the dispute among the parties.

SO ORDERED ADJUDGED AND DECREED.

Signed: January 31, 2022

Kenneth D. Bell

United States District Judge \ i

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