Brady v. Abbott Laboratories

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

ERNEST EUGENE BRADY, husband; 
MARRITTA KAY BRADY, wife; JAMES
DEAN BRADY, husband; FLOSSIE
MARIE BRADY, wife,
Plaintiffs-Appellees,
v.
ABBOTT LABORATORIES, an Illinois No. 04-15257
corporation (including Ross
Products Division of Abbor  D.C. No.
CV 01-0886 JAT
Laboratories, improperly named),
Defendant-Appellant, ORDER
and
ABC ENTITIES, I-X; JOHN/JANE
DOES, I-X; ROSS PRODUCTS, a
Division of Abbott Laboratories,
Inc.,
Defendants.

Filed April 25, 2006

Before: Jerome Farris, A. Wallace Tashima, and
Consuelo M. Callahan, Circuit Judges.

Order;
Dissent by Judge Hawkins

ORDER

The panel has voted to deny the petition for panel rehear-
ing. Judge Callahan votes to deny the petition for rehearing en
banc and Judges Farris and Tashima so recommend.

4589
4590 BRADY v. ABBOTT LABORATORIES
The full court was advised of the petition for rehearing en
banc and a judge of the court called for a vote on whether to
rehear the matter en banc. On such vote, a majority of the
nonrecused active judges failed to vote in favor of en banc
rehearing.

The petition for panel rehearing and the petition for rehear-
ing en banc are denied.

HAWKINS, Circuit Judge, dissenting from the denial of
rehearing en banc:

We should have taken this case for en banc review because
it presents an important question of state law that should have
been certified to the Arizona Supreme Court: whether the
“reasonable use” doctrine articulated in Bristor v. Cheatham,
255 P.2d 173 (Ariz. 1953) (“Bristor”) has been modified, in
certain drought-sensitive areas of Arizona, by the enactment
of the 1980 Arizona Groundwater Code (“the Code”).1

Bristor established that a landowner owed no duty to an
adjacent landowner for the extraction of groundwater, even
where there is demonstrable damage to a neighbor’s land, as
long as the water taken is reasonably used on the overlying land.2
1
The commentators assume that it has. See, e.g., Patrick and Archer, A
Comparison of State Groundwater Laws, 30 Tulsa L.J. 123, 132 (1994)
(“The 1980 Act replaced the traditional reasonable use doctrine that per-
mitted virtually unlimited use of groundwater.”); Paula Smith, Coercion
and Groundwater Management: Three Case Studies and a “Market”
Approach, 16 Envtl. L. 797, 850 (1986) (“For areas outside AMAs,
groundwater may be withdrawn and used for ‘reasonable and beneficial
use.’ ”) (emphasis added).
2
Although certification of the state law issue was the primary reason to
have en banc review, a compelling argument exists that even if Bristor
applies to this dispute, the district court correctly determined that Abbott’s
offsite dumping of extracted groundwater, in violation of the very permit
 BRADY v. ABBOTT LABORATORIES 4591
In 1980, the Arizona Legislature, recognizing the state’s
expanding population and limited water supplies, enacted a
comprehensive regulatory scheme which dramatically altered
the groundwater landscape. The Code significantly modified
the rights of landowners to remove groundwater underlying
their land. In certain drought-sensitive areas (Active Manage-
ment Areas or “AMA’s”), landowners may not even begin to
extract groundwater from beneath their land without permis-
sion from the Director of the Arizona Department of Water
Resources.

This case arose in just such an area. Abbott Laboratories
(“Abbott”) applied for and obtained a permit to withdraw
groundwater from beneath its land and then proceeded to
exceed the very restrictions placed upon that withdrawal.
Abbott’s actions so substantially depleted the surrounding
water table as to destroy nearly 300 pecan trees growing on
neighboring land. Those neighbors filed suit in the Arizona
courts and, had the dispute remained there, there would be no
need to ask the Arizona Courts about the issue. Abbott, how-
ever, exercised its removal rights, meaning the question
would be decided in federal court.

The matter proceeded to a bench trial before a district judge
well-versed in Arizona law. Brushing aside Abbott’s argu-
ments that Bristor permitted the “reasonable use” it had made
of the groundwater and specifically noting Abbott’s violation
of the very permit that allowed the withdrawal of groundwater
in the first instance, the district court found for the orchard

needed to extract the water in the first place, took Abbott’s actions outside
Bristor’s protection. See Jarvis v. State Land Department, 479 P.2d 169,
171-72 (Ariz. 1970) (“Percolating waters may not be used off the lands
from which they are pumped if thereby others whose lands overlie the
common supply are injured. Such waters can only be used in connection
with the land from which they are taken.”) (Citations omitted; emphasis
added); see also Farmers Investment Company v. Bettwy, 558 P.2d 14
(Ariz. 1976).
4592 BRADY v. ABBOTT LABORATORIES
owners, assessing both compensatory and punitive damages
on Abbott.

On appeal, Abbott convinced a three-judge panel that Bris-
tor applied to the dispute, notwithstanding the enactment of
the Code. The panel apparently found it unpersuasive that the
Arizona Supreme Court, while not specifically holding that
the Code modified the common law as expressed in Bristor
and its progeny, clearly seems to have assumed it did:

We similarly approach the state law parties’ argu-
ment that federal reserved rights holders may be ade-
quately protected against groundwater depletion by
the 1980 Groundwater Management Code, which
restricts application of the reasonable use doctrine
and mandates conservation measures in some parts
of Arizona. For example, within “active management
areas,” it prevents the drilling of new wells or
increased pumping, and requires permits for changes
in use. See A.R.S. § 45-411 et. seq.

In re Gen. Adjudication of All Rights to Use Water in Gila
River Sys. & Source, 989 P.2d 739, 749 n.13 (Ariz. 1999)
(emphasis added).

Arizona law permits federal courts to certify state law ques-
tions to the Arizona Supreme Court,3 and this was a perfect
opportunity to do so. Even assuming the question to be an
open one, the conflict between what Bristor allows and what
the Code restricts4 is so apparent that the Arizona courts
3
A.R.S. § 12-1861.
4
Compare A.R.S. § 45-518 (A)(4) (requiring [Arizona Dep’t of Water
Resources] director to determine “dewatering [removal of groundwater]
will not harm any person permitted to withdraw or use groundwater under
this title”) with Bristor, 255 P.2d at 238 (“If [groundwater] is diverted for
the purpose of making reasonable use of the land from which it is taken,
there is no liability incurred to an adjoining owner for a resulting dam-
age”).
 BRADY v. ABBOTT LABORATORIES 4593
should be allowed to say what the law of the state is — not
what a federal appeals panel thinks it might be. A healthy
respect for the federal-state relationship, as Justice Ginsberg
reminded us in Yniguez v. Arizonans for Official English, 520
U.S. 43, 62-63 & n.18 (1995), demands no less.
 PRINTED FOR
ADMINISTRATIVE OFFICE—U.S. COURTS
BY THOMSON/WEST—SAN FRANCISCO

The summary, which does not constitute a part of the opinion of the court, is copyrighted
© 2006 Thomson/West.