A San Francisco Superior Court judge has issued a sanctions order against the city of Modesto for disposing of nearly all inspection reports from 1991 related to its sewer system near local dry cleaners. The order, dated August 1, states that the city “willfully” withheld records that should have been disclosed as early as 2000, violating the Discovery Act.
The lost records are part of ongoing litigation against Dow Chemical, PPG Industries, R.R. Street, and several Modesto dry cleaners regarding groundwater contamination from tetrachloroethylene (PCE), a chemical classified as hazardous by the EPA. The two surviving inspection reports resurfaced in 2024 and indicate cracks in sewer lines near Sunshine/Coit Carpet on Princeton Avenue and Modesto Steam on Eighth Street—cracks that could have allowed PCE to seep into groundwater.
According to the court’s order, these findings contradict previous statements by city lawyers that there was no specific information linking sewer line defects to soil contamination until shortly before the lawsuit was filed. Judge Daniel A. Flores noted that up until recently, there were no records of these reports in the city’s document index.
The city acknowledged learning about PCE contamination at dry cleaner sites in 1991 after testing 25 locations and finding evidence at most of them. In response to concerns over PCE entering municipal drinking water wells through faulty sewers, Modesto used CCTV cameras to inspect lines and generated what it called “Television Inspection Reports.” Most of these were thrown away after then-assistant city attorney Roland Stevens allegedly told Robert Englent, current wastewater collections systems superintendent, that it was acceptable because everything had already been produced for defendants.
“The City of Modesto does not agree with the request for sanctions against the City. The City is preparing its opposition to the motion and expects to appeal any award,” according to a statement provided by the city.
Court documents reveal there is no evidence that destruction of these records received City Council approval or written consent from the city attorney as required under California law. Stevens said in deposition he was unaware of litigation holds meant to preserve such documents during lawsuits.
The judge found it implausible that during heightened state and federal scrutiny over PCE releases from Halfords Cleaners—a site later declared a superfund location—the city would inspect but not document sewer conditions.
In recent years, EPA cleanups have removed hundreds of pounds of PCE from affected areas around McHenry Avenue; however, issues persist according to federal assessments completed in 2023. Municipal Well 11 near this site was abandoned due to uranium levels exceeding safe limits after being shut down multiple times for PCE contamination. Another well between H and G streets exceeded safe drinking water standards for PCE within the past year; treatment systems have since been implemented by the city.
Modesto’s legal case against Halfords Cleaners ended with a settlement in September 2025. Dow Chemical and others argued missing inspection reports influenced prior verdicts involving Vogue dry cleaners and Modesto Steam but were denied new hearings by the court.
As a result of this sanctions order, Modesto will be required to pay defense costs related to depositions taken since 2000, pretrial work for ongoing cases like Sunshine/Coit Carpet, research supporting sanction requests, and expenses tied to rediscovery of lost reports—a total currently estimated at $13.1 million.
In an October statement submitted under oath, Englent said he would not have recommended additional testing for PCE based on his review of CCTV footage from various years at Sunshine/Coit Carpet. However, Judge Flores observed that reconstructing events more than three decades later is difficult given missing documentation and deceased personnel involved at that time.
Going forward, jurors will receive instructions reflecting that available CCTV inspections revealed defects capable of allowing PCE leaks into groundwater—and only two out of at least five original reports remain because others were intentionally destroyed by the city.
“The net effect of the City’s concealment and destruction of critical documents is tremendous,” wrote Judge Flores in his sanctions order. “The fact that two, out of at least five, inspection reports mysteriously surfaced decades later are no cure for the harm inflicted to Defendants.”
