In re: MTBE Products Liability Litigation

Jul 26: In the U.S. Court of Appeals, Second Circuit, Case Nos. 10-4135 & 10-4329. The Appeals Court explains that After an eleven-week bellwether trial and years of related litigation, the District Court entered a $104.69 million judgment for the City of New York, the New York City Water Board, and the New York City Municipal Water Finance Authority (collectively, the City) and against Exxon Mobil Corporation, Exxon Mobil Oil Corporation, and Mobil Corporation (collectively, Exxon). The jury found Exxon liable under New York tort law for contaminating City-owned wells in Queens by its release of the chemical methyl tertiary butyl ether (MTBE), which Exxon used as a gasoline additive from the mid-1980s through the mid-2000s, and whose use New York State banned as of 2004.

 

    On appeal, Exxon challenges the verdict, arguing primarily that the City's common law claims are preempted by the Federal Clean Air Act, which, from the mid-1990s through 2004, required use of gasoline oxygenates, such as MTBE, in New York City. Exxon also argues that because (among other reasons) the jury projected MTBE levels equal to the State's maximum contaminant level, the City's injury was not legally cognizable; that the City's action was not ripe for adjudication (or alternatively, that it was barred by the statute of limitations); that the City failed sufficiently to prove the elements of negligence, trespass, public nuisance, and failure-to-warn; and that the District Court erred in its handling of alleged jury misconduct. On cross-appeal, the City faults the District Court for instructing the jury to offset its damages award by the cost of remediating pre-existing contamination, and for its ruling that, as a matter of law, the City was not entitled to an award of punitive damages. The Appeals Court affirmed the decision of the District Court in its entirety.

 

    The Appeals Court concludes, "To summarize: We conclude that the state law tort verdict against Exxon is not preempted by the federal Clean Air Act. We conclude that the jury's finding that the MTBE levels in Station Six Wells will peak at 10 ppb in 2033 -- the MCL for MTBE since 2004 -- is not inconsistent with a conclusion that the City has been injured. We conclude that the City's suit was ripe because the City demonstrated a present injury, and that the City's suit was not barred by the statute of limitations. We conclude that the jury's verdict finding Exxon liable under state tort law theories is not precluded by the jury's concurrent conclusion that the City had not carried its burden, in the design-defect context, of demonstrating a feasible, cost-reasonable alternative to MTBE available to satisfy the standards of the now repealed Reformulated Gasoline Program. We conclude that Exxon's demand for a retrial because of an incident of juror misconduct is unavailing. And we conclude that the jury properly offset the gross damages award by amounts it reasonably

attributed to cleanup of contaminants other than MTBE, and that the City was not entitled to a jury determination of Exxon's liability for punitive damages."

 

    Access the complete 117-page opinion (click here). [#Air, #Water, #Toxics, #Drink, #CA2]

Voggenthaler v. Maryland Square, LLC

Jul 26: In the U.S. Court of Appeals, Ninth Circuit, Case No. 10-17520, 11-15174, 11-15176, 12-16409, and 12-16412. Appealed from the United States District Court for the District of Nevada. The Appeals Court explains, "Two environmental statutes "everyone loves to hate" are the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA). "In combination, they make owners of contaminated property and contributors to contamination responsible for cleaning up toxic waste, and, if someone else cleans up the waste, liable for the costs of that clean up. This litigation illustrates the point. It involves seepage over several decades of a toxic dry cleaning chemical into the ground under a Las Vegas shopping center. There have been two district court actions leading to multiple appeals."

    Two companies leased the Site and operated the dry cleaning facility. Shapiro Bros. Investment Co. (SBIC) operated it from 1969 until 1984. Johnson Group, Inc., the predecessor of DCI USA, Inc., (collectively DCI) purchased the dry cleaning business in 1984 and operated it until 2000. Neighboring homeowners brought the first action, seeking injunctive relief against the property owners of the shopping center and operators of the dry cleaning facility. The Nevada Division of Environmental Protection (NDEP) brought the other action to recover its clean up costs. The district court granted summary judgment for both sets of plaintiffs on all claims. The current owner and the former operators of the dry cleaning facility appeal. There are numerous procedural issues, but the principal legal contention is that application of CERCLA to this conduct that occurred solely in Nevada violates the Commerce Clause.

 

    The Appeals Court rules, "We largely affirm the district court, including its rejection of that constitutional challenge. We vacate the grant of summary judgment under CERCLA against the current owner and remand so the owner may have an opportunity to make the additional showing that would be necessary to establish that it meets an exception to CERCLA liability. We reverse on procedural grounds the grant of summary judgment under RCRA against the current owner and the operators because those defendants did not have an adequate opportunity to respond to plaintiffs' claims. We also reverse the grant of summary judgment against one guarantor, because there is no evidence of spills during the term of his guaranty.

 

    The Appeals Court concludes as follows: "The district court properly rejected Maryland Square's constitutional challenge to the application of CERCLA in this case, and correctly granted judgment against Maryland Square and in favor of NDEP on its state law claims. The district court's judgment in favor of NDEP and against SBIC on both the CERCLA and the state law claims must be affirmed. The judgment against SBIC on the claims of the prior Site owners for indemnity was in accordance with the provisions of the leases and must be affirmed.

 

    "The district court erred, however, in entering judgment against Maryland Square on NDEP's CERCLA claim without giving Maryland Square an opportunity to correct the deficiencies in its 'bona fide prospective purchaser' submission. The district court also erred in denying for lack of jurisdiction Maryland Square's motion for reconsideration of the RCRA judgment, and we remand for consideration on the merits. In the homeowners' RCRA action, the district court erred in entering judgment against SBIC sua sponte and the judgment, as well as the ensuing injunction, must be vacated. Although the district court properly held that the prior Site owners were entitled to indemnification from SBIC, the court erred in holding Melvin Shapiro was individually liable for indemnification on the basis of his personal guaranty that operated only prospectively."

 

    Access the complete opinion (click here). [#Haz, #Remed, #CA9]