The Year in Review: Ten Developments and Trends in Toxic Tort and Environmental Law for 2012 Roy Alan Cohen Jeffrey M. Pypcznski Porzio Bromberg & Newman 100 Southgate Pkwy Morristown, NJ 07962-1997 (973) 538-4006 racohen@pbnlaw.com jmpypcznski@pbnlaw.com Sneha Desai BASF Corporation Florham Park, NJ Peter A. Drucker Akzo Nobel Inc. Tarrytown, NY Joe Perez Exxon Mobil Corporation Houston, TX
Roy Alan Cohen and Jeffrey M. Pypcznski litigate and try a wide variety of toxic tort, product liability, and environmental matters. Mr. Cohen is a principal of the firm, a member of the DRI Toxic Tort and Environmental Law Steering Committee, a Certified Civil Trial Attorney by the Supreme Court of New Jersey Board on Trial Certification since 1987, and a frequent author and lecturer on litigation and trial subjects. Mr. Pypcznski is counsel with the firm and active member of the DRI Toxic Tort and Environmental Law Committee. Sneha Desai is Senior Litigation Counsel at BASF Corporation, the North American subsidiary of the world s largest chemical company. Her responsibilities include managing the company s material litigation portfolio, counseling business clients regarding litigation risk, and overseeing litigation-related policies and procedures (including legal hold protocols and e-discovery initiatives). Prior to joining BASF in January 2008, Ms. Desai was with the law firm of Patterson Belknap Webb & Tyler LLP in New York City, specializing in complex commercial and intellectual property litigation. Peter A. Drucker serves as Assistant General Counsel Litigation for Akzo Nobel Inc. in Tarrytown, New York. He manages a broad litigation docket for the company in the Americas. He was previously litigation counsel at ICI Group Services Inc., part of ICI Group, a worldwide specialty chemical manufacturer, where he managed toxic tort, product liability, environmental, anti-trust, commercial and insurance coverage litigation for ICI. He previously served as Assistant General Counsel-Litigation for Asarco Inc., a mining and metals refining company. Mr. Drucker is a frequent speaker on toxic tort and environmental law issues and is a DRI member. Joe Perez is counsel in ExxonMobil s Litigation Department in Houston. Mr. Perez graduated from the University of Texas at San Antonio and received his law degree from the University of Texas at Austin in 1992. He has held a number of positions in the ExxonMobil Law Department and directs and oversees outside counsel in toxic tort, asbestos, and insurance coverage cases across the country.
The Year in Review: Ten Developments and Trends in Toxic Tort and Environmental Law for 2012 Table of Contents I. Developments in Diacetyl Litigation ( Popcorn Lung Cases )...5 A. Victory for the Plaintiff Watson v. Dillon Companies, Inc., et. al., No. 08-cv-00091 (D. Colorado, June 7 2012)...5 B. Victory for the Defense Velasquez v. Flavor & Extract Mfrs. Ass n, No. BC370319 (Cal. Super. Ct. Los Angeles, December 12, 2012)...6 II. Developments on Preemption Defense in Toxic Tort Cases...7 A. Clean Air Act Preempts Diesel Fume Failure-To-Warn Claims...7 B. OSHA Attempts to Remove Any Preemption Defense Under the Federal Hazard Communication Standard...7 III. Developments in Asbestos Litigation...10 A. End of the Federal Court MDL for Most Asbestos Cases...10 B. Manufacturers Have No Duty to Warn Potential Users of the Hazards of Asbestos Components Manufactured by Others...10 C. Florida State Court Rules that Manufacturer Discharges Duty to Warn End Users by Adequately Warning Intermediary Manufacturers...11 D. A Plaintiff s Lack of Candor and Intentional Misrepresentations During The Discovery Process Found to be a Fraud on the Court and Results in Dismissal of Complaint with Prejudice...11 IV. Developments in Class Treatment of Toxic and Environmental Torts...12 V. Developments in the Substantial Factor Test for Proving Causation Most Court Will Now Require Quantitative Epidemiological Evidence...13 VI. Developments with Daubert...15 A. Asbestos Ninth Circuit Vacates $9 million Jury Verdict Finding That a District Court Failed to Fulfill Its Gatekeeping Obligations Under Daubert...15 B. Benzene Federal Court in Wisconsin Joins Growing List of Courts To Reject Plaintiff s No-Threshold Theory of Causation...16 C. Benzene Plaintiffs Expert s Opinion Insufficient to Support Claim Under the Louisiana Products Liability Act...17 VII. Developments in Superfund (CERCLA) Liability...18 A. United States v. NCR Corp., et. al., 840 F. Supp. 2d 1093 (E.D. Wis. 2011) Purchaser May Assume Superfund Liability Through Asset Purchase Agreement Even Though the Seller Still Exists...18 B. U.S. and The State of Wisconsin v. NCR Corp., 688 F.3d 833 (7 th Cir. 2012) Seventh Circuit Rules That Joint and Several Liability Remains Viable Under CERCLA...19 VIII. Ownership of Groundwater in Place A Constitutionally Protected Right in Texas...20 IX. Sackett v. EPA, 132 S. Ct. 1367 (2012) Supreme Court Strikes Down EPA s Ban on Pre- Enforcement Review of Administrative Compliance Orders Under the Clean Water Act...20 X. Plaintiffs Counsel Ordered to Pay $250,000 in Sanctions for Pursuing a Frivolous Medical Monitoring Claim Against Chevron USA...21 Endnotes...22 The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 3
The Year in Review: Ten Developments and Trends in Toxic Tort and Environmental Law for 2012 I. Developments in Diacetyl Litigation ( Popcorn Lung Cases ) A. Victory for the Plaintiff Watson v. Dillon Companies, Inc., et. al., No. 08-cv-00091 (D. Colorado, June 7 2012) In September 2012, a federal court jury awarded Wayne Watson $7.2 million in damages in one of the first diacetyl exposure, or popcorn lung cases brought by a consumer to result in a verdict. Companies involved or associated with diacetyl cases were monitoring the Watson case with interest because Mr. Watson is one of the first consumer of microwave popcorn diagnosed with the rare lung disease, bronchiolitis obliterans. The disease has been associated with exposure to diacetyl, one of several chemicals and manmade substances used to flavor microwave buttered popcorn. It causes the bronchioles of the lung to become scarred and constricted, thereby blocking the movement of air through the lungs. Mr. Watson alleged that contracted the disease as a result of his exposure to diacetyl through consumption of 2 bags of microwave popcorn per day over a period of approximately ten years. Jurors found Gilster-Mary Lee Corp., the private-labeling manufacturer of the popcorn, liable for 80 percent of the damages, and the Kings Scooper supermarket chain and its parent corporation, Kroger Co., liable for 20 percent. Diacetyl emerged as a potential toxic tort in the early 2000s when the National Institute for Occupational safety and Health ( NIOSH ) was asked to investigate an increase in incidences of bronchiolitis obliterans among former workers of a microwave popcorn plant in Jasper Missouri. This led to a comprehensive investigation by NIOSH over a period of several years with the cooperation of the microwave popcorn and flavoring industry, and resulted in the 2004 NIOSH Alert: Preventing Lung Disease in Workers Who Use or Make Flavorings. See http://www.cdc.gov/niosh/docs/2004-110/. Following its investigation, NIOSH concluded that diacetyl vapors may pose an inhalation hazard in the workplace: Toxicology studies have shown that vapors from heated butter flavorings can cause damage to airways in animals (Hubbs et al, 2002). Studies in both rats and mice demonstrate that the cells lining airways can be damaged by inhaling diacetyl vapors as a single agent exposure in both acute and subchronic studies (Hubbs et al, 2008; Morgan et al, 2008). In mice, aspiration of diacetyl alone caused a pattern of injury that replicates some of the features of human obliterative bronchiolitis (Morgan et al, 2008). These findings support the hypothesis that diacetyl vapors are an inhalation hazard in the workplace. Also, a study from the Netherlands shows that chemical workers in a plant that manufactured diacetyl developed the same type of lung disease as microwave popcorn workers (van Rooy et al, 2007 and 2009). These chemical workers had less complicated exposures than microwave popcorn workers. Overall, current evidence points to diacetyl as one agent that can cause flavorings-related lung disease. Other flavoring ingredients may also play a role. See http://www.cdc.gov/niosh/topics/flavorings/exposure.html. While the NIOSH investigation was focused on the daily and significant exposure of popcorn workers in the workplace, often in closed systems without proper ventilation, the research has opened the door to litigation brought by consumers claiming development of bronchiolitis obliterans and other lung disorders as a result of personal consumption of microwave popcorn products. The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 5
These consumer-based lawsuits raise serious issues related to general and specific causation on alleged diacetyl exposure. In Watson, Plaintiff s case on causation was based almost entirely on the opinions of his expert, Cecile Rose, MD, a professor and Director of the Occupational and Environmental Medicine Clinic for National Jewish Health in Colorado. 1 Dr. Rose explained her opinion on causation in Mr. Watson s case as follows: Q: What s the basis for your opinion that his exposure to microwave popcorn is a cause of the lung disease that you diagnosed in him? A: Well, the basis for that opinion relates mainly to the fact that his lung disease has stabilized with the cessation of use of the product and exposure to the inhalants related with that product. The fact that there was no other causal explanation for his lung condition and the fact that the clinical findings in his lung disease were similar to those that occurred in workers who were exposed to butter flavoring also support that opinion. Dr. Rose also testified that she did not rely on the results of any actual air testing conducted at Mr. Watson s home with respect to the measurement of diacetyl levels. She explained that she made the diagnosis of Mr. Watson s condition and the causal link to his use of microwave popcorn without any measurement in his home. Defense counsel believed that the failure to conduct any type of air sampling in the home and Dr Rose s reliance on nothing other than a differential diagnosis provided a strong basis for a Daubert motion to preclude her testimony on causation and dismiss the entire case. The court disagreed and ruled that: the Tenth Circuit has recognized that a medical expert does not always have to cite to published studies on general causation in order to establish causation and, under the right circumstances, a differential diagnosis (i.e., ruling out other possible causes of the condition) may reliably form the basis of an opinion that a particular item caused an injury. Hollander v. Sandoz Pharm. Corp., 289 F.3d 1193, 1211-12 (10th Cir. 2002) (quoting Turner v. Iowa Fire Equip. Co., 229 F.3d 1202, 1209 (8th Cir. 2000)). The first several victims of a new toxic tort should not be barred from having their day in court simply because the medical literature, which will eventually show the connection between the victims condition and the toxic substance, has not yet been completed. Turner, 229 F.3d at 1209. Dr. Egilman and Dr. Rose have both discussed why they believe that other known causes of bronchiolitis obliterans have been eliminated, leaving Mr. Watson s exposure to butter flavoring vapors as the most plausible explanation. See http://scholar.google.com/scholar_case?case=8816655380912051770. Thus, the case went to the jury and resulted in the first damages award in favor of a consumer alleging exposure to diacetyl through consumption of over-the-counter microwave popcorn. B. Victory for the Defense Velasquez v. Flavor & Extract Mfrs. Ass n, No. BC370319 (Cal. Super. Ct. Los Angeles, December 12, 2012) On December 12, 2012, the first popcorn lung case to be tried in California resulted in a defense verdict. The plaintiff was a former worker in a flavoring factory and alleged that exposure to diacetyl resulted in bronchiolitis obliterans. Suit was brought against several defendants, including Advanced Biotech, Inc, a distributor of diacetyl to plaintiff s employer. Most of the defendants settled, but Advanced Biotech decided to proceed to trial. Following a three-month trial, the jury found that Advanced Biotech had negligently supplied diacetyl to plaintiff s employer and had knowledge of the chemical s risk, but in a 9-3 vote, absolved the company of liability, concluding that its conduct was not a substantial cause of plaintiff s disease. See Heller, Matthew, California Jury Throws Out Factory Worker s Popcorn Lung Case, Law 360, December 17, 2012. 6 Toxic Torts and Environmental Law February 2013
Plaintiff s counsel was quoted as saying that the defense was very effective in confusing the jury, citing the defense s suggestion that plaintiff s disease may have been caused by Acetaldehyde, another chemical used in the flavoring process, and by defense expert testimony that plaintiff was suffering from asthma, not bronchiolitis. See id. A similar consumer case filed against ConAgra Foods and other defendants is scheduled to proceed to trial in New York in January 2013. II. Developments on Preemption Defense in Toxic Tort Cases A. Clean Air Act Preempts Diesel Fume Failure-To-Warn Claims In July 2012, the Second Circuit Court of Appeals ruled that the preemption clause under the Clean Air Act preempted a series of claims filed by public transit workers arising from their alleged occupational exposure to diesel exhaust fumes. Butnick v. General Motors Corp., No. 11-1068 (2d Cir. July 11, 2012). Plaintiffs claimed that the bus manufacturers failed to warn them about the potential hazards of inhalation of diesel fumes and that the buses did not meet applicable federal emissions standards promulgated under the Clean Air Act. The Court held that all claims were preempted pursuant to the Clean Air Act s preemption clause related to motor vehicle emissions standards. The Court affirmed and adopted the holding of the District Court, which ruled that the use of state common law to bring an action that questions whether a defendant complied with standards promulgated under the CAA is an example of a state attempting to enforce the CAA, and is therefore subject to preemption. Jackson v. General Motors Corp., 770 F. Supp. 2d 570, 575 (S.D.N.Y. 2011). This is the first federal case to approve a preemption defense based on the provisions of the Clean Air Act pertaining to new motor vehicles, and may serve as important precedent for manufacturers facing new personal injury, failure-to-warn claims based on alleged exposure to diesel exhaust fumes. B. OSHA Attempts to Remove Any Preemption Defense Under the Federal Hazard Communication Standard For more than twenty years, the Hazardous Communication Standard ( HazCom ) promulgated by the Occupational Safety and Health Administration ( OSHA ) included an express preemption clause as follows: This occupational safety and health standard is intended to address comprehensively the issue of evaluating the potential hazards of chemicals, and communicating information concerning hazards and appropriate protective measures to employees, and to preempt any legal requirements of a state, or political subdivision of a state, pertaining to this subject. Evaluating the potential hazards of chemicals, and communicating information concerning hazards and appropriate protective measures to employees, may include, for example, but is not limited to, provisions for: developing and maintaining a written hazard communication program for the workplace, including lists of hazardous chemicals present; labeling of containers of chemicals in the workplace, as well as of containers being shipped to other workplaces; preparation and distribution of material safety data sheets to employees and downstream employers; and development and implementation of employee training programs regarding hazards of chemicals and protective measures. Under section 18 of the Act, no state or political subdivision of a state may adopt or The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 7
enforce, through any court or agency, any requirement relating to the issue addressed by this Federal standard, expect pursuant to a Federally-approved state plan. See 29 C.F.R. 1910.1200(a)(2) (1994) (emphasis added). Use of the term requirement proved to be a source of confusion for state and federal courts interpreting the preemption clause when raised as a defense in chemical exposure failure-to-warn claims. Manufacturers and suppliers of chemical products argued that any failure-to-warn claim should be preempted if they can demonstrate that their MSDS and warning labels fully complied with the federal HazCom standard. Plaintiffs argued that HazCom merely sets the floor for labeling requirements and Plaintiffs experts should be permitted to testify that additional or more substantive warnings are required to meet the standard of care applicable in a particular case. Over the years, some courts sided with Defendants on this issue: See e.g. Bass v. Air Prods. & Chems., Inc., App. Div. Docket No. A-4542-03T (May 26, 2006), cert. denied 188 N.J. 354 (2006)(State law failure to warn claims preempted under HazCom; [t]he content of the materials provided by defendants with their products cannot form actionable failure to warn claims unless those warnings violated the requirements of federal law. ); Hoffman v. Hercules Chem. Co., Case No. 03 C 5222, 2004 U.S. Dist. LEXIS 22505, *12 (N.D. Ill. 2004) ( The MSDS is a cornerstone of OSHA standards intended to address comprehensively the issue of communicating to workers information concerning potential hazards of chemicals in the workplace and appropriate protective measures, and to preempt state law on that subject. ); Torres-Rios v. LPS Labs, Inc., 152 F.3d 11 (1 st Cir. 1998) (HazCom is designed to set a comprehensive standard for workplace safety and to preempt any legal requirements of a state pertaining to this subject. To succeed, plaintiffs must demonstrate that defendant s warnings failed to satisfy the federal standards.) Other courts sided with Plaintiffs position: See e.g. In re Welding Fume Products Liab. Litig., 364 F. Supp. 2d 669 (N.D. Ohio 2006) (Congress did not intend to pre-empt the field of chemical labeling requirements); Fullen v. Phillips Electronics North Am Corp., 266 F. Supp. 2d 471, 477 (N.D. W. Va. 2002)(state law failure-to warn claims not preempted because HazCom is nothing more than an intent to establish a uniform regulatory benchmark ); Wickham v. Amer. Tokyo Kasei, 927 F.Supp. 293 (N.D. Ill. 1996) (holding that HazCom does not preempt common law tort claims; York v. Union Carbide Corp., 586 N.E. 2d 861, 866 (Ind. Ct. App. 1992)(The OSH Act savings clause operates to exempt tort law claims from preemption). In 2008, the United States Supreme Court provided some guidance on the issue in Riegel v. Medtronic, 552 U.S. 312 (2008). The Court was considering the scope of the preemption clause under the Medical Device Amendments of 1976 (MDA), which provides that a State shall not establish or continue in effect with respect to a device intended for human use any requirement... which is different from, or in addition to, any requirement applicable under [federal law] to the device... 21 U.S.C. 360k(a). The Court ruled that absent other indication, reference to a State s requirements in a preemption clause includes its common law duties. 552 U.S. at 324. The Court explained: Congress is entitled to know what meaning this Court will assign to terms regularly used in its enactments. Absent other indication, reference to a State s requirements includes its commonlaw duties. As the plurality opinion said in Cipollone, common-law liability is premised on the existence of a legal duty, and a tort judgment therefore establishes that the defendant has violated a state law obligation. Id. at 522. And while the common-law remedy is limited to damages, a liability award can be, indeed is designed to be, a potent method of government conduct and controlling policy. 8 Toxic Torts and Environmental Law February 2013
Riegel, 552 U.S. at 323-324 (emphasis added). Thus, in light of the ruling in Riegel, persuasive arguments could be made that a manufacturer s compliance with HazCom s labeling requirements should preempt state law failure-to-warn claims. In 2009, OSHA introduced extensive amendments to HazCom in order to conform the federal labeling requirements to the United Nations Globally Harmonized System of Classification and Labeling of Chemicals ( GHS ). The purpose of implementing the GHS system was to create universally accepted chemical labeling and warning requirements so that manufacturers and distributors would not have to be burdened with attempts to comply with multiple and sometimes conflicting local, state, federal, and international labeling requirements. OSHA explained the importance of implementing a consistent national standard for hazard communication: Many countries already have regulatory systems in place for these types of [classification and labeling] requirements. These systems may be similar in content and approach, but their differences are significant enough to require multiple classifications, labels, and safety data sheets for the same product when marketed in different countries, or even the same country when parts of the life cycle are covered by different regulatory authorities. This leads to inconsistent protection for those potentially exposed to the chemicals, as well as creating extensive regulatory burdens on companies producing chemicals. For example, in the United States, there are requirements for classification and labeling of chemicals for the Consumer Product Safety Commission, the Department of Transportation, the Environmental Protection Agency, and the Occupational Safety and Health Administration. See www.osha.gov/dsg/hazcom/ghs.html, A Guide to The Globally Harmonized System of Classification and Labeling of Chemicals (emphasis added). OSHA also recognized that different labeling and classification standards have a significant impact on both protection of workers and international trade: In the area of protection, users may see different label warnings or safety data sheet information for the same chemical. In the area of trade, the need to comply with multiple regulations regarding hazard classification and labeling is costly and time-consuming. Some multinational companies have estimated that there are over 100 diverse hazard communication regulations for their products globally. For small and medium size enterprises (SMEs) regulatory compliance is complex and costly, and it can act as a barrier to international trade in chemicals. Despite the clear mandate from OSHA regarding the importance of developing and maintaining consistent and international labeling requirements, in 2012, after the public comment period for the proposed amendments had closed and just prior to final approval, OSHA introduced what it called two small changes to the preemption clause. First, the term legal requirements was removed from the first sentence of the clause and replaced with legislative or regulatory enactments. Second, the phrase through any court or agency was eliminated from the last sentence. These small changes essentially eviscerate any preemption defense that was provided by the original language of the clause and the Supreme Court s interpretation of a state s requirements. Thus, earlier this year, several industry groups filed Petitions with the U.S. Court of Appeals for the District of Columbia challenging portions of the revised standard. A Petition filed by the American Tort Reform Association ( ATRA ) includes arguments that OSHA does not have authority to modify or amend the HazCom preemption clause. The argument is that a federal agency such as OSHA has no authority to pronounce on preemption absent congressionally-delegated authority, and no such authority was granted to OSHA under the OSH Act. See The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 9
Wyeth v. Levine, 555 U.S. 555, 576-77 (2009); Lindsey v. Caterpillar, Inc., 480 F. 3d 202, 206 (3d Cir. 2007). A ruling on these Petitions is expected late this year or early 2013 and may result in a rejection of OSHA s proposed amendments to the preemption clause. III. Developments in Asbestos Litigation A. End of the Federal Court MDL for Most Asbestos Cases In December 2011, the United States Judicial Panel on Multidistrict Litigation entered an Order adopting a suggestion from the Honorable Eduardo C. Robreno that, subject to certain limited exceptions, the Panel cease transferring asbestos tag-along actions to the MDL. See http://www.paed.uscourts.gov/mdl875u. asp for a copy of the relevant Orders. Judge Robreno reported to the Panel that the backlog of cases in the MDL had largely been eliminated; almost all cases currently pending in the MDL are proceeding under scheduling orders calling for their adjudication, settlement, or Section 1407 remand by 12/31/12; and the current rate at which new asbestosrelated cases are being brought in the federal district courts stands at approximately 400 per year. Therefore, by amended Order dated November 21, 2012, the Panel will cease to transfer asbestos tag-along cases for centralized proceedings in the MDL, effective as of January 2012. Subject to any procedural or jurisdictional issues, federal asbestos cases will now remain in the District where they are filed with the exception of: The Eastern District of Virginia; The Seventh Circuit, including the Western and Eastern Districts of Wisconsin, the Northern and Southern Districts of Indiana, and the Northern, Central, and Southern Districts of Illinois; The Northern District of Ohio, including the Maritime Docket; The Northern District of California Claims from these Districts will continue to be transferred to the MDL until further notice. B. Manufacturers Have No Duty to Warn Potential Users of the Hazards of Asbestos Components Manufactured by Others A series of recent federal and state cases have resulted in favorable rulings for manufacturers of products that incorporated asbestos-containing component manufactured by others. In Surre v. Foster Wheeler LLC., 2011 U.S. Dist. LEXIS 147731 (S.D.N.Y. Dec. 20, 2011), a New York federal court ruled that an industrial boiler manufacturer has no duty to warn of asbestos found in insulation that is made by other companies but used with its products. The court applied New York state law and found that defendant Crane Co. had no duty to warn of asbestos insulation used in connection with its products because it neither manufactured the insulation nor put it into the stream of commerce. Similar rulings were issued by the California Supreme Court in O Neil v. Crane Co., 2012 Cal. LEXIS 3 (Cal. Sup. Ct. Jan. 12, 2012). (California law does not impose liability on manufacturers of shipboard valves and pumps used in connection with asbestos-containing parts manufactured by others), and the Eastern District Court of Pennsylvania in Conner v. Alfa Laval Inc., 2012 U.S. Dist. LEXIS 11812 (E.D. Pa. Feb. 1, 2012) (No liability under maritime law for manufacturers of products that did not contain asbestos, but were used with asbestos-containing products). These courts join the U.S. Court of Appeals for the Sixth Circuit and several state courts that have declined to extend liability for asbestos-related injuries to the manufacturers of products used in connection 10 Toxic Torts and Environmental Law February 2013
with asbestos-containing insulation, gaskets, packing, and other asbestos-containing component parts manufactured by others, many of which are now bankrupt. C. Florida State Court Rules that Manufacturer Discharges Duty to Warn End Users by Adequately Warning Intermediary Manufacturers In Union Carbide Corp. v. Aubin, No. 3D10-1982 (FL 3d Dist. Ct. of Appeals, June 20, 2012), plaintiff supervised the construction of a model home community in Florida and alleged that he developed peritoneal mesothelioma as a result of exposure to products containing SG-210 Calidra, a particular grade of chrysotile asbestos, mined and processed by defendant Union Carbide. Relying on the Second Restatement of Torts, the trial court instructed the jury that Union Carbide had a duty to directly warn the plaintiff of the hazards associated with exposure to SG-210 incorporated into products used by others. The jury returned a $14 million verdict against Union Carbide, which was subsequently adjusted to $6.6 million. Union Carbide appealed and the Florida Third District Court of Appeals vacated the verdict finding that the trial court improperly instructed the jury on the duty owed by Union Carbide. The court ruled that it was improper to instruct the jury based on the principles of the Second Restatement. Rather, in this case, the jury should have been instructed in accordance with the component parts doctrine articulated in the Third Restatement, which provides: One engaged in the business of selling or otherwise distributing product components who sells or distributes a component is subject to liability for harm to persons or property caused by a product into which the component is integrated if: (a) The component is defective in itself, under 1-4, and the defect causes the harm; or (b)(1) The seller or distributor of the component substantially participates in the integration of the component into the design of the product; and (2) The integration of the component causes the product to be defective as defined under 1-4; and (3) The defect in the product causes the harm. Restatement (Third) of Torts: Products Liability 5 Since the trial court did not follow the Third Restatement, the jury instructions did not properly apprise jurors that Union Carbide could discharge its duty to warn end-users by adequately warning the intermediary manufacturers and reasonably relying on them to warn end-users. D. A Plaintiff s Lack of Candor and Intentional Misrepresentations During The Discovery Process Found to be a Fraud on the Court and Results in Dismissal of Complaint with Prejudice In Gaskill v. Abex Corp., 2012 N.J. Super. Unpub. LEXIS 2694 (App. Div. 2012) (per curiam), the New Jersey Appellate Division held that a plaintiff s misrepresentations and outright lies regarding alleged exposure to asbestos that hindered a defendant s ability to prepare its case constituted a fraud on the court warranting dismissal of the Complaint with prejudice. Plaintiff filed a complaint alleging that he developed mesothelioma through the inhalation and ingestion of asbestos dust and particles while working as a mechanic s helper at auto body shops, and while assisting his grandfather in automotive maintenance and repair work, beginning in the early 1980s. The thirteen named defendants were alleged to have marketed asbestos-containing products for the automotive industry. Plaintiff appealed from an order of the trial court dismissing with prejudice his complaint for personal injuries, as a consequence of plaintiff s pervasive lies The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 11
during discovery and his efforts to subvert the discovery process. The appellate panel affirmed essentially for the same reasons expressed by the trial judge. The Court found that Plaintiff s conduct not only was an egregious violation of the discovery rules, but also is clearly a fraud upon the court. IV. Developments in Class Treatment of Toxic and Environmental Torts The requirements for class certification under Federal Rule 23, particularly the Rule 23(b) requirements, have become a battleground for practitioners and courts considering the appropriateness of class treatment for environmental pollution cases. In addition to the basic prerequisites for certification under Rule 23(a), plaintiffs seeking class certification of environmental tort actions must also satisfy at least one of the three factors set forth under Rule 23(b): (b)(1) permits certification on proof that prosecution of separate actions would either create the risk of inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the defendant, or the risk of adjudications with respect to individual class members would be dispositive of or detrimental to the interests of nonparties; (b)(2) permits certification where plaintiffs seek only injunctive or declaratory relief for the class as a whole; and (b)(3) permits certification where questions of law or fact predominate over questions affecting only individual members, and class treatment would be superior to other methods of adjudication. Plaintiffs seeking certification in environmental pollution cases most often attempt to rely on subsection (b)(3), which has resulted in significant litigation over the predominance requirement and disagreement between federal district and circuit courts over interpretation of the (b)(3) prerequisites. The following are some of the more recent cases addressing the (b)(3) requirements in the context of environmental tort actions. In Ginardi v. Frontier Gas Services, LLC, No. 4:11-cv-00420 BRW, 2012 U.S. Dist. LEXIS 54845 (April 19, 2012), Plaintiffs sought certification of a property damage class on behalf of all citizens of the State of Arkansas who live or own property within a one (1) mile radius of any natural gas compressor and or transmission station from which defendants allegedly emitted loud noises and pollutants. The class action Complaint alleged claims for strict liability, nuisance, trespass, and negligence. Plaintiffs sought certification under Rule 23(b)(3). On the issue of predominance, defendants argued that individual issues would clearly outweigh any common issues. For example, (1) each compressor station had been owned by different defendants at different times; (2) the stations are in different parts of the state, with different typographies; (3) there are different weather effects; (4) each station has different equipment resulting in different emission rates; and (5) any noise, odor or pollution will vary widely based on a plaintiffs proximity to the station. Id. at *14-15. The court agreed and denied class certification finding that Plaintiffs could not establish the Rule 23(b)(3) requirements. The Court explained that individual issues presented in the case would predominate over the common issues: Plaintiffs causes of action would require a detailed look at each plaintiffs individual damages including the amount of noise heard, the amount of gases present, and any level of contamination in the air, groundwater or soil. Each class member would be required to present highly individualized evidence regarding damages and causation. This makes full resolution of an entire class difficult. Id. at *16. In Gates v. Rohm and Haas Co., 655 F.3d 255 (3d Cir. 2011), the Third Circuit denied plaintiffs request to certify proposed medical monitoring and property damage classes finding that they failed to meet the predominance or superiority requirements of Rule 23(b)(3). Plaintiffs asserted that defendant s facility emitted 12 Toxic Torts and Environmental Law February 2013
vinylidene chloride, which seeped into a shallow aquifier, degraded into vinyl chloride, diffused back into the surface soils, and eventually evaporated into the air allegedly causing contamination on plaintiffs properties and potential future physical injuries. Plaintiffs therefore sought certification of property damage and medical monitoring classes. In rejecting the proposed medical monitoring class claim, the court explained that, even assuming that Plaintiffs could meet the Rule 23(a) requirements, [c]ourts have generally denied certification of medical monitoring classes when individual questions involving causation and damages predominate over (and are more complex than) common issues such as whether defendants released the offending chemical into the environment. Id.at 270. Specifically, the court concluded that individual issues will predominate over any common issues because inquiries into whether class members were exposed above background levels, whether class members face a significantly increased risk of developing a serious latent disease, and whether a medical monitoring regime is reasonably medically necessary all require considering individual proof of class members specific characteristics. Id. The Third Circuit also rejected the proposed property damage class and affirmed the ruling of the trial court that common questions did not predominate over individual questions because [a]lthough many aspects of [p]laintiffs claims may be common questions, the parties agree that resolution of those questions leaves significant and complex questions unanswered, including questions relating to causation of contamination, extent of contamination, fact of damages, and amount of damages. Id. at 271. However, the court noted that single instances or simple theories of contamination may be more apt for class treatment rather than extensive periods of contamination with multiple sources and various pathways as was the case here. Id. (citing In re Methyl Tertiary Butyl Ether ( MTBE ) Prods. Liab. Litig., 241 F.R.D. 435, 447 (S.D.N.Y. 2007) (certifying class for damage to property from water contamination but noting [c]ourts have repeatedly drawn distinctions between proposed classes involving a single incident or single source of harm and proposed classes involving multiple sources of harm occurring over time ); Reilly v. Gould, Inc., 965 F. Supp. 588, 602 (M.D. Pa. 1997) (noting in refusing to certify a property damage class it is the presence of additional individualized factors affecting individual plaintiffs which wreaks havoc on the notion that all plaintiffs injuries have been caused solely by the defendant s actions ). These cases continue the general approach taken by most state and federal courts that environmental tort actions seeking property damage and medical monitoring are not appropriate for class certification because individual inquires will almost always predominate over issues common to the proposed class. This is particularly so in light of the recent decision of the United States Supreme Court in Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), where the Court moved away from the traditional approach of not considering the merits of plaintiffs case in evaluating class certification. The Dukes Court emphasized that courts may be required to assess merits questions bearing on class certification, particularly involving questions related to the commonality and predominance requirements of Rule 23. Id. at 2552-2553. V. Developments in the Substantial Factor Test for Proving Causation Most Court Will Now Require Quantitative Epidemiological Evidence The substantial factor test for proving causation has long been a friend of plaintiffs and plaintiffs experts in toxic tort/chemical exposure cases where there are multiple potential causes of plaintiff s alleged injuries. Nowhere is this more evident than in asbestos litigation, which saw the development of the single fiber theory as a means of establishing plaintiff s burden of proof on causation based on expert opinion that any unmeasured exposure to asbestos may serve as a substantial contributing cause to the development of The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 13
the alleged disease. The law on this issue initially developed to the point where plaintiff s experts were essentially on auto-pilot and included the same magic language in reports to overcome any court challenge to their opinions it is my opinion within a reasonable degree of scientific certainty that plaintiff s exposure to asbestos present in products manufactured by X defendant was a substantial contributing cause of the development of his asbestos-related disease.... Two recent state cases out of Pennsylvania and Maryland illustrate the growing trend among courts to require plaintiffs to come forward with credible evidence to quantify the alleged exposure and demonstrate that the level of exposure was sufficient to cause the alleged disease. In Betz v. Pneumo Abex, LLC. 44 A. 3d 27 (Pa. 2012), the plaintiff alleged that he developed mesothelioma as a result of exposure to asbestos fibers while working with friction products over a period of approximately 40 years. Plaintiff s expert relied on the single fiber theory in offering his opinion on causation: Asbestos-related mesothelioma, like other diseases induced by toxic exposures, is a dose response disease: each inhalation of asbestos-containing dust from the use of products has been shown to contribute to cause asbestos-related diseases, including mesothelioma. Each of the exposures to asbestos contributes to the total dose that causes mesothelioma and, in so doing, shortens the period necessary for the mesothelioma to develop... [E]ach exposure to asbestos is therefore a substantial contributing factor in the development of the disease that actually occurs, when it occurs. Id. at 31. The Pennsylvania Supreme Court affirmed the trial court s rejection of this opinion and noted the fundamental flaw with the expert s any-exposure opinion as explained by the trial judge if all [plaintiff s expert] could say is that a risk attaches to a single asbestos fiber, how is it that he could also say that such risk is substantial when the test plaintiffs may have been (and likely were) exposed to millions of other fibers from other sources including background exposure. Id. at 55. The court concluded that the expert s opinion was in irreconcilable conflict with itself. Simply put, one cannot simultaneously maintain that a single fiber among millions is substantially causative, while also conceding that a disease is dose responsive. Id.at 56. The Court of Special Appeals of Maryland came to a similar conclusion in Dixon, et. al. v. Ford Motor Co., 47 A.3d 1038 (2012). The plaintiff in Dixon alleged that she developed mesothelioma as a result of direct exposure to asbestos while completing various home improvement projects, as well as bystander exposure from asbestos fibers brought home of the clothing of her husband, an automobile mechanic. Plaintiff s expert testified that, in her opinion, every exposure to asbestos is a substantial contributing cause and so brake exposure would be a substantial cause even if [the plaintiff] had other exposures. Id. at 1047. The court precluded the opinion explaining that plaintiff s expert merely implies that plaintiff s exposure to asbestos increased her risk of developing mesothelioma by more than nothing, and therefore was not a scientific conclusion and could not provide information for the jury to use in reaching its conclusion as to substantial factor causation. Id. at 1048. Thus, the Maryland Court of Special Appeals has joined with several other courts that require quantitative epidemiological evidence to establish substantial factor causation. Id.(citing Bland v. Verizon Wireless, L.L.C., 538 F.3d 893, 898 (8th Cir. 2008); Lindstrom v. A-C Product Liability Trust, 424 F.3d 488, 498 (6th Cir. 2005); Mitchell v. Gencorp Inc., 165 F.3d 778, 781 (10th Cir. 1999); Moore v. Ashland Chem. Inc., 151 F.3d 269, 278 (5th Cir. 1998)). On December 6, 2012, the Nevada Supreme Court ruled that the frequency, regularity, proximity test is the new causation standard for asbestos exposure suits in Nevada. See Holcomb v. Georgia Pacific, LLC., 128 Nev. Adv. Opn. No. 56 (Nev. 2012). Also, The Supreme Court of Virginia is currently considering the scope 14 Toxic Torts and Environmental Law February 2013
of the substantial factor test in an appeal filed in the matter of Ford Motor Co. v. Walter Boomer, et al. A decision in the case is expected on January 11, 2013. VI. Developments with Daubert A. Asbestos Ninth Circuit Vacates $9 million Jury Verdict Finding That a District Court Failed to Fulfill Its Gatekeeping Obligations Under Daubert In a ruling issued in November 2012, the Ninth Circuit Court of Appeals vacated a $9 million verdict finding that that the District Court abused its discretion by failing to conduct a pre-trial Daubert hearing or otherwise make relevance and reliability determinations regarding expert testimony submitted on behalf of plaintiff in an asbestos/mesothelioma case. There was no dispute that the plaintiff was exposed to asbestos from 1964 through 1984 while employed at a paper mill and working with dryer felts containing asbestos supplied by the defendants. In addition to working with these felts on the job, the plaintiff also took pieces of the dryer felt home with him to use in a garden. See Barabin v. AstenJohnson, Inc., Nos. 10-36142 and 11-35020, (9 th Cir. 2012) 2 The plaintiff was diagnosed with pleural malignant epithelial mesothelioma in November 2006. Prior to trial, defendant AstenJohnson filed a motion in limine to exclude the opinions of plaintiff s two expert witnesses at trial (Drs. Cohen and Millette). The District Court initially excluded Dr. Cohen as a witness because of his dubious credentials and lack of expertise with regard to dryer felts and paper mills... Id. at *5. The court also limited Dr. Millette s testimony requiring disclosure to the jury that Dr. Millette s tests were performed under laboratory conditions which are not the same as conditions at [plaintiff s workplace]. Id. However, during the pre-trial conference, the district court reversed its decision to exclude Dr. Cohen s testimony explaining that plaintiffs had clarified Dr. Cohen s credentials in response to defendant s in limine motion. Despite defendant s request, the district court declined to hold a Daubert hearing. The extent of the Court s explanation was: I think plaintiffs did a much better job of presenting to me the full factual basis behind Mr. Cohen testifying and his testimony in other cases... Id. at 8. Thus, the court allowed plaintiff to submit his experts unfiltered testimony to the jury. The jury found in favor of plaintiff and awarded damages in excess of $10 million, which was subsequently reduced to $9,373,152.12. Defendants appealed to the Ninth Circuit. The Ninth Circuit vacated the award and admonished the district court for failing to fulfill its obligations as a gatekeeper under Daubert v. Merrel Dow Pharm., Inc., 509 U.S. 579 (1993). The court discussed Daubert and its progeny and explained that once the district court was presented with additional information in response to defendant s in limine motion, at a minimum, the district court was required to assess the scientific reliability of the proffered expert testimony. Barabin at *10 (citing Ellis v. Costco Wholesale Corp., 657 F.3d 970, 982 (9 th Cir. 2011). The court seemed particularly disturbed with the following explanation offered by the district court in declining to hold the Daubert hearing: There is obviously a strong divide among both scientists and courts on whether such expert testimony is relevant to asbestos-related cases. In the interest of allowing each party to try its case to the jury, the Court deems admissible expert testimony that every exposure can cause an asbestos-related disease. Barabin at *11 (emphasis added in Ninth Circuit Opinion). The Court concluded that the district court s decision to allow presentation of the expert testimony to the jury without making any gateway determinations regarding relevance and reliability constituted an abuse of discretion requiring a new trial. Id. (citing Mukhtar v. Cal. State Univ., 299 F.3d 1053, 1063 (9 th Cir. 2002). The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 15
B. Benzene Federal Court in Wisconsin Joins Growing List of Courts To Reject Plaintiff s No-Threshold Theory of Causation In a recent decision issued by the United States District Court for the Eastern District of Louisiana, the Court granted defendants motions for summary judgment to dismiss all alleged benzene exposure claims finding that plaintiffs experts opinions on causation must be excluded under Daubert. See Schultz v. The Glidden Co., et. al., Case No. 08-C-919, Document 252, March 21, 2012 (E.D. Wis. 2012) 3. Plaintiff alleged that he was exposed to benzene-containing products while working as a maintenance painter for Chrysler Corporation between the years 1981 and 1989. He was diagnosed with leukemia in 2006. Plaintiff offered the testimony of an industrial hygienist who attempted to reverse engineer plaintiff s actual, quantitative occupational exposure to benzene. Through a series of reports, the expert concluded that plaintiff s mean ppm-year exposures to benzene had a mean of 22 ppm-years for the Main Plant and 2.0 ppm-years for the Lake Front Plant for a total of 24 ppm-years (90 percent of the cumulative exposures fell between 4.8 and 55 ppm-years.) After noting that the threshold for benzene-induced AML appears to be between 40 and 500 ppm-years (cumulative exposures), with an average value of ~200 ppm-years, the Court focused on the opinion offered by plaintiff s causation expert: when assessing specific causation in a cancer case, the quantified dose or exposure of the individual takes on far less significance than such information would have in the context of analyzing specific causation of most non-malignant diseases. This is true because, in the context of most non-malignant diseases, the oftrepeated aphorism that the dose makes the poison generally holds true. However, in the context of chemically-caused cancers generally, and exposure to benzene specifically, the absence of a safe threshold level of exposure to the cancer-causing substance substantially alters the nature of the causation inquiry. (citations omitted, emphasis added in District Court Opinion) * * * When no safe threshold of exposure to a carcinogen has been established, this means that each and every exposure to the chemical will increase the risk of development of the types of cancer that the carcinogen is capable of causing. To the extent that an individual has developed a type of cancer caused by the carcinogen in question, then any non-trivial exposure to that carcinogen during a time frame consistent with the range of latency periods with the disease should be considered as a probable substantial factor that contributed to the development of the individual s cancer. To the extent a known risk factor for a particular type of cancer has been identified in an individual who has developed that form of cancer, exclusion of that risk factor as one of the probable causes contributing to the cancer is not scientifically possible. The Court cited to other similar decisions from around the country and ruled that this no-threshold theory of causation must be excluded under Daubert. [The] theory that any amount of exposure more than negligible should be considered substantial risk factor for AML flies in the face of the scientific literature reviewed and other expert testimony in this case that there is a threshold or dose below which you do not see a significantly significant risk of developing AML. Even though benzene has been shown to cause AML, it is too difficult a leap to allow testimony that says any amount of exposure... to this toxin can cause AML and caused AML in [the plaintiff]. Henricksen v. ConocoPhillips Co., 605 F.Supp. 1142, 1166 (E.D. Wash. 2009); see also Baker v. Chevron USA, Inc., 680 F. Supp. 2d 865, 878 n. 9 (S.D. Ohio 2010)(The one-hit or no threshold theory of causation in which exposure to one molecule of a cancer-causing agent has some finite possibility of 16 Toxic Torts and Environmental Law February 2013
causing a genetic mutation leading to cancer is not a reliable theory for causation under Daubert standards ) (collecting cases). A ruling on the appeal to the Seventh Circuit is expected soon. C. Benzene Plaintiffs Expert s Opinion Insufficient to Support Claim Under the Louisiana Products Liability Act The United States District Court for the Eastern District of Louisiana recently ruled that that an expert s opinions in a trace benzene case were unreliable, inadmissible, and could not support several theories of liability asserted by plaintiff under the Louisiana Products Liability Act ( LPLA ). See Moore v. BASF Corp., Case No. 11-1001, Document 352, December 4, 2012 (E.D. La. 2012) 4. Plaintiff claimed that he was exposed to various benzene-containing products over a period of approximately 24 years while employed as a painter. As trial in the matter approached, the only defendant remaining in the case was International Paint, LLC. Plaintiff alleged that he was exposed to benzene from International Paint products for a period of two years while working in a shipyard. Plaintiff alleged that International Paint was liable for the development of his multiple myeloma under the LPLA based on several theories of liability, including construction and design defects, breach of warranty, and inadequate warnings. It was undisputed that the MSDS for all of the International Paint products at issue did not list benzene as a component or ingredient. The Court dismissed each theory of liability as follows: (1) Construction/Composition Plaintiff alleged that International Paint s products deviated from manufacturing specifications and prevailing performance standards because they failed to list benzene as a component or ingredient in the products. There was no dispute that benzene was not an ingredient or component, so plaintiff s expert offered an opinion that he reviewed all of the listed ingredients for each product and believes that when those ingredients are combined, harmful levels of benzene are created and should have been disclosed on the MSDS. The court rejected these opinions in their entirety because plaintiff s expert did not test any of the particular products that plaintiff actually used. (2) Design Plaintiff alleged that the design of the products was inadequate and more appropriate alternate designs existed. However, the court noted that during the deposition of plaintiff s expert, he failed to identify any alternate design of the International Paint products. The expert offered general testimony that quality-control programs should have been used to ensure that the product components did not contain benzene, and that the components should have been run through a purification process to remove any contaminants. The court rejected the opinions as too vague, and held that the expert failed to identify the actual components in the International Paint products that could be replaced or how a purification process would actually operate. Citing Scordill v. Louisville Ladder Group, No. 02-2565, 2003 WL 22427981, at *9 (E.D. La. Oct. 24, 2003)(plaintiffs failed to identify specific design alternative because they did not clarify how elements of the ladder they contrasted with the incident model ladder would apply to incident ladder). (3) Warnings Again, there was no dispute that the International Paint products contained no warnings about benzene. Defendant challenged the underlying claim that its products contained a harmful level of benzene. The court first addressed the content of plaintiff s expert s opinion regarding the alleged damage-causing characteristic of the products due to the alleged presence of benzene. The court ruled that the expert s opinions on this issue were overly speculative, based on unreliable data, and unverifiable. The flaw in the expert s methodology was that he The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 17
relied on MSDS that were dated from years other than the years in question to identify the ingredients at issue, and then assigned a benzene content to those ingredients based on data taken from outdated studies that he failed to verify. The court noted that the expert s report failed to include any calculations demonstrating how he arrived at the total amount of benzene levels, and that reports submitted by other experts failed to specifically address International Paint s products. For these reasons, the opinions were rejected as speculative and unreliable. Finally, the court concluded that aside from the deficiencies already noted, the expert further failed to offer any admissible evidence as to the nature or type of warnings that International Paint should have provided if identifiable amounts of benzene were present in the products. VII. Developments in Superfund (CERCLA) Liability Between 1954 and 1971, paper manufacturers along the Fox River in northeastern Wisconsin used PCBs to produce a certain type of carbonless papers, and other mills in the area produced different products with recycled waste paper that contained PCBs. These facilities discharged PCB-contaminated wastewaters into the river, which resulted in contamination of 40 miles of the Fox River and more than 1,000 square miles of Green Bay. The United States Environmental Protection Agency recently obtained a preliminary injunction against NCR Corporation, one of the potentially responsible parties, requiring a $70 million cleanup of contaminated sediment in the river. The litigation leading up to the injunction produced two interesting federal court rulings on CERCLA liability. A. United States v. NCR Corp., et. al., 840 F. Supp. 2d 1093 (E.D. Wis. 2011) Purchaser May Assume Superfund Liability Through Asset Purchase Agreement Even Though the Seller Still Exists In 1978 NCR Corp. sold its Appleton Papers Division to API s predecessor, a company called Lentheric, Inc. ( API ). As part of the asset purchase agreement memorializing that transaction, API agreed to assume several liabilities and to indemnify NCR as follows: Purchaser agrees that it shall assume, pay, perform, defend and discharge, if and when due, to the extent not paid, performed, defended or discharged prior to the Closing Date, all of the following: 1.4.4 all of Seller s obligations and liabilities of any kind, character or description relating to the period subsequent to the Closing Date which arise out of or in respect of any state of facts, matter, event or disclosure set forth on an attachment to the agreement that was designated as Schedule A; and 1.4.5 all of Seller s obligations and liabilities of any kind, character or description relating to the period subsequent to the Closing Date which arise out of or in respect of any... action, claim, investigation by a government body, or legal... proceeding set forth on Schedules A and M, and 1.4.9 all of Seller s liabilities... whether accrued, absolute, contingent, or otherwise... whether asserted or not and whether arising from transactions, [*1099] events or conditions occurring prior to or after the Closing Date, with respect to compliance of the Property... with all applicable federal, state and local and other governmental environmental and pollution control laws, ordinances, regulations, rules and standards Two of these assumption of liability clauses refer to Schedule A of the asset purchase agreement, which contained the following clause: 18 Toxic Torts and Environmental Law February 2013
Seller has reason to believe that the facilities of Appleton Papers Division located in Pennsylvania and Wisconsin may be operating; in violation of applicable federal, state, local and other governmental environmental and pollution control laws, ordinances, regulations, rules and standards. APD receives and has received notices from time to time from various federal, state, local and other governmental authorities claiming violation of environmental and pollution control laws, ordinances, regulations, rules and standards (collectively laws ). These claims may result, and have resulted in fines and corrective action. 840 F. Supp. 2d at 1098. The United States argued that each of these clauses established that API s predecessor explicitly assumed liability for the cost of the environmental cleanup at issue. The question for the court was whether the language in the asset purchase agreement was broad enough to encompass the liability at issue even though neither CERCLA nor the extent of the PCB problem had been in the minds of the parties at the time the contract was signed. The court had previously ruled that API is not a successor-in-interest to NCR, so API moved for summary judgment on the issue of liability. After analyzing the provisions referenced above, the court denied the motion explaining that the government is correct that the continued existence and liability of NCR does not preclude a finding that API assumed CERCLA liability. Moreover,... the terms of the 1978 assumption agreement, as applied in the parties arbitration, are broad enough that they could encompass liability. Id. at 1101. The court noted that API and NCR had previously entered into a two-party settlement to resolve liability for the PCB contamination. The arbitration panel determined that the asset purchase agreement was ambiguous, but imposed a larger share of liability on API based on extrinsic evidence. Referring to the ruling of the panel, the district court stated, Although I may be able to reach that conclusion from the asset purchase agreement alone, the parties recognize that the purchase agreement may no longer be read in a vacuum. Id. at 1100. Therefore, the court held [b]y agreeing to have the matter resolved by arbitration, the arbitration, in effect, altered the terms of the original purchase agreement. The entirety of the agreement is thus the product of the arbitration, which imposed liability upon API. Id. B. U.S. and The State of Wisconsin v. NCR Corp., 688 F.3d 833 (7 th Cir. 2012) Seventh Circuit Rules That Joint and Several Liability Remains Viable Under CERCLA During the hearing leading to the injunction issued against NCR, NCR argued that the environmental damage to the site was capable of apportionment against various parties. NCR submitted extensive and complex scientific evidence and analysis produced by experts on the apportionment issue. Based on the opinions of its experts, NCR argued that it should be liable for only a several 9 percent share of the pollution and that it should not be jointly and severally liable for the entire clean-up. The court disagreed and adhered to the instruction of the Restatement (Second) of Torts that apportionment is improper where either cause would have been sufficient in itself to bring about the result... Id. at 839. The court explained that this was not a situation where NCR contributed only a certain percentage of the total site contamination, some of which did not require remediation. In fact, NCR did not dispute the government s position that NCR s contribution of PCB contamination would, alone, require approximately the same level of remediation. The court cited to the recent Supreme Court decision in Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (2009), which distinguished the concept of apportionment from contribution: [A]pportionment... looks to whether defendants may avoid joint and several liability by establishing a The Year in Review: Ten Developments and Trends in Toxic Tort and... Cohen et al. 19
fixed amount of damage for which they are liable, while contribution actions allow jointly and severally liable PRPs to recover from each other on the basis of equitable considerations. Id. at 615 n.9. The Court emphasized that [e]quitable considerations play no role in the apportionment analysis; rather, apportionment is proper only when the evidence supports the divisibility of the damages jointly caused by the PRPs. Id. Thus, the Seventh Circuit concluded that even if NCR contributed no more than 10 percent of the PCBs, that 10 percent would require remediation. It was NCR s burden to show otherwise, and it failed to do so. 688 F.3d at 842. VIII. Ownership of Groundwater in Place A Constitutionally Protected Right in Texas In Edwards Aquifier Authority v. Day, et. al., 369 S.W. 3d 814 (Tex. 2012), the Texas Supreme Court unanimously held that a landowner has a constitutionally protected property interest in groundwater in place. The import of this historic decision is that state municipalities in Texas can no longer take groundwater for public use without appropriate compensation paid to the landowner. The Aquifier authority argued that a landowner did not own the groundwater under their property until the landowner brought it to the surface and physically took possession of it. The Supreme Court disagreed and in a 28-page opinion explained that a landowner has a constitutionally protected ownership interest in groundwater beneath his land, and that any restrictions on his production of water based on historical use (which had been the practice of the Aqufier authority) could deprive him of property rights and require compensation. The decision is important because it is among the first to declare that a groundwater is a constitutionally protected property right, and that a State cannot regulate groundwater production on private property in a way that may deprive the landowner of property rights. The decision will surely lead to additional litigation regarding historic regulation and perhaps takings claims by landowners against municipalities. IX. Sackett v. EPA, 132 S. Ct. 1367 (2012) Supreme Court Strikes Down EPA s Ban on Pre-Enforcement Review of Administrative Compliance Orders Under the Clean Water Act In a unanimous decision, the Supreme Court ruled that persons subject to cease and desist orders issued by the U.S. Environmental Protection Agency ( EPA ) for allegedly polluting U.S. waters may challenge those orders in federal court. Prior to this decision, these cease and desist orders, or administrative compliance orders were considered pre-enforcement action taken by the EPA, and therefore not subject to judicial review under the Clean Water Act. The Sackett case began when an Idaho couple, Mike and Chantell Sackett, attempted to build a new home on property they owned near Priest Lake, Idaho, in an area where the EPA had declared that protected wetlands exist. When the Sacketts began construction, the EPA issued a compliance order stating that they had illegally dumped soils and rocks into wetland areas on their property. The Sacketts attempted to challenge the EPA s jurisdiction to take this action on their property, but the case was dismissed by the lower courts on the grounds that it was filed prematurely since the EPA had not yet instituted a court action against them. The Supreme Court ruled that the Administrative Procedures Act permits judicial review of this type of pre-enforcement order issued by the EPA because it constitutes a final agency action for which there is no other adequate remedy in court. The Court rejected the EPA s argument that the Clean Water Act specifi- 20 Toxic Torts and Environmental Law February 2013