Toxic Tort Litigation Blog : Toxic Tort Lawyer & Attorney : Epstein Becker Green Law Firm : Product Liability, Contamination, Pollution

In In toxic tort cases where plaintiffs have questionable liability claims, serving burdensome e-discovery demands on defendants often threatens to change the focus of the case from the merits of the claim to a spoliation of evidence sideshow that focuses on the efforts of the defendant to preserve and produce electronically stored information ("ESI"). To avoid traps for the unwary (potentially both corporate defendants and the law firms that represent them), this blog will occasionally provide e-discovery guidance and reference information.  The Electronic Discovery Reference Model  or ERDM is one such authoritative reference. The ERDM is an industry group that establishes practical standards and guidelines for ESI, including its identification, collection, processing, review, analysis, storage and production. The ERDM also provides helpful information on the  triggering events, which may give rise to a duty to preserve or disclose email, documents or other data in conjunction with a pending or future legal proceeding. (According to ERDM,  It is the point at which the party or the law firm may become liable to meet certain standards, the violation of which can result in any number of  unfavorable outcomes depending upon the forum).  Ensuring that both you, as counsel, and your client, have a firm understanding of how these triggering events work is an important first step in approaching ESI issues in litigation.  EDRM's trigger discussion expands upon some of the following concepts: (1) The duty to preserve and disclose data may be triggered by a judicial order, a discovery request, or mere knowledge of a pending or future proceeding likely to require data; (2) The scope of data to be preserved or disclosed is determined by the subject matter of the dispute and the law and procedural rules that a court or other authority will ultimately apply to resolve it. In general, data is potentially discoverable if it is relevant to the disputed transaction or may lead to relevant data; and (3) Failure to preserve or disclose discoverable data may result in serious penalties. To minimize this risk, diligent steps must be taken to identify all potentially discoverable data in the client's possession or control.

Are defendants in New York product liability and toxic tort litigation better off in federal court than in state court? Federal court discovery rules certainly are more liberal than state court discovery rules. There, plaintiff’s experts are subject to deposition and, if appropriate, Daubert challenges. In contrast, state court provides only minimal expert disclosure. However, state court rules concerning the production of electronically stored information (“ESI”) may be more favorable to corporate defendants litigating in state court. In state court, the general rule is that the requesting party pays for the defendant’s ESI retrieval. In federal court, the court will apply “proportionality” concepts, and balance the importance of the discovery with the burden on the producing party. Thus, the result of the burden shifting analysis is somewhat more complex and subject to more variables. As reported in this space on November 4, 2009, (“Cost Allocation of E-Discovery in NY Trial Courts”), the Joint Committee on Electronic Discovery, convened by the Association of the Bar of the City of New York, has recommended that the legislature amend the CPLR to address time-consuming ESI disclosure disputes. The new proposed CPLR rule is expected to address a litigant’s duty to preserve ESI in anticipation of litigation; the scope of that duty; and the scope of ESI production. 

An article in Kramer Levin’s Electronic Discovery Update (January 2010), “Cost Shifting in New York: Forum Makes All the Difference,” discusses the background of the general presumption in state court that the requesting party pays for the cost of discovery. Although the CPLR does not explicitly apply this presumption to ESI costs, New York state courts have followed this presumption when deciding how to allocate e-discovery costs. In Lipco Elec. Corp. v. ASG Consult. Corp., for example, the court found that “… cost shifting of electronic discovery is not an issue in New York, since the courts have held that, under the CPLR, the party seeking discovery should incur the costs.” Lipco Elec. Corp. v. ASG Consult. Corp., 4 Misc.3d 1019(A), 2004 WL 1949062 (Sup. Ct. Nassau Co. Aug 18, 2004). In contrast to state court practice, the standard under federal jurisprudence is less clear cut.  The Hon. Shira Scheindlin (SDNY) has articulated a multi-factored balancing test, which has been influential in guiding determinations of when the cost of producing “inaccessible” data should be shifted to the requesting party. Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003). The Kramer Levin Update observes that a recent New York trial court opinion declined to apply this federal approach, stating that it was “not empowered – by statute or case law – to overturn the well settled rule in New York state that the party seeking discovery bear the cost incurred in its production.” T.A. Ahern Contractors Corp. v. Dormitory Auth. of the State of N.Y., 2009 WL 806779 (Sup. Ct. N.Y. Co. Mar. 19, 2009). Citing the policy behind the rule, the court observed that the requester-pays standard gives a party “a strong incentive to formulate its discovery requests in a manner as minimally burdensome as possible.”  I predict that the differences between state and federal ESI practice will narrow in the near term, possibly with the promulgation of a CPLR rule, and that New York will ultimately adopt a more federal approach modeled on the influential Sedona Conference Working Group template.  However, for the present, a New York state court plaintiff runs the risk of incurring substantial costs in demanding burdensome ESI from a corporate defendant.  Be careful what you wish for!

According to a report issued by Cornell Law School, the State of New York’s blueprint for Marcellus Shale development proposes 187 new regulatory activities necessary for the oversight of natural gas drilling, but the blueprint does not explain how DEC will carry out these activities.  Cornell’s report concludes that DEC does not have the manpower to appropriately regulate economic development in the Marcellus Shale Formation. According to Adjunct Professor Keith Porter at Cornell Law School, “There is no way they [DEC’s Division of Mineral Resources] have enough people to visit the sites to make sure conditions are met.”  The Cornell study notes that DEC’s proposals require firsthand inspections and the development of detailed spill prevention plans on a site-by-site basis. The proposals also involve assessing and monitoring water resources to ensure they are not damaged by the gas industry’s need for huge volumes of fresh water to stimulate gas production in the fracking process. This process involves shooting millions of gallons of chemical solutions into each well, which then regurgitate brine and wastewater with chemicals, heavy metals and naturally occurring radioactivity. For their part, industry proponents point to New York’s strict regulations and a strong track record by industry. Environmental advocates challenge industry claims, pointing to hundreds of incidents and complaints involving natural gas and oil drilling buried in the DEC’s hazardous spills database. However,  it was reported on January 11, 1010 that DEC Commissioner Pete Grannis had asserted in a letter to Assemblyman William Parment, a member of the legislature's Environmental Conservation Committee, that reports of accidents relating to natural gas drilling in New York have been overblown and taken out of context.  Without additional DEC inspectors, says Professor Porter, Marcellus Development “will rely on self-compliance.” Environmental advocates point to the water contamination and regulatory violations that plagued the operations of Cabot Oil & Gas in Dimock, Pennsylvania as an object lesson. The Cornell study summarizes the proposed regulatory obligations DEC sets forth in the draft Supplemental Generic which include, among other things,  protecting water resources such as New York’s portion of the Great Lakes Basin;  reviewing permits for equipment and structures that might disturb surface water bodies such as rivers and streams or potentially impact aquatic wetland and terrestrial habitats and water quality;  impacts to wetlands; aquifer depletion arising from proposed groundwater withdrawals for high-volume hydraulic fracturing; reviewing major water withdrawals and approved diversions in the Great Lakes-St. Lawrence River Basin under the Great Lakes-St. Lawrence River Water Resources Compact; comprehensive storm water pollution prevention plans and review of permits to address storm water runoff and storm water discharges; industrial activities, including addressing potential sources of pollution and determining when drilling and hydraulic fracturing operations are completed; surface spills and releases at the Well Pad; drilling rig, fuel and tank refueling activities; groundwater impacts associated with well drilling and construction;  private water well testing;  infrastructure control from waste transport to road spreading; and, not least, protecting New York City’s subsurface water supply infrastructure. The import  of the Cornell Law School study is that New York can build an elaborate regulatory scheme designed to protect the environment, but unless there are enough of the right people to enforce the regulations and ensure that they are being rigorously adhered to, the regulations do not amount to much. 

Environmental groups and proponents of economic development and natural gas exploration are on a collision course of competing economic and environmental interests involving an enormous untapped reservoir of natural gas in the Marcellus Shale Formation. That the Marcellus Shale Formation lies in part across economically depressed regions in upstate New York and Pennsylvania, in urgent need of  an economic boost,  only adds fuel to the dispute. At the heart of the controversy lies the New York City watershed, pristine waters in upstate New York  counties that provide the drinking water for millions of people in New York City. The Marcellus Shale Formation sits underground and stretches southwest from New York through Pennsylvania, and into West Virginia and Ohio. According to experts at Penn State University, the Marcellus Shale Formation is the largest known shale deposit in the world. Recently developed extraction techniques in horizontal drilling and hydraulic fracturing are expected to provide an additional boost to the productivity of Marcellus gas wells. Terry Englander, a geoscience professor at Penn State University, estimates that recoverable reserves in Marcellus Shale could be as high as 489 trillion cubic feet! The Draft 2009 New York State Energy Plan recognizes the great potential benefit to New York from development of the Marcellus Shale natural gas resource. But what environmental safeguards should accompany this monumental enterprise?

On December 23, 2009, the New York City Department of Environmental Protection (“DEP”) (not to be confused with theNew York State Department of Environmental Conservation or "DEC"),  called for a prohibition on natural gas drilling in the New York City watershed, urging that, “[N]natural gas drilling and exploration are incompatible with the operation of New York State’s unfiltered water supply system and pose unacceptable risks for more than nine million New Yorkers in this City and State.” According to DEP’s Final Impact Assessment Report, drilling in the watershed requires invasive industrialization and would create a substantial risk of chemical contamination and infrastructure damage. In particular, the DEP’s report singled out the high-volume hydrofracking and horizontal drilling as posing significant environmental risks. Clearly, measures will be taken to protect the watershed, but the devil will be in the details.  A Congressional Research Service report, released on September 9, 2009, examines gas drilling in the Marcellus Shale region.  The report acknowledges that groundwater contamination from improper drilling and casing is a risk.  Water sources in New York listed as "primary" or "principal" aquifers may be at risk, according to the report, due to the permeable "unconsolidated sand and gravel deposits" in northern Pennsylvania and southern New York because of short distances from the land surface to the water table. 

Michael Hoenig’s Product Liability column in The New York Law Journal, “Complexities Abound In Product Design Claims” (January 11, 2010), provides an excellent primer  on the law of product liability in New York state and a good discussion of the leading cases. (NYLJ.com requires a subscription to access. If you cannot download the article, Mr. Hoenig  will post the article within a couple of weeks on his law firm's web site).   Mr. Hoenig devotes the body of his article to a recent Appellate Division, First Department decision, Chow v. Reckitt & Colman Inc., 2010 NY Slip Op 00013 (App. Div., 1st Dept., Jan. 5, 2010).  There, a split First Department upheld the trial court's grant of summary judgment to the defendant manufacturer of of a drain cleaner called "Lewis Red Devil Lye", which blinded the plaintiff during an attempt to unclog a floor drain in the kitchen of the restaurant where he worked.  Applying the Court of Appeals standard in Voss v. Black & Decker Manufacturing Co, the court examined the 'risk-utility balancing' calculus, which often lies at the heart of a defective design product liability inquiry. In addition to Mr. Hoenig’s “refresher” survey of the law of product design liability, he directs his readers to the commentary issued by the Committee on Pattern Jury Instructions of the Association of Justices of the Supreme Court of the State of New York, particularly PJI 2:120. For further reading, a thoughtful discussion of PJI 2:120 appears in a 2008 article "New  Design-Defect Jury Instructions: Catching 'Denny' " by Stephen R. Blacklocks, a partner in Hunton & Wiliams'  New York office.  As Mr. Hoenig states in the conclusion of NYLJ article, “Mastery of the legal principles – our survey merely scratches the surface – is indispensable in perfecting one’s advocacy.”  When your client next assigns you a new case for  you to defend, take a few minutes to review Mr. Hoenig's primer to remind yourself just how many hurdles plaintiff's counsel needs to overcome to make out a prima facie case of design defect. 

BNA Toxics Law Reporter reported on December 31, 2009, that a Michigan Appeals Court affirmed a mold exposure verdict for $303,260, finding that expert testimony was not necessary under Michigan State law to prove either general causation or specific causation.  In Genna v. Jackson, Mich. Ct. App., No. 285746, the Michigan Court Of Appeals (Oakland Circuit Court) affirmed the trial court's denial of defendant's post-judgment motion for judgment notwithstanding the verdict (JNOV) and for a new trial. Based upon a review of the decision, it is not disputed ( at least by this writer) that defendant's negligent conduct resulted in substantial  flooding in the plaintiffs' home and the gross mold contamination that resulted. Plaintiff's microbial expert identified two molds in the home--penicillum and aspergillus--which he testified at trial could affect human health and pose safety issues.  Plaintiffs' children began to experience what the court described as "flu-like symptoms including: diarrhea, vomiting, congestion and nosebleeds".  Over a period of months, these symptoms worsened and the symptoms did not respond to aggressive treatment.  Plaintiffs did not call an expert to testify that these symptoms were the result of the mold contamination. Nonetheless, the appeals court held that plaintiff did not have to demonstrate that the alleged toxin is "capable" of causing injuries like those suffered by the children, let alone requiring the plaintiffs to prove that these children's symptoms were caused by mold exposure. The court reasoned as follows: "This is not a complicated case: the children were removed from the home, the mold was discovered, and the children recovered".  Thus, the court based its decision on "circumstantial evidence that would 'facilitate reasonable inferences of causation, not mere speculation'."  With due respect to the appellate panel, which was obviously impressed with the graphic description of "patches of mold of all different colors all over the walls and ceilings in her kitchen, family room and dining area", this is a really bad decision and a potentially dangerous precedent in Michigan!  It is a mistake to base toxic tort causation on a temporal relationship,i.e., the "children were removed from the home, the mold was discovered, and children recovered."  Flu-like symptoms can be caused by......well, the flu.  That the children's symptoms went away could signify that they had recovered from a prolonged bout of the  flu. Based upon this court's reasoning, the children's illness could have been caused just as easily by lead paint poisoning, contamination of their drinking water, VOC's emanating from their carpeting,  formaldehyde in the walls....or just a really bad allergic reaction to the family's cats.  Did anyone check the family furnace for carbon monoxide gas?  It is not as if the symptoms that the children suffered from were unique to mold "poisoning". Moreover, no one appears to have apprised the trial court that it is not unusual that the antibiotics the children were administered did not cure a viral infection! We also suffer from flu-like symptoms all the time. It is not unusual, particularly in the frigid month of February in Royal Oak, Michigan, when this incident occurred, for these symptoms to occur and to persist in the absence of an exposure to toxic mold. The court faults the defendant for not submitting "any scientific evidence that the mold in her condominium could not have caused plaintiffs' injuries." (emphasis theirs).  And since when does the burden in a negligence case shift to the defendant, and to prove a negative no less?