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

Guest Blogger SHEILA A. WOOLSON, a member of Epstein Becker & Green in Newark,  focuses her practice on complex litigation matters across a wide array of commercial and environmental  disputes.  In expertly handling the defense of environmental and toxic tort matters across New Jersey, New York and Pennsylvannia, Sheila draws on her training as a former professional  chemist in the pharmaceutical industry.  She represents clients in those types of  products liability and toxic tort claims where her  scientific background is a valuable asset.  In the following discussion, Sheila analyzes the potential CERLCA liability of medical facilities for the disposal of non-medical solid waste and makes practical recommendations concerning how medical facilites can limit their CERCLA exposure.

Health care facilities are among the most heavily regulated facilities in the country. Along with the myriad of laws and regulations pertaining directly to the provision of health care, health care facilities are also subject to federal and state environmental regulations regarding their operations, waste, emissions, and discharges. There are over 40 federal regulations and several different acts that potentially affect health care facilities, including the Resource Conservation and Recovery Act; the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”); the Safe Drinking Water Act; the Emergency Planning and Community Right to Know Act; the Clean Air Act; the Clean Water Act; the Toxic Substances Control Act; and the Federal Insecticide Fungicide and Rodenticide Act. See Profile of the Healthcare Industry, EPA Office of Compliance Sector Notebook Project (Feb. 2005).  Most states have their own regulatory schemes that overlay these federal schemes. In addition to complying with these regulations, health care facilities face the possibility of being named as potentially responsible parties (“PRPs”) in CERCLA litigation arising out of the disposal of non-medical waste in landfills.

Municipal solid waste is essentially the same as waste produced by a household, is picked up by normal municipal collections, and does not contain hazardous substances greater than the waste generated by a single-family household. The Environmental Protection Agency (“EPA”) estimates that hospitals produce approximately 3.4 billion tons of solid waste annually, more than half of which is paper. The waste also includes glass, plastic, metal, and other substances. Often, hospitals contract with haulers to dispose of this solid waste in landfills. 

There are currently over 1,300 sites on the National Priority List of Superfund sites that the EPA is currently investigating or remediating, many of which are landfills. There are even more landfills that are under investigation or remediation by state environmental agencies. If a landfill becomes the subject of an investigation and remediation by the EPA or concomitant state agencies, a health care facility could be named a PRP if it allegedly generated or arranged for the disposal of waste in that landfill.

CERCLA contains an exemption for certain nonprofit organizations. To be eligible, a nonprofit organization must qualify as a 501(c)(3) organization and have no more than 100 paid employees at the location generating the waste. This exemption does not apply if the EPA deems that the solid waste contributed significantly to the cost of the response, or the generator failed to comply with an information request or subpoena or impeded the response at the site.

The federal and state environmental agencies usually begin their investigations by sending out information requests that require the PRPs to provide information and documents relating to their activities at the landfill. This is an opportunity to educate the agency about why an entity should not be considered a PRP or why its contribution is de micromis.

If the agency cannot be persuaded to drop its claims against a health care facility, the agency will usually agree to negotiate with all the identified PRPs to have them pay for or undertake the cleanup. CERCLA encourages settlement by barring claims for contribution against settling PRPs. Often, early settlement is a more cost-effective option than litigation, although, of course, this depends on the individual circumstances, including the health care facility’s alleged nexus to the site, the amount of the individual contribution sought from the facility, and the cooperation of the PRPs.

When litigation is started, it is often a lengthy process from which it can be difficult for the entity to extract itself. For example, in United States v. El Dorado County, 2006 WL 1281860 (E.D.Ca. 2006), the government began its investigation in 1995 and filed a lawsuit in 2001. Barton Hospital was named as a third-party defendant in a CERCLA cost-recovery case. The hospital had allegedly deposited ash from incinerated solid waste in a landfill. In 2006, the hospital sought summary judgment, alleging that the contaminants driving the remediation—volatile organic compounds (“VOCs”)—had no connection to its ash. The landfill operator opposed the motion, contending that, because the investigation of the site was not yet completed, it was premature to argue that the VOCs were the only contaminants of interest. In particular, the landfill operator contended that the hospital’s incinerated ash contained detectable levels of metals that also may have required remediation. Therefore, the hospital was unable to demonstrate that its waste did not contain hazardous substances or that response costs would not be incurred to address those substances. This litigation continues to be active to some extent, even now.

In addition to the routine disposal of waste, hospitals and other health care facilities also can become embroiled in CERCLA disputes through construction projects and acquisitions. CERCLA provides for an “innocent landowner defense,” which requires the purchaser to have made “all appropriate inquiries” and to have no knowledge and no reason to know of any alleged contamination. If a health care entity cannot qualify for that defense, acquisitions and purchases of facilities can create liability.

In Hidden Lakes Development v. Allina Health System, 2004 WL 2203406 (D. Minn. 2004), Allina Health Partners (“Allina”) acquired a health care facility in Minnesota that had been constructed by its predecessors. The predecessors had undertaken a significant construction project, and they had used the resulting construction and demolition debris to fill a ravine on the property. They also contracted with a third party to allow it to dispose of additional construction and demolition debris in the ravine. Allina later sold part of its property to Hidden Lakes Development, which was aware of the fill at the time of the purchase. Hidden Lakes Development subsequently determined that the debris used to fill the ravine contained hazardous substances, including asbestos. The disposal of contaminated fill by Allina’s predecessors made Allina a “responsible party.”

Allina’s predecessors also sold a portion of the property to another party, Transitional Hospitals Corporation (“THC”). THC sold its portion of the property to Hidden Lakes Development, as well. Allina filed a third-party complaint against THC for contribution. However, unlike Allina, THC had settled with Hidden Lakes Development before the lawsuit was filed, paying the sum of $2 million. Because CERCLA bars claims for contribution/indemnification following a settlement of CERCLA liability, the federal district court granted THC’s motion for summary judgment, stating that THC had paid for its peace.

As these cases demonstrate, the disposal of non-medical solid waste may expose a hospital or other health care facility to potential liability under CERCLA, which may be difficult and/or expensive to resolve. Accordingly, health care facilities may want to review their practices, including the haulers and disposal sites, in order to minimize any risk. Additionally, health care facilities undertaking acquisitions should carefully review the current and historic disposal practices of any targets in order to assess and address any potential CERCLA liability. 

Guest Blogger ANDREA J. LAWRENCE is a Senior Counsel at Epstein Becker & Green in New York.  She provides legal advice and counsel to clients in the real estate industry. Andrea has extensive commercial litigation experience, and has provided legal representation to real estate companies, landlords, developers, property management companies, and commercial tenants  She recently published an article about bed bug litigation in the New York Real Estate Journal.  Despite some recent highly publicized bedbug personal injury litigation involving prominent New York hotels, Andrea concludes on the basis of a recent New York appellate case, that bedbug cases may not fare well in a commercial setting. 

Many people don't necessarily associate bedbugs with other environmentally hazardous conditions such as toxic mold or oil contamination. However, the reemergence of bedbugs in this country has created unsafe and hazardous living conditions, and has spawned a recent spate of lawsuits throughout the United States. Just recently in New York, the Appellate Division, First Department, shed some light on the issue of liability in the sale of an apartment building with an alleged bedbug infestation. In 85-87 Pitt St., LLC v 85-87 Pitt St. Realty Corp., 83 A.D.2d 446, 921 N.Y.S.2d 40 (1st Dep't 2011), the appellate court upheld a lower court dismissal of a lawsuit, where a buyer sought damages from a seller after its purchase of a residential apartment building with a prior bedbug infestation. The Appellate Division affirmed the lower court's dismissal of the case, predicated upon the contract clause setting forth that the buyer had accepted the building "as is" after having had an opportunity for inspection, as well as the merger clause contained therein that extinguished any claims arising from the seller's alleged misrepresentations concerning bedbugs. Thus, at least in this jurisdiction, there is not much legal recourse for purchasers of buildings, or even apartment units, with a bedbug history, where such relief is precluded by contract.

 The lesson to be learned from this case is simple – in the course of a buyer’s due diligence in today’s market, it should search building records for reports of a bed bug (or any insect/vermin) infestation, and may want to conduct its own physical inspection with an exterminator to uncover any such infestation, past or present. Moreover, should a buyer wish to have some safeguard against this issue, it should insist on a clause within the contract of sale whereby the seller proffers a representation about the presence or absence of bedbugs so as to be enforceable. 
 

In the case of Wyeth v. Weeks, the Alabama Supreme Court consented to answer the following question from the Middle District of Alabama: “Under Alabama law, may a drug company be held liable for fraud or misrepresentation (by misstatement or omission), based on statements it made in connection with the manufacture or distribution of a brand-name drug, by plaintiffs claiming physical injury from a generic drug manufactured and distributed by a different company?" In its brief filed on December 12, 2011—a combined effort with the Alabama Defense Lawyers Association—the Defense Research Institute (DRI)  argues that well-established state tort duty principles prohibit imposing liability on a brand-name manufacturer that did not manufacture the product ingested by plaintiffs. The contrary decision of the Middle District of Alabama is one of but three decisions in the entire country that have allowed failure-to-warn claims to proceed against a brand-name manufacturer where the plaintiff ingested a generic version of the brand-name drug.

The dispute in this case stems from plaintiffs who ingested generic metoclopramide and developed tardive dyskinesia. The plaintiffs claimed that the generic manufacturer failed to warn of the dangers of metoclopramide adequately, and sued the generic defendant on a failure to warn theory. However, the United States Supreme Court recently ruled in PLIVA, Inc. v. Mensing that, because federal regulations prohibit generic manufacturers from unilaterally altering their warning labels, state tort failure-to-warn claims against generic manufacturers are preempted by federal law. Accordingly, the plaintiffs brought suit against the brand-name manufacturers, and the Middle District of Alabama denied in part the brand-name manufacturers’ motion to dismiss. DRI argues against extending common tort principles out of their shape to impose a duty on a defendant who did not manufacture the product and has no control over it. DRI maintains that federal preemption of generic manufacturers does not change this result, even if application of proper tort principles leaves the plaintiff without a remedy.

It would be bad jurisprudence and bad precedent for the Alabama Supreme Court to uphold plaintiffs' position and impose liability on a drug manufacturer, whose  product did not cause the alleged harm.  If that was the result, it is conceivable that a manufacturer with only 10% market share could be held strictly liable for adverse drug reactions caused by generic competitors, who might collectively control 90% of the market.  It would be unfair and unequitable to shift the burden of liability to a manufacturer whose product did not cause the injury merely because the Supreme Court has ruled that preemptioin protects generic manufacturers against state tort failure-to-warn claims. 

A recent Michigan Court of Appeals decision, Alfieri et al. v. Bertorelli et al., dated October 18, 2011 re-visits the issue of whether a real estate agent has a duty to disclose environmental information to a prospective purchaser in the absence of privity. The take-away in this and similar cases is that the  result is often dependent upon the specific facts presented, and even then, the result may vary depending upon the law of the state at issue. For example, New York strongly adheres to the doctrine of caveat emptor, which imposes no liability on a seller (let alone the seller's agent)  for failing to disclose information regarding the premises in an arms length transaction, unless there is some conduct on the part of the seller which constitutes active concealment.  In New York, the purchaser of contaminated property would arguably have a difficult time, in the absence of some affirmative misrepresentation and a showing of reasonable reliance, holding seller's agent liable.

Although the Alfieri case is based on Michigan, not New York, law, its holding is instructive. Alfieri arose out of plaintiffs’ purchase of a condominium unit in what had once been an abandoned factory. The factory had been contaminated with trichloroethylene, and in the process of converting it into condominiums, a vapor barrier was installed. Nonetheless, the former factory property was never properly decontaminated. However, plaintiffs were led to believe that the contamination had been cleaned up. In part, plaintiffs relied upon a sales brochure, prepared by Coldwell Banker, the seller’s agent, indicating that the site had been decontaminated. The plaintiffs purchased the condominium without conducting any independent diligence of their own and only learned following the closing that the property was seriously contaminated.

In rejecting Coldwell Banker’s motion for summary judgment, the Michigan court discussed two of plaintiffs’ theories of recovery – silent fraud and negligent misrepresentation. The court explained that common law fraud or fraudulent misrepresentation involves: (1) a defendant making a false representation of material fact with the intention that a plaintiff would rely on it; (2) the defendant either knowing at the time that the representation was false or making it with reckless disregard for its accuracy; and (3) plaintiff actually relying on the representation and suffering damage as a result. Silent fraud is essentially the same, except that it is based on a defendant suppressing a material fact that he or she was legally obligated to disclose, rather than making an affirmative misrepresentation. A silent fraud may be a misleadingly incomplete response to the purchaser’s inquiry concerning a particular concern.

The court did not accept seller’s agent’s argument that Michigan jurisprudence did not impose upon the seller’s agent a duty of disclosure, in contrast to the duty imposed on the sellers themselves. The court held that a duty of disclosure may be imposed on seller’s agent to disclose newly acquired information that is recognized by the agent as rendering a prior affirmative statement untrue or misleading. In this case, there was evidence that the plaintiffs made direct inquiries of defendants about the condition of the property. The Michigan Department of Environmental Quality provided information to the seller which suggested that the sales brochure contained inaccurate and misleading information. What is troubling about the court’s holding is that the agent for the seller prepared the sales brochure on the basis of information obtained from the client. Did the agent have reason to believe that the contents of the sales brochure were not true until the plaintiffs filed suit? The decision does not provide a clear answer. However, the court apparently believed that there was a sufficiently genuine issue of material fact to deny the agent’s motion for summary judgment.
 

In an article titled, “How Phase I Reports Can Hurt Your Clients,” (ALI-ABA Practical Real Estate Lawyer, Vol. 27, No. 6, November 2011), environmental guru Larry Schnapf cautions purchasers of property that an ill-conceived Phase I report may result in their losing CERCLA ability protection or expose them to misrepresentation claims.  The article’s primary concern is that a Phase I report may not necessarily assist a purchaser in establishing a CERCLA:  1) third-party defense; 2) innocent landowner defense; or 3) bona fide prospective purchaser defense, the requirements for each of which are set forth in the statute. 

To qualify for CERCLA liability protection, a property owner or operator must, among other things, demonstrate that it investigated the past use and ownership of the property consistent with the requirement of the EPA “All Appropriate Inquiries” (“AAI”) rule and exercised appropriate care with respect to contamination at the property.  In an earlier article, “The New ‘All Appropriate Inquiries’ Rule,” (ALI-ABA Practical Real Estate Lawyer, January 2007), Schnapf observes that ASTM’s standard practice for environmental site assessments (ASTM E1527-00) may be inconsistent with the statutory criteria set forth in Small Business Liability Relief and Brownfields Revitalization Act of 2002 (the “2002 Brownfields Amendments”) and spurred EPA to develop the AAI rule.  Thereafter, ASTM worked with EPA to revise E1527-00 to ensure that a revised standard would satisfy the requirements of the AAI rule. When EPA issued the final AAI rule, which became effective November 1, 2006, the agency announced that E1527-05 was now consistent with the final rule so that environmental site assessments consistent with the ASTM standard could be considered compliant with the rule.  Do pitfalls remain?

Schnapf cautions that the absence of a “recognized environmental condition” (“REC”) in a Phase I may not guarantee that there is no “business environmental risk” (“BER”).  For example, over the years, some Phase I reports have come to include environmental issues (e.g., asbestos, lead-based paints, radon mold) that do not fall within the definition of an REC because they do not involve releases of hazardous substances, although they could still be of concern to a property owner, tenant or lender.

  In Bank of New York Mellon Trust Company et al. v. Morgan Stanley Mortgage Capital Inc. (MSMCI), 2011 U.S. Dist. LEXIS 69168 (S.D.N.Y. June 27, 2011), a New York federal district court denied a motion to dismiss filed by a mortgage originator who was alleged to have failed to adequately disclose environmental conditions at a shopping center.  In that case, a mortgage loan purchase agreement was entered into in connection with a shopping center that had been constructed on a former landfill.  The landlord at the shopping center was required to monitor methane gas and had been subject to a number of violations.  Just before the loan closed, the largest tenant of the shopping center issued a Notice of Default accusing the owner of failing to properly manage the methane gas and alleging that methane gas levels had reached dangerous levels.  Although the landlord’s Phase I discussed the methane issue, the court declined to grant the defendant’s motion to dismiss finding that the purpose of the report was to identify RECs, that the report had not identified any RECs.  The court held that an “item of environmental concern” was not necessarily congruent with an REC.  Accordingly, the court found there was a legitimate dispute as to whether the Phase I had adequately disclosed the existence of a material environmental threat, which resulted in the loss of the primary tenant.

In addition to providing a caution to due diligence counsel concerning the scope of the Phase I, Larry also raises a concern about the practice of some environmental consultants in providing recommendations for further investigation or remediation in the Phase I report.  If such recommendations are made, and the purchaser fails for any reason to promptly implement them, the purchaser’s bona fide prospective purchaser defense arguably may be jeopardized.  Accordingly, the article recommends that any recommendations for further investigation or remediation be provided by the consultant in a separate letter to counsel and not be transmitted to the client directly. 

Sunovion Pharmaceuticals obtained summary judgment on October 5, 2011 after oral argument before the Hon. Stefan R. Underhill in federal court in Bridgeport, Connecticut in the case of Swoverland v. GlaxoSmithKline, 2011 U.S.Dist.LEXIS 127753.  Co-Defendant GlaxoSmithKline, represented by King & Spalding, also obtained summary judgment.  William A. Ruskin and Victoria Sloan of Epstein Becker & Green represented Sunovion. 

The plaintiff alleged that his use in combination of Sunovion’s Lunesta, a sleep aid, and GSK’s Paxil, an anti-depressant, caused depression and suicidal ideation, which resulted in an unsuccessful attempt to kill both himself and his daughter.  As a result of the incident, plaintiff was sentenced to prison and forfeited his position as a prison guard.  Sunovion defended the case on the basis that it adequately warned of the drug’s potential risks and that there was no causal connection between any alleged failure to warn and the treating physician’s prescription of the drug. 

In granting summary judgment to Sunovion, the court reaffirmed Connecticut’s adherence to the learned intermediary doctrine on the basis of the Connecticut Supreme Court's 2001 decision in Vitanza v. Upjohn, 257 Conn 365.   Judge Underhill described the learned intermediary doctrine as "essentially hold[ing] that because there is, or when there is a traditional physician/patient relationship, because the physician is the decision-maker as to whether a particular drug will be used by the ultimate consumer, it is the adequacy of the warnings to the physician that matter.  The Court also rejected plaintiff’s assertion that the learned intermediary doctrine should not apply in this case either because Lunesta directly advertised to the patient or over-promoted the product.  The Court held that there was no factual basis in the record to support the application of either of these exceptions to the learned intermediary doctrine and that, as a matter of law, Connecticut did not recognize these exceptions.

Recently, New York DEC issued its draft regulations for hydraulic fracturing based on the proposed requirements in the revised supplemental generic EIS released earlier this month. Public comment began yesterday and will run concurrently with the public comment period on the DSGEIS, which ends on December 12.  DEC  also released the proposed SPDES general permit for storm water discharges associated with hydraulic fracturing.  Public hearings will be held during November and here in New York on Nov. 30 at Tribeca Performing Arts Center. No permits can be issued for hydraulic fracturing until the SGEIS is finalized and the DEC issues the required Findings Statement.  The summary of express terms can be found on the DEC website at  http://www.dec.ny.gov/regulations/77373.html

At a recent Shale Gas Insight conference in Philadelphia, Aubrey McClendon, the outspoken Chairman of Chesapeake Energy, expressed optimism concernining progress made by industry to address methane contamination of drinking water supplies due to faulty gas well construction. According to McClendon, "Problem identified; problem solved".  However, according to the Times-Tribune writer, Laura Legere, DEP data concerning environmental violations demonstrates that McClendon's optimism may be premature and that problems with cemented steel well casings designed to protect groundwater from gas and fluids in Marcellus wells perist.  Of course, casing and cementing violations do not necessarily indicate that gas has migrated or will migrate into drinking water supplies. Moreover, methane is present in many water wells in PA from natural pathways unrelated to gas drilling.  However, the crux of environmentalists' opposition  to hydrofracking appears to center on the gas casing and cementing concerns.  In his comments, McClendon credited an "updated and customized casing system" included in PA state regulations which will hopefully prevent new instances of gas migration.  It is recognized, however, that the geology in Marcellus Shale is neither uniform nor predictable and that the geologic issues are complex.  In planning for Marcellus Shale natural gas exploration in New York, NYDEC personnel have taken to heart (we hope) the lessons of  PA's experience--good and bad--with hydrofracking and will craft a set of regulations in NY that will promote safe natural gas exploration on a sound economic footing. DEC's website contains a detailed discussed of DEC staffers' visit to PA in July '11 that detailed the environmental issues in PA that NY needs to address in its regulatory framework.

The Wall Street Journal reported today that Texas Governor Rick Perry signed into law Friday a bill that will require companies to make public the chemicals they use on every hydraulic fracturing job in the state.  Texas' law is significant because the oil and gas drilling industry, which is powerful in Texas, vocally supported the measure.  Opponents to fracking in the Marcellus Shale region of  New York and Pennsylvannia have long accused the drilling companies of secrecy for failing to disclose the chemicals used in hydrofracking.  Widespread support for this measure, and similar measures in other states, provide some indication of just how untenable the industry's former stance had been.  Fracking involves blasting millions of gallons of water, sand and chemicals into the ground to break up oil and gas-bearing rocks.  Environmentalists and residents in drilling areas fear that the fracking process may result in chemical contamination of drinking water aquifers.  Until now, industry's argument that fracking is safe has been hamstrung by drillers' refusal to disclose the chemicals used.  Going forward, the fracking debate can now refocus on the important issues, such as the likelihood that faulty well construction may result in contamination of an aquifer.  According to industry spokespersons, tens of thousands of wells have been drilled with relatively few problems.  In those rare instances where a problem has been reported, the industry believes that the problem is most likely attributable to an improperly constructed well.  Earlier this year, some of the larger gas producers, notably Chesapeake, Chevron and BP, announced that they would voluntarily begin to publicize the chemicals they use online at FracFocus.org. This website is a joint project of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission.

Consumer Reports, among others, reported this week that the International Agency for Research on Cancer ("IARC"), which is part of the World Health Organization ("WHO"), has classified low-level radiation from cell phones as "possibly carcinogenic to humans" based on limited evidence linking cell phone use to glioma, a type of brain cancer.  Although Consumer Reports concluded in its article that IARC's action was based on "limited evidence" and doesn't "convincingly" link typical cell phone use with cancer, an American public that often skims only headlines of articles, may be susceptible to appeals of sympathy by plaintiff lawyers representing long-time cell phone users with brain cancers.  Throughout the 1980's the utility industry battled spurious claims, premised upon junk science, that electromagnetic field radiation was responsible for "cancer clusters" of child leukemias and other dreaded diseases.  Although virtually every major EMF toxic tort claim was successfully defended by industry over a period of years, tens of millions of dollars was spent defending these lawsuits, which were brought in courts all  across the country.  As in the case of low dose radiation from cell phone use, there were  millions of millions of potential plaintiffs in the EMF cases and all of the prospective utility industry defendants had deep pockets. Following issuance of the IARC release, a spokeswoman for the Federal Communications Commission ("FCC") stated that FCC currently requires that all cell phones meet safety standards based upon the advice of federal health and safety agencies.  Moreover, according to the National Cancer Institute's Surveillance Epidemiology and End Results Program ("SEER"), the incidence of brain cancer in the United States has actually declined over recent years as cell phone use has skyrocketed.  Despite these reassuring pronouncements, well-heeled plaintiff lawyers may bring some cases as trial balloons to test industry resolve based upon other equally ambiguous pronouncements, such as the contention that cell phone use can affect "brain function".  As in the cases brought against chemical manufacturers in the 1980's,  which alleged that chemicals cause generic  "immune system dysfunction", enterprising plaintiffs may attribute any number of injuries to purported "brain function" impacts.  Hopefully, courts will continue to exercise their gatekeeper roles to maintain some semblance of scientific rigor in the courtroom to exclude inconclusive science  if these cases are brought. 

On November 6, 2009, we reported here concernining a case of first impression brought by the Ecological Rights Foundation ("ERF") in federal court in California.  In her decision, dated March 31, 2011, the Hon. Saundra Brown Armstrong, sitting in the United States District Court for the Northern District of California (Oakland Division), dismissed ERF's  environmental claims brought  against Pacific Gas & Electric (“PG&E”) and Pacific Bell Telephone (“Pacific Bell”).  The Ecological Rights Foundation alleged that the Defendants’ wooden utility and telephone poles were pressure treated with an oil-based pentachlorophenol preservative which was “oozing” to the surface and being washed off of the Poles, thereby contaminating San Francisco Bay and adjacent waterways.  As a result of the migration of this material over time from the Poles into the soils, ERF alleged that “dioxin-like” compounds were released into the environment placing surrounding homeowners, commercial fisherman and the general public at significant risk.  As a practical matter, if ERF had prevailed, PG&E and Pacific Bell may have had to replace tens of thousands of Poles throughout California. 

In dismissing the case, which was brought pursuant to the Clean Water Act (“CWA”) and the Resource Conservation and Recovery Act (“RCRA”), the Court examined the required showings under each statute.  The CWA distinguishes between point and nonpoint sources.  A point source is defined in the statute as “any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.”  All other sources of pollution are characterized as “nonpoint sources.”  To succeed, ERF had to demonstrate that the Defendants’ discharges were point source discharges. 

In dismissing the CWA claim, the Court held that “point and nonpoint sources are not distinguished by the kind of pollution they create or by activity causing the pollution, but rather by whether the pollution reaches the water through a confined, discrete conveyance.”

The key issue in the analysis of ERF’s RCRA claim was whether the chemical preservatives used on the Poles qualified as a “solid waste” within the meaning of RCRA.  The term “solid waste” is statutorily defined as “discarded material.”  Although not defined by statute, EPA regulations specify that “discarded material” includes any material that is “abandoned.”  ERF alleged that solid waste was disposed of into the environment when the chemical preservative leaked, spilled or dripped from the Poles due to rain, and when dust impregnated with the chemical is blown into the air during dry seasons.  In dismissing the RCRA claim, the Court held that the “flaw in plaintiff’s theory of disposal is that in this case, there is no allegation that Defendants engaged in any conduct that resulted in the discharge of the chemical preservative. To the contrary, Plaintiff merely alleges that the purported contamination is the result of natural forces – mainly, rain and wind… Such allegations, on their face, are insufficient to establish that Defendants engaged in the ‘disposal’ of hazardous waste under § 6972(a)(1)(B).”  The Court rejected Plaintiff’s theory that the “passive” spilling or leaking of materials from a place of containment into the environment constitutes “disposal” of solid waste.  In so holding, the Court distinguished prior cases that found that leakage fromgasoline USTs may be actionable under RCRA.  The UST holdings are only applicable to situations where the discharge of hazardous waste leaked or spilled from a container intended to hold the waste.  In contrast, the Court found that “the Poles are not containers; but rather, they were used to suspend wires for the transmission of electricity for PG&E and data for Pacific Bell.”  Thus, liability under RCRA ¶ 7002 did not attach based on the “discharge” of chemical preservatives from the Poles attributable to natural forces, such as rain and wind.

Ed Lowenberg, the Coordinator of the Toxic Torts Group in the Litigation Department at ExxonMobil, is retiring after 32 with the company on November 30, 2010.  He will be greatly missed by members of the toxic tort bar--by both the defendant and plaintiff lawyers with whom he has worked over his long career  To many of us, Ed Lowenberg personified Exxon.  Over the years, he was responsible for some of the most high profile toxic tort litigations in the United States.  Like the consummate fighter that he was, Ed always looked to land a decisive  knockout blow on an adversary. At the same time, however , Ed handled all of his matters with professional integrity, creativity and good humor.  He will be greatly missed by the toxic tort bar. 

After receiving a B.A. in Political Science from the City College of New York in 1967 and a J.D. from the University of Texas in 1970, Ed worked at HEW, as a Trial Counsel for Justice, and as Special Counsel for the SEC. He also served as Special Assistant United States Attorney in Houston, New Orleans and in other venues. However, he found his true calling working in-house at Exxon, which he joined in 1978, defending the the company's toxic tort litigation.

Ed was an early advocate of joint defense groups in mass tort litigation.  In cases in which plaintiffs would sue 20 chemical manufacturers, each manufacturer would routinely retain its own legal team to defend the case.  In a joint defense, the defendants agree to waive conflicts and to retain a single law firm to represent the entire defense group.  When joint defense groups were initially proposed, there was a tremendous backlash within both the in-house bar and among outside law firms, who feared the  loss of significant clients to the "joint defense counsel"  and bemoaned the the loss of revenue from defending the case.  However, Ed and other pioneering in-house lawyers recognized that the industry could more properly defend baseless toxic tort cases once a joint defense group comprised of in-house lawyers could was able to instruct defense counsel how best to defend a case.  With multiple law firms appearing for multiple defendants, the temptation for some companies to settle for "nuisance value" to avoid high defense costs was often irresistible.  In a joint defense, in which each of the twenty law firms pays only a fraction of the cost of defense, nuisance value is greatly diminished and plaintiff lawyers often lose their enthusiasm about their claims.  The joint defense was just one of many innovations Ed brought to toxic tort defense.

Eileen Millett is Counsel to the law firm of Epstein Becker & Green, P.C. where she represents clients on environmental matters, including solid and hazardous waste and the Clean Water Act,  and counsels clients on general regulatory compliance questions, including issues related to toxic waste and water quality, permitting, emerging obligations under impending climate regulations and other federal, state, and local environmental statutes and regulations.  Ms. Millett previously served as Assistant Counsel with the Hazardous Waste Task Force at NYDEC and as General Counsel to the Interstate Environmental Commission, a tri-state water and air quality enforcement authority, where she conducted and managed litigation to control and abate water pollution and ensure adequate water and sewer infrastructure.  She teaches environmental law at the Syracuse University College of Law. 

Marcellus Shale is shale formation that extends deeply underground from Ohio and West Virginia, northeast into Pennsylvania, and into New York’s southern tier. Although the shale is exposed in some locations in New York, it descends to a depth of as much as 7,000 feet or more below the ground surface along New York’s Pennsylvania border.  Estimates project that this shale formation contains enough natural gas to fuel New York State’s energy needs for decades to come. Some geologists have estimated that the entire Marcellus Shale formation could contain between 168 trillion to over 500 trillion cubic feet of natural gas throughout its entire extent. New York uses approximately 1.1 trillion cubic feet of natural gas a year. How much gas will be recoverable from the shale is not yet known. Nonetheless, natural gas has emerged as an energy source capable of contributing to alleviating some of the United States’ dependence on foreign oil. Thus, the ability to effectively capture natural gas in the Marcellus shale efficiently and in an environmentally sound manner is of the utmost importance.

It is the process associated with the recovery of natural gas from the shale and the attendant interstate environmental impacts that have become the subject of much debate. The natural gas is both very deeply and very tightly embedded in the shale. However, of late, new technological developments with extraction, notably hydraulic fracturing, have demonstrated promising results.   Interest has naturally advanced because of the shale’s proximity to high demand markets and the development of the Millennium Pipeline. This interest, however, has not been without question about the effects on the surrounding communities and the environment. The concerns raised have been with the technology, horizontal drilling and hydraulic fracturing.

Horizontal drilling is one of the techniques used in the process of reaching the natural gas. One drills down vertically first and then special tools are used to turn the well horizontally. This type of drilling has two advantages, one, is the production of more gas from a single well, since perpendicular penetration of the vertical rock fractures allow engineers to drill more area in the zone of gas producing rock, and, two, many more horizontal wells may be drilled from the same surface location, thus, disturbing less ground surface as compared to using vertically wells. Both, horizontal drilling and hydraulic fracturing technologies have enhanced the cost-efficient recovery of natural gas contained within Marcellus shale. The NYDEC website provides a description of the drilling technology.

Hydraulic fracturing is the high pressure pumping of fluid with a material adept at propping, such as sand, to both expand or fracture the rock to facilitate recovery of the gas, and at the same time, allow the space that’s been expanded to stay open long enough to allow the maximum amount of gas to flow into the well. Unlike of types of drilling, no blasting is used. The hydraulic fracturing process is especially helpful for the type of “tight” rock formation found in rocks like shale. Water and fine sand are pumped through the rock with pressure, fracturing the shale and leaving the grains propping up the rock so that gas escapes. Extracting gas from shale is not as simple as this process may sound. Each shale rock formation is different, thus, to achieve the optimal gas production, could require one to change the amount and mix of fluid and sand. The results cannot be guaranteed and experience and experimentation is the normal way of operating.  

Concerns have been raised that the fracking technique could contaminate groundwater, and that its use should be closely regulated. Most fractured wells are thousands of feet below any potable water zone, thus concerns about groundwater while understandable may be misplaced.  Notable among the concerns is the volume of water required for the process, the chemical composition of the fluid used and the challenges posed by the proper disposal of those fluids. First, Hydraulic fracturing requires the use of large volumes of water to fracture the rocks and produce gas, with each well using up to a million gallons of water. Secondly, the fracturing fluid contains compounds added to it to make the process more effective.   These fluids could include chemicals to reduce friction, inhibit the growth of bacteria, assist in carrying the propping agents into fractured rock, substances to ensure that the propping agent stays in the fracture and agents to prevent or retard corrosion of pipes in the wells. Thirdly, fluid removed from the wells is required to be handled, transported and disposed of properly.

ANALYSIS OF THE WATER QUALITY ISSUE

Among the many issues of concern for the environment in the water quality context are water usage, effluent content, and disposal. Among the most pressing of these issues are the following: the amount of water usage, the need to withdraw surface water, what authority controls and regulates the withdrawal of public drinking water, what authority regulates the withdrawal of surface water for commercial and industrial use, the management of the water withdrawals outside of the authority of water quality commissions (the Delaware River Basin Commission (DRBC), the Susquehanna River Basin Commission (SRBC) and the Great Lakes Commission (GLC)), what approved pretreatment programs exist, and the adequacy, the capacity and the ability of treatment facilities to properly treat and dispose of water. The challenge for attorneys and for courts will arise as communities grapple with:

● Managing the use of water, water withdrawals, what authority controls and who regulates;

● Impacts if any on waterbodies and aquatic life in affected water bodies accepting chemical fluids of varying composition;

● Adequacy and availability of treatment and pre treatment facilities.

Guest Blogger Brian Molinari is the author of the Prima Facie Law Blog, and a Labor and Employment Associate at Epstein Becker & Green. Brian asks in this post whether an employer has a duty to provde a green workplace for her employees.

With the global spotlight on reducing greenhouse gases and carbon footprints, including the Obama Administration’s unprecedented attention on encouraging environmental conservation and development of renewable energy sources, it’s clear that we’re in a “go green” era.

To cut to the question posed in this blogposts’s title, the answer is “no”.  There is no legal duty, at the moment, for a private employer to “go green”. Perhaps at some point in the future, statutory authority such as the federal Occupational Safety & Health Act and state and local counterparts will include “green workplace standards”. For example, with respect to the investment in “green jobs” the Department of Labor and National Institute for Occupational Safety and Health are already focusing on ensuring that OSHA standards are appropriately designed and enforced to protect workers performing that type of work. At present, however, there are no mandates and instead only various governmental and non-governmental incentives for a workplace to go green. 

The U.S. Environmental Protection Agency (EPA) and Pew Center on Global Climate Change estimate that commercial buildings account for nearly half of all energy consumption in the U.S., and contribute to nearly half of U.S. greenhouse gas emissions. The Energy Star Program, administered by the EPA and U.S. Department of Energy, attempts to encourage energy efficiency in buildings to meet strict energy performance standards set by EPA and reduce greenhouse gas emissions.  Federal buildings are eligible to receive a High Performance Building designation. 

In addition, commercial real estate and private companies are leading the green charge through voluntary compliance with standards set by a private, nonprofit membership organization, the U.S. Green Building Council (USGBC). The USGBC’s LEED® (Leadership in Energy and Environmental Design) Green Building Rating System™ awards points for satisfying specified green building criteria. The six major environmental categories of review include: 

• Sustainable Sites
• Water Efficiency
• Energy and Atmosphere
• Materials and Resources
• Indoor Environmental Quality and
• Innovation and Design

A building, or unit therein, can be certified as LEED Silver, Gold, or Platinum based on the total number of points earned within each LEED category. For example, our firm’s Miami and Los Angeles offices are in buildings with LEED Gold certification. It was reported two days ago that a high profile commercial property investment company will spend up to $10 million retrofitting its properties for environmental sustainability. LEED can be applied to all building types including new construction, individual unit commercial interiors, core & shell developments, existing buildings, homes, neighborhood developments, schools and retail facilities. In addition, LEED for Healthcare was released in early 2008.

In sum, the green movement has not yet resulted in mandated private employer obligations. Notwithstanding the lack of affirmative duty to do so, however, based on information provided by the USGBC and EPA there are many pragmatic benefits that employers should consider for greening their workplaces:

• Monetary:  Funding and tax incentives 
• Energy Efficiency:   Using energy more efficiently may save operating costs on utility bills over the life of the building; reduce the cost per unit on manufactured goods and services; and enhance resale and lease value of real estate
• Environmental Efficiency:   Reducing environmental impact may reduce waste materials and disposal costs, water usage, chemical use and disposal costs; encourage recycling and reuse of materials; develops local markets for locally produced materials, saving on transportation costs and develops economy-of-scale price reductions
• Human Efficiency:   Improving indoor environment, producing healthier places to work leading to increases productivity; reduction in absenteeism; boosting morale and corporate loyalty (also through creation of corporate “green teams”), and reduction in employee turnover
• Goodwill:  Green Buildings often receive high profile notoriety and increased public perception of goodwill toward employees and the community.  

On January 28, 2010, the Louisiana Court of Appeal, Fourth Circuit, affirmed the New Orleans  trial court’s denial of class certification in a series of putative class actions involving alleged exposure to Normally Occurring Radioactive Material (“NORM”) on industrial property located in , Louisiana, which had been used for oilfield pipe and equipment cleaning operations for over forty years. Although class certification was rejected on multiple grounds, the decision relied in large part upon the Louisiana Supreme Court’s landmark decision in Ford v. Murphy Oil USA, Inc., 703 S.2d 542, which involved alleged exposures from hazardous materials from several distinct sources. As in Ford, the class action failed because the Harvey plaintiffs alleged toxic exposures as a result of pipe cleaning activity on the non-contiguous property of three separate and distinct landowners – Rathborne, Grefer and ITCO – over a forty-six year period, with varying amounts of pipe cleaning taking place at different times in different locations (in almost checkerboard pattern) by different companies. Ford stands for the proposition that only mass torts arising from a single common cause or disaster are appropriate for class certification.

How did pipe cleaning cause the alleged NORM exposure? Pipe cleaning involves the mechanical reaming of the inside of oilfield pipe to remove scale or crust that builds up on the interior of the tubing to the point where the scale impedes the flow of oil up the pipe. The scale, formed from natural elements, gradually clogs the pipes that are inserted deep into the ground during the course of petroleum production. At some point, it was determined that the scale inside the pipe contained material determined to be radioactive, with varying half-lives (time for half of the atoms of a radioactive substance to decay), which is called “NORM” or “TERM,” an acronym referring to Technologically Enhanced Radioactive Material. When precisely the oil industry knew or should have known that pipe cleaning could result in occupational exposure to NORM is hotly disputed. The plaintiffs allege that over the decades this pipe cleaning occurred in Harvey, “toxic dust” (NORM/TERM) was deposited in their neighborhoods and was the source of various diseases and illnesses.

What I find interesting about the Fourth Circuit’s opinion is its rejection of the trial court’s determination that the plaintiffs failed to satisfy the numerosity requirement of the Louisiana Class Action Statute, which was a primary basis for the trial court’s denial of class certification. The trial court  found that there was not sufficient numerosity because so many potential class members had already opted out, citing other lawsuits in which 3,748 individuals, a large percentage of the putative class, were involved. These so-called opt-outs were represented by several outspoken plaintiff lawyers, who did not want to see a class certified. The Fourth Circuit ruled that it was premature to opt out of a class before it was certified. A plaintiff could not opt out of a class that did not yet exist. Therefore, the Fourth Circuit found that the numerosity requirement had been met. However,  the Fourth Circuit held that sufficient commonality for class certification was not present. In addition, the Fourth Circuit held that the broad diversity of the diseases and ailments of the plaintiffs underscored the inadequacy of the class representatives representation, leading the court to conclude that there was no typicality. The Harvey TERM plaintiffs complained of diseases ranging from common cold symptoms to reproductive problems and many different forms of cancer.  The plaintiffs' strategy at both the trial court and appellate level was to argue that the court should not be required to conduct a rigorous analysis of whether the facts satisfied the class action requirements.  Plaintiffs argued that the trial court confused a motion to certify a class with a trial on the merits, essentially asserting that it had made too many "factual findings".  However, the Fourth Circuit soundly rejected this argument, citing the Louisiana Supreme Court's decision inBrooks v. Union Pacific Railroad Co., 2008-2035, *6, 2009 WL 1425972 (La. 05/22/09), which recognized the "essentially factual basis of the certification inquiry and of the district court's inherent power to manage and control pending litigation."  Brooks, 08-2035 at p. 11, 13 So 3d at 554

On February 26, 2010, the New York League of Conservation Voters (“NYLCV”) hosted an Eco-Partners Breakfast with New York City Department of Environmental Protection (“DEP”) Commissioner Cas Holloway, DEP's energetic new commissioner.  Mayor Bloomberg appointed Mr. Holloway to head DEP in November 2009 after a year long nation-wide search. Prior to his appointment, Mr. Holloway served as a Senior Advisor and Chief of Staff to Ed Skyler, New York's Deputy Mayor for Operations. Mr. Holloway, a former Cravath associate who earned an undergraduate degree at Harvard and a law degree from the University of Chicago, brings to the position a rare combination of political savvy and operational know how that should serve DEP well.  Although DEP has a $1,000,000 budget and a staff of over six thousand, it often flies below the radar screen. DEP performs four basic functions. (1) First and foremost, it is a water utility. It is responsible for the supply, distribution and treatment of New York City’s drinking water. Unlike California, which delegates the supply and treatment functions to different agencies, both functions fall within DEP's  aegis in New York; (2) DEP is a customer service agency. It more or less determines the price of water; (3) DEP is a capital projects agency. For example, it is building at a cost of $6,000,000,000 the third underground tunnel that will carry drinking water from upstate to millions of New Yorkers; and (4) DEP is an environmental regulator on, among other things, air and water issues.   Based upon his first few months on the job, Cas Holloway appreciates the importance of working with various stakeholders and interest groups. On February 25, 2010, Mayor Bloomberg, Mr. Holloway's agency,  NYS Department of Environmental Conservation and several environmental groups announced an agreement-in-principle to significantly improve the health of Jamaica Bay through sewage treatment plant upgrades and investments in marsh restoration. As a result of the agreement-in-principle, DEP headed off a potentially costly Clean Water Act litigation arising from the alleged failure of its four sewage treatment plants to prevent nitrogen discharges to the bay. Mr. Holloway described the resolution of the Jamaica Bay dispute as a "paradigm shift" and a case study for how he hopes DEP will resolve future disputes. Up next for Mr. Holloway is the threat to water quality in the New York City Watershed posed by natural gas companies  seeking permits to exploit valuable natural gas deposits in the Marcellus Shale through the extensive use horizontal drilling and hydrofracking.  All New Yorkers should wish Mr. Holloway well in addressing this new Watershed concern.

According to recent reports in the Greenwich Time, Greenwich, CT state legislators are proposing a bill that would prohibit building cell towers within 750 feet of a school or day care because of a perceived health risk from electromagnetic radiation. However, some Cos Cob, CT residents believe that the cell towers should not be permitted within 5,000 feet of any schools, day cares and elderly homes due to health concerns. Reportedly, the cell tower bill has been proposed by Rep. Fred Camillo, R-151st District, and supported by fellow Reps. Livvy Floren, R-149th District, Lile Gibbons, R-250th District, and Sen. L. Scott Frantz, R-136th District. There is no good evidence that attending school near a cell tower, such as the one proposed, creates a health risk. During the 1980’s, some plaintiff lawyers ballyhooed electromagnetic field (“EMF”) litigation as the “new asbestos.” A series of well-funded EMF trials were litigated against various electric utility companies around the United States in the 1990’s. After the presentation of the scientific evidence, judges and juries uniformly rejected plaintiff health claims. The Centers for Disease Control (“CDC”) website contains a great deal of reliable scientific information concerning health effects from radiation exposure from cell towers, cell phones, microwave ovens and hair dryers. According to the CDC, the risk is extremely low. The low frequency radiation that those fields emit may have a biological effect, but do not cause adverse health effects, according to the website of the World Health Organization (“WHO”), which has devoted years of study on EMFs. So what is a biological effect? WHO’s literature explains that “biological effects” may include “listening to music, reading a book, eating an apple or playing tennis,” none of which cause health effects. WHO's conclusion is that there is no health risk to the EMF radiation to which the public is exposed. Thus, contrary to popular hysteria, there is no evidence that proximity to EMFs can “fry” a person’s brain or cause cancer. If our legislators are going to propose EMF safety precautions, they should base their proposals on strong science rather than fear. The "dose" or exposure from cell tower EMFs can be measured and quantified. Once that “exposure” is known, it is then necessary to look to the scientific literature to evaluate the likelihood of a health risk from that exposure. If EMF radiation posed a health risk to everyone living near a cell tower, it is a no-brainer that all cell towers should be dismantled--not just those near schools and day cares and homes for the elderly. The cell tower issue has always been about diminution of property value and aesthetics; it is not about our health! 
 

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. 

The Mass Tort Defense Blog reported recently that the North Carolina federal district court overseeing the MDL concerning panacryl sutures declined last week to certify a proposed national class action in In re Panacryl Sutures Products Liability Cases, 2009 WL 3874347 (E.D.N.C. 11/13/09).  The decision is a significant one for pharmaceutical and medical device MDL practitioners because the court's reasoning in denying class certification is broadly applicable to other medical device products. It is increasingly rare for plaintiffs to obtain class certification in medical device litigation and this case is no exception. Panacryl Sutures are synthetic, braided, absorbable surgical sutures, designed to remain in a patient's body for 24-36 months after surgery to provide wound support. Various plaintiffs alleged that Panacryl Sutures were defective in that they allegedly caused a high rate of foreign body reactions when used as directed. Plaintiffs further alleged that the defendants failed to provide adequate warning of the dangers associated with the devices. Plaintiffs eventually filed a motion to certify a National Class Action. The Panacryl sutures were the subject of a  2006 recall by FDA.

In his blog post, Dechert's Sean P Wajert, discusses the various rationale underlying the court's decision not to certify a national class. In evaluating the requirements under Rule 23(a) and Rule 23(b), the court considered the impact that the laws of the various states where plaintiffs reside would have on the proposed class.  Considering Rule 23(a)(3)'s "typicality" requirement, the court found that the plaintiffs had not considered the varying substantive laws governing every class member.  Considering to Rule 23(b), the court found that in class actions governed by the laws of several states, variations in state law often overwhelmed common issues.  The court held that the plaintiffs would have to demonstrate by "extensive analysis" that the laws of interested jurisdictions did not pose "insuperable obstacles" to class certification.  As Mr. Wajert points out, courts have generally found that common questions of fact do not predominate in medical device products cases. In the Panacryl Sutures litigation, the sutures were used in a variety of surgical procedures, which required different techniques and skill sets on the part of the surgeon and presented different risks of post-operative complications.  Thus, it is not likely that any class would have been certified due to a lack of predominance of common issues, let alone a national class. For a further discussion of the policy and legal considerations that warrant denial of class actions in pharmaceutical and medical device litigation, take a look at the enthusiastic discussion of the decision in the Drug and Device Law Blog authored by Jim Beck and Dechert and Mark Herrmann at Jones Day.

In a first-of-its-kind litigation, the Ecological Rights Foundation ("ERF") has alleged in a Complaint brought in federal district court in San Francisco that Pacific Gas & Electric Company (PG&E)  is  in violation of the Clean Water Act ("CWA") and the Resource Conservation and Recovery Act ("RCRA").  ERF alleges that the treatment of PG&E's utility poles treated with pentachlorophenol ("penta"), a wood preservative, has resulted in contamination of groundwater and surface water throughout four counties in Northern California -- Alameda, Contra Costa, Marin, and San Francisco, including San Francisco Bay.  The suit implicates all of the estimated 300,000 utility poles that support Northern California's electrical power grid. Does ERF expect a court will order that all of those utility poles be taken down and replaced with poles comprised of an as-yet-to-be-invented-space-age-material that does not require chemical treatment, never deteriorates, causes no environmental harm and does not cause hazardous waste to be emitted during manufacture? 

In an article posted on its website, Foley & Lardner, which has been tapped by PG&E, cautions that  this lawsuit potentially has far-reaching implications. The Milwaukee-based law firm notes that millions of utility poles throughout the country are treated with penta or other preservatives, which are necessary to keep the utility poles from deteriorating and to keep electricity and telephone service flowing to homes and businesses.  Significantly, they observe that the environmental impact of the penta-treated poles was examined in great detail by the USEPA when the use of penta-treated wood poles as utility poles was approved.  By approving the use of penta, USEPA found that penta did not cause the significant environmental harm now alleged by ERF. If ERF is successful in San Francisco, where might this type of litigation lead? 

Apart from the serious policy considerations at issue here, ERF's lawsuit will have to overcome significant legal hurdles, including for starters: (1) that under CWA, ERF must demonstrate that each individual pole is a "point source". It may be difficult to argue with a straight face in federal court that PG&E should have obtained a permit for each discharge from every pole--all separate violations of the statute: and (2) that under RCRA, ERF must demonstrate that PG&E is a generator of solid waste that presents "an imminent and substantial endangerment to the environment. The defendants are not the applicators of the material.  The sub-text of the litigation appears to revolve around  ERF's unhappiness over USEPA's past decision making concerning the use of Penta on utility poles. If so, ERF take it up with USEPA and leave our fragile power grid alone! 

Kenneth Ross, one of the more discerning authors in the product liability defense bar, has authored a thoughtful piece titled, Is There Anything Optional About Safety? in the August '09 DRI Product Liability Committee Newsletter--"Strictly Speaking".  As manufacturers design new products and update the design of old products, many times they sell and offer for sale differing levels of safety and quality.  Ken's article explores the legal and practical risks in selling products with these differences and provides advice to manufacturers about minimizing risk.  As one law professor notes, the case law is "muddled and quite sparse".  There are cases on both sides--those that hold that safety devices can be optional and those that hold that not installing a safety device establishes a basis for liability.  Ken discusses several important considerations that should be weighed in performing this delicate balancing act.

BNA Toxics Law Reporter reports that on August 3, 2009, the First Circuit affirmed the dismissal of the American Chemistry Council ("ACC"), formerly known as the Chemical Manufacturers Association, in a case arising from a plaintiff's long-term exposure to vinyl chloride. The First Circuit's decision in June Taylor et al v. ACC, et al is attached. The ACC is the chemical industry's trade association.  The ACC has been effective in improving the image of the chemical industry in the United States and in promoting safety and environmental initiatives within its membership.  The family of Claude Taylor alleged in federal district court in Massachusetts that ACC, along with several chemical manufacturers, should be found liable for failure to warn, conspiracy and fraud for helping to produce false and misleading warnings that were adopted by the PVC industry.  The plaintiff focused on an ACC publication entitled, "Chemical Safety Data Sheet SD-56", which was first published in 1954 and later revised in 1972, claiming that the publication downplayed the danger of VC exposure.  In upholding the trial court's dismissal of the claims against the ACC, the First Circuit held that there was no evidence that the trade association had the "unlawful intent" necessary to establish "substantial assistance liability" under MA law.  The court held that it would have been necessary for plaintiff to prove that ACC was aware of Monsanto's tortious conduct and that it intended to assist or encourage that conduct.  The wide dissemination of SD-56 within the industry was not sufficient to support the claim that the ACC was aware that Monsanto was incorporating SD-56 into its own literature.  ACC's lawyer, Tim Couglin of Thompson Hine, successfully convinced the appeals court that: (1) ACC did not provide "substantial assistance" to Monsanto; (2) ACC had no knowledge of Monsanto's activities; and (3) there was no record evidence to support the underlying conspiracy claim. 

Trade associations do not manufacture or market products, but they have been the targets of toxic tort and product liability plaintiffs nonetheless.  The threshold issue in these cases is whether the association owed a duty of care to the plaintiff.  In cases in which the trade association is alleged to have promulgated a safety standard, the issue often comes down to the degree of control the trade association has over its members.  In the absence of control, the trade association is not as likely to be held liable for failure to warn.  What about a trade association that endorses products?  If a plaintiff's injury is due to a defect in a product bearing the "Good Housekeeping Seal of Approval", for example, is the association potentially liable?  One California court replied in the affirmative if it could be demonstrated that the association obtained economic gain from the endorsement and encouraged the public to purchase the product, and that  the plaintiff relied on the representation to his detriment.  Courts appear to recognize that it is not in the public interest to hold trade associations liable for injuries to remote plaintiffs in tort litigation.  The AAA might rank hotels on the basis of service and cleanliness.  Should the AAA be subject to liability for injuries allegedly resulting from its failing to warn its members that a hotel was located in a bad neighborhood?

According to Senator Herb Kohl, the intention of the "Sunshine in Litigation Act of 2009" (S. 537) is to require federal judges to perform a " simple balancing test" to ensure that in any proposed secrecy order, the defendant's interest in secrecy truly outweighs the public interest in information related to public health and safety.  Citing court-approved confidential settlement agreements in product liability cases entered into by drug and tire manufacturers, Senator Kohl argues that federal judges must be required to consider public health and safety when deciding whether to allow a secrecy order.   Although this proposal may have a populist appeal, the  American Bar Association believes that the proposed law would make discovery more burdensome, more expensive, and more time-consuming, and would threaten important privacy interests.  The Act would change Federal Rule of Civil Procedure 26(c) by limiting a court's ability to enter an order in a civil case: (1) restricting disclosure of information obtained through discovery; (2) approving a settlement agreement restricting the disclosure of such information; or (3) restricting access to court records in civil cases. Before entering a secrecy order, a court would first have to perform the balancing test discussed by Senator Kohl or reach a determination that the order would not restrict the disclosure of information relevant to the protection of public health or safety.  I concur with the ABA that the Sunshine Act is a bad idea; its adoption would not serve the public interest.

The Committee on Rules of Practice and Procedure of the Judicial Conference of the United States reported last year that empirical studies demonstrate that there is no evidence that protective orders create a significant problem of concealing information about public hazards.  The Judicial Conference Advisory Committee on Civil Rules strongly opposes the measure as unnecessary legislation that will burden the courts and have significant adverse consequences for civil litigation.  Moreover, the ABA already has adopted policy that encourages courts to permit disclosure of information relevant to potential hazards.  Typically, in cases involving a sealed settlement agreement, there is sufficient information available to the public providing details of a potential public health or safety hazard. As product liability litigators are well aware, protective orders serve to facilitate the timely production of documents. Requiring that a court hearing be conducted before such an order is entered into in every civil case would consume precious judicial resources and further delay litigants' day in court.

My hometown newspaper Greenwich Time, reported in a front page headline on March 25, 2009 "Mold found again at Ham Ave."  The Hamilton Avenue Elementary School in Greenwich was closed in 2005 largely due to the perception that mold made the school unsafe for students and faculty.  For the past three years, the youngsters attended classes in temporary modular classrooms, which ironically also suffered from mold problems, while awaiting completion of the oft-delayed reconstruction of the school, the Greenwich Time reported.   It was discovered last week at the newly re-opened school that a 2-to-3-square-foot patch of mold was discovered due to a leaky interior pipe that hadn't been properly sealed during construction. It is not surprising that the school's industrial hygienist, Hygenix, found "exceptionally low" levels of mold after sampling. What is surprising is that the decision was made to perform sampling at all considering that the source of the water infiltration was addressed and the mold removed.  Sampling is often not necessary and sampling results are frequently misinterpreted to suggest a health hazard where none exists.  In its guidance for "Mold Remediation in Schools and Contaminated Buildings", the USEPA cautions that there a number of pitfalls associated with mold sampling which at best only provides a "snapshot" of conditions as they exist at a given time.  To suggest, as the school's consultant did, however, that any "residual microbial hazards" had been eliminated is an unfortunate choice of words because it is probably the case that no hazard ever existed in the first place.  Ron Gots, a toxicologist based in Rockville, Maryland, who has written extensively about public misinformation about mold describes how medical statements by mold testers may result in unintended consequences in the event of a claim.  For example, the statement in a hygienist's report that "This mold is known to produce toxins which can cause a variety of adverse health effects including......"  is not only irrelevant, but begs the question whether:(1) the mold is producing toxins in this instance?; (2) those toxins are getting to people?; and (3)  they are getting to people in sufficient quantity to cause harm?  As Dr. Gots points out, the issue is not what molds can do; the question is what they are likely or proven to do under these particular circumstances in this setting.  To avoid further fear and confusion about mold (and unnecessary costs) at the Hamilton Avenue school,  a more scientifically objective approach should be considered by the Town. 

In his  recent article, "Made in China: Consumer Product Lawsuits Imported to the United States", Seattle defense lawyer and IADC member Gregory Shelton offers American importers several good suggestions for avoiding potential liability from imported products.  These include: (1) requiring the exporter to comply with all applicable U.S. product quality standards and product safety regulations; (2) obtaining legal counsel in the exporter's home jurisdiction; (3) requiring the exporter to obtain appropriate insurance coverage from an American or international insurer that will protect the importer in the event of a recall or lawsuit; and (4) retaining good legal counsel early.  I would add to Greg's checklist: (5) having an independent U.S. consultant available to test, if necessary, the components of imported products, particularly if an American consumer reports a complaint to the company or to the CPSC.  Early independent product evaluation can be critical for an importer in planning its next steps, such as whether to perform a recall or halt future shipments until an issue can be addressed.  There are many good consultant firms to chose from. One excellent consultant up-to-speed on the new CPSC requirements is Exponent.

However, we disagree with Mr. Shelton when he argues that Chinese imports are more likely to result in lawsuits or recalls than imports from other countries.  There is simply no empirical evidence to support this assertion.  To the contrary, China has made enormous progress, particularly over the last year, to police its domestic suppliers.  To blame China for the spate of recalls over the last couple of years is to ignore the past lack of adequate funding for the CPSC, the agency that provides regulatory oversight of consumer products.  Moreover, blaming China results in Americans turning a blind eye to problems in our domestic product supply chain. 

In a provocative thought piece appearing in the Wall Street Journal on March 9, 2009, L. Gordon Crovitz predicts that the United States Supreme Court decision in Wyeth v. Levine will usher in an era of increased prices for drug and create a disincentive for new product innovation. Mr. Crovitz compares the American legal culture behind the Court's decision to the Luddites that smashed mechanized looms in England at the beginning of the Industrial Age in 19th century England.  He also suggests that the decision's logic may lead product manufacturers to "carry 50 different warnings, one for each state, updated by local juries from time to time."  Despite his misgivings about the decision, it is not likely that any product manufacturers, drug makers or otherwise, are likely to start tailoring their warning on a state by state basis.  As a practical matter, products are sold nationally, often through distributors, and it would be virtually impossible to  ensure that product warnings for Texas purchasers ended up in Texas and that product warnings intended for California purchasers ended up in California.  Moreover, from a jury standpoint, nothing would please a plaintiff's lawyer more than to be able to argue that the manufacturer provided a less strict warning for the product in the jurisdiction where his client's accident occurred. 

How can a brand-name pharmaceutical manufacturer owe a duty to patients who take only a generic version of its product? In a case of first impression in California, a state appellate court held on November 7, 2008 that Wyeth, Inc. owed a duty to plaintiff Elizabeth Conte, who developed a serious and irreversible neurological condition as a result of taking metoclopramide, the generic version of Wyeth’s Reglan, which is used to treat gastroesophageal reflux disease. In so holding, the California appellate court declined to follow the holdings of a majority of courts that have grappled with this issue.

In Elizabeth Ann Conte v. Wyeth, Inc. et al., the Court of Appeal of the State of the California in the First Appellate District in San Francisco, held that a brand-name pharmaceutical manufacturer’s common law duty to use due care when providing product warnings extends not only to consumers of its own product, but also to those patients whose doctors foreseeably rely on the name-brand manufacturer’s product information in prescribing a medication, even if the prescription is filled with the generic version of the drug. In reversing summary judgment granted to Wyeth by the trial court, the appellate court accepted Conte’s argument that Wyeth should be liable for her injuries because a brand-name manufacturer that disseminates information about its product owes a duty of care to ensure the information’s accuracy to all physicians who prescribe the drug in reasonable reliance on that information, even if the patient ends up taking the product’s generic equivalent.

The court agreed with Wyeth that Conte could not pursue a strict products liability claim against Wyeth. Indeed, Conte did not allege that Wyeth was strictly liability due to inadequate warnings. Rather, she claimed that Wyeth failed to exercise due care in disseminating its product information to physicians.  The court rejected Wyeth’s contention that Conte’s case was merely a product liability suit masquerading as a negligence case. The court held that the plaintiff could pursue claims of intentional and/or negligent misrepresentation based upon Wyeth’s labeling information about the safety of metoclopramide, the risks of its long term use, and the likelihood of serious side effects. 

Was the court correct in determining that Wyeth owed the plaintiff a duty in a negligence context where no such duty could be found to exist in a strict liability case? As a matter of public policy, should a brand-name drug manufacturer be subjected to what Wyeth argued might be “permanent and uncontrolled liability” in perpetuity. Even as a brand-name manufacturer’s sales decrease over time, its potential product liability exposure may actually increase because of higher market share won by generic competitors. Ironically, the generic manufacturer takes precious market share from the brand-name manufacturer at the same time that the court shifts the generic’s product liability exposure back to the pioneer. 

We believe that the better reasoned analysis of this issue may be found in Foster v. American Home Products Corp. (4th Cir. 1994) 29 F.3d. 165 (2003), in which the Fourth Circuit held that a manufacturer of a name-brand drug could not be held liable under a theory of negligent representation for an injury arising from the ingestion of a generic version of the drug. Taken to its logical extreme, in the brave new world envisioned by the Conte court, it may not matter that a plaintiff cannot identify the manufacturer of a product that caused an alleged injury so long as the plaintiff can plausibly claim to have relied on some other manufacturer’s operator’s manual.

The Consumer Product Safety Improvement Act of 2008 ("CPSIA") provides that the Consumer Product Safety Commission ("CPSC") will establish and maintain an Internet database on the safety of consumer products.  The CPSIA Section 212 requires that the database be: (1) available to the public; (2)  searchable; and (3) accessible on the CPSC's website.  Reports of harm caused by consumer products may be reported by consumers; local, state or federal govenment agencies; health care professionals; child service providers; and public safety entities. Ideally, the database will encourage the sharing of information and direct communications among consumers, consumer advocacy groups and state attorneys general, who have been given an important new role under the CPSIA.  For the first time, consumers will have direct instant access on the Agency's website to potentially important product safety information. 

The CPSIA of 2008 is much needed legislation to upgrade the level of  protection provided to the American consumer by the federal government.  The law represents the Congress' response to a year of multiple, embarrassing consumer product scandal after another during what some commentators have termed the "Year of the Recall".  In the past, information vital to the public welfare concerning defective consumer products has not been promptly provided to the American people.  At times, this delay may have been responsible for what may have been preventable injuries or deaths --  hence, the legislative mandate for the database.   

In light of these public benefits, can there be any dark side to this new era of governmental transparency?  Are consumer product companies justified in fearing that the database has the potential to  spread disinformation and unfairly tarnish reputations? 

The statute requires that a report submitted for inclusion on the database: (1) describe the consumer product; (2) identify the manufacturer or private labeler; (3) describe the harm related to the use of the product; (4) provide contact information; and (5) contain a verification that the report is true and accurate. Based upon informal Commission staffer comments, the CPSC is not required to perform an independent investigation to determine the veracity of a report or whether the incident that is the subject of the report occurred in the manner claimed or occurred at all.  For this reason, there is a risk that the database may morph into a  consumer Wikipedia, but with the imprimatur of United States approval and the gloss that comes from being hosted on a federal regulatory agency website.  What opportunity will  manufacturers have to comment on a report that one of their products may have triggered a fire in a home or caused a child to suffocate before the report is posted?  Unfortunately, not a whole lot!  The statute requires that within five days of receiving a report the Commission shall "to the extent practicable" transmit the report to the manufacturer identified in the report prior to the report being posted on the database.   Because the person making the report need not be identified to the manufacturer unless he or she explicitly consents, there may not be much the manufacturer can do, within the 10 day window provided before the report is posted, to determine whether the report is accurate. Certainly, this narrow window does not permit a manufacturer to obtain the product from a consumer, assuming the consumer can be identified, and inspect it.  The manufacturer can request that proprietary or trade secret information not be posted on the database, but that request, if granted, will result only in the sensitive information being redacted, not in a delay in posting the report on the database.  The statute permits a manufacturer to request that its own comments also be included in the database, but in the absence of a realistic time frame to perform an investigation of the underlying report, what would be an appropriate comment to make?  Moreover, the manufacturer may be at a disadvantage if reporters call seeking comment after the consumer's report is posted by the Commission. 

Whether electricity supplied to a homeowner by the local electric utility  is viewed as a "product" or a "service" may have significant ramifications in litigation.  If providing electricity constitutes a "product", injured plaintiffs can seek recovery under a theory of strict liability.  If it is not a product, the plaintiff would have to demonstrate the electric utility failed to use reasonable care.  In a recent Connecticut case, Travelers Indemnity Company of America v. Connecticut Light & Power Co, Hartford J.D. at Harford (Docket No. CV-07-5012441-S ) 2008 WL 2447351 (Conn. Super.), the trial court  held that once electricity entered the homeowner's residence, it constituted a "product" rather than a "service" and that plaintiff could  proceed under the Connecticut Product Liability Act ("CPLA").   In the case, a fire allegedly caused by voltage fluctuations broke out in the home of Travelers' insureds, Linda and Michael Murphy, resulting in property damage.  Apparently,  the Murphy's had complained to CL&P earlier about the voltage fluctuations and had been assured that the problem had been addressed.  After paying the claim,

Connecticut courts are split concerning whether electricity can be classified as a product such that a claim could be brought under the CPLA..  However, the court in Travelers relied upon what appears to be an emerging majority view nationally.  In a 1985 California appellate decision, Pierce v. PG&E, the court opined that policy justifications warranted the imposition of strict liability: (1)  difficulty of proving negligence involving a vast and complex electrical power system; (2) economic incentive for improved product safety; (3) to encourage reallocation of resources toward safer products; and (4) to spread the risk of loss among all who use the product.  What judicial limitations may be reasonable to prevent increased access to strict liability in tort for toxic tort plaintiffs injured by electricity? One bright line test might be permit electricity to be viewed as a product only when the electricity has been transferred to the consumer in a usable voltage.  Only then could a court reasonably view electricity as a consumer product.  Under this test, exposure to high voltage transmission lines would not result in a strict liability lawsuit.