Comcast Corp. v. Behrend's Impact In Toxic Tort Litigation

I have written about how the U.S. Supreme Court's decision in Comcast v. Behrend has had the practical result of raising the bar for class certification and leveling the playing field for corporate defendants. Until recently, however, it was unclear what impact this anti-trust decision would have on toxic tort litigation. 

On January 17, 2014, the Seventh Circuit issued a groundbreaking decision in Parko v. Shell Oil Company, which was an appeal from the Illinois district court's certification of a class of property owners in Roxana, Illinois, who had filed suit against Shell Oil Company which (together with various subsidiaries) had owned and operated an oil refinery from 1918 to 2000 adjacent to the village where the 150 class members reside. Although multiple claims were alleged, Parko was  largely a diminution of property value case.

 In Parko, the class action plaintiffs were successful in obtaining class certification in the district court without having to provide evidence. Typically, plaintiffs seek to reserve any discussion of the merits of their claims until after class certification.  Plaintiffs are well aware that the certification of a class creates enormous pressure on defendants to settle regardless of the merits of the case.

The plaintiffs alleged that the refinery had leaked benzene and other contaminants into the groundwater under the class members' homes.  The Seventh Circuit found it particularly significant that the groundwater was not being used as a drinking water supply.  As such, it was unclear whether the contamination had caused any diminution of property value at all.

In addition, the Seventh Circuit noted defendants' contention that the contamination alleged by plaintiffs occurred over a 90-year period and involved acts and omissions charged against the six defendants, and maybe other polluters as well.  The defendants had identified sources of pollution in the area that were attributable to the operations of non-parties.  As a consequence,  class members could have experienced different levels of contamination from multiple sources over many years. 

Relying on the language in Comcast Corp. v. Behrend, the Court reversed the district court, holding that a trial judge may not "refuse to entertain arguments against respondents' damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination."  

The Court held that "mere assertion by class counsel that common issues predominate is not enough. That would be too facile. Certification would be virtually automatic. And so Rule 23 does not set forth a mere pleading standard....Rather, when factual disputes bear on issues vital to certification (that is, to whether the suit should be allowed to be litigated as a class action), such as predominance, the court must receive evidence . . . and resolve the disputes before deciding whether to certify the case."  (emphasis added)  In reviewing the record below, the court stated that it was not even clear that plaintiffs "have identified a common issue."

The Parko decision is short and pithy, and contains a trove of valuable nuggets of good language for the class action  toxic tort defense practitioner. 

On proof of diminution of property value:   

Real estate values have taken a drubbing in recent years, with the collapse of the housing bubble and the ensuing financial crisis. It can't be assumed that a decline in the value of residential property in Roxana (if in fact there's been a decline) is the result of proximity to a refinery that for all one knows has been leaking contaminants for the last 95 years without causing detectable harm. There are many things commonly found in soil beneath rural or suburban houses that homeowners would very much like not to enter their home (such as earthworms, fungi, ants, beetles, slugs, radon, chemical residues, thousands of different types of microbe— and groundwater), but as long as there is no danger of such unwanted visitors their underground presence should not affect property values. Benzene in the water supply is one thing; benzene in groundwater that does not feed into the water supply is quite another. (emphasis added)

On Rule 23's predominance requirement post-Comcast:  

The district judge did not explore any of these issues. He treated predominance as a pleading requirement. He thought it enough at this stage that the plaintiffs intend to rely on common evidence and a single methodology to prove both injury and damages, and that whether the evidence and the methodology are sound and convincing is a question going to the strength of the plaintiffs' case and should be postponed to summary judgment proceedings or trial. But if intentions (hopes, in other words) were enough, predominance, as a check on casting lawsuits in the class action mold, would be out the window. Nothing is simpler than to make an unsubstantiated allegation. A district judge may not "refus[e] to entertain arguments against respondents' damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination."

 On the appropriate level of judicial inquiry pre-certification:

The judge should have investigated the realism of the plaintiffs' injury and damage model in light of the defendants' counterarguments, and to that end should have taken evidence. For if the defendants are right, there is no common issue, only individual issues that will vary from homeowner to homeowner: is there benzene in the groundwater beneath his home at a level of concentration that if the groundwater were drunk would endanger health (and is there any possibility it would enter the water supply); what is the source of the benzene in the groundwater beneath a given home (that is, who is the polluter who caused the groundwater to become polluted); could the presence of the benzene in that concentration cause any other form of harm; has the presence of the benzene reduced the value of his property; if so, how great has the reduction been. It is difficult to see how these issues can be managed in the class action format. But in any event they must be engaged by the district judge before he can make a responsible determination of whether to certify a class.

Benzene in the water supply is one thing; benzene in groundwater that does not feed into the water supply is quite another."  Amen!

 

 

Effort Mounted To Reverse Colorado Lone Pine Ban

A substantial effort has been mounted to urge the Colorado Supreme Court to reverse the intermediate appellate court's ruling on July 3, 2013 in Strudley v. Antero Resources Corp., which determined  that Lone Pine Orders are prohibited under Colorado law.  In so holding, the Strudley court reversed a trial court ruling that had dismissed plaintiffs' case for failing to provide the court with any competent prima facie evidence of causation.  We discussed the appellate court holding in a recent article, "Does the Lone Pine Still Stand?"

By way of background, Strudley is a complex toxic court action involving numerous claims by the plaintiffs premised on allegations that the defendants committed tortious acts while hydrofracking natural gas oils. The central issue in the case was whether the defendants caused plaintiffs’ alleged injuries, which the plaintiffs vaguely described as “health injuries” from exposure to air and water contaminated by “hazardous gases, chemicals and industrial waste”. 

The trial court, cognizant of the significant discovery and cost burdens presented by a case of this nature, entered a Lone Pine Order requiring plaintiffs to make an early prima facie showing of exposure and causation. When plaintiffs failed to meet this burden, the trial court dismissed plaintiffs’ case. A Lone Pine Order typically requires a plaintiff to present sufficient evidence prior to full discovery to establish a foundational evidentiary showing of one or more critical elements of the claims, or to risk possible dismissal.

In the wake of this decision, the Colorado Supreme Court has been urged by the bar to take a more expansive view of what case management tools are available under Colorado law. The Colorado Defense Lawyers Association, the Colorado Civil Justice League (“CCJL”) and the American Petroleum Institute (“API”) have all filed amicus curiae in support of the use of Lone Pine Orders in Colorado.

In particular, the memoranda of CCJI and API provide excellent surveys on the extent to which state and federal courts throughout the United States have embraced Lone Pine Orders as an important case management tool. These well-written briefs should be read by toxic tort practitioners with an interest in case management.  In a well-crafted brief authored by Snell & Wilmer, CCJL argues that, if permitted to stand, Strudley will chill efforts by trial courts to exercise active case management. 

As the basis for its argument, CCJL relies upon the Colorado Supremes Court’s June 2013 decision in DCP Midstream, LP v. Anadarko Petroleum Corp, in which the court announced that trial courts should consider cost-benefit and proportionality factors in managing discovery. In the decision, the court held  that Colorado law reflects “an evolving growing effort to require active judicial management of pretrial matters to curb discovery abuses, reduce delay, and decrease litigation costs. The Committee Comments to the revised Rule 16 similarly recognize that “where a case is complex or requires special treatment, the Rules provide flexibility so that the parties and Court can alter the procedure.”  Thus, pursuant to revised Rule 16 and Supreme Court precedent, the Court of Appeals should have upheld the use of Lone Pine.

In arguing for a case management scheme that would permit the Colorado trial courts to apply Lone Pine, CCJL cautions that Lone Pine is hardly a hammer that should be arbitrarily or routinely invoked and is not by any means a substitute for summary judgment.  In summary, CCJL argues that Strudley is bad precedent that will only obstruct the creativity of trial judges in managing their cases. 

API’s excellent amicus brief, submitted by Steptoe & Johnson, also argues that Strudley is not consistent with the DCP Midstream. API emphasizes that toxic and mass tort cases present unique case management challenges. 

Cases involving many parties on the plaintiffs’ or defendants’ side often feature broad allegations of liability that are conclusory and lacking in detail, or are based on the parties’ beliefs or dramatic human situations, rather than competent evidence. Allegations of injuries may include every conceivable injury without regard to exposure or actual liability, and without specific information relating to each plaintiff. 

Thus, argues API, the parties and the courts are often required to spend enormous amounts of money, time and energy litigating these cases with respect to every element and defense, although one issue is often dispositive. When that single issue can be dealt with out front, it often results in dismissal or, alternatively, an early mediated settlement.  As the New Jersey court observed in the original Lone Pine case, many defendants understandably will settle such claims, even if meritless, rather than spend the hundreds of thousands of dollars necessary for discovery.  The plaintiff bar despises Lone Pine because it disincentivizes defendants from paying substantial nuisance value settlements in cases of questionable liability.

Considering the jurisprudential strength and logic of the amici curiae arguments, we believe that the Supreme Court will hold that Lone Pine is alive and well in Colorado and reinstate Judge Frick's trial court decision.   

Losing The "Empty Chair" At Trial

It has become common practice in multi-party toxic tort litigation for co-defendants to avoid taking potshots at each other during discovery or at trial. Pursuant to this reasoning, if the defendants point fingers at each other, it will only inure to plaintiff’s benefit. Therefore, it may be preferable for co-defendants to settle any differences they may have in private and present a unified front in the courtroom. This is a particularly helpful startegy when plaintiff is expected to have difficulty proving causation. Why make the plaintiff’s job any easier?

Consistent with this strategy, toxic tort defendants would rather target culpable non-parties who are not represented by counsel at trial and may not even appear as witnesses, colloquially referred to as “empty chair” defendants. It becomes the burden of the attorney representing the plaintiff to defend these “empty chairs” in order to obtain a full recovery for his client. Otherwise, plaintiff runs the risk that any verdict will be diminished by the empty chair’s proportion of fault. If one or more defendants obtains a dismissal prior to trial, the absent parties are subject to attack as “empty chair” defendants at trial by their former co-defendants.

 
There is emerging case law in New York that may force defendants to reassess the strategy of how “empty chair” defendants are pursued. In an article titled, “Recent Decisions on Empty Chair Defendants,” which appeared in the New York Law Journal on April 3, 2012, plaintiff trial lawyers, Thomas A. Moore and Matthew Gaier, discuss a recent First Department case,Carmona v. Mathisson, 92 A.D.3d 492 (1st Dep’t 2012), which held that the remaining defendants at trial were precluded from blaming the dismissed defendant under the “law of the case” doctrine. As Mssrs. Moore and Gaier discuss, the plaintiff in Carmona was injured during cataract surgery in which a machine was used to assist in the removal of the lens with the cataract. 

The plaintiff brought suit against the surgeon, the hospital where the procedure was performed, and the manufacturer of the machine. The manufacturer obtained partial summary judgment prior to trial pursuant to which the claims for negligent failure to warn and breach of warranty were dismissed. On appeal, the Appellate Division, First Department, dismissed the remaining counts for strict liability and negligence based upon manufacturing and design defects. See 54 A.D.3d 633 (1st Dep’t 2008). The treating physicians and the hospital vigorously opposed the manufacturers’ efforts to extricate itself from the case at every step along the way.

Later, at trial, the treating physicians and the hospital were permitted to elicit testimony that the machine malfunctioned and/or contained a design defect. The trial court included the manufacturer on the jury’s verdict sheet for the purpose of apportioning liability. Article 16 of the CPLR, not only imposes limitations on joint and several liability, but permits the culpable conduct of non-parties to be considered in apportioning a defendant’s fault for the purposes of such liability. No longer in the case to defend itself, the treating physicians went after the manufacturer at trial with guns blazing.
After the jury returned a defense verdict on behalf of the defendants, the plaintiff appealed. The Appellate Division reversed, holding that it was error for the trial court to permit evidence that the machine was defective and to include the manufacturer on the verdict sheet.

The Appellate Division held that its prior decision on the summary judgment appeal constituted “law of the case,” which was binding on the trial court and operated to foreclose any re-examination of the question absent a showing of subsequent evidence or change of law. The Court also held that on retrial the treating physicians would not be precluded from presenting a defense based on a claim of unexpected malfunction of the machine. The Court observed that the summary judgment decision found that the machine complied with design and manufacturing standards, but did not rule out that the machine could have malfunctioned for some other reason. Based upon the evidence at trial, the court observed, a jury could determine that the machine could malfunction even absent a defect. Therefore, the court left open a narrow window for the physicians and the hospital to still go after the empty chair.

In a medical malpractice action in which a medical device manufacturer is thrown into the defendant mix of physician and hospital defendants, it is perhaps not unusual that the physician defendants aggressively pursue the manufacturer. This scenario may play out differently in a toxic tort case where more cooperation among defendants is anticipated. The take-away from Carmona is that toxic tort defense counsel can no longer assume that any dismissed defendant becomes an easy “empty chair” to attack at trial.

One first has to determine how the “empty chair” arrives at the courtroom – through inattention of plaintiff; settlement prior to trial; or as a result of summary judgment. The answer to that inquiry may have a significant impact on the remaining defendants’ case evaluation and the extent to which an “empty chair” strategy can be successfully pursued.
 

"Take-home" Toxic Tort Exposure Claims

The concepts of “duty” and “foreseeability” figure prominently in any discussion of “take-home” toxic tort exposure claims. In an insightful article appearing in BNA Toxics Law Reporter, dated November 3, 2011, Christine G. Rolph,Arthur F. Foerster andHans H. Grong of Latham & Watkins discuss “take-home” exposure claims in asbestos litigation. The typical “take-home” plaintiff is a bystander such as the child who claims she was exposed to asbestos while playing in the basement where her father’s work clothes were laundered.

Latham & Watkins performs a national survey of “take-home” exposure claims. They observe that a plaintiff’s success in these claims depends heavily on whether the court applies a “relationship” or “foreseeability” analysis. The defense-favorable “relationship” analysis focuses on the nexus between the plaintiff and the defendant company. Without the ability to show a close relationship, the article points out, the “relationship” courts have been unwilling to impose a duty. The plaintiff-favorable “foreseeability” test, on the other hand, focuses on whether a risk of harm reasonably could have been predicted. The application of these two approaches creates very different results. For example, in CSX Transportation, Inc. v. Williams, 608 S.E. 2d 208 (Ga. 2005), the Supreme Court of Georgia declined to impose liability on an employer as the result of the non-employee plaintiff coming into contact with asbestos-tainted work clothing at the employee’s home. Although the Georgia court recognized that “an employer owes a duty to his employee to furnish a reasonably safe place to work,” the court found that this duty did not extend to third-parties who came into contact with the asbestos-tainted work clothing away from the workplace. Clearly, if the George Supreme Court had applied a foreseeability analysis, the result would have been very different. Courts that apply a foreseeability analysis often infer that companies should have known of the risk of harm to secondarily exposed persons because of their knowledge that asbestos exposure is dangerous generally. For example, in Olivo v. Owens-Illinois, Inc., 895 A.2d 1143 (N.J. 2006), the court found that a risk of injury to the employee’s spouse should have been foreseeable to the defendant because it was aware of the risk of injury due to an asbestos exposure of sufficient duration and intensity. The problem with this line of cases is the failure to examine whether the bystander risk was actually reasonably foreseeable as of the date of alleged exposure.

Recently, some “foreseeability” courts have been applying a more rigorous analysis in determining whether a “bystander exposure” risk was foreseeable. In Martin v. Cincinnati Gas & Elec. Co., 561 F.3d 439 (6th Cir. 2009) (applying Kentucky law), the Sixth Circuit held that no duty was owed by the defendant because there was no evidence that a “bystander exposure” risk was foreseeable during the 1951-1963 time frame, when the alleged negligence occurred. In Martin, and other recent cases, courts examined the scientific literature to determine precisely when the defendant “should have known” about any alleged harm. The Sixth Circuit observed that although studies existed regarding exposure of workers and neighbors to asbestos emissions in factories and mines, the first studies on family members of asbestos-exposed workers were not published until 1965. Accordingly, the Sixth Circuit determined that the risk to plaintiff Martin was not foreseeable. In June 2011, an Illinois appellate court dismissed a “take-home” exposure case in Estate of Holmes v. Pneumo Abex, 2011 WL 2517420 (Ill. App. Ct. 4th Dist. June 22, 2011), where the court made clear that the plaintiff, to prevail, had to show that the defendants were “aware of concrete evidence of take-home exposure as opposed to the more prevalent literature involving direct exposure.” Thus, these cases signal a willingness by some courts to more closely examine historical knowledge and scientific information when applying the “foreseeability” test to take-home claims.
 

Ed Lowenberg Retires From ExxonMobil

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.