In a victory for Beveridge & Diamond’s client Sunoco and the other Defendants, the District Court for the Southern District of New York on August 4, 2021, issued an Opinion and Order dismissing three of the remaining counts in the case brought by the Commonwealth of Pennsylvania against numerous petroleum companies alleging groundwater contamination due to use of the gasoline additive methyl tertiary butyl ether, or MTBE. In re MTBE Prod. Liab. Litig.; Commonwealth of Pennsylvania v. Exxon Mobil Corp., et al., 2021 WL 3371938 (S.D.N.Y. Aug. 3, 2021). The decision underscores the value of challenging aggressive attempts by state and local governments to expand tort and statutory liability in the context of products that are already heavily regulated, such as gasoline additives.

Judge Vernon S. Broderick granted in part and denied in part the motion to dismiss. The judge dismissed three of the Commonwealth’s counts against the Defendants, including a count for alleged public nuisance and two counts for alleged violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). These latest dismissals are in addition to the Court’s previous dismissal of the Commonwealth’s trespass claim. The judge also denied the defendants’ motion regarding the Commonwealth’s count of alleged violation of the Pennsylvania Storage Tank and Spill Prevention Act (“STSPA”).

A brief summary of the Court’s ruling follows:

• Public Nuisance (motion to dismiss granted):

In her 2015 ruling on an earlier motion to dismiss in the Pennsylvania case, Judge Broderick’s predecessor on the case, Hon. Shira A. Scheindlin, dismissed the Commonwealth’s original nuisance claim with prejudice to the extent it applied to the defendants in their capacities as refiners or suppliers of gasoline containing MTBE. Judge Scheindlin stated that nuisance only lies against parties that have possession or control over the alleged nuisance (here, the sites from which product containing MTBE was released). In its Second Amended Complaint, the Commonwealth pled an identical count, ostensibly to “preserve the record” for appeal, but Judge Broderick dismissed it following Judge Scheindlin’s reasoning.

• UTPCPL (motion to dismiss granted):

Pennsylvania’s unfair trade practices statute prohibits a broad range of “unfair methods of competition” and “unfair or deceptive acts or practices.” The Commonwealth alleged that the defendants misleadingly indicated in their Material Safety Data Sheets that gasoline that contained MTBE could be handled like non-MTBE gasoline, and that statements the defendants made in certain newspaper articles and advertisements were false and deceptive. Judge Broderick rejected the MSDS claim because the Commonwealth established no duty to disclose that could be based on any alleged omission. He rejected the advertisement claims as protected speech and rejected the newspaper article claims because the statements were non-actionable puffery, not false representations of facts regarding MTBE.

• STSPA (motion to dismiss denied):

In 2015, Judge Scheindlin dismissed the Commonwealth’s STSPA “failure to cooperate” claims in the First Amended Complaint for failure to allege facts necessary to trigger a duty to cooperate. However, Judge Scheindlin permitted the Commonwealth to replead. The Commonwealth made allegations in the Second Amended Complaint regarding such a duty. Judge Broderick denied the defendants’ motion to dismiss with regard to the repleaded claim, finding that the Commonwealth had adequately alleged that “information on private insurance coverage constituted ‘related information’ relevant to the Commonwealth’s request for information on subrogation.” The judge further found, taking the allegations in the complaint as true, Defendants could be found to have violated their duty to cooperate based on an alleged failure to disclose such information.

Beveridge & Diamond's Toxic Tort and Environmental Tort practice group defends companies in virtually all industries against toxic tort and product liability claims involving a wide range of chemicals and related substances, and all kinds of environmental media, including groundwater.