Toxic Tort and Product Liability Quarterly

Legislation

Vermont House of Representatives to Consider Pair of Sweeping Toxic Tort Liability Bills

On March 21, 2018, the Vermont Senate approved S.197, a bill that

1. Establishes strict liability, jointly and severally, for any person who releases a toxic substance.
2. Creates a private right of action for medical monitoring damages related to toxic substance exposure.

The Vermont House Judiciary Committee split the bill in two after hearing extensive testimony. The strict liability provisions are now attached to an unrelated bill, S.123, while the medical monitoring provisions remain in S.197.

S.123: Strict Liability for Toxic Substance Release – Amending 10 V.S.A. ch. 159 §§ 6685-86

If adopted as currently drafted, this bill will change dramatically the way toxic substance releases are regulated and litigated in Vermont. First, the bill’s proposed new definition of “toxic substance” is sweeping. The definition includes any substance “identified as toxic or hazardous under state or federal law” as well as any substance “that has been shown at any time to cause an increased risk of disease.”

Second, creating strict liability for releases would effectively invalidate environmental discharge permits provided by either the state or federal governments. The bill would expose an entity to strict liability for any release, regardless of whether the entity obtained a permit authorizing that discharge or activity.

Third, the bill proposes joint and several liabilities. Any company found to be liable for any part of the release would be liable for all of the damages. Companies would still be able to sue others for contribution.

Fourth, the right to seek contribution under the draft bill includes the right to sue a manufacturer for failure to warn of “a toxic substance’s propensity to cause the harm complained of.” However, the bill fails to identify who the manufacturer must warn. The language only refers vaguely to warning “a person.” This hearkens to California’s long-criticized Proposition 65 and its far-reaching consequences.

In an effort to protect consumers and business interests, S.123 also calls for the Commission of Financial Regulation to monitor how the bill affects pricing and availability of insurance in Vermont. The bill proposes an effective date of July 1, 2019, for strict liability, and would apply only prospectively.

S. 197: Medical Monitoring Damages – Amending 12 V.S.A. ch. 219 §§ 7201-02

If adopted in its current form, the amendment would set a low bar for plaintiffs seeking medical monitoring damages. The amendment would allow a plaintiff “with or without a present injury or disease” to bring suit against a person who released a toxic substance. The plaintiff would have to show that:

1. They were exposed as the result of tortious conduct by the defendant.
2. There is a “probable link between exposure . . . and a latent disease."
3. The plaintiff’s exposure increases the risk of contracting the latent disease.
4. Diagnostic testing is reasonably necessary.
5. Medical tests or procedures exist to detect the latent disease.

As it stands, the amendment does not require the plaintiff to show a disease is even likely to occur, only that there is an increased risk. The draft bill’s proposed effective date is July 1, 2018.

The implications of these bills for entities engaged in activities related to toxic substances in Vermont, including manufacturers whose products end up in Vermont, are broad. We will continue to monitor S.123 and S.197. If passed, the bills will push Vermont-related entities to carefully analyze their compliance regimes and reconsider their appetite for toxic tort liability.

Climate Change Torts

Conflicting District Court Rulings Set up Climate Change Tort Issues for Resolution by the Ninth Circuit

After two judges from the Northern District of California reached different conclusions in similar cases, The Ninth Circuit Court of Appeals will be next to determine whether climate-change-related tort actions may be properly heard in federal court. As previewed by Beveridge & Diamond in a March 30 news alert, the two judges reached contrary decisions concerning the scope of federal jurisdiction over climate-change-related tort actions, thus teeing up the complicated issues of Clean Air Act displacement and federal common law for the Ninth Circuit. See California v. BP Plc, et al., No. 17- cv-6011 WHA, Memorandum Opinion and Order at *8 (N.D. Cal. 2018) (Alsup, J.); County of San Mateo v. Chevron et al., No. 17-cv-4929 VC, Memorandum Opinion and Order at 2-3 (N.D. Cal. 2018).

Each district judge relied upon the same climate change, emissions, and Clean Air Act displacement precedent of the Ninth Circuit and Supreme Court to reach their conflicting conclusions. Judge Alsup, in California, concluded that the plaintiffs’ climate-change-related nuisance claims, “though pled as state-law claims, depend on a global complex of geophysical cause and effect involving all nations of the planet (and the oceans and atmosphere),” and thus “necessarily involve[] the relationships between the United States and all other nations [and] demand[] to be governed by as universal a rule of apportioning responsibility as is available.” California at 8. Accordingly, Judge Alsup determined that “plaintiffs’ claims, if any, are governed by federal common law,” sufficing federal jurisdiction. Id.

In contrast, Judge Chhabria, in County of San Mateo, concluded that the Clean Air Act displaces federal common law “claims that seek the abatement of greenhouse gas emissions,” as well as “claims against energy producers’ contributions to global warming and rising sea levels.” County of San Mateo at 1-2. For that reason, removal of the state climate-change-related tort action was improper, because the relevant “federal common law [] no longer exists,” and the Clean Air Act does not preempt state torts. Id. at 3-5. Judge Chhabria has also yet to rule in similar cases, filed by Santa Cruz County and the cities of Santa Cruz and Richmond.

We will continue to monitor this litigation and report on significant developments in the Ninth Circuit or elsewhere.

Preemption

Montana Supreme Court Undercuts CERCLA, Permits Property Owners to Pursue Restoration Damages Claim

In an opinion tilting against the weight of precedent elsewhere, the Montana Supreme Court held that private landowners could pursue common-law claims to clean-up their properties beyond what EPA required in its selected CERCLA remedy for the Anaconda Smelter Superfund site. Atl. Richfield Co. v. Mont. Second Judicial Dist., 390 Mont. 76 (Mont. Dec. 29, 2017). ARCO has filed a Petition for a Writ of Certiorari asking the U.S. Supreme Court to overrule the Montana Supreme Court. Petition for Writ of Certiorari, Atl. Richfield Co., No. 17-1498 (Apr. 27, 2018).

The Anaconda Smelter, a former copper mine in western Montana, is one of the largest and oldest Superfund sites. The site covers some 300 square miles, and it has been on the National Priorities List since 1983. EPA selected a remedy to address environmental contamination at the site in 1998. In relevant part, EPA’s selected remedy obligates ARCO to remediate soils in residential yards with arsenic levels above 250 parts per million (ppm) and treat wells with arsenic levels above ten parts per billion (ppb). Id. The estimated completion date for the cleanup is 2025. Id. at 99.

In 2008, a group of 98 property owners within the boundaries of the EPA-delineated site sued ARCO in state court, asserting common law trespass, nuisance, and strict liability claims, and claiming restoration damages. Id. at 78. The plaintiffs seek to have the top two feet of soil removed from their properties and propose a series of underground trenches and barriers to treating groundwater. Id. The requested remedy would require “restoration work in excess of what the EPA required of ARCO in its selected remedy.” Id. at 78. Indeed, in selecting a remedy, EPA rejected the restoration work proposed by the Plaintiffs. 

In the Montana Supreme Court, ARCO argued that the restoration claim should be precluded because it constituted a “challenge” to EPA’s selected remedy under § 113(h), or, alternatively, because was preempted due to conflicts with EPA’s remedy. Id. at 81. The Comprehensive Environmental Response, Compensation, and Liability Act’s (CERCLA) “timing of review” provision prohibits challenges to an ongoing EPA remedy. 42 U.S.C. § 9613(h). ARCO also argued that the plaintiff landowners were barred from conducting restoration activities without EPA approval under § 122(e)(6) because they were potentially responsible parties (“PRPs”) under CERCLA. Id. The United States government filed an amicus brief arguing that permitting the plaintiffs to pursue their claim would “undermine EPA’s ability to implement its own remedy” and “delay [] EPA’s cleanup efforts.” Pet. for Cert., Appx. C at 71a & 75a.

Over a strong dissent, the Montana Supreme Court held that there was no basis under CERCLA to prohibit the plaintiffs from pursuing what the court characterized as a common law claim for damages. The court narrowly interpreted the term “challenge” in 113(h) and held that “a 113(h) challenge must actively interfere with EPA’s work, as when the relief sought would stop, delay, or change the work EPA is doing.” Atl. Richfield Co., 390 Mont. at 83. Even though the plaintiffs sought restoration beyond EPA’s remedy, the court found that the restoration claim would not “force EPA to do, or refrain from doing anything at the Site.” Id. at 85. For similar reasons, the court also held that the claim was not preempted. The court also declined to treat the plaintiffs as PRPs – even though they owned property within the Superfund Site – because they had not been treated as PRPs throughout the long history of the Site. Id. at 86.

Both the dissent and ARCO’s Petition for Certiorari argue that the court’s interpretation of § 113(h) is out of step with the decisions of six federal courts of appeals. See id. at 95-96; Pet. for Cert. at 15-17. The Ninth Circuit, for example, has held that 113(h) applies where the action is “related to the goals of the cleanup.” ARCO Envtl. Remediation, L.L.C. v. Dep’t of Health and Envtl. Quality of Mont., 213 F.3d 1108, 1115 (9th Cir. 2000). The dissent argued that this was a clear case to apply § 113(h) because EPA had actually rejected the restoration work proposed by the plaintiffs. Atl. Richfield Co., 390 Mont. at 100.

If the Montana Supreme Court’s decision stands, it will be a precedent for a narrow interpretation of § 113(h). And as ARCO warns in its Cert Petition, potentially a model for similarly situated landowners at Superfund sites around the country.

Clean Air Act Preemption Claims Not Preempted in Diesel Cheat Device Class-Action

A Michigan district court judge determined that the Clean Air Act did not preclude plaintiffs from bringing 53 state law fraudulent concealment and consumer protection claims against General Motors LLC and its suppliers for developing and installing devices on GM diesel trucks to cheat emissions tests. See Fenner v. Gen. Motors, LLC, 2018 WL 949856 (E.D. MI. February 20, 2018).

Consumers of GM diesel vehicles with Duramax motors sued GM and developers of an emissions control device installed in their vehicles. Id. The class-action suit characterized the defendants as conspirators who fraudulently developed and installed an emissions control device, leading the vehicles to not perform as represented. Id. Plaintiffs sought damages for the approximately $9,000 premium they paid for the diesel motors compared to comparable vehicles with gas motors. Id. Defendants argued that, among other things, the plaintiffs’ suit was precluded and preempted by the Clean Air Act.

Defendants first argued that plaintiffs’ sought impermissible conditions precedent to the sale of motor vehicles by requiring defendants to disclose information regarding their emission control devices. The Clean Air Act prohibits states from requiring “certification, inspection, or any other approval relating to the control of emissions . . . as a condition precedent to the initial retail sale of a new motor vehicle,” See 42 U.S.C. § 7543(a). Defendants contended that the disclosure requirement was a violation of § 7543(a). Id. The court disagreed and held that “it appears impossible that consumers could impose any ‘condition precedent to the initial retail sale’ of a vehicle.” Id. at 12. Rather the plaintiffs merely sought compensation for GM’s fraudulent concealment. 

The defendants also argued that the plaintiffs’ claims were disguised suits for noncompliance with EPA emission standards. Id. at 12. While the court acknowledged that such a suit would be preempted, the court held that the plaintiffs’ claims were not preempted because the claims did not require proof of noncompliance with EPA emission standards to be successful. Id. at 15.

The third argument hinged on implied preemption. Plaintiffs accused GM of failing to publicly disclose specific information about the emission devices. The defendants contended that the claim was preempted because the EPA imposed regulations regarding what automakers must disclose to the public about emissions devices. Id. at 16. The court disagreed, holding the plaintiffs’ claims will in no way interfere with EPA’s regulatory scheme or the Congress’s purpose in passing the Clean Air Act. Id.

Mississippi Federal Court Rejects RCRA Preemption

Illustrating limits on Resource Conservation and Recovery Act (RCRA) preemption of state tort claims, a Mississippi federal court concluded that the state’s toxic tort claims were not preempted by federal law. See Mississippi ex rel. Hood v. Meritor, Inc., No. 17-CV-74 SA/JMV, Memorandum Opinion and Order at 1, 9 (N.D. Miss. Mar. 13, 2018).

Mississippi’s Attorney General brought suit in Mississippi’s chancery court seeking injunctive relief against defendants in this action from “discharging contaminants into the groundwater and surface waters, releasing toxic sludge and chemicals onto the ground and emitting thousands of tons of hazardous chemicals into the air through its operation of an automobile wheel cover (hubcap) plant.” Id. at 1. Among the state’s claims were gross negligence, public nuisance, and trespass. Defendant removed the case to federal court, arguing that RCRA and EPA’s RCRA regulatory and permitting scheme preempted the state’s tort claims.

The court concluded that “resolution of Plaintiff’s claims does not require the interpretation of a substantial issue of federal law,” and that “remedies granted to the Plaintiff for its common-law tort claims would not necessarily require interference with the terms of the permit.” Id. at 4, 7. The court granted the motion to remand because the defendants were simply asserting compliance with RCRA as a defense to the plaintiff’s tort claims; the defendants’ “arguments result in an application of ordinary preemption principals that do not merit removal jurisdiction.” Id. at 8.

Beveridge & Diamond's Toxic Tort and Environmental Tort practice group defends large companies in virtually all industries against toxic tort and product liability claims involving a wide range of chemicals and related substances, including metals such as arsenic, lead, and mercury. While the majority of clients tend to be in oil, chemicals, and manufacturing, we represent any type of company with actual or potential exposure to toxic tort liability or product liability. For more information, contact the authors.