House Hearing on Consumer Product Safety Improvement Act

The House Energy and Commerce Committee's Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Mary Bono Mack (R-CA), held a hearing last week to examine the unintended consequences of the Consumer Product Safety Improvement Act of 2008 on American job creators, including small businesses. The purpose of this oversight hearing was to develop an understanding of the problems created by CPSIA, including the practical impediments to implementation; the impact of CPSIA on children’s safety; the impact on American jobs and businesses of all sizes; and practical ways to amend the law without endangering children’s health.

Two panels of witnesses testified before the Subcommittee. On the first were Honorable Inez Tenenbaum, Chairman, Consumer Product Safety Commission; and Honorable Anne Northup, Commissioner, Consumer Product Safety Commission.   The second panel included a mix of child safety advocates and representatives of small business industries.

The Chair noted that as a former small business owner, she recognized how unnecessary regulations – even well intentioned ones – can destroy lives.  Rick Woldenberg, the operator of Learning Resources, Inc., a small business making educational products and educational toys, testified on the many difficulties associated with the new, burdensome regulatory requirements. His company, Learning Resources, Inc., has recalled a grand total of 130 pieces in a single recall since its founding in June 1984, showing management of safety risks that was highly effective long before the government intervened in the safety processes.

CPSC Commissioner Northup testified on the exorbitant costs to small businesses, stating that in  March 2009, Commission staff reported that the economic costs associated with the CPSIA would be in the billions of dollars. Small businesses without the market clout to demand that suppliers provide compliant materials have been hit the hardest. Many report that the new compliance and testing costs have caused them to cut jobs, reduce product lines, leave the children’s market completely, or close.

CPSC Commissioner Anne Northup also focused on a key aspect of the new reporting database, observing that the Commission's database rule all but guarantees that the database will be flooded with inaccurate reports of harm, and thus it will be less useful for commission staff in determining hazard patterns than are the current, internal databases. She suggested that the Congress delay the launch of the database until new CPSC regulations can ensure that reports of harm contain sufficient information to permit verification, and the agency has an effective procedure in place to resolve a claim of material inaccuracy before a report is posted on the database.

She noted that the the Majority on the CPSC has expanded the list of database submitters to such an extent that virtually anyone can submit reports of harm—thereby rendering meaningless the statutory language listing permitted submitters. A database full of inaccurate reports from individuals who have second or third-hand information is not remotely helpful to consumers to determine which consumer product they should purchase.  Soliciting information from sources seeking to promote an agenda unrelated to simply sharing first-hand information invites dishonest, agenda-driven use of the database.  Trial lawyers, unscrupulous competitors, advocacy groups and other nongovernmental organizations and trade associations serve their own agendas and lack an incentive to prioritize accuracy in their reports of harm.  In particular, she testified, plaintiff trial lawyers with self-serving motives will use the Commission’s database to look for potential trends and patterns of hazards. Under the current database rule, this same group could also submit to the database false and unverifiable reports to fuel a lawsuit.


 

Lousiana Supreme Court Reverses Lower Court on Teen Riding Oil Pump

Readers may recall our post last fall about a decision by the Louisiana appeals court to reverse the grant of summary judgment against a plaintiff injured during his attempt to "ride" an oil well pump like it was an amusement park attraction. Payne v. Gardner, No. 10-0021 (La. Ct. App., 10/27/10).

Now comes word that the Louisiana Supreme Court has reversed the court of appeals decision that would have let the claim go to trial, finding that riding an oil-well pump like it was an amusement park ride was not a reasonably anticipated use of the pumping unit at the time of its manufacture in the 1950's. Payne v. Gardner, No. 2010-C-2627  (La. 2/18/11).

Thirteen-year-old Henry Goudeau, Jr. sustained injuries when he climbed onto the moving pendulum of an oil well pump and attempted to “ride” the pendulum. When he climbed on the moving pendulum, his pants became entangled in other parts of the pump and, as the pendulum continued to move upward, he alleged he sustained severe personal injuries.

Defendants moved for summary judgment, pointing to the undisputed facts that they manufactured the pump for the sole purpose of extracting oil from the ground; they never intended for anyone to ride the pump; and the plaintiff would not have gone near the pump had his mother been with him.

Plaintiff argued in opposition to the motion that there existed a foreseeable risk that children would attempt to play on the oil well pump. Plaintiffs pointed the trial court to 3 cases from California, Texas, and Oklahoma, over the past 30 years in which children had allegedly been injured while attempting to “ride” on an oil well pumping unit. See Titus v. Bethlehem Steel Corp., 91 Cal.App. 3d 372, 154 Cal. Rptr. 122 (Cal.App. 2d Dist. 1979); Burk Royalty Co. v. Pace, 620 S.W. 2d 882 (Tx.App. 12th Dist. 1981); Knowles v. Tripledee Drilling Co., Inc., 1989 OK 40, 771 P.2d 208 (1989).

The District Court granted summary judgment, finding plaintiff failed to allege any facts that the pump was unreasonably dangerous in itself and for the purpose for which it was intended, i.e., pumping oil.  The Court of Appeal reversed and remanded, finding in a 3-2 decision that it
could not conclude that the evidence presented by Payne was insufficient to allow a reasonable jury to conclude the defendant should have expected an ordinary person in the same or similar circumstances to use or handle the pumping unit in this way.  So, summary judgment was not proper.

The claim was governed by the Louisiana Product Liability Act (LPLA), which requires that the injury be from a reasonably anticipated use of the product. A “reasonably anticipated use” of the product is defined as “a use or handling of a product that the product’s manufacturer should reasonably expect of an ordinary person in the same or similar circumstances.” La. Rev. Stat. 9:2800.53(7).

The Supreme Court noted that this definition is narrower in scope than its pre-LPLA counterpart, "normal use," which included "all reasonably foreseeable uses and misuses of the product.”  The Court offered the following legal guidelines:

  • What constitutes a reasonably anticipated use is ascertained from the point of view of the manufacturer at the time of manufacture.
  • Unlike its "normal use" counterpart, the use of the words "reasonably anticipated" effectively discourages the fact-finder from using hindsight.
  • "Reasonably anticipated use" also effectively conveys the important message that “the manufacturer is not responsible for accounting for every conceivable foreseeable use” of its product.
  • And “knowledge of the potential and actual intentional abuse of its product does not
    create a question of fact on the question of reasonably anticipated use.”

Accordingly, under the LPLA, plaintiff had to make a sufficient evidentiary showing that, at the time of manufacture, Lufkin should have reasonably expected an ordinary consumer or user of its pumping unit would use its product as a “ride.  Significantly, all the evidence and examples relied
upon by the appellate court and plaintiff to establish that the intentional misuse in this case, i.e., the riding, could be considered a reasonably anticipated use involved occurrences well after the date the pump was manufactured.  This the decision was reversed, and summary judgment to be entered for the manufacturer.

This is an important reversal of a decision seemingly motivated by sympathy, however natural, rather than the law. A manufacturer is not responsible for every conceivable or foreseeable use of its product. All this scanty evidence suggested was that the misuse seemed, in hindsight, like it might have been foreseeable. Not that it was reasonably foreseeable, not that a manufacturer should reasonably expect such misuse, certainly not that this was the act of an ordinary person under the circumstances, and not that it was reasonably foreseeable in the 1950's. 

New Report on Asbestos and Silica Litigation in Texas

The Texas Civil Justice League has released a new report, "A Texas Success Story: Asbestos and Silica Lawsuit Reform."

Established in 1986, the Texas Civil Justice League is a non-partisan, statewide business coalition committed to legal reform and public policy research. The League makes legislative recommendations in vital issue areas, such as administration of the courts, general business liability, mass torts, and products liability.

The purpose of this special report is to document the current state of asbestos and silica litigation in Texas state courts. Part one provides a brief history of asbestos and silica litigation in the United States and an overview of the legislative efforts in Texas to address abuses in asbestos and silica litigation.  The report then offers a description of asbestos and silica litigation in Texas’s two multidistrict litigation courts handling asbestos and silica cases, and the impact of reform legislation (S.B. 15) on the state MDLs.

The report then turns to recent issues in asbestos litigation, specifically to the science-based evidentiary standards required by the Texas Supreme Court’s decision in Borg-Warner Corp. v. Flores.

Next are the issues relating to asbestos claimant compensation, starting with the role of bankruptcy trusts in compensating asbestos claimants; the bankruptcy trust payment system can provide substantial compensation to asbestos victims, but is a “black box” system that remains hidden from public scrutiny.

Lots of good info, worth a read.

New Report on Asbestos and Silica Litigation in Texas

The Texas Civil Justice League has released a new report, "A Texas Success Story: Asbestos and Silica Lawsuit Reform."

Established in 1986, the Texas Civil Justice League is a non-partisan, statewide business coalition committed to legal reform and public policy research. The League makes legislative recommendations in vital issue areas, such as administration of the courts, general business liability, mass torts, and products liability.

The purpose of this special report is to document the current state of asbestos and silica litigation in Texas state courts. Part one provides a brief history of asbestos and silica litigation in the United States and an overview of the legislative efforts in Texas to address abuses in asbestos and silica litigation.  The report then offers a description of asbestos and silica litigation in Texas’s two multidistrict litigation courts handling asbestos and silica cases, and the impact of reform legislation (S.B. 15) on the state MDLs.

The report then turns to recent issues in asbestos litigation, specifically to the science-based evidentiary standards required by the Texas Supreme Court’s decision in Borg-Warner Corp. v. Flores.

Next are the issues relating to asbestos claimant compensation, starting with the role of bankruptcy trusts in compensating asbestos claimants; the bankruptcy trust payment system can provide substantial compensation to asbestos victims, but is a “black box” system that remains hidden from public scrutiny.

Lots of good info, worth a read.

Wisconsin Enacts Tort Reform

A Superbowl win. An upset of the previously undefeated No. 1 college basketball team.  Wisconsin is on a roll.  But of greatest interest to our readers is, late last month, Wisconsin's Governor Scott Walker (R) signed into law new tort reform legislation in that state.  The bill is regarded as the most extensive set of changes to Wisconsin's civil litigation system in decades.  Tort reform as a vehicle to improve Wisconsin's business climate was a campaign theme for the governor in the last election, and the reform bill was one of the first agenda items for the new legislature in January.  Republican majorities had been elected in both the state Senate and the Assembly last fall.

The Act contains several provisions that will affect plaintiffs and defendants in product liability  litigation.

  • Punitive damages received by the plaintiff may not exceed twice the amount of any compensatory damages recovered by the plaintiff or $200,000, whichever is greater.
  • The law establishes a higher legal standard for recovering punitive damages, as the plaintiff must prove that the defendant either acted with intent to cause injury to a particular person or persons or that the defendant knew that the action of the defendant that resulted in injury to one or more persons was practically certain to result in injury to one or more persons. 
  • The act adopts a Daubert-like standard for experts. The expert testimony must be based
    upon sufficient facts or data, the testimony must be the product of reliable principles and methods, and the witness must have applied the principles and methods reliably to the facts of the case.
  • With respect to strict liability claims, the bill borrows the definition of defect from the  Restatement (Third) of Torts.  A product is defective in design if the foreseeable risks of
    harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the manufacturer and the omission of the alternative
    design renders the product not reasonably safe.   
  • In an action for damages caused by a manufactured product based on a claim of strict liability, evidence of remedial measures taken subsequent to the sale of the product is not admissible for the purpose of showing a manufacturing defect in the product, a defect in the design of the product, or a need for a warning or instruction, but may be used to show a reasonable alternative design that existed at the time  the product was sold.
  • The law creates a rebuttable presumption that the product is not defective if it complied with relevant standards under federal or state law.
  • The act also modifies the market share or “risk contribution’’ theory that Wisconsin adopted in the lead paint litigation. The new law reaffirms the general rule that manufacturers, distributors, and sellers of a product may be held liable for damages only if the injured party proves that the specific product that caused the injury was manufactured, distributed, sold or promoted by the defendant.  The only exception is when a claimant can prove all of the following:
    1. That no other lawful process exists for the claimant to seek any redress from any other person for the injury or harm.
    2. That the claimant has suffered an injury or harm that can be caused only by a manufactured product chemically and physically identical to the specific product that
    allegedly caused the claimant’s injury or harm.
    3. That the manufacturer, distributor, seller, or promoter of a product manufactured, distributed, sold, or promoted a complete integrated product, in the form used by the claimant or to which the claimant was exposed, and that meets all of the following criteria:
            a. Is chemically and physically identical to the specific product that allegedly caused the claimant’s injury or harm.
            b. Was manufactured, distributed, sold, or promoted in the geographic market where the injury or harm is alleged to have occurred during the time period in which the specific product that allegedly caused the claimant’s injury or harm was manufactured, distributed, sold, or promoted.
          c. Was distributed or sold without labeling or any distinctive characteristic that identified the manufacturer, distributor, seller, or promoter.
          d.  The action names, as defendants, those manufacturers of a product who collectively manufactured at least 80 percent of all products sold in this state during the relevant
    production period.  

 

  • The law permits defendants to claim damages for frivolous claims,  that is, for actions undertaken solely for the purpose of harassing or maliciously injuring another.
  • Regarding comparative fault in an action by any person to recover damages for injuries caused by a defective product based on a claim of strict liability, if the injured party’s percentage of total causal responsibility for the injury is greater than the percentage resulting from the defective condition of the product, the injured party may not, based on the defect in the product, recover damages from the manufacturer, distributor, seller, or any other person responsible for placing the product in the stream of commerce.

A good model for other states considering tort reform.

More than any ad campaign, a civil justice system that is equitable and reliably predictable signals to employers that a state is truly open for business. Particularly in light of recent liability-expanding state court decisions, the new reform package enacted by Wisconsin will help convince employers that it’s a new day in the Badger State, according to the American Tort Reform Association

 

Panel Creates Vitaminwater MDL

The U.S. Judicial Panel on Multidistrict Litigation last week ordered the coordination of the litigation against Coca-Cola Co. alleging it misled the public about the nutritional benefits of its Vitaminwater.  In re: Glaceau Vitaminwater Marketing and Sales Practices Litigation, MDL No. 2215 E.D.N.Y.).

Common defendants The Coca-Cola Company and Energy Brands Inc. moved, pursuant to 28 U.S.C. § 1407, for coordinated pretrial proceedings of this litigation filed in three federal districts. (Two tag along districts emerged as well.) Some plaintiffs supported the motion; some opposed.  The parties opposing centralization variously argued, that (1) some of the actions named local retailers as defendants, and the claims against them presented unique
issues of fact; (2) questions of law were unique to the various jurisdictions in which actions have been filed; (3) only three actions were pending, alleging discrete multi-state or statewide classes of consumers.

The Panel found that these arguments had "some merit," but on balance, were outweighed by the benefits of centralization. Though only three actions were before the Panel, and they do not allege overlapping putative classes, the Panel was persuaded that centralization was appropriate. The relatively small number of cases was sufficient: the Eastern District of New York action consisted of five prior actions that were voluntarily consolidated, and it involves proposed classes of consumers from three states. Two additional related actions were pending.

These actions shared factual questions arising out of allegations that defendants misrepresented their VitaminWater product as a healthy alternative to soft drinks though it contains almost as much sugar, said the order. Section 1407 does not require a complete identity or even a majority of common factual or legal issues as a prerequisite to transfer. See, e.g., In re Gadolinium Contrast Dyes Prods. Liab. Litig., 536 F. Supp. 2d 1380, 1382 (J.P.M.L. 2008). Nor does it require an identity of common parties.

Centralization would eliminate duplicative discovery; prevent inconsistent pretrial rulings; and conserve the resources of the parties, their counsel, and the judiciary. Creation of an MDL will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation, the Panel concluded.

The Eastern District of New York was deemed to be the most appropriate transferee district. The action in that district had been pending for two years, and is more advanced than any other action in this litigation. The court has ruled on a motion to dismiss, and discovery is underway. Both some plaintiffs and some defendants supported centralization in this district.

State Supreme Court Ignores Amendment to Find Standing in Consumer Fraud Claim

California's Supreme Court ruled late last month that consumers who purchase a product allegedly as a result of misleading advertising can sue the manufacturer even in the absence of traditional injury, despite enactment of a recent ballot proposition that was designed to stiffen injury requirements and limit standing under the state's unfair competition and false advertising laws. Kwikset Corp. v. Superior Court, No. S171845, 2011 WL 240278 (Cal. Jan. 27, 2011).

Readers have seen our posts about the danger of plaintiffs' misuse of state consumer fraud acts and unfair and deceptive practices acts.  Partially in response to such abuse, a few years back the voters of California passed Proposition 64, which substantially revised the state's unfair competition and false advertising laws by beefing up standing and injury requirements for suits by private individuals.  The initiative declared: “It is the intent of the California voters in enacting this act to prohibit private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact under the standing requirements of the United States Constitution.”  Specifically, Proposition 64 also restricted standing to consumers who can allege they have suffered “injury in fact” and have “lost money or property” as a result of the defendant's improper business practice.  The plain import of this is that a plaintiff now must demonstrate some form of economic injury -- the issue is what form. 
 
Plaintiff James Benson brought suit against Kwikset Corp. challenging the company's “Made in U.S.A.” labeling of lock sets that allegedly contain foreign-made parts or involved foreign manufacture.  Specifically, plaintiff alleged that Kwikset falsely marketed as “Made in USA” locksets that contained screws or pins made in Taiwan or that were assembled in Mexico. Plaintiff prevailed in the trial court, on injunctive relief, but lost on the restitution claim. While cross-appeals were pending, Proposition 64 took effect. The lower courts gave plaintiff an opportunity to plead standing based on injury under the new Prop standing requirements of injury in fact and loss of money or property. The amended complaint then alleged that plaintiff relied on Kwikset’s representations in deciding to purchase the locks, and that he supposedly would not have purchased the locksets if they were not labeled “Made in the USA.”  On appeal, the court of appeals vacated the decision in light of the standing issues in the wake of the new law. The court found that the plaintiffs (new plaintiffs had been added) had alleged “injury in fact,” but they had not alleged “loss of money or property” because they got perfectly functioning locksets in return for their money, and they were not overpriced or defective. Plaintiffs therefore received the benefit of the bargain. 

The state Supreme Court agreed to hear the appeal, specifically to address the new standing requirements and what constitutes “loss of money or property” under California’s unfair competition law (Business and Professions Code section 17200 et seq. (the UCL)) and the false advertising law (Business and Professions Code section 17500 et seq.).

The state high court held that plaintiffs who allege they are deceived by a product’s label and thus purchase a product that they would not have purchased otherwise have “lost money or property” as required by Proposition 64 and have standing.  The court somehow concluded that such an individual does not receive the “benefit of the bargain” even if the product is not overpriced or defective, and works just fine. The Supreme Court concluded that “labels matter.” For each consumer who relies on the truth and accuracy of a label and is deceived by misrepresentations into making a purchase, the economic harm is the same: the consumer has purchased a product that he or she paid more for than he or she otherwise might have been willing to pay if the product had been labeled accurately, said the court. This economic harm -the "loss of real dollars from a consumer's pocket" -is the same whether or not a court might objectively view the products as functionally equivalent.  If a party has alleged or proven a personal, individualized loss of money or property in any non-trivial amount, he or she has also alleged or proven injury in fact.

The majority worried that to deny such consumers standing would bring an end to private consumer enforcement regarding label misrepresentations.  Instead, this unfortunate decision may well encourage frivolous and contrived class action litigation by plaintiffs who have not suffered any type of quantifiable economic loss -- exactly what the voters voted to curtail.

The dissent correctly noted that the majority's ruling directly contravened the both the intent of Prop 64 and the express language of the amendment.  Indeed Proposition 64 was an effort to curb suits just like this one (which was mentions in the campaign), in which plaintiff got the benefit of their bargain. In direct contravention of the electorate's intent, the majority disregarded the express language of the amendment and arguably made it easier for a plaintiff to achieve standing under the UCL.  Lost money cannot refer to every time a consumer pays for something, because then every consumer would always have standing to challenge every transaction, and how could Proposition 64 be seen as a new restriction on standing?  Loss of money is not the same as any economic injury. Lost money or property is a subset, one form of, economic injury.  Not all economic injuries include lost money as the statute uses the term;  the majority effectively rendered one of the two statutory requirements redundant and a nullity. 

By delving into the subjective motivation of the plaintiff ("labels matter"), the court ignored the focus of the statute not on subjective intent of the buyer, but objective proof of actual loss of property versus no such loss.

In focusing on the fact that the plaintiffs paid for the items, the majority ignored the fact that plaintiffs received the locksets in return, which were not alleged to be overpriced or otherwise defective. Aside from paying the purchase price of the locksets, plaintiffs have not alleged they actually “lost” any money or property.  The majority simply concluded there was a loss of real dollars, but there was no such allegation of such a loss here, where plaintiffs simply paid the purchase price for the mislabeled but otherwise fully functional locksets. Plaintiffs did not allege that the locksets were worth less or were of lesser quality or were defective, and the majority's holding apparently does not require that plaintiffs allege any price differential.

 

Legislation Proposed to Curb EPA Greenhouse Gas Authority

As we have noted in previous posts, one of the many important questions lurking in the climate change/global warning cases currently being litigated is whether the EPA will be the primary regulator of greenhouse gas emissions or whether private parties will be permitted to go directly to court. Should a single judge set emissions standards for regulated utilities across the country—or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue? Judges in subsequent cases could set standards for other utilities or industries, or even conflicting standards for these same utilities. At the sane time, many observers question whether the current EPA regulatory direction offers sufficient protection for the jobs and the still shaky economy.

A number of bills have been introduced that could affect this equation. The Chair of the House Energy and Commerce Committee, Fred Upton (R-Mich.), last week spoke of draft legislation that would prohibit the Environmental Protection Agency from regulating greenhouse gas emissions.  The Energy Tax Prevention Act of 2011 would bar the EPA from regulating the so-called greenhouse gases under the Clean Air Act by precluding the agency from taking into consideration the emission of a greenhouse gas due to concerns regarding possible climate change.

Joining in support of this approach were Sen. James Inhofe (R-Okla.), the highest ranking Republican on the Senate Environment and Public Works Committee, and Rep. Ed Whitfield (R-Ky.), chairman of the House Energy and Commerce Subcommittee on Energy and Power.
Senator Inhofe reportedly plans to introduce a Senate version of the bill soon. 

Already in the Senate, Sen. Jay Rockefeller (D-W.Va.) re-introduced the EPA Regulations Suspension Act of 2011 (S. 231) which would delay for two years EPA's greenhouse gas emissions rules covering stationary sources.  Co-sponsors include Democrats: Sens. James Webb (Va.), Claire McCaskill (Mo.), Tim Johnson (S.D.), Joe Manchin (W.Va.), Ben Nelson (Neb.), and Kent Conrad (N.D.).  Rockefeller's version would apparently continue to allow EPA regulation of vehicle greenhouse gas emissions.  Wyoming Republican Senator John Barrasso introduced a more sweeping Senate bill (S. 228) that would reduce federal authority to regulate such emissions under not just the Clean Air Act, but also the Clean Water Act, the National Environmental Policy Act, and the Endangered Species Act.

The White House announced last year that the President would veto efforts to curb EPA authority over these greenhouse gas emissions. But many have expressed concern that the EPA regulations could hurt job growth, particularly for heavy manufacturing states.
 


 

Climate Change Case Update

A quick update to one of the key climate change cases pending in the federal courts. Readers may recall that the U.S. Supreme Court announced late last year that it will indeed hear the challenge to a court of appeals decision allowing several states to pursue a public nuisance suit against various utilities for their greenhouse gas emissions. See American Electric Power Co. v. Connecticut, No. 10-174 (U.S. certiorari petition granted 12/6/10).

Last week the federal government weighed in and asked the Court to overturn the court of appeals' decision in this public nuisance suit against American Electric Power Co. and other utilities for their greenhouse gas emissions, but on relatively narrow grounds. The brief filed by the Acting Solicitor General argues that the plaintiffs lacked “prudential standing” and that their suit should therefore be dismissed.  We have noted here before that a central issue is whether the EPA will be the primary regulator of greenhouse gas emissions or whether private parties will be permitted to go directly to court. Should a single judge set emissions standards for regulated utilities across the country—or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue? Judges in subsequent cases could set standards for other utilities or industries, or conflicting standards for these same utilities.  A second issue is whether controlling power plant emissions' alleged effects on the climate is a political question beyond the reach of the courts. Recall that the Southern District of New York dismissed the suit in 2005, holding that the claims represented a political question. Connecticut v. American Electric Power Co., 406 F. Supp. 2d 265.

The government position is that plaintiffs bring claims under the federal common law of public nuisance against six defendants alleged to emit greenhouse gases contributing to climate change. But if plaintiffs' theory is correct, virtually every person, organization, company, or government across the globe also emits greenhouse gases, and virtually everyone will also sustain climate-change-related injuries. Principles of prudential standing do not permit courts to adjudicate such generalized grievances absent statutory authorization, particularly because EPA, which is better-suited to addressing this global problem, has begun regulating greenhouse gases under the CAA. As a result, plaintiffs’ suits must be dismissed.  EPA began regulating greenhouse gas emissions from certain sources in January, although members of Congress are moving to delay or block EPA's authority to do so, which we will post on later this week.

The federal government brief concedes that plaintiffs have Article III standing based on their interest in preventing the loss of sovereign territory for which they are also the landowners.  It asks that the Court not decide whether plaintiffs’ suits are barred by the political question doctrine, although noting that this case does indeed raise separation-of powers concerns highlighted by the second and third factors used in Baker v. Carr, 369 U.S. 186 (1962), to describe the political question doctrine: a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion.

The AEP brief is available for interested readers.


 

CPSC and CDC Release Report on Alleged Drywall Deaths

The Consumer Product Safety Commission released a report of an investigation it had requested be performed by the CDC's National Center for Environmental Health regarding deaths allegedly associated with exposure to imported drywall.  The report concludes that the drywall was not a contributing factor in the deaths of the people who had previously lived in or visited homes reported to contain problem drywall.

The investigation included reviews of the pertinent medical records,  interviews of witnesses, and available information from state public health authorities.   The CDC review confirms the results of previous reviews conducted by CPSC itself.  The cause of death in each case was clearly a primary, and often secondary, pre-existing chronic health condition.  Subjects typically had multiple long-term, severe, pre-existing conditions.  

We have posted about the drywall issues here and here


 

Partial Settlement Proposed in FEMA Trailer Litigation

Defendants and certain plaintiffs in the FEMA TRAILER FORMALDEHYDE PRODUCTS
LIABILITY LITIGATION, MDL NO. 07-1873(E.D. La.) have filed a joint motion seeking approval of a partial settlement of the litigation.

Readers may recall from our previous posts that plaintiffs had filed claims against the United States and several manufacturers alleging that they were exposed to high levels of formaldehyde contained in emergency housing provided to them by FEMA in the aftermath of Hurricane Katrina. The plaintiffs proposed litigating the claims in six subclasses, including four subclasses for residents divided by state (Louisiana, Alabama, Texas, and Mississippi), a medical monitoring (“future medical services”) subclass, and an economic loss subclass.  The court denied the personal injury class, and then the medical monitoring class.   The court then adopted a bellwether trial approach.  We posted on the federal jury in Louisiana returning a defense verdict in just such a bellwether plaintiffs' suit over alleged exposure to formaldehyde fumes while living for several months in a FEMA-provided trailer.  Indeed, all three bellwether trials have resulted in losses for plaintiffs. There are currently two appeals pending from previous bellwether trial verdicts. The MDL court also found last year that FEMA itself could not be held liable for the alleged formaldehyde in the trailers.
 

Now, several maker of the emergency mobile homes used after hurricanes Katrina and Rita have agreed to pay approximately $2.6 million to settle certain claims that plaintiffs were allegedly sickened by levels of formaldehyde in the homes.  The proposed settlement covers FEMA mobile homes issued to victims of the hurricanes, not the travel trailers, which actually formed the majority of emergency housing made available after the hurricanes. 

Under the proposed settlement, a whopping 48% of that total will be set aside for plaintiff attorneys' fees.  According to the settlement agreement, the size of the potential settlement class is more than 1,000.  In addition to the trial results, the joint motion makes reference to the MDL court ruling that precluded plaintiffs from arguing for liability under varied (and higher) state standards, rather than a uniform federal level.

Multi-State Coalition On Chemicals Management Formed

Readers have been following our posts on new state efforts on chemical regulation, such  as California's Green Chemistry initiative. Now comes word that environmental officials from 10 state and local governments have formed an umbrella organization - the Interstate Chemicals Clearinghouse (IC2) - with the stated goals of promoting a clean environment, healthy communities, and a vital economy through the development and use of safer chemicals and products.

The states joining IC2 include California, Connecticut, Massachusetts, Michigan, Minnesota, New Jersey, New York, Oregon, and Washington.

The goals of the IC2 are to:

  • Avoid duplication and enhance efficiency and effectiveness of state, local, and tribal initiatives on chemicals through collaboration and coordination
  • Build agency capacity to identify and promote safer chemicals and products
  • Ensure that state, local, and tribal agencies, businesses, and the public have ready access to high quality and authoritative chemicals data, information, and assessment methods

Launched under the auspices of the Northeast Waste Management Officials' Association (NEWMOA), the new Clearinghouse says it will support state, local, and tribal health and environmental agencies with development and implementation of programs to promote use of safer chemicals and products; support the development of alternative assessment methods and identification of safer alternatives; share data and information on chemical use, hazard, exposure, and alternatives; share strategies and outcomes on chemicals prioritization initiatives; and build the capacity of agencies by sharing materials, strategies, and trainings.  IC2 has a number of projects planned in these areas.

The Northeast Waste Management Officials Association's announcement of the IC2 comes just as many chemical manufacturers are expecting that the federal government (including through an update to TSCA) will take the lead in regulating chemical products, not state regulatory agencies and legislatures.

Industry groups, including the American Chemistry Council, continue to believe that a patchwork of state and local programs has the potential to create more confusion for consumers and manufacturers, and may ultimately simply hamper investment, and threaten future job creation.  As we have noted, some of the bills introduced in the last Congress would have set an impossibly high hurdle for all chemicals in commerce, and were guaranteed to produce significant technical, bureaucratic and commercial barriers. Of particular concern to readers of MassTortDefense would be efforts to eliminate the current risk-based review system under TSCA and force EPA to use the so-called precautionary principle.

It seems more supportable that any overhaul of TSCA should include the notion that scientific reviews must use data and methods based on the best available science and risk-based assessment; must include cost-benefit considerations for the private-sector and consumers; must protect proprietary business information, and should logically prioritize reviews for existing chemicals.



 

Snapple Prevails in All Natural Suit

A federal court granted summary judgment to defendant Snapple in a lawsuit accusing
Snapple Beverage Corp. of misleading consumers by labeling drinks as "all natural" even though they are sweetened with high fructose corn syrup. Weiner et al. v. Snapple Beverage Corp., No. 1:07-cv-08742 (S.D.N.Y.).

We have commented on the growing and alarming trend of plaintiffs' lawyers concocting consumer fraud class action claims against products, even when consumers were not injured and got basically what they paid for, because of some alleged ambiguity in the label or old-fashioned puffing.

Snapple Beverage Corporation was founded in New York’s Greenwich Village in 1972. Snapple began selling and marketing its teas and juice drinks in the late 1980s. In marketing its beverages, Snapple focused on, among other things, flavor, innovation, and humor. Snapple became known for its quirky personality and funny advertising, as well as its colorful product labels and beverage names. For instance, Snapple’s television advertisements featured, among other things, Snapple bottles dressed in wigs and hats, singing in a Backstreet-esque “boy-band,” running with the bulls (hamsters with cardboard horns) in Spain, and performing synchronized swimming.

When Snapple entered the beverages market in the late 1980s, it avoided putting preservatives, which were then commonly found in some similar beverages, in its teas and juice drinks. Snapple was able to do so by using a “hot-fill” process, which uses high-temperature heat pasteurization to preserve products immediately before bottling. Snapple also used 16-ounce glass bottles instead of aluminum cans or plastic. Hence the term on their label "All Natural."

From their inception, Snapple’s beverages were sweetened with high fructose corn syrup. HFCS is made from corn ( a natural product last time we checked), and its primary constituents are glucose and fructose, the sugars that comprise table sugar and honey (which also sound pretty natural). It is undisputed that Snapple disclosed the inclusion of HFCS in the ingredient list that appears on the label of every bottle of Snapple that was labeled “All Natural.”

Readers may recall from our previous post, that here plaintiffs sued seeking to represent a nationwide class of consumers who made purchases between 2001 and 2009 in New York of Snapple beverages labeled “all natural” and which contained high fructose corn syrup.  The plaintiffs alleged they paid a premium for the company's drinks as a result of the all natural claim.

Judge Cote denied the plaintiffs' motion for class certification last year, finding that plaintiffs had not proposed a suitable methodology for establishing the critical elements of causation and injury on a class-wide basis. Without a reliable methodology, plaintiffs had not shown that they could prove at trial, using common evidence, that putative class members in fact paid a premium for the beverage. Because individualized inquiries as to causation, injury, and damages for each of the millions of putative class members would predominate over any issues of law or fact common to the class, plaintiffs’ claim could not be certified under Rule 23(b)(3).

Snapple then moved for summary judgment on the two named plaintiffs' individual claims
under New York's consumer protection laws, as well as claims of unjust enrichment and breach of express warranty.

Jurisdiction was predicated on CAFA, so a preliminary issue was whether the court retained jurisdiction after the denial of class certification. The statute does not speak directly to
the issue of whether class certification is a prerequisite to federal jurisdiction, and the Second Circuit has not addressed the issue. The circuits that have considered the issue, however, have uniformly concluded that federal jurisdiction under CAFA does not depend on class certification. See Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010); United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union, AFL-CIO, CLC
v. Shell Oil Co., 602 F.3d 1087, 1092 (9th Cir. 2010); Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n.12 (11th Cir. 2009).

The court granted the motion, finding that the named plaintiffs had failed to show that they were injured as a result of Snapple's labeling.  According to Snapple, because the plaintiffs had not offered evidence showing either the price they paid for Snapple or the prices charged by competitors for comparable beverages, they could not demonstrate that they paid a premium for the “All Natural” Snapple product and thus could not show harm stemming from the allegedly misleading label.  Neither of the plaintiffs had any record of his purchases of Snapple. Their most recent purchases were made in 2005 and 2007, or 3 to 5 years before their deposition testimony was taken. Not surprisingly, they had only vague recollections of the locations, dates, and prices of their purchases of Snapple. Besides being unable to establish the actual price they paid for the Snapple products at issue here, the plaintiffs have offered no other evidence from which to
calculate the premium they paid for Snapple. The court agreed that plaintiffs failed to prove that they paid more for Snapple's products than they would have for comparable beverages.

As for the breach of expressed warranty claim, an injured party is entitled to the benefit of its bargain, measured as the difference between the value of the product as warranted by the manufacturer and its true value at the time of the transaction. Because the plaintiffs
had not demonstrated that they purchased Snapple's drinks in reliance on the “all natural”
label, they could not show any such difference in value.