Court of Appeals Rejects Nuisance Class

The Eighth Circuit recently reversed class certification in a recent environmental case. See Smith v. ConocoPhillips Pipe Line Co., No. 14-2191 (8th Cir., 9/15/15).

Defendant owned a petroleum products pipeline which runs through the town of West Alton, Missouri. After a leak in the line was discovered way back in 1963, its source was repaired, but the contamination at the leak site allegedly was not fully remediated. In 2002, contaminants allegedly from the leak were discovered in a family residence in the area. Defendant purchased and demolished this property as well as others affected by the leak. In cooperation with the Missouri Department of Natural Resources, Phillips fenced in the area around the leak site and set up monitoring wells to track any spread of pollutants. This action was filed in 2011 on behalf of a putative class of nearby landowners alleging that the contaminated site is a nuisance. The district court certified the class on the theory that possible "pockets of contamination" existed within the identified area.

The class plaintiffs presented expert  evidence, including Dr. Patrick Agostino, a Ph.D in geology. Dr. Agostino explained that leaked contamination is pulled downward by gravity and spreads out, thus shifting over time. According to his testimony, the contamination in West Alton spread both to the north and south of the leak site; it was then pulled downward until it reached the water table and contaminated the groundwater. Based on his analysis, Dr. Agostino concluded that the resulting plume of contamination could have been “considerably larger” in the past than currently, and that it would therefore have affected other properties outside the contamination site. Discovery also included sampling of the contamination site and nearby properties.

The district court certified the class seeking nuisance based damages and injunctive relief. In its certification order the court relied on evidence that contaminants had been shown in some monitoring wells, that the pollution was continually shifting, and that it could not “rule out the possibility that pockets of contamination exist.”

To show the Rule 23 requirement of commonality, the plaintiff must demonstrate that the class members have suffered the same injury. On appeal, Phillips argued that the lack of proof of contamination spread throughout the class land shows there is no class-wide injury. Absent the injury of actual contamination, it argued, plaintiffs could not meet the Rule 23 requirements of commonality or typicality. The key contaminant chemicals had not been shown to be on land owned by the class members. 

 

The court of appeals saw a contemporary consensus reached by persuasive authority on the meaning of common law nuisance in the context of environmental contamination, requiring physical contact or impact or invasion.  Thus, the panel concluded that the putative class fear of contamination spreading from the West Alton leak site to harm their property is not a sufficient injury to support a claim for common law nuisance in the absence of such proof. So there was a crucial lack of commonality defeating class certification.

 

Upcoming Seminar of Interest

Our readers may be interested in the upcoming seminar: Chemical Products Liability and Environmental Litigation.  

It's scheduled for April 22-23 in New Orleans, and includes topics such as Recent Developments In Fracking Litigation, and Navigating the Litigation Threat Stemming from Potentially Disruptive Regulatory Changes.

Your humble blogger is on the faculty.  I have the privilege of moderating a panel on In-House Perspectives: Thinking like Litigation Counsel, Analyzing Litigation Trends, and Sharing Insight about Docket Management.  The panel features Jennifer L. Ferratt, Esquire, of Chevron USA; Scott A. King, Esquire, from Occidental Chemical Corporation, and Eric S. Sarner, Esquire, of Praxair, Inc.

This is the 6th Annual conference and the prior years' drew great reviews from litigators in the toxic tort and environmental fields. 

Worth checking out.

Plaintiffs Attacking Fiji's Green Water Sing the Blues

A California appeals court last week affirmed the dismissal of a putative class action in which plaintiffs accused Fiji Water Co. LLC of improperly promoting its bottled water. Ayana Hill v. Roll International Corp. et al., No. A128698 (Cal. Ct. Appeal, 1st Appellate District).

Plaintiff  Hill alleged she bought bottles of Fiji water, on the label of which was a green drop; she claimed that the drop somehow represented Fiji bottled water was environmentally superior to other waters and endorsed by an environmental organization. Hill filed a proposed class action on behalf of herself and other consumers of Fiji bottled water, asserting violations of California‚Äüs Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.), False Advertising Law (FAL) (§ 17500 et seq.), and Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.), plus common law fraud and unjust enrichment.

Readers know that the term “green” is commonly used to describe the environmentally friendly aspects of products, and that concerned about over-use of such terms, the Federal Trade Commission (FTC) has issued standards known as “Green Guides” to describe the appropriate use of such labeling. The Federal Trade Commission last Fall proposed revisions to the guidance that it gives marketers to help them avoid making misleading environmental claims. The proposed changes were designed to update the Guides and make them easier for companies to understand and use.  The changes to the Green Guides included new guidance on marketers’ use of product certifications and seals of approval, “renewable energy” claims, “renewable materials” claims, and “carbon offset” claims.

Because the guides are not legislative rules under Section 18 of the FTC Act, they are not themselves enforceable regulations, nor do they have the force and effect of law. They consist of general principles, followed by nonexclusive specific examples, and are intended to provide a safe harbor for marketers who want certainty about how to make environmental claims. However, a few states, such as California, have incorporated the FTC guides into their consumer fraud (here CLRA) definition of environmental marketing claims.  

Hill's personal allegations were that, starting in 2008, she bought Fiji water about twice a week from Walgreens stores in San Francisco, relying on  these alleged representations that the product was “environmentally friendly and superior.” She would not have bought Fiji water had she supposedly known the truth that the Green Drop was the creation of defendants, not a neutral party or environmental group. Defendants accomplish this supposed elaborate "deception” through conspicuous placement of the Green Drop on the front of the product to allegedly look similar to environmental seals of approval.  Further, plaintiff complained  that in their packaging and marketing, defendants have “called their product FijiGreen” and, in stores and other public places, stated that "Every Drop is Green.” 

The trial court dismissed the claims, and plaintiff appealed.  In that posture, the court assumed that Hill actually was, as she claims, misled in the context to believe that the green drop symbol on Fiji water was a seal implicitly indicating approval by a third party organization, and thus believed that the Fiji product was environmentally superior to competitors' bottled water.

The problem was that Hill's beliefs, asserted and even assumed, do not satisfy the reasonable consumer standard, as expressed in the FTC guides (16 C.F.R. § 260.7(a) (2011) [material implied claims conveyed “to reasonable consumers”]) and as used in California's consumer laws. The court of appeals emphasized that the standard is not a least sophisticated consumer, nor the unwary consumer , but the ordinary consumer within the larger population.  Importantly, the court noted that "it follows, in these days of inevitable and readily available Internet criticism and suspicion of virtually any corporate enterprise, that a reasonable consumer also does not include one who is overly suspicious."  How true that is.

So, does the green drop on Fiji water bottles convey to a reasonable consumer in the circumstances that the product is endorsed for environmental superiority by a third party organization? No, said the court. The drop itself bears no name or recognized logo of any group, much less a third party organization, no trademark symbol, and no other indication that it is anything but a symbol of Fiji water.  The water has just a green drop, the drop being the most logical icon for this particular product—water.  And for context, a green drop on the back of every bottle appears right next to the website name, “fijigreen.com,” further confirming to a reasonable consumer that the green drop symbol is by Fiji water, not an independent third party organization—and, of course, inviting consumers to visit the website, where Fiji Water's explains its  environmental efforts.

Plaintiff asked the court of appeals to reverse the the trial court's denial of leave to amend, claiming that any defects in the complaint could be cured by amendment. But Hill's saying so "does not make it so," and it was her burden to show how she might amend to cure the deficiencies. She did not. Dismissal without leave affirmed.


 

Think-Tank Report on Environmental Litigation Worth A Look

A new think-tank report discusses the evolution in environmental and toxic tort litigation. The Manhattan Institute Center for Legal Policy publishes reports and updates that shed light on the size, scope, and inner workings of what they call "America's lawsuit industry" at TrialLawyersInc.com.

The new report, "Un-natural Claims," discusses the trend to use litigation to supplant or supplement regulation and legislation of environmental and toxic hazards.  Because tort law is necessarily retrospective, not prospective (plaintiffs traditionally must show that they have actually been injured and that the party being sued caused the injury), and because it makes sense to prevent environmental injuries in advance, instead of addressing them after they occur, advanced economies have developed regulatory regimes that place boundaries around economic activities that risk generating environmental damage.

Nuisance suits, for example, do not manage environmental harms well. Injuries are sometimes too dispersed to be remedied by damage awards to individuals, and causation too speculative or remote to meet historical legal norms. Lay juries are generally ill-equipped to make scientific judgments on complex environmental questions, argues the report.  Yet, increasingly, plaintiffs and activists have sought to use tort law to supplant regulation, often by seeking broad injunctive relief. The report argues that such suits seek to circumvent statutory and regulatory schemes and turn the courts into alternative environmental regulators.

The report offers the recent global warming litigation as a dire example.  In such suits, activist groups—or state attorneys general seeking their support—are trying to make an end run around regulators or legislatures to achieve policy goals. The report warns that one should not assume that pecuniary motives are absent from such suits: in addition to earning themselves substantial publicity, the state AGs often receive the largesse of lawyers involved in the form of direct or in-kind campaign assistance; and trial lawyers get to enlist the state attorneys general to press for judicial rulings that would make future litigation more profitable. In some cases, they get hefty contingency fees for doing the states’ work.

Worth a look.