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.

 

Ninth Circuit Hears Oral Argument in Climate Change Case

The Ninth Circuit recently heard oral argument in a potentially significant case raising climate change issues.  See Kivalina v. Exxon Mobil Corp., No. 09-17490 (9th Cir.)(oral argument  11/28/11).

We have posted on this case before, in which the village of about 400 people alleged that, as a result of global warming, the Arctic sea ice that protects the Kivalina coast from storms has been diminished, and that resulting erosion requires relocation of the residents to another village. (The town of Kivalina is located at the tip of a six-mile-long barrier reef, about 70 miles north of the Arctic Circle on Alaska's northwest coast.) Plaintiffs sought damages under federal common law nuisance, state nuisance, and civil conspiracy theories. They alleged that defendants were a major part of the cause of excessive emissions of carbon dioxide and other greenhouse gases, which plaintiffs claimed are causing the global warming.

The defendants properly noted that many of the questions raised by the plaintiffs in this suit were inherently political; there are no traditional judicial standards available to adjudicate such political issues. They also argued that plaintiffs lacked standing under Article III because the injury to the plaintiffs was not “fairly traceable” to the conduct of the defendants.

After the District Court dismissed the case, 663 F. Supp. 2d 863 (N.D. Cal. 2009), the U.S. Supreme Court rejected a global warming case brought by a number of states and land trusts that sought injunctive relief against utilities under the Clean Air Act.  See American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011).  The Kivalina case is potentially significant as one of the first to apply and interpret the Supreme Court decision limiting climate change lawsuits under federal common law.
 

The plaintiffs in Kivalina argue that the AEP decision focused exclusively on injunctive relief and did not address damage claims under federal common law. Kivalina does not seek to set emissions caps. It seeks damages, they argued.  But that reading of the decision may overstate the importance of that fact; the Court focused on the issue of injunctive relief arguably because that was what was being sought by the states and land trusts.  Defendants argued that displacement of the federal common law applies to both injunctive and damages remedies.  When Congress crafted the regulatory framework establishing the Clean Air Act, it did not provide for any compensatory relief to an allegedly injured private party. Accordingly, a damages remedy should also be displaced.  Recognizing the nuisance theory in this context would enable a federal judge to substitute a different balancing of interests from the one made by the EPA, to which Congress assigned this function.


 

ALI Annual Meeting This Week

Your humble blogger is a member of the American Law Institute, attending the annual ALI meeting in San Francisco this week.  Readers likely know that ALI is the leading independent organization in the United States producing scholarly work to clarify, modernize, and otherwise improve the law.  It publishes the Restatements and other works, including, notably for our readers, the Principles of the Law of Aggregate Litigation.

Highlights of Day 1 included an address by Steve Zack, President of the ABA.  We have been privileged to know and work with this excellent lawyer for about 15 years.  His tenure as head of the ABA has been marked by a number of important initiatives, and at ALI he spoke of assaults on the important principle of equal justice under law.  The down economy, falling tax revenues, etc. have severely impacted access to justice, including to the degree that civil jury trials are indefinitely postponed or excessively delayed in some jurisdictions. Courts are closed, judicial staff let go.  Steve closed with a moving story about his grandparents fleeing from the communists in Cuba, heartened by the freedoms and rule of law in the U.S., and noting that they would never be refugees again because if the U.S. legal system collapsed, there would really be no place else to go.

Mush of the afternoon was devoted to the final chapter of the Restatement Third of Torts. Volume 1 of the Restatement was published in 2009, and covers the most basic topics of the law of torts: liability for intentional physical harm and for negligence causing physical harm, duty, strict liability, factual cause, and scope of liability (traditionally called proximate cause).  A second volume, dealing with affirmative duties, emotional harm, landowner liability, and liability of actors who retain independent contractors, will complete this work and is expected to be published in 2011.  Yesterday's session dealt with the final chapter, the liability of actors who retain independent contractors.

Professor Pryor of SMU was the leader for this final chapter, which deals both with direct liability of those who hire, and vicarious liability for the contractor's tortious conduct.  Students of the Restatements may recall that Dean Prosser himself once said that this topic was "the worst mess of any chapter" in the Restatement.  But Prof. Pryor has done great work to improve that situation.

A number of tweaks were suggested by the membership, including by my colleague Jim Beck, who noted that an illustration regarding the asbestos context would be helpful, given the search for new defendants that is a constant feature of that mass tort, and a clarification of the Reporter's sense that the references to public nuisance in the section referred to traditionally land-based public nuisance claims, and were not expressing any opinion on the recent attempts to apply the doctrine to non-traditional settings, such as climate change.

New Theory Emerges in Climate Change Litigation

Just as many eyes are focused on the climate change/global warming cases pending in the appellate courts, a group of activist environmentalists have enrolled new plaintiffs to bring an old legal theory into the climate change litigation mix. A case filed last week alleges that the atmosphere is a "public trust resource" and, as such, the government has a duty to act to protect it. See Loorz v. Jackson, No. CV11-2203 (N.D. Cal., 5/4/11).

Plaintiffs are youths, alleged to be "beneficiaries" of the "public trust," including the teenage head of the group, Kids v. Global Warming, which is also a named plaintiff. Defendants are the EPA and numerous federal agencies who allegedly could act to curb greenhouse gas emissions allegedly linked to global warming.

Plaintiffs' complaint contains the well-known litany of alleged effects of global warming, including rising seas, melting glaciers, warming oceans, changing precipitation, all as an alleged result of increasing CO2 levels.  It takes short term readings and phenomena and raises them to the level of global climactic changes, hypotheses into alleged scientific proof.

The plaintiffs seek declaratory and injunctive relief, on the theory that the atmosphere is a public trust; that under the public trust doctrine, the federal government has a fiduciary duty as trustee to protect the trust for the benefit of the benficiaries (plaintiffs); and that therefore the agencies should be ordered to act to reduce CO2 emissions by 6% a year beginning in 2013.

Thus, the claim moves beyond environmental statutes, such as the Clean Air Act, and tort doctrines such as public nuisance, both of which have been recognized as not applicable by most courts, to an even less applicable theory, the so-called public trust doctrine. This notion has a far more limited reach, with lakes and navigable streams being maintained for drinking, commerce, and recreation purposes under a public-trust doctrine -- or tidal and submerged lands not being given over to private ownership.

Media reports that similar lawsuits are being filed in several other courts, and that petitions for rulemakings by state administrative agencies will be filed in other states.

The cynical use of youthful plaintiffs (aren't we all "beneficiaries"?) may illustrate how clearly the environmental activists sees the challenges of persuading courts on the science and the law, that human emissions of carbon dioxide which comprises less than 0.04 percent of the atmosphere is somehow responsible for hurricanes and every other weather event we experience. 

Whatever the theory alleged, it seems likley that these cases will run headlong into the same issues that derail so much of the global warming agenda, the fact that these cases raise political questions that should be reserved for the political branches of government, not an inidvidual judge. Indeed, the legislative branch, acting within the confines of the common law public trust doctrine, is recognized in the calse law as the ultimate administrator of the trust and often is described as the ultimate arbiter of permissible uses of trust lands.


 

Supreme Court Hears Oral Argument in Second Circuit "Global Warming" Case

We have posted before about the climate change or so-called global warming litigation. Last week, the Supreme Court heard oral argument in one of the seminal cases in this area, American Electric Power Co. v. Connecticut, No. 10-174 (U.S. certiorari petition granted 12/6/10).

Readers will recall that the issues include whether a cause of action to cap carbon dioxide emissions can be implied under federal common law; and whether claims seeking to cap carbon dioxide emissions based on a court's weighing of the potential risks of climate change against the utility of defendants' conduct can be adjudicated through judicially discoverable and manageable standards, and whether they could ever be resolved without  the policy determinations clearly of a kind judges should not be making. (Justice Sotomayor, on the panel below, was recused.)

Extended time was given. The Court did not seem persuaded by the arguments of the defendants and the Justice Department that the case should be thrown out on procedural  grounds.  But on the merits, there appeared to be much skepticism about how a district court could ever proceed to a final decision in these kinds of cases.  Counsel for plaintiffs, the six states, had great difficulty  describing how to get there from here, how to have a manageable lawsuit against a small group of greenhouse gas emitters (among the billions of sources), and one focused on alleged  emission-reduction technology that they supposedly should have used. Counsel could muster not a single example of a similar suit that had proceeded to resolution.

Justice Ginsburg observed that the relief sought sounds like "the kind of thing EPA does..... You are setting up a District Judge as a kind of ‘super EPA.’”  And the rest of the Court's traditionally liberal wing seemed to suggest that this was an issue for the EPA.  Justice Kagan suggested that the suit overlapped the typical work of regulatory agencies; Justice Breyer asked an interesting hypothetical about whether the trial court could impose a remedy that was in essence a per-ton tax on carbon emissions, and assuming the finding was that this would be cost-effective, it would lead to substitution, it would "actually bring about a world without global warming." Plaintiffs answered in the negative.  But if there is no "power to enter that order, which could be proved to be extremely effective, and least possible harm to the consumer, why does [the court] have the power to enter the order you want?"

Justice Scalia wondered about the slippery slope, and if this suit could proceed against a handful of utilities, why couldn't the states sue every farmer who owned a cow, or every home that emitted from their home HVAC system?

Justice Alito took another approach to the difficulties of the litigation, noting that if a certain reduction in greenhouse gas emissions is ordered, that will increase the cost of electricity by a certain amount, and that will produce certain consequential effects. It will result in the loss of a certain number of jobs; it will mean that consumers will have less money to spend on other products and services; it will mean that some people will not be able to have air conditioning in the summer. That will have health effects on the elderly and people with breathing issues.  "How is the district judge -- what standard does the district judge have to decide those" questions?

Counsel for defendants correctly noted that the states were in essence asking a judge to perform a legislative and regulatory function, and balance a set of issues that is among the most complex, multifaceted, and consequential of any policy issues now before the country.

Chief Justice Roberts observed that a central issue when dealing with global warming is that there are costs and benefits on both sides, and a policy maker has to determine how much to readjust the world economy to address the global warming.  There are inevitable trade-offs. "I think that's a pretty big burden to impose on a district court judge."

Good news for the defendants: none of the eight justices appeared to voice any significant support for the plaintiffs' position.

 

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.


 

Supreme Court Passes on Case Involving State Retention of Private Counsel

The U.S. Supreme Court declined last week to review a California Supreme Court ruling that permitted cities and counties to engage private attorneys for public nuisance litigation against lead paint defendants on a contingency fee basis.  See Atlantic Richfield Co. v. Santa Clara County, Calif., No. 10-546 (U.S. cert. denied 1/10/11).

Readers may recall our previous posts on the important issue of  the power of government agencies to retain private plaintiffs attorneys on a contingency fee basis to prosecute nuisance litigation.  One case we posted on was County of Santa Clara v. The Superior Court of Santa Clara County, Cal., No. S163681 (7/26/10), in which a group of public entities composed of various California counties and cities were prosecuting a public-nuisance action against numerous businesses that manufactured lead paint.

The state supreme court permitted the use of contingency fee counsel with restrictions. To pass muster, neutral government attorneys must retain and exercise the requisite control and supervision over both the conduct of private attorneys and the overall prosecution of the case. Such control of the litigation by neutral attorneys supposedly will provide a safeguard against the possibility that private attorneys unilaterally will engage in inappropriate prosecutorial strategy and tactics geared to maximize their monetary reward. Accordingly, when public entities have retained the requisite authority in appropriate civil actions to control the litigation and to make all critical discretionary decisions, the impartiality required of government attorneys prosecuting the case on behalf of the public has been maintained, said the court. 

We noted that the list of specific indicia of control identified by the court seem quite strained, and to elevate form over substance, written agreements over human nature. Defendants sought cert review. In amicus filings, various trade organizations including the American Chemistry Council, the American Coatings Association, and the National Association of Manufacturers, argued that the financial incentives inherent in contingency-fee agreements simply distort the decision-making of both the government lawyers and the private attorneys they retain. Inadequately grounded contingency fee arrangements distort the state's duty of even-handedness not only to defendants, but also to the public. The amici argued that public nuisance cases are not typical tort lawsuits because they claim to be pursued in the public interest. It violates due process for the type of personal financial assessment made by contingency fee private lawyers to impact the decisions in a public nuisance action brought in the government's sovereign capacity. The briefing also raised another important practical issue: the attorney-client privilege and work-product doctrines will block any meaningful inquiry into whether the government is actually exercising the appropriate control that he state court said would solve these issues.

These kinds of contingency fee prosecutors threaten to diminish the public's faith in the fairness of civil government prosecutions. These arrangements frequently result in allegations that government officials are doling out contingency fee agreements to lawyers who make substantial campaign contributions.


 

Use of Contingency Fee Private Counsel Appealed

A variety of business groups have weighed in as amici, asking the Supreme Court to recognize how contingency fee arrangements by California counties and cities pursuing lead paint litigation violated the due process rights of the defendants. Atlantic Richfield Co. v. County of Santa Clara, No. 10-546 (U.S., amicus curiae brief submitted 11/24/10).

Readers may recall our previous posts about how the California supreme court had taken a major step backward by modifying a 1985 decision that had limited the power of government agencies to retain private plaintiffs attorneys on a contingency fee basis to prosecute nuisance litigation. County of Santa Clara v. The Superior Court of Santa Clara County, No. S163681 (Cal. 7/26/10).

A group of public entities composed of various California counties and cities were prosecuting a public-nuisance action against numerous businesses that manufactured lead paint. Defendants moved to bar the public entities from compensating their privately retained counsel by means of contingent fees. The lower court, relying upon People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985), ordered that the public entities were barred from compensating their private counsel by means of any contingent-fee agreement, reasoning that under Clancy, all attorneys prosecuting public-nuisance actions must be “absolutely neutral.”

The state supreme court acknowledged that Clancy arguably supported defendants' position favoring a bright-line rule barring any attorney with a financial interest in the outcome of a case from representing the interests of the public in a public nuisance abatement action. The court proceeded to engage in a reexamination of the rule in Clancy, however, finding it should be "narrowed," in recognition of both (1) the wide array of public-nuisance actions (and the corresponding diversity in the types of interests implicated by various prosecutions), and (2) the different means by which prosecutorial duties may be delegated to private attorneys supposedly without compromising either the integrity of the prosecution or the public's faith in the judicial process.

The state court had previously concluded that for purposes of evaluating the propriety of a contingent-fee agreement between a public entity and a private attorney, the neutrality rules applicable to criminal prosecutors were equally applicable to government attorneys prosecuting certain civil cases. The court had noted that a prosecutor's duty of neutrality stems from two fundamental aspects of his or her employment. As a representative of the government, a prosecutor must act with the impartiality required of those who govern. Second, because a prosecutor has as a resource the vast power of the government, he or she must refrain from abusing that power by failing to act evenhandedly.

But then, the court concluded that to the extent Clancy suggested that public-nuisance prosecutions always invoke the same constitutional and institutional interests present in a criminal case, that analysis was "unnecessarily broad" and failed to take into account the wide spectrum of cases a state may bring. The court described a range of cases; criminal cases require complete neutrality. In some ordinary civil cases, neutrality is not a concern when the government acts as an ordinary party to a controversy, simply enforcing its own contract and property rights against individuals and entities that allegedly have infringed upon those interests. The nuisance cases fall between these two extremes on the spectrum of neutrality required of a government attorney. The case was not an “ordinary” civil case in that the public entities' attorneys were appearing as representatives of the public and not as counsel for the government acting as an ordinary party in a civil controversy. The case was being prosecuted on behalf of the public, and, accordingly, the concerns identified in Clancy as being inherent in a public prosecution were, indeed, implicated.

But, despite that, state supreme court found that the interests affected in this case were not similar in character to those invoked by a criminal prosecution or the nuisance action in Clancy. The case would not have resulted in an injunction that prevents the defendants from continuing their current business operations. The challenged conduct (the production and distribution of lead paint) has been illegal in the state since 1978. Accordingly, whatever the outcome of the litigation, no ongoing business activity would be enjoined. Nor would the case prevent defendants from exercising any First Amendment right. Although liability may be based in part on prior commercial speech, the remedy would not involve enjoining current or future speech, said the court.

While a heightened standard of neutrality was required for attorneys prosecuting public-nuisance cases on behalf of the government, that heightened standard of neutrality is not always compromised by the hiring of contingent-fee counsel to assist government attorneys in the prosecution of a public-nuisance abatement action. Use of private counsel on a contingent-fee basis is permissible in such cases if neutral, conflict-free government attorneys retain the power to control and supervise the litigation.

In so finding, the court downplayed the reality that the public attorneys' decision-making conceivably could be influenced by their professional reliance upon the private attorneys' expertise and a concomitant sense of obligation to those attorneys to ensure that they receive payment for their many hours of work on the case.To pass muster, neutral government attorneys must retain and exercise the requisite control and supervision over both the conduct of private attorneys and the overall prosecution of the case. Such control of the litigation by neutral attorneys supposedly will provide a safeguard against the possibility that private attorneys unilaterally will engage in inappropriate prosecutorial strategy and tactics geared to maximize their monetary reward. .

The list of specific indicia of control identified by the state supreme court seem quite strained, however, and to elevate form over substance, and written agreements over human nature. The authority to settle the case involves a paramount discretionary decision and is an important factor in ensuring that defendants' constitutional right to a fair trial is not compromised by overzealous actions of an attorney with a pecuniary stake in the outcome.  In reality, even if the control of private counsel by government attorneys is viable in theory, it fails in application because private counsel in such cases are hired based upon their expertise and experience, and therefore always will assume a primary and controlling role in guiding the course of the litigation, rendering illusory the notion of government “control”.

Defendants are seeking cert review. In amicus filings, various trade organizations including the American Chemistry Council, the American Coatings Association, and the National Association of Manufacturers, have argued that the financial incentives inherent in contingency-fee agreements simply distort the decision-making of both the government lawyers and the private attorneys they retain. Inadequately grounded contingency fee arrangements distort the state's duty of even-handedness not only to defendants, but also to the public.  The amici argue that public nuisance cases are not typical tort lawsuits because they claim to be pursued in the public interest. It violates due process for the type of personal financial assessment made by contingency fee private lawyers impacts the decisions in a public nuisance action brought in the government's sovereign capacity. The briefing also raises another important practical issue: the attorney-client privilege and work-product doctrines will block any meaningful inquiry into whether the government is actually exercising the appropriate control that he state court said would solve these issues.

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.

 

 

Federal Appeals Court Vacates Class Action Verdict In Radiation Case

Last week, a federal appeals court vacated a $926 million judgment against Rockwell International  and Dow Chemical over alleged plutonium contamination. See Cook v. Rockwell International Corp., No. 08-1224 (10th Cir., 9/3/10).

The owners of properties near the former Rocky Flats Nuclear Weapons Plant (“Rocky Flats”) filed a proposed class action against the facility’s operators under the Price-Anderson Act, alleging trespass and nuisance claims arising from the alleged release of plutonium particles onto their properties. Rocky Flats, located near Denver, Colorado, was established by the US in the 1950s to produce nuclear weapon components. The government contracted with Dow to operate the facility from 1952 to 1975, and then with Rockwell from 1975 to 1989.

Some radiation cases seem to last longer than the half-life of uranium.  The complaint here was filed in 1990.  A class was certified in 1993. After over fifteen years of litigation, the district court conducted a jury trial between October, 2005 and January, 2006, resulting in a jury verdict in favor of the plaintiff class, which numbered about 15,000.

This appeal ensued, and a main issue was the jury instructions (we leave for another day the preemption and PAA statutory issues). In accordance with the district court’s construction of Colorado law, the jury instructions did not require plaintiffs to establish either an actual injury to their properties or a loss of use of their properties. With respect to the nuisance claims, the district court instructed the jury that plaintiffs could establish defendants’ conduct interfered with the use and enjoyment of the class properties by proving defendants’ conduct exposed plaintiffs to “some increased risk of health problems” or caused conditions “that pose a demonstrable risk of future harm" to their property area.  As to plaintiffs’ trespass claims, the district court instructed the jury that plaintiffs were not required to show that plutonium is present on the class members' properties at any particular level or concentration, that they suffered any bodily harm because of the plutonium, or that the presence of plutonium damaged these properties in some other way.

First, the nuisance theory. Under Colorado law, a plaintiff asserting a nuisance claim must establish an interference with the use and enjoyment of his property that is both “substantial” and “unreasonable.”  A jury may find the presence of radioactive contamination creates an actual risk to health and thereby interferes with a plaintiff’s use or enjoyment of his land if the contamination disturbs the plaintiff’s comfort and convenience, including his peace of mind, with respect to his continued use of the land.  But, said the court,  a scientifically unfounded risk cannot rise to the level of an unreasonable and substantial interference. To the extent plaintiffs here relied on anxiety from an increased risk to their health as an interference with the use and enjoyment of their properties, that anxiety must arise from scientifically verifiable evidence regarding the risk and cannot be wholly irrational. No reasonable jury could find that irrational anxiety about a risk that cannot be scientifically verified tips this balance so as to render the interference "unreasonable."  So the charge was wrong to the extent it permitted any subjective anxiety to suffice for an unreasonable interference.

The court of appeals then turned to the trespass theory.  And here, the issue turned on whether the plaintiffs' claim was a traditional trespass theory or a so-called "intangible trespass."  The parties agreed that to prevail under a traditional trespass claim, a plaintiff must establish only a physical intrusion upon the property of another without the proper permission from the person legally entitled to possession. A plaintiff need not establish any injury to his legally protected interest in the land or damage to the land itself.  Unlike a traditional trespass claim, however, the court made clear that an intangible trespass claim requires an aggrieved party to prove physical damage to the property  caused by such intangible intrusion. 

So is the invasion of plutonium particles onto real property a traditional or intangible trespass claim?  The cases suggest that “intangible” is something that is impalpable, or incapable of being felt by touch. Noise intrusion and electromagnetic fields emitted by power lines are examples of the intangible. Neither can be perceived by any of the senses.   Here,  plaintiffs had to concede that the plutonium particles allegedly present on their properties are impalpable and imperceptible by the senses. Although the particles in question have mass and are "physically present" on the land, because the particles are impalpable, the trespass alleged here must be tried as an intangible trespass.

Consequently, the instructions on this point were also in error, and on remand, plaintiffs will be required to prove the plutonium contamination caused “physical damage to the property” in order to prevail on their trespass claims.

Interestingly, because the district court’s class certification analysis failed to consider whether
plaintiffs could establish various elements of their claims, properly defined, the 10th Circuit also reversed the district court’s class certification ruling. Upon remand, the district court will have to  revisit the class certification question to determine whether plaintiffs can establish the proper elements of their claims on a class-wide basis.  Obviously, the need to show unreasonable interference and physical damage may each create predominating individual issues.

 

U.S. Urges Reversal of 2d Circuit Global Warming Nuisance Decision

The federal government (Acting Solicitor General Neal Katyal on behalf of the Tennessee Valley Authority, a government-owned company), last week urged the Supreme Court to overturn a court of appeals decision that allowed Connecticut and several other states to move forward in their suit seeking greenhouse gas emissions reductions under a federal common law nuisance theory. American Electric Power Co. v. Connecticut, No. 10-174 (U.S., brief filed 8/24/10).

Readers may recall from earlier posts that in Connecticut v. American Electric Power Co., 2009 WL 2996729 (2nd Cir. 9/21/09),  two groups of plaintiffs, one consisting of eight states and New York City, and the other consisting of three land trusts, sued several electric power corporations that own and operate fossil-fuel-fired power plants, seeking abatement of defendants' alleged ongoing contributions to the "public nuisance of global warming." Plaintiffs claimed that global warming, to which the defendants allegedly contributed as large emitters of carbon dioxide, is causing and will continue to cause serious harm affecting human health and natural resources. The plaintiffs' theory is that carbon dioxide acts as a greenhouse gas that traps heat in the earth's atmosphere, and that as a result of this trapped heat, the earth's temperature has risen over the years and will continue to rise in the future. Pointing to an alleged “clear scientific consensus” that global warming has already begun to alter the natural world, plaintiffs predicted that it “will accelerate over the coming decades unless action is taken to reduce emissions of carbon dioxide.”

When thinking about "global climate" changes, MassTortDefense has always been sobered by the fact that humans have been trying to measure temperature consistently only since the1880s, during which time advocates think the world may have warmed by about +0.6 °C -- which is less than the margin of error on our ability to measure the Earth's temperature!

Anyway, plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state nuisance law, to force defendants to cap and then reduce their carbon dioxide emissions. The district court held that plaintiffs' claims presented a non-justiciable political question and dismissed the complaints. 406 F. Supp. 2d 265.

On appeal to the Second Circuit, plaintiffs argued that the political question doctrine does not bar adjudication of their claims; that they had standing to assert their claims; that they had properly stated claims under the federal common law of nuisance; and that their claims were not displaced by any federal statutes.

In a lengthy opinion, the two judges (Justice, then-Judge Sotomayor had to drop out) held that the district court erred in dismissing the complaints on political question grounds; that all of plaintiffs had standing; that the federal common law of nuisance governs their claims; that plaintiffs had stated claims under the federal common law of nuisance; that their claims were not displaced by other federal law.

In a very minimalist interpretation of what is needed for standing, the Second Circuit distinguished multiple precedents of the Supreme Court which held that to have standing a plaintiff must allege an injury that is concrete, direct, real, and palpable -- not abstract.  Injury must be particularized, personal, individual, distinct, and differentiated -- not generalized or undifferentiated. The Supreme Court has further stated that the asserted injury must be actual or imminent, certainly impending and immediate --not remote, speculative, conjectural, or hypothetical. The court rejected defendants challenge that the contentions of future injury at some unspecified future date are not the kind of “imminent” injury required. The court also gave short shrift to the argument that plaintiffs could neither isolate which alleged harms will be caused by defendants' emissions, nor allege that such emissions would alone cause any future harms.

As we noted here, several defendants have filed a cert petition that raises the important, recurring question whether states and private plaintiffs have standing to seek, and whether federal common law provides authority for courts to impose, a non-statutory, judicially created regime for setting caps on greenhouse gas emissions based on vague and indeterminate nuisance concepts. It also asks the Court to decide whether judges, in addition to Congress and the EPA, may regulate greenhouse gas emissions at the behest of states and/or private parties and, if so, under what standards. Under the Second Circuit's ruling, a single judge could 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 different standards for other utilities or industries, or conflicting standards for these same utilities.

While the Second Circuit called this an ordinary tort suit, this litigation seeks to transfer to the judiciary nearly standard-less authority for some of the most important and sensitive economic, energy, and social policy issues presently before the country. Federal nuisance law is neither sufficiently developed nor sufficiently detailed to substitute for actual regulation. Thus, at stake is the financial health and security of numerous sectors of the economy. Indeed, virtually every entity and industry in the world is responsible for some emissions of carbon dioxide and is thus a potential defendant in climate change nuisance actions under the theory of this case. The threat of litigation, and the indeterminate exposure to monetary and injunctive relief that it entails, could substantially impede and alter the future investment decisions and employment levels of all affected industries, and ultimately every sector of the economy.


Now the government brief takes a different approach, asking the Court not to accept the case for full review, but rather to simply vacate the decision and direct the Second Circuit to reconsider two issues: whether the plaintiffs have standing to bring the lawsuit, and whether recent actions by the EPA  to regulate greenhouse gas emissions supplant the reason given by the Second Circuit for allowing the lawsuit to go forward.  Since the initial decision below, EPA has issued final rules establishing reporting requirements for major emitters of greenhouse gases; issued a finding that greenhouse gas emissions from cars and light trucks endanger public health and welfare; and established new greenhouse gas emissions limits for cars and light trucks. In addition, EPA has signed off on a final rule requiring that additional categories of sources begin to track and report greenhouse gas emissions under EPA's earlier GHG reporting rule.  The Second Circuit decision was seemingly predicated on the "now-obsolete conclusion" that EPA had not taken action to regulate carbon-dioxide emissions from stationary sources. 

The TVA brief also argues that  that the lower court should dismiss the case based on “prudential standing,” a narrower ground than the case or controversy argument of the other defendants.


 

Defendants in Second Circuit Climate Change Case Seek Cert

Several electric power companies have asked the Supreme Court to review a Second Circuit ruling that Connecticut and several other states may seek greenhouse gas emissions reductions under a federal common law nuisance claim.  American Electric Power Co. v. Connecticut, No. 10-174 (U.S. 8/2/10). The petition for certiorari was filed by American Electric Power Co., Duke Energy Corp., Southern Co., and Xcel Energy Inc.

Readers may recall that in 2004, two groups of plaintiffs, one consisting of eight states and New York City, and the other consisting of three land trusts, sued six electric power corporations that own and operate fossil-fuel-fired power plants, seeking abatement of defendants' alleged ongoing contributions to the "public nuisance of global warming." Plaintiffs claimed that global warming, to which the defendants allegedly contributed as large emitters of carbon dioxide, is causing, and will continue to cause serious harm affecting human health and natural resources.

Because of the procedural posture (motion to dismiss), the court did not really describe the other side of the story, but readers of MassTortDefense know that change is what the climate is always doing as a result of the planet's orbital eccentricities, axial wobbles, solar brightness changes, cosmic ray flux, and multiple other factors. There are numerous plausible terrestrial drivers of climate changes too. While global warming is a serious topic worthy of scientific study and political discussion, plaintiffs' alleged "consensus" on this issue ignores the fact that global mean temperature is only one part of climate, and may not even be the best metric. Moreover, the most important driver of the greenhouse effect are water vapor and clouds. Carbon dioxide is only about 0.038% of the atmosphere, and humans are responsible for only about 3.4% of carbon dioxide emitted to the atmosphere annually, the rest of it being natural.  When thinking about "global climate" changes, we have to be cognizant of the fact that humans have been trying to measure the temperature consistently only since the1880s, during which time even advocates think the world may have warmed by about +0.6 °C -- which is less than the margin of error on our ability to measure the Earth's temperature. 

Anyway, plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state nuisance law, to force defendants to cap and then reduce their carbon dioxide emissions. The district court correctly held that plaintiffs' claims presented a non-justiciable political question and dismissed the complaints. On appeal, plaintiffs argued that the political question doctrine does not bar adjudication of their claims; that they had standing to assert their claims; that they had properly stated claims under the federal common law of nuisance; and that their claims were not displaced by any federal statutes.

In a lengthy opinion, the court of appeals held that the district court erred in dismissing the complaints on political question grounds; that all of plaintiffs had standing; that the federal common law of nuisance governs their claims; that plaintiffs had stated claims under the federal common law of nuisance; that their claims were not displaced.  In a very minimalist interpretation of what is needed for standing, the Second Circuit distinguished multiple precedents of the Supreme Court which held that to have standing a plaintiff must allege an injury that is concrete, direct, real, and palpable -- not abstract. Injury must be particularized, personal, individual, distinct, and differentiated -- not generalized or undifferentiated. The Supreme Court has further stated that the asserted injury must be actual or imminent, certainly impending and immediate --not remote, speculative, conjectural, or hypothetical. The court of appeals rejected defendants challenge that these vague contentions of future injury at some unspecified future date are not the kind of “imminent” injury required. The court also gave short shrift to the argument that plaintiffs could neither isolate which alleged harms will be caused by defendants' emissions, nor allege that such emissions would alone cause any future harms. 

This petition raises the important, recurring question whether states and private plaintiffs have standing to seek, and whether federal common law provides authority for courts to impose, a non-statutory, judicially created regime for setting caps on greenhouse gas emissions based on vague and indeterminate nuisance concepts.  It also asks the Court to decide whether judges, in addition to Congress and the EPA, may regulate greenhouse gas emissions at the behest of states and private parties and, if so, under what standards.  Under the Second Circuit's ruling, a single judge could 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 different standards for other utilities or industries, or conflicting standards for these same utilities.

While the Second Circuit called this an ordinary tort suit, this litigation seeks to transfer to the judiciary nearly standardless authority for some of the most important and sensitive economic, energy, and social policy issues presently before the country.  Thus, at stake is the financial health and security of numerous sectors of the economy. Indeed, virtually every entity and industry in the world is responsible for some emissions of carbon dioxide and is thus a potential defendant in climate change nuisance actions under the theory of this case. The threat of litigation, and the indeterminate exposure to monetary and injunctive relief that it entails, could substantially impede and alter the future investment decisions and employment levels of all affected industries, and ultimately every sector of the economy.

California Supreme Court Amends Rules for Government Retention of Private Contingent Fee Counsel

The California supreme court has taken a major step backward by modifying a 1985 decision that had properly limited the power of government agencies to retain private plaintiffs attorneys on a contingency fee basis to prosecute nuisance litigation. County of Santa Clara v. The Superior Court of Santa Clara County, Cal., No. S163681 (7/26/10). 

A group of public entities composed of various California counties and cities were prosecuting a public-nuisance action against numerous businesses that manufactured lead paint. Defendants moved to bar the public entities from compensating their privately retained counsel by means of contingent fees. The lower court, relying upon People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985), ordered that the public entities were barred from compensating their private counsel by means of any contingent-fee agreement, reasoning that under Clancy, all attorneys prosecuting public-nuisance actions must be “absolutely neutral.”

The supreme court acknowledged that Clancy arguably supported defendants' position favoring a bright-line rule barring any attorney with a financial interest in the outcome of a case from representing the interests of the public in a public-nuisance abatement action. The court proceeded to engage in a reexamination of the rule in Clancy, however, finding it should be "narrowed," in recognition of both (1) the wide array of public-nuisance actions (and the corresponding diversity in the types of interests implicated by various prosecutions), and (2) the different means by which prosecutorial duties may be delegated to private attorneys supposedly without compromising either the integrity of the prosecution or the public's faith in the judicial process.

The court had previously concluded that for purposes of evaluating the propriety of a contingent-fee agreement between a public entity and a private attorney, the neutrality rules applicable to criminal prosecutors were equally applicable to government attorneys prosecuting certain civil cases. The court had noted that a prosecutor's duty of neutrality stems from two fundamental aspects of his or her employment. As a representative of the government, a prosecutor must act with the impartiality required of those who govern. Second, because a prosecutor has as a resource the vast power of the government, he or she must refrain from abusing that power by failing to act evenhandedly.

But now, the court concluded that to the extent Clancy suggested that public-nuisance prosecutions always invoke the same constitutional and institutional interests present in a criminal case, that analysis was "unnecessarily broad" and failed to take into account the wide spectrum of cases that fall within the public-nuisance rubric. In the present case, found the court, both the types of remedies sought and the types of interests implicated differed significantly from those involved in Clancy and, accordingly, invocation of the strict rules requiring the automatic disqualification of criminal prosecutors was unwarranted.

The court described a range of cases; criminal cases require complete neutrality. In some ordinary civil cases, neutrality is not a concern when the government acts as an ordinary party to a controversy, simply enforcing its own contract and property rights against individuals and entities that allegedly have infringed upon those interests. The present case fell between these two extremes on the spectrum of neutrality required of a government attorney. The case was not an “ordinary” civil case in that the public entities' attorneys were appearing as representatives of the public and not as counsel for the government acting as an ordinary party in a civil controversy. A public-nuisance abatement action must be prosecuted by a governmental entity and may not be initiated by a private party unless the nuisance is personally injurious to that private party. The case was being prosecuted on behalf of the public, and, accordingly, the concerns identified in Clancy as being inherent in a public prosecution were, indeed, implicated.

But, the court found that the interests affected in this case were not similar in character to those invoked by a criminal prosecution or the nuisance action in Clancy.  This case would not result in an injunction that prevents the defendants from continuing their current business operations. The challenged conduct (the production and distribution of lead paint) has been illegal in the state since 1978. Accordingly, whatever the outcome of the litigation, no ongoing business activity would be enjoined. Nor would the case prevent defendants from exercising any First Amendment right. Although liability may be based in part on prior commercial speech, the remedy would not involve enjoining current or future speech, said the court.

With the public-nuisance abatement action being prosecuted on behalf of the public, the attorneys prosecuting this action, although not subject to the same stringent conflict-of-interest rules governing the conduct of criminal prosecutors or adjudicators, were held to be subject to a heightened standard of ethical conduct applicable to public officials acting in the name of the public — standards that would not be invoked in an ordinary civil case.  That is,  to ensure that an attorney representing the government acts evenhandedly and does not abuse the unique power entrusted in him or her in that capacity — and that public confidence in the integrity of the judicial system is not thereby undermined — a heightened standard of neutrality is required for attorneys prosecuting public-nuisance cases on behalf of the government.

The court then determined that this heightened standard of neutrality is not always compromised by the hiring of contingent-fee counsel to assist government attorneys in the prosecution of a public-nuisance abatement action.  Use of private counsel on a contingent-fee basis is permissible in such cases if neutral, conflict-free government attorneys retain the power to control and supervise the litigation.  In so finding, the court downplayed the reality that the public attorneys'  decision-making conceivably could be influenced by their professional reliance upon the private attorneys' expertise and a concomitant sense of obligation to those attorneys to ensure that they receive payment for their many hours of work on the case.

To pass muster, neutral government attorneys must retain and exercise the requisite control and supervision over both the conduct of private attorneys and the overall prosecution of the case. Such control of the litigation by neutral attorneys supposedly will provide a safeguard against the possibility that private attorneys unilaterally will engage in inappropriate prosecutorial strategy and tactics geared to maximize their monetary reward. Accordingly, when public entities have retained the requisite authority in appropriate civil actions to control the litigation and to make all critical discretionary decisions, the impartiality required of government attorneys prosecuting the case on behalf of the public has been maintained, said  the court.

The list of specific indicia of control identified by the court seem quite strained, and to elevate form over substance, written agreements over human nature. The authority to settle the case involves a paramount discretionary decision and is an important factor in ensuring that defendants' constitutional right to a fair trial is not compromised by overzealous actions of an attorney with a pecuniary stake in the outcome. The court found that retention agreements between public entities and private counsel must specifically provide that decisions regarding settlement of the case are reserved exclusively to the discretion of the public entity's own attorneys. Similarly, such agreements must specify that any defendant that is the subject of such litigation may contact the lead government attorneys directly, without having to confer with contingent-fee counsel.

But in reality, even if the control of private counsel by government attorneys is viable in theory, it fails in application because private counsel in such cases are hired based upon their expertise and experience, and therefore always will assume a primary and controlling role in guiding the course of the litigation, rendering illusory the notion of government “control”.  The concurring opinion questioned whether public attorneys under all foreseeable circumstances will be able to exercise the independent supervisory judgment the majority concludes is essential if private counsel are to be retained under contingent fee agreements. 

The court noted that the issues all arose under its authority to regulated the practice of law, and no statutes or state constitutional provisions were at issue, which may distinguish the case from the issue in other states.

Update on "Climate Change" Litigation -- Vanishing Quorum

Readers may recall my post about the Fifth Circuit granting the petition for rehearing en banc in Comer v. Murphy Oil.  The case involves a lawsuit by property owners against some three dozen oil, coal, and chemical companies, alleging that the defendants' activities contributed to climate change and magnified the effects of Hurricane Katrina, and thus exacerbated the damage from the storm. The trial court dismissed the suit on political question and standing grounds.  On appeal, a panel of the 5th Circuit reversed last Fall, finding that the plaintiffs did have standing and that the political question doctrine did not apply.

The defendants filed a petition for rehearing en banc, which was granted, and set the case for oral argument next week.  But, the clerk recently sent a letter noting the cancellation of en banc oral arguments.  Apparently, since the en banc court was constituted, new circumstances have arisen that make it necessary for another judge to recuse, leaving only eight members of the court able to participate in the case. Consequently, said the clerk, the en banc court has lost its quorum. Seven members of the court had previously recused themselves from the case.

Several defendants have filed a motion arguing for a different reading of the rule regarding a quorum, and/or raising the argument that the district court's opinion ought to remain the controlling law of the case, rather than the panel's decision which was vacated by the en banc decision. The court has responded by asking for supplemental briefing on these issues. Specifically, the order invited the parties to address the matter “as they think appropriate” but specifically directed them to analyze the interplay between the following rules and statute in resolving the disposition of the appeal: Fed. R. App. P. 35(a), 28 U.S.C. §46 (c) and (d), Fed. R. App. P. 41 (a) and (d) (1), 5th Cir. Local Rule 41.3, and Fed. R. App. P. 2. The court also instructed the parties that they may consider the rulings of Chrysler Corp. v. United States, 314 U.S. 583 (1941) and North American Co. v. Securities & Exchange Comm’n, 320 U.S. 708 (1943) and the Rule of Necessity.

Presumably, three outcomes are possible:the court decides it actually does have a quorum and thus oral argument is rescheduled; the panel decision is reinstated by default (with an ensuing cert petition to the Supreme Court); or, the district court is affirmed without opinion.

Many observers had predicted that the en banc decision by the 5th Circuit would create a circuit split  with the 2d Circuit decision in Connecticut v. American Electric Power. There, a two-judge panel reversed the lower court dismissing the case on political question grounds, and finding the plaintiffs had standing to assert nuisance claims (with a similar attenuated causation theory).  This presumably would have paved the way for Supreme Court cert review.  Of course, Justice Alito has recused himself in cases involving ExxonMobil due to his ownership of its stock, and  Justice Breyer has recused himself from cases involving BP.  Perhaps Justice Sotomayor would also recuse herself due to her participation in the Connecticut v. American Electric Power case when she was on the Second Circuit.  So any possible Supreme Court review may be complicated also by the recusal and quorum issues.

Stay tuned.  This one is getting even more interesting, if thatis possible.

 

"Global Warming" Litigation Update (Part II)

Part two of our update on recent climate change litigation.  In our last post, we discussed the well reasoned decision in Native Village of Kivalina v. ExxonMobil Corp., 2009 WL 3326113 (N.D.Cal. 9/30/09).  We contrasted it with the somewhat startling (2-judge) Second Circuit panel decision in Connecticut v. American Electric Power Co., allowing a group of states and land trusts to proceed with a so-called global warming tort suit.

In another noteworthy recent case, the Fifth Circuit recently held that a group of property owners in Mississippi can proceed with global warming-related claims. See Comer v. Murphy Oil Co., 2009 WL 3321493 (5th Cir. 10/16/09).  A proposed class of thousands of property owners alleged that damage to their Mississippi coastal properties from Hurricane Katrina would not have been as serious had not defendants' climate change conduct intensified the storm. Along with the Second Circuit decision, this opinion represents a clear and dangerous trend within the court of appeals to usurp Congress, warp the traditional nuisance doctrine, and plunge the federal courts into what are essentially political questions.

In Comer, the district court correctly held that tort suits against electric power companies and other alleged large greenhouse gas emitters should not proceed in federal court because climate change, and tort claims based on alleged climate change, is fraught with national political and policy considerations.  The Fifth Circuit reversed, asserting that until Congress, the executive branch, or a federal agency acts more directly on global warming, Mississippi common law tort rules questions posed by the case are justiciable because there is no commitment of those issues exclusively to the political branches of the federal government.  Thus, plaintiffs had demonstrated standing for public and private nuisance, trespass, and negligence claims; the claims were justiciable and did not present a political question. 

The Fifth Circuit in some ways went  further than the Second Circuit, ruling in essence that climate change-related claims are not limited to injunctions being brought by governmental entities or even quasi-public groups like nonprofit land trusts. The Fifth Circuit ruled that private property owners under Mississippi law also may have standing to bring climate change-related nuisance and trespass claims for both property and punitive damages. That holding may propel additional climate change litigation -- if the ruling stands following likely rehearing motions.

The causation allegation here was arguably even more attenuated than the long, convoluted causation chain in other global warming cases; plaintiffs asserted that defendants' greenhouse gases didn't cause but contributed to global warming, which made the waters in the Gulf of Mexico warmer, which didn't create but then made Hurricane Katrina more intense, which then caused their alleged property damage to be worse.  That stands as perhaps the most attenuated, least supportable, causal link in tort history -- the absence of proximate cause as a matter of law.  The concurrence noted this issue, and would have affirmed a dismissal on this basis.  With class certification, expert discovery, Daubert, and summary judgment hurdles to be crossed, it is clear that this causation issue will not soon disappear.

Ironically, the rash of global warming opinions in cases that had been argued long ago may reflect a recognition of the new administration and a changing emissions policy... in turn, reflecting the political nature of the issues. All readers ought to have profound reservations about the notion, inherent in all private climate change litigation, that the tort system is capable of adjudicating rights and responsibilities on the subject of global warming.

The decisions potentially present business interests with difficult choices: proposed regulations from the administration may be onerous and not grounded in good science; but absent federal action, defendants may risk public nuisance liability in the courts on issues that juries cannot begin to handle well.  

Global Warming Litigation Update (Part I)

Today, the first of a couple of posts on the so-called global warming litigation.  We have posted on the climate change litigation before, and here, and we note first that a  federal trial court recently dismissed a global climate change suit filed by Inupiat Eskimos from Kivalina, Alaska against dozens of oil and energy companies. Native Village of Kivalina v. ExxonMobil Corp., 2009 WL 3326113 (N.D.Cal. 9/30/09).

The suit was brought by the village of about 400 people, who alleged that as a result of global warming, the Arctic sea ice that protects the Kivalina coast from storms has been diminished, and that resulting erosion will require relocation of the residents to another village.  (The town of Kivalina is located at the tip of a six-mile-long barrier reef, about 70 miles north of the Arctic Circle on Alaska's northwest coast.) Plaintiffs sought damages under federal common law nuisance, state nuisance, and civil conspiracy theories. They alleged that defendants were a major part of the cause of excessive emissions of carbon dioxide and other greenhouse gases, which plaintiffs claimed are causing global warming.

The defendants properly noted that many of the questions raised by the plaintiffs in this suit were inherently political; there are no traditional judicial standards available to adjudicate such political issues. They also argued that plaintiffs lacked standing under Article III because the injury to the plaintiffs was not “fairly traceable” to the conduct of the defendants. 

Judge Saundra Brown Armstrong of the U.S. District Court for the Northern District of California agreed, finding global warming to be a political issue not appropriate for a federal court to decide. The courts have long indicated that disputes involving political questions lie outside of the Article III jurisdiction of federal courts.  Corrie v. Caterpillar, Inc., 503 F.3d 974, 980 (9th Cir.2007). The political question doctrine serves to prevent the federal courts from intruding unduly on certain policy choices and value judgments that are constitutionally committed to Congress or the executive branch.  Koohi v. United States, 976 F.2d 1328, 1331 (9th Cir.1992).  A non-justiciable political question exists when, to resolve a dispute, the court must make a policy judgment of a legislative nature, rather than resolving the dispute through legal and factual analysis. Courts typically look at three broad factors: (i) Does the issue involve resolution of questions committed by the text of the Constitution to a coordinate branch of Government? (ii) Would resolution of the question demand that a court move beyond areas of judicial expertise? (iii) Do prudential considerations counsel against judicial intervention?

Under the second factor, which was key here, the court concluded that a factfinder would have to weigh, inter alia, the energy-producing alternatives that were available in the past and consider their respective impact on far ranging issues such as their reliability as an energy source, safety considerations and the impact of the different alternatives on consumers and business at every level. The factfinder would then have to weigh the benefits derived from those choices against the risk that increasing greenhouse gases would in turn increase the risk of causing flooding along the coast of a remote Alaskan locale. Plaintiffs ignored this aspect of their claim and otherwise failed to articulate any particular judicially discoverable and manageable standards that would guide a factfinder in rendering a decision that is principled, rational, and based upon reasoned distinctions.

Secondly, plaintiffs conceded they were unable to trace their alleged injuries to any particular defendant.  While they sought to rely on, by analogy, injury concepts under the Clean Water Act, the court concluded that even if the theory were applicable outside the context of a statutory water pollution claim, it is simply inapposite where, as here, plaintiffs have not alleged that even the “seed” of their injury can be traced to any of the defendants. Plaintiffs acknowledged that the genesis of the global warming phenomenon dates back centuries and is a result of the emission of greenhouse gases by a multitude of sources other than the defendants. The complaint further alleges that the level of atmospheric carbon dioxide -- “the most significant greenhouse gas emitted by human activity” -- has been increasing steadily “since the dawn of the industrial revolution in the 18th century, and more than one-third of the increase has occurred since 1980.”  Significantly, the source of the greenhouse gases are undifferentiated and cannot be traced to any particular source, let alone a defendant, given that they rapidly mix in the atmosphere. 

The court thus dismissed the suit for lack of subject matter jurisdiction, both because of the political question, and because the plaintiffs could not prove the companies caused the alleged injury.

The decision is consistent with most prior decisions coming out of the district courts, which generally have viewed these climate change cases as raising fundamentally political judgments.  The decision is a more coherent analysis than the recent, ostensibly conflicting, ruling of the Second Circuit allowing plaintiffs to sue over climate change under federal common law, in Connecticut v. American Electric Power Co., No. 05-5104-cv (2d Cir. 9/21/09).  (It also will be contrasted in our next post with the Fifth Circuit's recent ruling in Comer v. Murphy Oil Co.

The Second Circuit case involved a suit by states and environmental groups against various electric power companies; these plaintiffs made allegations similar to those in the Alaska case, and that defendants were thus harming the environment, the states' economies, and public health.  The appeals court overturned a well-reasoned trial court ruling that the case represented a non-justiciable political question.  

Unlike the Second Circuit, the California district court recognized major distinctions between ordinary pollution cases and planet-wide climate change allegations;  the court was wisely unwilling to confront -- and could not ignore the existence of -- the myriad legal and policy issues relating to imposing liability on a planetary scale. Judge Armstrong disagreed with the appeals court conclusion that traditional water pollution and air pollution nuisance cases provide appropriate guidance in assessing global warming "nuisance" cases.  While a water pollution claim typically involves a discrete, geographically definable waterway, plaintiffs’ global warming claim is based on the emission of greenhouse gases over decades from innumerable sources located throughout the world and supposedly affecting the entire planet.

Fundamentally, such a nuisance claim would require the judiciary to make a policy decision about who should bear the cost of global warming, if it turns out to be a real climatic phenomenon. Though alleging that defendants are responsible for a "substantial portion" of greenhouse gas emissions, plaintiffs also acknowledge in these cases that virtually everyone on Earth is responsible at some level for contributing to such emissions (even you readers). Thus, plaintiffs are in effect asking the courts to make a political judgment that the two dozen defendants named in this action should be the only ones to bear the cost of contributing to global warming.  The Second Circuit, in contrast, in American Electric, tried to draw a highly dubious distinction between a claim seeking a comprehensive solution to global climate change, a task that arguably falls within the purview of the political branches, and a claim "merely" to limit emissions that allegedly constitute a public nuisance -- because the emissions (part of the highly controversial political debate about global warming) are greenhouse gasses and the source of alleged climate change caused by human activity.    

 

Federal Court Approves Class Action Settlement in Toxic Tort Case

The Sixth Circuit has approved a class action settlement in an interesting toxic tort case. Moulton v. U.S. Steel Corp., 2009 WL 2997921 (6th Cir., 9/22/09).

This class action was filed in 2004 by neighbors of a steel mill operated by defendant U.S. Steel, and alleged various claims arising from “metal-like dust and flakes” allegedly falling on plaintiffs' property. The district court in Michigan certified the class in 2006, and the parties eventually agreed on a settlement for $4.45 million in 2008.

As is not unheard of, some class members and at least one plaintiffs' lawyer objected to the settlement. They argued that the settlement agreement was not “fair, reasonable, and adequate” under Fed.R.Civ.P. 23(e)(2).  Specifically, they argued (1) that the agreement dis-serves the “public interest” due to the broad scope of the release, (2) that alleged “collusion” between Class Counsel and U.S. Steel tarnished the agreement and (3) that the agreement improperly prioritizes the distribution of the settlement proceeds. The district court rejected all such objections, and the court of appeals reviewed the district court's conclusions for abuse of discretion.

To determine whether a settlement agreement satisfies Rule 23's fairness standard,  courts consider:  (1) the risk of fraud or collusion;  (2) the complexity, expense and likely duration of the litigation;  (3) the amount of discovery engaged in by the parties;  (4) the likelihood of success on the merits;  (5) the opinions of class counsel and class representatives;  (6) the reaction of absent class members; and (7) the public interest. UAW v. Gen. Motors Corp., 497 F.3d 615, 631 (6th Cir.2007). 

On the issue of the scope of the release, the release of the continuing nuisance claims was held not unfair, because, contrary to the objections, it did not go“well beyond the claims plead in the complaint."  Since 2005, every version of the plaintiffs' complaint included a claim for “continuing private nuisance.”  As class members, the objectors are the last individuals in a position to claim lack of notice that this claim was on the table at the settlement talks. And the bar on future continuing nuisance claims applies only to claims arising out of conditions that existed prior to the settlement. It does not preclude future continuing nuisance claims based on emissions from new equipment installed after the date of settlement. Nor does it bar future claims based on old equipment, so long as the continuing nuisance is a “new” one.

Neither did the objectors make the case that the agreement was a product of collusion. See Williams v. Vukovich, 720 F.2d 909, 921 (6th Cir.1983). The duration and complexity of the litigation undermined the objectors' suspicions. The parties litigated for almost four years before reaching a settlement agreement. The court fielded numerous contested pretrial motions. Class Counsel pursued multiple avenues to gather evidence; and the agreement itself was a product of months of supervised negotiations, two facilitated mediations and a settlement conference with the court.

Third, there was the challenge to the $4.45 million settlement, which the agreement distributed as follows: $300 to each covered member of the class, limited to one award per household; $10,000 to the seven class representatives; and $1.335 million in attorney's fees (30%) and $622,279.86 in costs to class counsel. Any residual goes to local public schools. Because class counsel received 4,026 class-member claims, roughly $1.21 million will go to the claimants and roughly $1.28 million will go to the schools. The appeals court noted that the district court should have been more expansive in its explanation of the approval of the award as reasonable.  However, that claimants will in the aggregate receive less than Class Counsel does not automatically invalidate the agreement. That the public schools will receive $1.28 million in unclaimed funds does not reflect on the settlement's fairness.

Finally, a plaintiffs' lawyer purporting to represent multiple class members insisted that the court improperly shut him out of the case. In what the appeals court called a “sideshow” to the main case, the attorney reportedly contacted an unknown number of class members after the class certification advising them to opt out because those who opt out “always get a much higher settlement than … the general population.”  The 6th Circuit found that the district court also did not err by corralling the extent of this counsel's involvement in the case. Rule 23 gives the district court broad discretion in handling class actions, authorizing orders that impose conditions on the representative parties or on intervenors. Fed.R.Civ.P. 23(d)(1)(C).  In view of the questionable communications with litigants, unannounced solicitation of opt outs, and apparent guarantee to individuals who opted out, the district court appropriately exercised its discretion, said the Circuit.

Partial Summary Judgment Granted in Genetically Modified Rice MDL

The judge overseeing the federal MDL involving genetically modified rice has granted partial summary judgment to the defendants, dismissing several claims, including a public nuisance allegation. In re: Genetically Modified Rice Litigation, No.4-md-1811 (E.D. Mo. 10/9/2009). 

This multi-district litigation relates to the claims of U.S. long-grain rice producers, and others in the rice business, who allege that certain defendants contaminated the U.S. rice supply with non-approved genetically modified strains of rice. The first of a series of bellwether trials will begin in November; this first trial involves Missouri farmer plaintiffs, and the court's Order rules on only the portions of the motions directed to the claims of the Missouri plaintiffs.

The Missouri plaintiffs are seeking damages under a variety of theories, including negligence,  public and private nuisance, negligence per se, and the North Carolina Unfair Trade Practices Act. The plaintiffs are suing to recover allegedly lost income they claim resulted from the drop in market price for rice; following the announcement of the contamination in 2006, some rice companies around the world banned the importation of U.S. rice, which allegedly caused a dramatic drop in the U.S. market price for rice.

Judge Catherine Perry of the U.S. District Court for the Eastern District of Missouri issued an opinion on a host of summary judgment  issues, most notably granting defendants’ motion for summary judgment on plaintiffs’ claims under the North Carolina Unfair Trade Practices Act and on plaintiffs’ claims for public nuisance and negligence per se.

Defendants asserted first that the economic loss doctrine bars all the common-law claims.  The economic loss doctrine bars recovery of purely pecuniary losses in certain tort cases if there is no personal injury or physical damage to property other than the property at issue in the case – usually an allegedly defective product in a products liability case. A plaintiff suing over damage to a product he contracted for is limited to his contract remedies. Many states have adopted the economic loss doctrine for products liability cases, and some states have applied the doctrine to other torts
as well. Here, however, the court found that the alleged damages were not to any property that was the subject of a contract, and the plaintiffs were not claiming damage to any property that is alleged to be defective. Rather, they claim market losses and damage to other property, including equipment, land, and rice. Because they alleged damage to other property, the doctrine does not
apply, concluded the MDL court.

Defendants fared better with plaintiffs' attempt to rely on the more pro-plaintiff North Carolina statute.  The court noted that plaintiffs are not suing based on contracts with Bayer, and although some of Bayer’s decision-making occurred in North Carolina, the claims of plaintiffs cannot be said to arise mainly from those North Carolina activities.  Although there was some conflicting authority, the court concluded that the better reasoned cases require an in-state injury to a plaintiff’s in-state business operations. In other words, the North Carolina Unfair and Deceptive Trade Practices Act is intended to protect the North Carolina consumer.  Plaintiffs had not shown that their claims here had a sufficient effect on North Carolina business for them to benefit from this act intended to protect North Carolina commerce.

Third, in Missouri, a public nuisance is an offense against the public order and economy of the state that violates the public’s right to life, health, and the use of property, while, at the same time annoys, injures, endangers, renders insecure, interferes with, or obstructs the rights or property of the whole community, or neighborhood, or of any considerable number of persons. Bayer was able to show that, as matter of law, plaintiffs cannot recover for public nuisance. There is no evidence in the record showing the sort of public harm or negative effect on the entire community that public nuisance law was developed to remedy.

A private nuisance, on the other hand, is the unreasonable, unusual, or unnatural use of one’s property so that it substantially impairs the right of another to peacefully enjoy his property.  Plaintiffs’ private nuisance claim survived summary judgment because factual disputes remain regarding whether contamination of plaintiffs’ crops may interfere with their enjoyment of their land. The focus of a private nuisance claim, said the MDL court,  is on defendant’s unreasonable interference with the use and enjoyment of plaintiff’s land.  A genuine issue of fact remains regarding whether plaintiffs can prove a private nuisance.

Defendants were entitled to summary judgment on plaintiffs’ negligence per se claim, to the extent it relied on a violation of federal Animal and Plant Health Inspection Service regulations. This is because they are more in the nature of performance standards that do not provide a standard of
care.  So, for example, if a building code says a stair riser must be six inches tall, that is a precise directive that a builder can follow, and if someone is injured because the riser is taller or shorter, negligence per se might apply.  A building code that says the stair riser should be of a sufficient height not to be dangerous or so that a person will not fall could not provide a basis for a negligence per se claim because the question of what is reasonable was not answered by the building code regulations.

We will keep an eye on the first bellwether case for our readers.

Second Circuit Issues Nuisance Decision That May Impact "Climate Change" Litigation

We posted here recently about proposed "climate change" legislation and how it may affect litigation. Now comes a  federal appeals court ruling allowing certain nuisance claims against major greenhouse gas emitters, a decision that may provide an impetus to more so-called climate change litigation.   See Connecticut v. American Electric Power Co., 2009 WL 2996729 (2nd Cir. Sept. 21, 2009). Interestingly, this is a two-judge decision as original panel member Judge is now Justice Sotomayor.

In 2004, two groups of plaintiffs, one consisting of eight states and New York City, and the other consisting of three land trusts, sued six electric power corporations that own and operate fossil-fuel-fired power plants, seeking abatement of defendants' alleged ongoing contributions to the "public nuisance of global warming." Plaintiffs claimed that global warming, to which the defendants allegedly contributed as large emitters of carbon dioxide,  is causing and will continue to cause serious harm affecting human health and natural resources. The plaintiffs' theory is that carbon dioxide acts as a greenhouse gas that traps heat in the earth's atmosphere, and that as a result of this trapped heat, the earth's temperature has risen over the years and will continue to rise in the future. Pointing to an alleged  “clear scientific consensus” that global warming has already begun to alter the natural world, plaintiffs predicted that it “will accelerate over the coming decades unless action is taken to reduce emissions of carbon dioxide.”

Because of the procedural posture (motion to dismiss), the court did not really describe the other side of the story, but readers of MassTortDefense know that change is what the climate is always doing as a result of the planet's orbital eccentricities, axial wobbles, solar brightness changes, cosmic ray flux, and multiple other factors. There are numerous plausible terrestrial drivers of climate changes too.  While global warming is a serious topic worthy of scientific study and political discussion, plaintiffs' "consensus" ignores that global mean temperature is only one part of climate, and may not be the best metric.  Moreover, the most important driver of the greenhouse effect are water vapor and clouds. Carbon dioxide is about 0.038% of the atmosphere, while water in its various forms ranges up to 4% of the atmosphere.  Scientists estimate that water accounts for about 90% of the Earth's greenhouse effect.  And humans are responsible for only about 3.4% of carbon dioxide emitted to the atmosphere annually, the rest of it being natural.  When plaintiffs talk about the consensus, another major issue is that the "warming" numbers come not from measurements but from computer models -- with a huge range of assumptions. One is the so-called multiplier effect which assumes that increasing atmospheric carbon dioxide causes a large increase in water vapor and thus a large rather than small temperature spike.

When thinking about "global climate" changes, we have also been sobered by the fact that humans have been trying to measure the temperature consistently only since the1880s, during which time advocates think the world may have warmed by about +0.6 °C -- which is less than the margin of error on our ability to measure the Earth's temperature!

Anyway, plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state nuisance law, to force defendants to cap and then reduce their carbon dioxide emissions. The district court held that plaintiffs' claims presented a non-justiciable political question and dismissed the complaints. 406 F. Supp. 2d 265.

On appeal, plaintiffs argued that the political question doctrine does not bar adjudication of their claims; that they had standing to assert their claims; that they had properly stated claims under the federal common law of nuisance; and that their claims were not displaced by any federal statutes.

In a lengthy opinion, the two judges held that the district court erred in dismissing the complaints on political question grounds; that all of plaintiffs had standing; that the federal common law of nuisance governs their claims; that plaintiffs had stated claims under the federal common law of nuisance; that their claims were not displaced.

An important aspect of the ruling was that the the activity in Congress and the administrative agencies was not yet far enough along to displace common law relief. Federal common law is a necessary expedient to which federal courts may turn when compelled to consider federal questions which cannot be answered from federal statutes alone. But when Congress addresses a question previously governed by a decision rested on federal common law the need for lawmaking by federal courts disappears. The question whether a previously available federal common-law action has been displaced by federal statutory law involves an assessment of the scope of the legislation and whether the scheme established by Congress addresses the problem formerly governed by federal common law.  The court did note that it may happen that new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance.  (EPA appears to be on the road on the road toward regulating greenhouse gases.) But at least until EPA makes more findings, for the purposes of a displacement analysis the Clean Air Act does not sufficiently regulate greenhouse gas emissions.

In a very minimalist interpretation of what is needed for standing, the Second Circuit distinguished multiple precedents of the Supreme Court which held that to have standing a plaintiff must allege an injury that is concrete, direct, real, and palpable -- not abstract. Injury must be particularized, personal, individual, distinct, and differentiated -- not generalized or undifferentiated.  The Supreme Court has further stated that the asserted injury must be actual or imminent, certainly impending and immediate --not remote, speculative, conjectural, or hypothetical. The court rejected defendants challenge that the contentions of future injury at some unspecified future date are not the kind of “imminent” injury required.  The court also gave short shrift to the argument that plaintiffs could neither isolate which alleged harms will be caused by defendants' emissions, nor allege that such emissions would alone cause any future harms. 

The ruling may pave the way for more public nuisance suits, as it appears to enable private, nonprofit entities like the Sierra Club to pursue these cases. Allowing such a claim to proceed to discovery raises the potential stakes for every defendant currently or potentially facing public nuisance liability. And thus defendants may be faced with the difficult choice of working towards legislation or facing more of this kind of litigation.
 

 

Lead Paint Defendant Goes On Counter-attack

The Sherwin-Williams Co. has sued counsel for plaintiffs in past lead paint lawsuits, claiming that the attorneys for the Rhode Island attorney general and other claimants improperly obtained and used copies of internal documents discussing the paint manufacturers' strategy in the lead paint litigation. The complaint was filed against plaintiff counsel in state court in Ohio.

The complaint alleges that plaintiff counsel came into possession of confidential information from a 2004 board of directors meeting. Sherwin-Williams claims that the slides were created by its inside counsel in order to update the company's board on various issues in the lead paint and pigment litigation, including possible response to settlement overtures in dozens of public nuisance and private lawsuits.

We have posted on lead paint issues before. Properly viewed, state attorneys general typically fail to prove that the paint companies had control of the lead paint when it allegedly harmed children in their states. Control at the time the damage occurs is critical in any public nuisance cases, especially because the principal remedy for the harm caused by the nuisance is abatement. The responsibility for the harm that lead paint caused lies with property owners, as many state legislature have explicitly established. However grave the problem of lead paint may be, public nuisance law simply does not provide a remedy for this alleged harm. The proper means of commencing a lawsuit against a manufacturer of lead pigments for the sale of an allegedly unsafe product is a products liability action, with all the potential defenses to such a claim. Public nuisance and products liability are two distinct causes of action, each with rational boundaries that are not intended to overlap. Public nuisance focuses on the abatement of annoying or bothersome activities. Products liability law, on the other hand, has its own well-defined structure, which is designed specifically to allow plaintiffs to attempt to hold manufacturers liable for harmful products that the manufacturers have caused to enter into the stream of commerce.

Here, the company’s complaint alleges that plaintiff counsel presented the confidential slides in a legal memorandum opposing a motion for costs, filed with the Rhode Island Superior Court during the public nuisance suit brought by the Rhode Island attorney general. The company includes a John Doe defendant, allegedly responsible for disclosing the documents. Plaintiff counsel allegedly acknowledged receipt of the documents and their confidential nature, but has thus far refused to return them, according to the complaint.

Sherwin-Williams is seeking a return of the documents, an order barring plaintiffs from using them, punitive damages, costs and court fees. 

 

UPDATE:  The plaintiffs' firm has apparently agreed not to use or disseminate the documents pending further order of the court.
 

Eighth Circuit Affirms Dismissal of Nuisance Claim Against OTC Drug Makers

The 8th Circuit has affirmed the dismissal of nuisance claims against the makers of over-the-counter cold and cough medicines containing ephedrine or pseudoephedrine. Ashley County v. Pfizer, No. 08-1491, slip op. (8th Cir. Jan. 5, 2009) (here's a link to the opinion at the Eighth Circuit website).  Important to readers of MassTortDefense, this may be the first appellate court to address whether the lawful distribution of an FDA-approved product can be actionable under a nuisance theory.

Several Arkansas Counties sought to hold the drug companies liable because the lawful cold medicines were being converted by criminals into methamphetamine, an addictive illegal drug. The Counties pleaded theories of unjust enrichment, statutory unfair trade practices, nuisance, and the Arkansas crime victims civil liability statute.

The Counties claimed that the defendants were unjustly enriched at the Counties' expense when methamphetamine cooks purchased the defendants' products for use in the illegal manufacture of methamphetamine. Unjust enrichment is an equitable doctrine that allows a party to recover for benefits conferred on another. It is restitutionary in nature and focuses on the benefit received. It is not enough, however, to establish a benefit received by another party. There must also be some operative act, intent, or situation to make the enrichment unjust and compensable. A party who is free from fault cannot be held to be unjustly enriched merely because it has chosen to exercise a legal or contractual right.

Here, the Counties did not provide the services for which they sought compensation, i.e., law enforcement, inmate housing, social services, and treatment, with the expectation that the defendants–manufacturers and wholesalers of products containing pseudoephedrine–would pay for those services. In other words, the cold medicine manufacturers cannot be said to be the beneficiaries of the services provided by the Counties. The circumstances connecting the sales of cold medication to the provision of these government services were simply too attenuated to give rise to an implied contract between the manufacturers and the county providers to state a cause of action for unjust enrichment.

The remaining nuisance and statutory claims all failed for lack of proximate cause. Arkansas law incorporates the doctrine of intervening acts, which reflects the limits that society places on a defendant's liability for his actions. An original act is eliminated as a proximate cause by an intervening cause if the latter is of itself sufficient to stand as the cause of the injury, and the intervening act is independent of the original act. On this, the Eighth Circuit relied on a Third Circuit gun case, City of Philadelphia v. Beretta U.S.A. Corp., 277 F.3d 415 (3d Cir. 2002), to hold that intervening criminal misconduct can break the chain of proximate cause to product manufacturers. The allegations in the Third Circuit case were nearly identical to the allegations here–that the defendant manufacturers failed to take steps to restrict access to the products containing pseudoephedrine when they knew (an alleged fact the court had to take as true at the judgment on the pleadings stage) that the pseudoephedrine-containing products were being purchased and used illegally to make methamphetamine. "The criminal actions of the methamphetamine cooks and those further down the illegal line of manufacturing and distributing methamphetamine are 'sufficient to stand as the cause of the injury' to the Counties in the form of increased government services, and they are 'totally independent' of the Defendants' actions of selling cold medicine to retail stores . . . . " Slip opin. at 15.

 
 

California Supreme Court Agrees To Hear Contingent Fee Public Nuisance Issue

The California Supreme Court has agreed to hear a public nuisance case involving lead paint manufacturers that raises the important issue whether public entities can hire outside attorneys on a contingency fee basis in these kinds of cases. County of Santa Clara v. Superior Court (Atlantic Richfield), No. S163681 (Cal. S.Ct.).

In granting review last week, the Court stated: “This case presents the following issue: May a public entity retain private counsel to prosecute a public nuisance abatement action under a contingent fee agreement?”

Ten or so California cities and counties are plaintiffs in the case which accused several former lead paint manufacturers of fraud, strict liability, negligence, unfair business practices, and public nuisance. Eventually, the plaintiffs agreed to move forward with only the public nuisance question. In February, 2007, the defendants filed a motion to bar payment of contingency fees to private attorneys hired by the government plaintiffs. Under an agreement reached by the cities and counties, private counsel apparently were to receive only a small fee upfront, but then 17% of any net recovery.

The California superior court barred the public entities from compensating their private counsel through contingency fees. In April, 2008, the Sixth Appellate Court of Appeal overturned that decision, saying private counsel would only play a limited role in this particular litigation – so the arrangement was acceptable. The court of appeals' opinion tried to draw a distinction between situations where private counsel are performing tasks on behalf of and in the name of the government in a public nuisance abatement action – where private counsel must be absolutely neutral and cannot be compensated by a contingent fee arrangement – and the situation where private counsel are “merely assisting” government attorneys in the litigation of a public nuisance abatement action and are explicitly serving in a subordinate role. In the latter case, private counsel are not themselves acting in the name of the government and have no role in the balancing of interests that triggers the absolute neutrality requirement, the court stated. The defendants filed a petition for review.

When an attorney wields the power of the state in court, there are ethical and prudential concerns. Not only is a government lawyer's neutrality essential to a fair outcome for the litigants in the case in which he or she is involved, it is essential to the proper function of the judicial process as a whole. Our system relies for its validity on the confidence of society; without a belief by the people that the system is just and impartial, the concept of the rule of law cannot survive. When a government attorney has a personal interest in the litigation, the neutrality so essential to the system is violated. For this reason prosecutors and other government attorneys can be disqualified for having an interest in the case extraneous to their official function.

The justification for the prohibition against contingent fees seen in criminal actions has been extended to certain civil cases. In People ex rel. Clancy v. Superior Court, 39 Cal.3d 740, 218 Cal.Rptr. 24 (Cal. 1985), the Court did not adopt a per se ban on such contingency fees, but did note that there is a class of civil actions that demands the representative of the government be absolutely neutral. This requirement would preclude the use in that class of cases of a contingent fee arrangement.

The abatement of a public nuisance involves a balancing of interests. On the one hand is the interest of the people in ridding their community of the alleged obnoxious or dangerous condition; on the other hand is the interest of the landowner in using/selling his property or products. Thus, as with an eminent domain action, the abatement of a public nuisance involves a delicate weighing of values. Any financial arrangement that would tempt the government attorney to tip the scale cannot be tolerated, said Clancy. It will be interesting to see if the "merely assisting" distinction succeeds.

That type of distinction was adopted by the Rhode Island Supreme Court in State of Rhode Island v. Lead Industries Association, Inc., No. 2004-63-M.P. (R.I. July 1, 2008), found here. In that case, the fee agreement provided that, in return for their legal representation on behalf of the state in the lead paint litigation, counsel would be entitled to a fee reflecting 16 2/3 percent of any monies recovered. Although the Court ruled for the defendants on the merits, it addressed the fee issue as one of extreme public importance, and as capable of repetition but evading review. The Court noted that the propriety vel non of contingent fee agreements in the public sector is a much controverted and still developing area of the law. It concluded that the Attorney General is not precluded from engaging private counsel pursuant to a contingent fee agreement in order to assist in certain civil litigation, so long as the Office of Attorney General retains absolute and total control over all critical decision-making in any case in which such agreements have been entered into. Accordingly, in order to ensure that a contingent fee agreement is not adverse to the standards that an attorney representing the government must meet, it is vital that the Attorney General have absolute control over the course of any litigation originating in that office. The Attorney General’s discretionary decision-making must not be delegated to the control of outside counsel; rather, it is the outside counsel who must serve in a subordinate role.


State Supreme Court Rejects Public Nuisance Lead Claim

In a unanimous decision, the Rhode Island Supreme Court has rejected the state's public nuisance suit against three former lead pigment makers. See Rhode Island v. Lead Industries Association, No. 2006-158-Appeal; No. 2007-121-Appeal (July 1, 2008).

The decision represents the latest round in the ongoing battle surrounding the misapplication by plaintiffs of the traditional tort of nuisance. The Rhode Island action was the first suit filed by a state against the lead paint industry. Since then, appeals courts in New Jersey, Missouri, and Illinois all have rejected public nuisance claims against former lead pigment manufacturers.

The state sued a number of paint makers and the trade group Lead Industries Association Inc., in 1999. The state alleged that the manufacturers or their predecessors-in-interest had
manufactured, promoted, distributed, and sold lead pigment for use in residential paint, despite
that they allegedly knew or should have known, since the early 1900s, that lead is hazardous to human health. The state also contended that the LIA was, in essence, a co-conspirator of one or more of the manufacturers from at least 1928 to the present. The state asserted that defendants failed to warn Rhode Islanders of the hazardous nature of lead and failed to adequately test lead pigment. In addition, the state maintained that defendants concealed these hazards from the public or misrepresented that they were safe. 

Paint manufacturers voluntarily stopped selling lead-based house paint in the 1990’s after evidence began to suggest that it posed serious health risks. Particular to the nuisance claim,  defendants assert that they did not control the lead pigment at the time it caused harm to Rhode Island children and that, therefore, they cannot be held liable for public nuisance. The defendants also argue that there was no interference with a public right, as that term has been recognized under public nuisance law.

The Rhode Island trial judge declined to dismiss the state's public nuisance claims. Defendants had asserted that the state had not alleged and could not show that defendants' conduct interfered with a public right, or that defendants were in control of lead pigment at the time it allegedly caused harm to children in Rhode Island. The first trial in the case ended in a mistrial in 2002. Following a 15-week trial, the longest civil jury trial in the state’s history, the jury in state Superior Court in 2006 found Sherwin-Williams Co., NL Industries Inc., and Millennium Holdings LLC responsible for the public nuisance posed by lead in buildings. The jury found that the defendants should be ordered to abate the nuisance, the first time in the United States that a trial resulted in a verdict that imposed liability on lead pigment manufacturers for creating a public nuisance. The state offered a $2.4 billion abatement plan in September 2007.

On appeal, defendants argued that argued that the trial justice erred by: (1) misapplying the law of public nuisance; (2) finding a causal connection between defendants’ actions and lead poisoning in Rhode Island; and (3) failing to hold that the action was barred by the constitutional provision concerning separation of powers. In an 81-page ruling, the state's top court reversed the judgment of abatement.

The Restatement (Second) defines public nuisance, in relevant part, as follows:
1) A public nuisance is an unreasonable interference with a right common to the general public.   2) Circumstances that may sustain a holding that an interference with a public right is unreasonable include the following: “(a) Whether the conduct involves a significant interference with the public health, the public safety, the public peace, the public comfort or the public convenience….” 4 Restatement (Second) Torts § 821B at 87.

The Rhode Island Court accordingly recognized three principal elements that are essential to establish public nuisance: (1) an unreasonable interference; (2) with a right common to the general public; (3) by a person or people with control over the instrumentality alleged to have created the nuisance when the damage occurred. After establishing the presence of the three elements of public nuisance, one must then determine whether the defendant caused the public nuisance."  Causation is a basic requirement in any public nuisance action." In addition to proving that a defendant is the cause-in-fact of an injury, a plaintiff must demonstrate proximate causation.

The Rhode Island attorney general failed to prove that the companies interfered with a public right or had control of the lead paint when it harmed children in the state. Control at the time the damage occurs is critical in public nuisance cases, especially because the principal remedy for the harm caused by the nuisance is abatement. The responsibility for the harm that lead paint caused lies with property owners, as the state Legislature has already established. “The General Assembly has recognized defendants' lack of control and inability to abate the alleged nuisance because it has placed the burden on landlords and property owners to make their properties lead-safe.”

However grave the problem of lead poisoning is in Rhode Island, public nuisance law simply does not provide a remedy for this harm. The proper means of commencing a lawsuit against a manufacturer of lead pigments for the sale of an unsafe product is a products liability action. The law of public nuisance never before has been applied to products, however harmful. "Undoubtedly, public nuisance and products liability are two distinct causes of action, each with rational boundaries that are not intended to overlap." Public nuisance focuses on the abatement of annoying or bothersome activities. Products liability law, on the other hand, has its own well-defined structure, which is designed specifically to hold manufacturers liable for harmful products that the manufacturers have caused to enter the stream of commerce.

Courts presented with product-based public nuisance claims have expressed their concern over the ease with which a plaintiff could bring what properly would be characterized as a products liability suit under the guise of product-based public nuisance. Courts in other states consistently have rejected product-based public nuisance suits against lead pigment manufacturers, expressing a concern that allowing such a lawsuit would circumvent the basic requirements of products liability law. See American Cyanamid Co., 823 N.E.2d at 134; Benjamin Moore & Co., 226 S.W.3d at 116; In re Lead Paint Litigation, 924 A.2d at 503-05 (N.J.).

The battle now shifts to pending cases in Ohio and California.

Texas Appeals Court Affirms Dismissal of Property Damage Claims

At MassTortDefense we are not adverse to spotlighting the occasional interesting, helpful (or even scary) intermediate appellate court decision. Hence, our focus today on Adamcek v. Reynolds Metals Co., Tex. Ct. App. 13th Dist., No. 13-06-240-CV, 2008 WL 1822772 (April 24, 2008), in which the Texas court of appeals ruled that expert testimony for plaintiffs living in an area affected by a hazardous waste plume was insufficient in a toxic tort case.

Those readers confronting toxic tort litigation know the importance of causation: including whether the substance is capable of causing the injury alleged (general) and whether the substance did cause the injury (specific). And a component of the latter is that the plaintiff actually suffered an exposure, and an exposure above background, and an exposure sufficient to have caused the damage alleged. In the property damage context, causation is equally important, and should not be taken for granted by defendants. This opinion is interesting in part because it shows the importance of putting plaintiffs to their proof on every element of a claim in the property damage context, and because it also involves a nuisance claim – which plaintiffs have been trying to expand and distort beyond its historical foundation and policy roots.


Background
The lawsuit involved 1200 consolidated plaintiffs, who filed suit after the discovery of groundwater contamination by a chemical called Trichloroethylene (TCE). Plaintiffs alleged that the TCE originated at an aluminum extrusion facility owned and operated by various defendants at various times. They alleged personal injuries, punitive damages, and this part of the case involved their claims of property damage under the theories of nuisance, negligence, and gross negligence.
Defendants filed a “no evidence” motion, basically a summary judgment motion asserting that there is no evidence of one or more essential elements of a claim on which an plaintiffs have the burden of proof. In order to avoid the no-evidence summary judgment, plaintiffs must produce more than a scintilla of probative evidence that raises an issue of material fact on each element challenged. That is, they need evidence that rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. The trial court granted the motion, and 97 plaintiffs appealed.

Need for Causal Link to Injury 

The court defined a nuisance as a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities attempting to use and enjoy it. Under Texas law, in order to recover on a nuisance claim, the defendant must have generally engaged in one of three kinds of activity: (1) intentional invasion of another's interests; (2) negligent invasion of another's interest; or (3) other conduct, culpable because abnormal and out of place in its surroundings, that invades another's interests. The invasion must cause an injury, an interference. Just as in a claim for negligence which requires that damages were proximately caused by the breach.

Plaintiffs’ “Proof” Insufficient

Plaintiff relied on an affidavit from an expert to meet their burden on causation. The expert identified an “additional plume, which had its genesis in a leak from a sewer line.” In his affidavit, he referred to a map that he alleged showed where the plaintiffs live. However, carefully analyzed, it was clear that the expert did not show that any of the appellants owned an interest in the property within the additional plume he demonstrated. Moreover, he did not designate which properties or whose interests were in fact affected by the TCE under his theory, and how. Thus, the affidavit did not provide any evidence that any particular appellant had an interest that was affected by the TCE contamination. The Texas Court of Appeals upheld dismissal of the nuisance claim, finding the residents failed to assert sufficient evidence of causation of injury.

Think about putting plaintiffs to their proof on each and every element of the toxic tort claim.