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Presenting a live 90-minute webinar with interactive Q&A

Groundwater Contamination Litigation: Proving and Defending Against Liability

Demonstrating Nexus, Causation and Injury to Recover Damages

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, NOVEMBER 30, 2016

Byron P . Gee, Partner, Nossaman, Los Angeles

• R. Trent Taylor, Partner, McGuireWoods, Richmond, Va.

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GROUNDWATER CONTAMINATION LITIGATION

Byron P. Gee Los Angeles, CA bgee@nossaman.com November 30, 2016

What Is Groundwater? And Why We Litigate To Clean It Up?

6

Can’t Fish in Groundwater

7

Can’t Swim in Groundwater

8

Not Good for Recreation

9

Not Very Attractive

10

Why Do We Care About Groundwater?

11

Public Water Supply and Irrigation

12

Potential Sources of Groundwater Contamination

• Chemical and Fuel Storage Tanks;
• Septic Systems;
• Uncontrolled Hazardous Waste;
• Landfills;
• Chemicals and Road Salts; and
• Atmospheric Contaminants

13

Santa Clarita Valley Groundwater Contamination

A Case Study

14

Federal and State Regulatory Structures

Federal and State Regulatory Structures RCRA CERCLA California Porter-Cologne Water Quality Control Act Department of Public Health; Office of Environmental Health Hazard Assessment; Department of Toxic Substances Control  State Common Law

15

Identification and Nexus

• Testing is close to Whittaker-Bermite

Site

• Four(4) Wells in Saugus Formation

Contaminated with Perchlorate

• Water Agencies make the Decision to

Remove the Wells from Operation

16

Identification and Nexus

• Discovery of Perchlorate in one

Alluvial Water Supply Well

• Second Alluvial Water Supply Well

Contaminated

• Experts Retained

17

The Cause

Location of Contaminated Wells

Whittaker Bermite Site

10

18

The Site

• Whittaker-Bermite Site
• Located in the center of the Santa Clarita

Valley

• Operated as an explosive and munitions

manufacturing, testing, and storage facility since the late 1930’s

• Perchlorate was used in the manufacturing of

solid rockets and missiles until operations ceased in 1987

19

The Cause

Perchlorate Use At the Whittaker-Bermite Site

• Perchlorate comprised 65-75% of Propellants

used in Rockets

• 9,600 lbs/week in Sidewinder and Chaparral

Missiles and Spin Rockets

• 900 lbs/week in Explosives
• 800 - 1,000 lbs/week of Waste Propellant

burned (except in summer)

20

Water Purveyors’ Response

• Discussions with Site Owner and DTSC
• Objective: Develop Pump and Treat Program
• Contain perchlorate migration
• Prevent impact to additional wells
• Restore lost production capacity

21

Water Purveyors’ Response Multi-Faceted Approach

• Regulatory – Oversight Agreement with

DTSC

• Technical – Army Corps of Engineers
• Political – Federal Funding
• Insurance – Cost Recovery
• Litigation – Get Dischargers and Property

Owners to Pay

22

The Parties

• Plaintiffs – Impacted by Perchlorate Contamination
• Castaic Lake Water Agency (CLWA)
• Newhall County Water District (NCWD)
• Valencia Water Company (VWC)
• Santa Clarita Water Company (SCWC)
• Defendants – Owned/Operated Whittaker-Bermite

Site

• Whittaker Corporation
• Remediation Financial, Inc.
• Santa Clarita, LLC
• Other
• American International Specialty Lines Insurance

Company (AISLIC)

23

Litigation Begins

• Lawsuit filed
• Central District Court of California
• Complaint – Claims for Relief
• Comprehensive Environmental Response, Compensation and

Liability Act (CERCLA)

• Hazardous Substance Account Act (HSAA)
• Negligence
• Nuisance
• Trespass
• CERCLA Claim -- Advantages
• Strict Liability – No showing of fault required
• Relaxed Causation Standard – Did release cause incurrence of

response costs?

• Possibility of Joint and Several Liability

24

Initial Remediation Efforts

• Water Agencies Committed to Clean-Up
• Environmental studies and engineering work
• Federal Funding – U.S. Army Corps Study
• $3 million to study and characterize contamination
• Environmental Oversight Agreement with DTSC
• Coordination with DTSC directed efforts
• Help to insure NCP Compliance

25

Defendants Response

• Challenged Causation
• Challenged Science
• Challenged Damage Calculation
• Third Parties
• Counter-Claims

26

Summary Judgment

• Castaic Lake Water Agency v.

Whittaker Corp., 272 F.Supp.2d 1053

• Defendants Found Liable for

Perchlorate Contamination

• Settlement Negotiations

Commenced Shortly after Summary Judgment

27

Summary Judgment - Causation

SUMMARY JUDGMENT

• Castaic Lake Water Agency, et al. vs.

Whittaker Corporation, et al., 272 F.Supp.2d 1053

• Key Findings
• Release of perchlorate at Whittaker-Bermite Site
• Plausible pathways to Plaintiffs’ Wells
• Burden of Proof shifts to defendants
• Defendants unable to meet burden

28

Summary Judgment - Causation

• Key Precedent
• United States vs. Bliss, 667 F.Supp.1298 (E.D. Mo. 1987) – No

need to fingerprint any particular defendant’s waste.

• Westfarm Associates Limited Partnership vs. Washington

Suburban Sanitary Commission, 66 F.3d 669 (4th Cir. 1995) – No need to prove actual contaminant migration from the waste site to the water supply well.

• “The Plaintiff must prove only that contaminants which were
• nce in the custody of Defendant could have traveled onto

plaintiffs’ land, and that subsequent contaminants (chemically similar to the contaminants once existing in defendant’s custody)

• n the plaintiffs’ land caused the plaintiffs to incur cleanup

costs.” Westfarm at 681.

• Holding - Defendants Liable for Reasonable and

Necessary Response Costs Consistent with the National Contingency Plan.

29

Interim Settlement Agreement

• Remediation Design Not Complete – Final

Settlement Not Possible

• Interim Settlement Provides Funding for

Remediation Design and Past Costs

• Stay of Litigation
• Joint Plaintiff/Defendant Efforts to Design remedy
• Up Front Payment to Water Suppliers

30

Bankruptcy Court Proceeding

• The Landowner Declares bankruptcy
• Dispute Among Insurance Carriers
• Coverage and Claims Settlement Agreement
• Results: $45 Million in Escrow for Cleanup
• Bankruptcy Stay Lifted

31

Resumption of Litigation and Settlement Discussions

• Interim Settlement Agreement Expired
• Negotiations and Litigation Proceed

Simultaneously

• Plaintiffs Continue To Work on Remedy
• Final Settlement on Courthouse Steps

32

Settlement Agreement

• $100 Million in Funding for the

Groundwater Cleanup

• Funding to Construct Replacement Wells,

Pipelines and a Treatment Plant to Remove Perchlorate

• $12 Million to Reimburse the Water

Agencies for Past Expenditures

33

Lessons Learned

• Client Commitment to Clean-up Crucial
• Top Experts Immediately
• Be Prepared for Counter-Claims
• Consider Bifurcation
• Consider Joint Effort to Design

Remedy

34

Evolution of CERCLA

• Cooper Industries v. Aviall Services, Inc.
• United States v. Atlantic Research
• Burlington Northern SF v. United States
• CTS Corp. v. Waldberger, et. al.

35

General Rules

• Cannot bring a Sect. 113 Contribution

Claim unless previously sued under Sections 106 or 107

• If you voluntarily incurred Response Costs

and Clean-up was not compelled by a 106/107 Claim, you are entitled to only a 107 Claim

• But what happens if the Administrative

Order is not approved by the Courts?

36

CERCLA Does Not define “Voluntary Clean-Up”

• Courts look to the Language of the

Administrative Order

• Parties Negotiating a Government

Consent Order want Contribution Protection and often file a Corresponding Complaint and Settlement to Provide Contribution Protection

• Most Courts will find a way to limit

Responsible Parties’ Rights to Contribution

37

Recent Trends From A Practitioner’s Perspective

• Limiting parties’ rights to either a 107

Claim or a 113 Claim Simplifies CERCLA Litigation

• The holdings in Cooper Industries and

Aviall likely reduces the number of Parties brought into a CERCLA Suit

• The impacts of the BNSF and Waldberger

Decisions are legally significant but do not impact many CERCLA Suits

38

Issues that Remain to be Addressed

• CERCLA Litigation Remains Complex

and Often Takes Years to Resolve

• There are No Provisions that

Prioritize Cleanup of Groundwater and other Scarce Resources

39

The Driving Force for Future Groundwater Cleanup Litigation?

40

Drought Conditions

Surface Water Storage No Longer Sufficient

Lake Oroville from July 20, 2011 to August 19, 2014

41

Groundwater Buffer

42

Groundwater Is Not A Perfect Replacement For Surface Water

. . . But we can make do.

43

We Can Continue To Swim Using Groundwater

44

Groundwater Has Some Recreational Use

45

Fishing With Groundwater Is Still Problematic

46

Groundwater Wells Can Be Attractive . . .

47

. . . If you are thirsty!

48

www.mcguirewoo

• ods.

s.com

• m

Groundwater Contamination Litigation: Proving And Defending Against Liability

• R. Trent Taylor – McGuireWoods LLP

rtaylor@mcguirewoods.com

McGuireWoods LLP | 50 CONFIDENTIAL

Targets

• Fly/coal ash
• Fracking
• Uranium/Radioactive
• Oil Spills
• PFOA
• MTBE
• TCE
• PCBs
• Hexavalent chromium
• sulfolane

McGuireWoods LLP | 51 CONFIDENTIAL

Fracking

McGuireWoods LLP | 52 CONFIDENTIAL

Recent Litigation

• $752 millio

ion – settlement amount in MDL MTBE against various corporate defendants alleging exposure to MTBE

• $700 millio

ion – settlement amount in a suit by a class of Alabama residents against Monsanto Co. alleging exposure to PCBs

• $236 millio

ion n – verdict in MTBE suit brought by New Hampshire against Exxon

• $85 millio

ion n – tentative settlement by JPMorgan to cleanup landfill and leachate treatment plant in CA

McGuireWoods LLP | 53 CONFIDENTIAL

Common Law

McGuireWoods LLP | 54 CONFIDENTIAL

Public Nuisance

• “An offense against, or interference with the exercise of rights common to the public.”

McGuireWoods LLP | 55 CONFIDENTIAL

Public Nuisance

• “the interference must be both

substantial and unreasonable”

• “it is ‘substantial’ if it causes

significant harm and ‘unreasonable’ if its social utility is outweighed by the gravity of the harm inflicted”

McGuireWoods LLP | 56 CONFIDENTIAL

Private Nuisance

Private Nuisance: “a nontrespassory invasion of another’s interest in the private use and enjoyment of land.” Restatement (Second) of Torts § 821D

McGuireWoods LLP | 57 CONFIDENTIAL

Trespass

• Trespass is generally defined as “an invasion of

the interest in the exclusive possession of land, as by entry upon it.”

• The key distinction between trespass and

nuisance is that “[a] claim of trespass contemplates actual physical entry or invasion, whereas nuisance liability arises merely by virtue

• f an activity which falls short of tangible,

concrete invasion by interferes with the use and enjoyment of land.”

McGuireWoods LLP | 58 CONFIDENTIAL

Others

• Infliction of Emotional Distress
• Failure to Warn
• Battery
• Fraud
• Conspiracy

McGuireWoods LLP | 59 CONFIDENTIAL

Recent Litigation and Trends

McGuireWoods LLP | 60 CONFIDENTIAL

Trend # 1 -- Lone Pine’s Popularity Sags

McGuireWoods LLP | 61 CONFIDENTIAL

Scoreboard for Lone Pine Orders

Granted Denied Baker v. Anschutz Exploration Corp., No. 11-CV- 6119 (W.D. N.Y.) Kamuck v. Shell Energy Holdings GP, LLC, (M.D. Pa.

• Sept. 5, 2012)

In re Fosamax Prods. Liab. Litig., 2012 WL 5877418 (S.D.N.Y. Nov. 20, 2012) Roth v. Cabot Oil & Gas Corp., No. 12-CV-00898 (M.D. Pa. Oct. 15, 2012) Pinares v. United Technologies Corp., No. 9:10-cv- 80883 (S.D. Fla. 1/19/11) Hagy v. Equitable Production Co., No. 2:10-cv- 01372, 2012 BL 60567 (S.D. W. Va. Mar. 5, 2012) McManaway v. KBR Inc., 265 F.R.D. 384 (S.D. Ind. 2009) Strudley v. Antero Resources Corp., 2013 COA 106 (July 3, 2013) Avila v. Willits Environmental Remediation Trust, 633 F.3d 828 (9th Cir. 2011) In re Digitek Prod. Liab. Litig., 264 F.R.D. 249, 255 (S.D. W. Va. 2010)

McGuireWoods LLP | 62 CONFIDENTIAL

More Denials

• Russell v. Chesapeake Appalachia, LLC, No. 4:14-cv-00148 (M.D. Pa. Mar. 2, 2015) = denied

motion for a line Pine order, holding that it could not issue a Lone Pine order without some discovery; found the order to be unjustified at the early stage of the lawsuit; Court set a high bar for issuing the order, explaining that it “should issue only in an exceptional case and after the defendant has made a showing of significant evidence calling into question plaintiff’s ability to bring forward” evidence of causation.

• Antero Resources Corp. v. Strudley, 2015 WL 1813000 (Colo. Apr. 20, 2015) = affirmed a

appellate court opinion holding that “lone Pine orders” are not permitted by Colorado law

– held that “Colorado’s Rules of Civil Procedure do not allow a trial court to issue a modified case management order, such as a Lone Pine order, that requires a plaintiff to present prima facie evidence in support of a claim before a plaintiff can exercise its full rights of discovery under Colorado rules”

McGuireWoods LLP | 63 CONFIDENTIAL

More Denials

• Adinolphe v. United Technologies, Inc., 768 F.3d 1161 (11th Cir. 2014) = reversed a district

court’s Lone Pine order issued prior to motions to dismiss. = “As a general matter, we do not think that it is legally appropriate (or for that matter wise) for a district court to issue a Lone Pine order requiring factual support for the plaintiffs’ claims before it has determined that those claims survive a motion to dismiss.”

• Hamilton v. Miller, 15 N.E.3d 1199, 1203-04 (N.Y. 2014) (under NY law, the trial court abused

its discretion in requiring pltfs to provide medical evidence of each alleged injury and causation

• r be precluded from offering evidence at trial, on the basis that causation is appropriate for

expert discovery and if warranted, SJ)

• Manning v. Arch Wood Protection, Inc., 40 F. Supp. 3d 861 (E.D. Ky. 2014) (denied Lone Pine
• rder)
• Smith v. Atrium Med. Corp., 2014 WL 5364823 (E.D. La. Oct. 2014) = denying Lone Pine order

McGuireWoods LLP | 64 CONFIDENTIAL

Trend # 2 – Climate Change and Water

McGuireWoods LLP | 65 CONFIDENTIAL

Trend # 2 – Climate Change and Water (cont.)

• Attacking climate change through water
• Recent suit by the Conservation Law Foundation based on NPDES requirements

to allege CWA violations based on the potential for surface water impacts due to sea level rise associated with climate change

• CLF Inc. v. Exxonmobil Corp., No. 1:16-cv-11950 (D. Mass. Sept. 29, 2016)
• Juliana et al. v. USA et al., case number 6:15-cv-01517, in the U.S. District Court

for the District of Oregon.

McGuireWoods LLP | 66 CONFIDENTIAL

Trend # 3 – Presumption of Pollution

• In certain states, operators of wells are presumed to have caused any

contamination identified in water within a certain time period (typically between 6 and 30 months) after completion of drilling, well completion, and production and within a certain distance (typically between 1500 and 2500 feet) from drilling activities

McGuireWoods LLP | 67 CONFIDENTIAL

Trend # 3 – Presumption of Pollution (cont.)

• In PA and West VA, no pre-drill testing but must bear burden of rebutting the

presumption that caused the contamination.

• In CO and WY, both pre-drill and post-drill testing but no presumption of

contamination.

• NC and IL have both pre-drilling and post-drilling testing requirements and

contamination presumptions.

• In OH and CA, no pre or post drill testing and no presumption.

McGuireWoods LLP | 68 CONFIDENTIAL

Trend # 4 – Class issues

• McCormick v. Halliburton (W.D. Okla.)
• “The court finds a trial on whether Halliburton released perchlorate into the

groundwater, as well as the current and future scope and extent of that groundwater contamination, is unlikely to substantially aid resolution of the ultimate determination of Halliburton’s liability.”

• “Simply put, the individual issues would dwarf whatever common issues there

may be, such that a vast array of mini-trials would be required for each class member if certification were granted.”

McGuireWoods LLP | 69 CONFIDENTIAL

Trend # 4 – Class issues (cont.)

• Smith v. ConocoPhillips Pipe Line Co., No. 14-2191 (8th Cir.)
• Reversed a district court’s decision to grant class certification to a group of

property owners who alleged that a pipeline leak was never properly remediated and was thus a nuisance.

• No common injury: “The presence on only one property of a petroleum

pollutant not found at the leak site cannot prove that actual contamination exists

• n the class land.”
• Physical injury was required.

McGuireWoods LLP | 70 CONFIDENTIAL

Trend # 4 – Class issues (cont.)

• Ebert v. General Mills, 823 F.3d 472 (8th Cir. 2016)
• Reversed class certification, holding that no predominance.
• Landowners sued General Mills, alleging that the company caused trichloroethylene (TCE) to be

released from its former industrial facility and that TCE vapors migrated into surrounding residential areas, threatening the landowners’ health and the value of their properties.

• Illustrates that class action requirements, like predominance of common issues and cohesiveness of

claims, can be difficult to establish in the environmental context because issues of liability, causation, and damages are individualized. Ebert may pose a significant obstacle for class certification in future environmental cases.

McGuireWoods LLP | 71 CONFIDENTIAL

Early Daubert challenges in class actions

• Comcast Corp. v. Behrend, No. 11-864, 2013 BL 80435 (U.S. March 27, 2013)

(courts must look at the merits issues when deciding class certification)

• Wal-Mart Stores v. Dukes, 132 S. Ct. 320 (2011) (held that prior to certifying a

class action, the trial court should engage in a rigorous review of all relevant issues)

• American Honda Motor Co. v. Allen, 600 F.3d 813, 815-16 (7th Cir. 2010) (held

that where it is “critical to class certification” a court “must perform a full Daubert analysis before certifying the class”)

McGuireWoods LLP | 72 CONFIDENTIAL

Coleman v. Union Carbide,

• No. 110366 (S.D. W. Va.)
• Refused to certify proposed Plaintiff classes in a toxic exposure case because it

addressed Daubert challenges at the class certification stage and found the expert testimony on which plaintiffs relied to be inadmissible

• Court found that the experts’ opinions were not based on sufficient facts or data

and questioned their methodology

McGuireWoods LLP | 73 CONFIDENTIAL

Parko v. Shell Oil Co., 739 F.3d 1083 (7th Cir.)

• Reversed trial court’s certification of a class of Illinois residents who claimed a

refinery leaked toxic chemicals into their water supply

• Court found that the trial court had taken the plaintiffs’ promise of future

evidence at face value and should have researched the soundness of their methodology.

• “Not
• thing

ng is simpler er th than to to make a unsubstant bstantiated iated allega gation tion. . The judge e shou

• uld

d have investigated the realism of the plaintiffs’ injury and damage model in light

• f the defendants’ counter arguments and to that end should have taken

evidence.”

McGuireWoods LLP | 74 CONFIDENTIAL

Parko v. Shell Oil Co., 739 F.3d 1083 (7th Cir.)

• “For if the defendants are right, there is no common issue, only individual issues that will vary

from homeowner to homeowner: is there benzene in the groundwater beneath his home at a level

• f concentration that if the groundwater were drunk would endanger health (and is there any

possibility it would enter the water supply); what is the source of the benzene in the groundwater beneath a given home (that is, who is the polluter who caused the groundwater to become polluted); could the presence of the benzene in that concentration cause any other form of harm; has the presence of the benzene reduced the value of his property; if so, how great has the reduction been. It is difficult to see how these issues can be managed in the class action format. But in any event t they must be engag aged ed by the district strict judg dge e before re he can make a responsi

• nsible

ble deter ermina mination tion of whether ther to certify tify a class ss.”

McGuireWoods LLP | 75 CONFIDENTIAL

Trend # 5 – Science!

McGuireWoods LLP | 76 CONFIDENTIAL

The harm alleged in environmental contamination suits is becoming more subjective and less tangible

• Gates v. Rohm and Haas Co. (E.D. Pa.) – ruled that the presence of vinyl chloride in the air, even if below

backgr grou

• und

nd levels, constitutes a physical injury to property under nuisance law.

• Meyer v. Fluor Corp. (Mo.) – in nuisance class suit against lead smelter to recover prospective medical

monitoring due to harmful emissions, MO S. Ct. certified the class and held that recovery very for medical l monitor toring ing is not contin ingen gent t upon the existence ce of a present t physical al injury

• State of NC v. TVA – (1) numerous social and economic harms to North Carolinians, including lost school

and work days, increased pressure on the health industry due to extra doctor visits, and the general loss of well-being that results from chronic health problems; (2) harm to the environment including killing local vegetation, removing nutrients necessary for healthy forest growth, and degrading water quality; and (3) significant effects on visibility due to creating haze in many pristine areas of wilderness in NC

• Cook

k et al. v. Rockwel well l and Dow – jury verdict of almost $1 billion based solely on decline ne in property ty values s for 13,000 00 plaintiff iffs

McGuireWoods LLP | 77 CONFIDENTIAL

Science getting better

• Can find contamination in ever lower levels
• But such knowledge cuts both ways
• Brings statute of limitations into play even earlier (In re MTBE

Products Liab. Litig., No. 00-01898 (S.D. N.Y.)

• Can pinpoint exact causes to a great extent, meaning alternative

causes cab be found easier

• See micro-seismic mapping

McGuireWoods LLP | 78 CONFIDENTIAL

“Fear of” & Emotional Distress Damages

McGuireWoods LLP | 79 CONFIDENTIAL

Berish v. Southwestern

• “Plaintiffs' claims for Damages for Emotional Distress except as to Plaintiff C.S. will be dismissed. Plaintiffs'

will be allowed to amend their Complaint to seek damages for inconvenience and discomfort.”

• “Under Pennsylva

vania nia law, claims for emotiona nal l distress s require ire that the plaintif iff suffer fer an attendant t physica cal l injury

• ury. Houston v. Texaco, Inc., 538 A.2d 502, 505 (Pa. Super. Ct. 1988). Plaintiffs have only pled physical

ailments as to Plaintiff C.S. Therefore, the emotional distress claims will be dismissed except as to Plaintiff C.S.”

• “Plaintiffs have asked the Court for leave to amend their Complaint to add a claim for damages for

inconvenience and discomfort. Pennsylvania law recognizes "a cause of action for inconvenience and discomfort caused by interference with another's peaceful possession of his or her real estate." Houston, 538 A.2d at 506. Plaintiffs have complied with Fed. R. Civ. P. 15(a) and Local Rule 15.1, and the Court will grant them leave to amend in order to add claims for damages for inconvenience and discomfort. This determination essentially comports with the agreement reached at oral argument.”

McGuireWoods LLP | 80 CONFIDENTIAL

Reece v. AES Corp.

• Reece v. AES Corp.,2016 WL 521247 (10th Cir. 2015)
• “[A] plaintiff in a toxic tort case must prove that he or she was exposed to and

injured by a harmful substance . . . [a]lleging reasonable concern about an injury

• ccurring in the future is not sufficient to allege an actual injury in fact … a

cause of action does not accrue until an injury in fact occurs.”

• Also held that pltfs’ allegations of present physical harm were insufficient because

“the general statement that pltfs suffer ailments consistent with exposure to [the contaminants at issue] is nothing more than a formulaic recitation.”

McGuireWoods LLP | 81 CONFIDENTIAL

• Smith v. ConocoPhillips Pipe Line Co., No. 14-2191 (8th Cir.)
• “In light of the contemporary consensus reached by persuasive authority on the

meaning of common law nuisance in the context of environmental contamination, we conclude 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 proof.”

McGuireWoods LLP | 82 CONFIDENTIAL

Cook et al. v. Rockwell and Dow 618 F.3d 1127 (10th Cir.)

• “While the resolution of these issues typically involves questions of fact, a scientifically unfounded

risk cannot rise to the level of an unreasonable and substantial interference. To the extent nt Plai ainti tiffs fs rely on anxiety ety from an increas reased ed risk sk to their ir health th as an interferen rference ce with th the use and enjoyment yment of their ir properti erties, es, that anxiet ety y must t aris ise e from scien entifi tifica call lly y veri rifia fiable le evid iden ence ce regarding the risk and cannot be wholly irrational.”

• We “predict

edict that the Colora rado Supreme reme Court rt would ld not permit mit recov

• very

ery premised emised on a findin ding g that t an n int nterferen rference, ce, in n the form of anx nxiet ety or fear of health th risks, ks, is "subs ubstant antia ial" l" and nd "unre reas asonab nable" e" unless ss that anxiety ety is supported

• rted by some

e scien entific tific evid iden ence

• ce. The district court

erred in concluding otherwise.”

McGuireWoods LLP | 83 CONFIDENTIAL

Other Law

• Plaintiffs are generally required to allege that they have suffered an “appreciable, substantial tangible injury.”
• Courts have explained that this substantial harm must be one of “importance, involving more than slight

inconvenience or petty annoyance.” Darney v. Dragon Prods. Co., LLC, 640 F. Supp. 2d 117 (D. Me. 2009) (quoting Restatement (Second) of Torts § 821F, cmt. c)).

• Furthermore, numerous courts have held that the harm must be more than “de minimis” and that if the

alleged invasion relates to contamination, it must “rise to the level of toxicological concern.” Lamb v. Martin Marietta Energy Sys., 835 F. Supp. 959 (W.D. Ky. 1993); Benesh v. Amphenol Corp. (In re Wildewood Litig.), 52 F.3d 499 (4th Cir. 1995); Brooks v. E. I. du Pont de Nemours & Co., 944 F. Supp. 448 (E.D. N.C. 1996); In re TVA Ash Spill Litig., 805 F. Supp. 2d 468, 491 (E.D. Tenn 2011) (plaintiff must show constituents reached property in sufficient concentrations to cause actual damage). An invasion of small amounts of contaminants on plaintiffs’ land is not enough to state a claim for private nuisance. Bradley v. American Smelting & Refining Co., 635 F. Supp. 1154, 1157-58 (W.D. Wash. 1986).

McGuireWoods LLP | 84 CONFIDENTIAL

In re: Tennessee Valley Authority Ash Spill Litigation, Case No. 3:09-cv- 00009 (E.D. Tenn.)

• “Although plaintiffs argue that exposure to the toxic constituents in the ash exists

by virtue of the presence of ash in the environment, th the mere existenc stence e of

• f a to

toxin n in th the environme ronment nt is insuff ufficient icient to to esta tabli lish sh causatio sation n with thou

• ut

t proo

• of th

that t th the indi divid idual ual was actu tual ally ly expos

• sed

d to to th the to toxin and at t a level suffic ficient ient to to c cause e injury ury or

• r str

tress.”

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Case Study

• City of New York v. Exxon Mobil Corp. (S.D. N.Y.)
• Jury awarded city $105 million in compensatory damages. Court did not permit punitive damages.
• The jury found that gasoline containing MTBE was a defective product and a public nuisance because Exxon Mobil gave

no warnings about the product’s dangerous propensity to contaminate groundwater.

• Jury decided against Exxon despite the fact that it found there was pre-existing contamination of the wells at issue (for

which they subtracted $70 million).

• The damages awarded were to compensate the city for building (in the future) a water treatment facility to treat the water

for 40 years.

• Damages were awarded even though the MTBE contamination will not peak until 2033 at levels 25% of what the EPA

says is the maximum safe level.

• Affirmed by Second Circuit

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In re MTBE Prod. Liab. Litig., 2013 WL 3863890 (2d Cir.)

• “We agree with the district court that for standing purposes, the MCL does not define whether injury has occurred. It

strikes us as illogical to conclude that a water provider suffers no injury-in-fact, and therefore cannot bring suit, until pollution becomes “so severe that it would be illegal to serve the water to the public.’ This is especially true in view of a NY water provider’s duty and common-sense obligation to protect or remediate groundwater before contamination reaches the applicable MCL. We decline to hold that the MCL constitutes a bar beneath which a water provider can never suffer injury-in-fact.”

• Held that proper standard was whether “a reasonable water provider in the City’s position would treat the water to reduce

the levels or minimize the effects of the MTBE in the combined outflow of the Station 6 wells”

• Found that this strikes a proper balance, recognizing that “even clear, good-tasting water contains dozens of contaminants

at low levels” and demanding more than a de minimus contribution before a water provider may establish injury

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NRDC v. County of Los Angeles (9th Cir. 2016)

• Reversed motion to dismiss
• Held that Los Angeles County may be liable for injunctive relief sought by

environmental groups in a dispute over alleged water pollution.

• Found that a new permit does not guarantee compliance.

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Expert Issues

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The Battlefield? Causation!

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Success of Daubert Challenges

• In a 2010 report of 6,141 Daubert challenges to witnesses from all fields in both

federal and state courts, it concluded that the success rate of challenges was 45% for either complete or partial exclusion.

• Attempts to completely preclude an expert were successful 25% of the time.
• A trial court’s rulings on Daubert motions were affirmed 87% of the time.
• There were more than three times as many Daubert challenges in 2010 as they

were in 2000.

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Daubert Empirical Findings

• 71% of Daubert motions are filed by defendants
• In almost half of cases, multiple Daubert motions are made.
• 31% of Daubert motions target medical experts.
• 24% target engineering/technical/environmental experts.
• Defendants are more likely to win Daubert motions than pltfs.
• Overall, parties win about 22% of Daubert motions in full. Defendants partially

win 53%, while plaintiffs partially win 45%.

• In tort cases, Defendants win 30% in full, and 52% in part. Plaintiffs however

win in full only 16% and in part 37%.

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Daubert Empirical Findings

• When a Daubert motion is granted for a pltf, their overall win rate is 42% versus

29% when their motions are denied.

• When a Daubert motion is granted for a defendant, then the defendants win 75%
• f the time, but only 69% of the time when their motions are denied.
• Within 100 days of a Daubert ruling, more than half of the cases ended in

settlement or summary judgment.

• Source: Judicial Treatment of Daubert Motions: An Empirical Examination, by

James C. Cooper (George Mason Law)

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Fracking

• Baker v. Anschutz Exploration Corp., 2014 U.S. Dist. LEXIS 174442 (W.D. N.Y.
• Dec. 17, 2014), aff’d on reconsideration, 2016 U.S. Dist. LEXIS 33353 (W.D. N.Y.

March 15, 2016) (excluded most of the testimony of expert; found expert not qualified and that even if he had been, would have been speculation)

• Ely v. Cabot Oil & Gas Corp. = excluded nearly all of the opinions of one of

pltfs’ causation experts

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New Hampshire v. Exxon Mobil Corp.

• New Hampshire Supreme Court upheld $236 million verdict against Exxon.
• U.S. Supreme Court denied cert. earlier this year.
• Plaintiff used statistics to extrapolate Exxon’s share of liability for MTBE contamination.
• “In a perfect setting, the [state] would have the resources to test each individual well over a long period of

time and precisely determine damages. However, if such a process were undertaken here, it would have to continue beyond all lives in being . . . Moreover, requiring the [state] to test each individual well undoubtedly and unfairly ‘tilts the scales’ in [defendants’] favor . . . [T]he necessary additional litigation costs the [state] would have to bear would consume much of any recovery, making continued pursuit of the litigation fruitless.”

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People of the State of California v. Kinder Morgan Energy Partners LP

• People of the State of California v. Kinder Morgan Energy Partners LP, (9th Cir.

2015)

• Reversed summary judgment and exclusion of Pltfs’ expert
• Held that flaws with expert may go to weight, not admissibility.

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Case Study – Expert issues in McCormick v. Halliburton

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Sharp Split on Methodological Flaws

• Three Courts of Appeals have recently held that minor methodological flaws go

to the weight of the evidence, not the admissibility, and does not require exclusion of the opinions.

• SQM North America Corp. v. City of Pomona, 750 F.3d 1035 (9th Cir. 2014)

– “A minor flaw in an expert’s reasoning or a slight modification of an otherwise reliable method does not render expert testimony inadmissible.” – “A more measured approach to an expert’s adherence to methodological protocol is consistent with the spirit of Daubert and the Federal Rules of Evidence: there is a strong emphasis on the role of the fact finder in assessing and weighing the evidence.”

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Sharp Split on Methodological Flaws (cont.)

• Johnson v. Mead Johnson & Co., 754 F.3d 557 (8th Cir. 2014)

– Found that it was acceptable that the PFGE test at issue only used one enzyme rather than the CDC standard of two or three – Found that the district court went too far by weighing the experts’ conclusions instead of focusing only on methodology

• Manpower Inc. v. Ins. of Penn., 732 F.3d 796 (7th Cir. 2013)

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Courts focusing on differential etiologies

• McMunn v. Babcock & Wilcox Power Generation Group, Inc. (W.D. Pa. 2014) =

magistrate excluded pltfs’ experts; trial court however permitted them

• “Dr. Hu’s opinions have met the pedestrian standards required for reliability and

fit as they are based on scientifically sound methods and procedures as opposed to subjective beliefs and unsupported speculation.”

• court also held that differential diagnosis method does not require that he

estimate the likelihood that radiation caused a particular cancer before he can conclude that radiation is the most likely cause among many, including those unknown

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Trend # 2 – Courts focusing on differential etiologies

• C.W. v. Textron, Inc., (7th Cir. Aug. 26, 2015) = district court excluded pltf’s 3 experts; COA

affirmed

• District court found that expert’s reliance on differential etiology failed to meet Daubert because

he “failed to connect the dots between the scientific studies he analyzed and the opinions that he

• ffered” == the studies he relied upon failed to establish that vinyl chloride, at the dose and

duration relevant to the case, could cause the problems that plaintiffs experienced or claimed they were likely to experience; COA said “This approach is not the stuff of science.”

• “Without the benefit of analogous studies and an acceptable method of extrapolation, Dr. Byers .

. . is forced to take a leap of faith in pointing to vinyl chloride as having the capacity to cause the injuries (and risk of injury) to [plaintiffs]. The district court ably performed its gatekeeper role in shielding the jury from this leap.”

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How Do You Defend Against Them? Strategies for Defending Against Liability

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Initial Case Assessment - Defense

• Removal?
• Property damage or personal injury?
• Present or future injury?
• Actual contamination or mere fear of it?
• What is the evidence of contamination?
• Alternative causes?
• Co-defendants – Friend or Foe?

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Disaggregation

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Force Concretization

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Physical Invasion?

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Actual Injury?

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Strategies for Defending Against Liability

• Individualize

– Do not let pltfs get away with making general, non-specific allegations of harm – Attack specific causation – Consider a motion to sever if appropriate – Consider other strategies including bringing in third-parties

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Attack

• Consider aggressively attacking claims that do not seem to be based in fact or

that seem to rely on faulty data

• Motion for Sanctions
• Counterclaims

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Attack (cont.)

• Baker et al. v. Chevron USA, Inc., Case No. 05-cv-00227 (S.D. Ohio) (court awarded to defendant

sanctions of $250,000 against plaintiffs’ attorneys in groundwater contamination suit)

• The court found that the plaintiffs had “utterly failed to produce any individualized exposure data

whatsoever.”

• “This amount will have a substantial deterrent effect on these lawyers in light of their financial

situations and, the court believes, it will effectively promote general deterrence since very few attorneys, no matter how well off, will want to run the risk of incurring such a penalty under similar circumstances.”

• Affirmed by Sixth Circuit in Aug. 2013 (No. 11-4369)

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Dispositive Motions

• In aggregated cases, individual plaintiffs will ignore or be unable to prove elements
• f their claims.
• Frequent dispositive motion issues include:

– Plaintiffs’ failure to demonstrate lack of actual injury or physical invasion; and – Plaintiffs’ inability to demonstrate causation.

• Defendants should also raise legal arguments designed to defeat novel claims or

damages theories to guard against expansion of liability.

• Do not leave legal arguments on the table.

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Strategies for Defending Against Liability

• Documents

– Defendants face possible massive discovery in groundwater contamination cases. – Determine known universe of relevant documents now, especially those related to conduct and knowledge – If possible, institute a campaign to limit harmful documents going forward

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Strategies for Defending Against Liability

• Science

– Get a handle on the science in your litigation as quickly as possible. Cannot attack causation without knowing the science cold. – Examine alternative causes of alleged harm

• Experts

– Spend time to find the best experts – Lock up the key experts as quickly as possible

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Possible Expert Witnesses

• Possible Experts

– Hydrogeologist- Obtain groundwater and soil data to determine the origin of the solvents – Groundwater Modeler- Create model of ground water flow system – Expert in Groundwater Chemistry- Determine the effect soil and water have on the breakdown of solvents – State of the Art Expert (household and manufacturer’s tort claims)- Explain that the chemicals were handled with the prevailing scientific knowledge and industry and regulatory standards

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Possible Expert Witnesses

• Household Case

– Epidemiologist- General causation – Toxicologist- General causation – Medical Doctor- Specific causation – Medical Monitoring

• Whether the plaintiff is at an increased risk of a serious latent disease
• Whether early detection is beneficial
• Whether appropriate monitoring methods exist
• Possible downsides of monitoring

– Property Appraiser

• Manufacturer’s Case

– Environmental Engineer- Reasonable cost of cleanup

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Questions or Comments?

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