Reducing Environmental Risk

The Southern District of New York cites to Burlington Northern in an Apportionment Case.

In a recent decision in In Re Methyl Tertiary Butyl Ether (“MTBE”) Products Liability Litigation (“In re MTBE”), No. 00 MDL 1898, and related case City of New York v. Exxon Mobil Corporation, No. 04 Civ. 3417 (S.D.N.Y. July 14, 2009), the District Court for the Southern District of New York relied on the Supreme Court’s recent decision in Burlington Northern & Santa Fe Railway Co. v. United States, No. 07-1601, -U.S.- (U.S. May 4, 2009) (“BNSF”), in holding that the defendants have the burden of providing apportionment under the commingling theory of liability in that environmental toxic tort case.

By way of brief background, the Methyl-tertiary-butyl-ether (MTBE) products liability litigation is an environmental toxic tort case that is a multidistrict litigation arising from MTBE contamination in drinking water wells across the country. “Seeking compensatory and punitive damages, as well as other remedies, plaintiffs sued various companies in the oil industry that have manufactured, refined, marketed or distributed MTBE or gasoline containing MTBE. In their complaint, plaintiffs assert claims for (1) violation of Section 8(e) of the Toxic Substances Control Act (“TSCA”); (2) public nuisance; (3) strict liability for design defect and/or defective product; (4) failure to warn; (5) negligence; (6) private nuisance; (7) trespass; and (8) violation of the New York Navigation Law.” In re MTBE, 591 F.Supp.2d 259, 263 (SDNY 2008).

In a June 2009 decision in the MTBE litigation that is not the subject of this post, the District Court ruled that (1) the City of New York may seek punitive damages for claims that proceed under the commingled product theory; and (2) a defendant’s liability resulting from its contribution to a defective commingled product is merely several, rather than joint and several. See In re MTBE, No. 00 MDL 1898, 04 Civ. 3417, 2009 WL 1649668 (S.D.N.Y. June 9, 2009). The issue left open in that ruling was which party bears the burden of proof for apportionment of liability for such claims.

The Court noted that the commingled product theory adopts, with slight adjustments, the concurrent wrongdoing theory of liability and the market-share theory of apportioning damages. Under the market share theory, the burden of proving that the defendant’s conduct did not contribute to causing the injury shifts to the defendants. However, courts have not taken a uniform approach in addressing which party has the burden of apportioning the damages among the defendants that were not able to exculpate themselves. Decision, at 7.

The Court, noting the inherent dangers in placing the burden on either party, quoted the Restatement of Torts, which says that “the burden of production should be low to permit ‘the fact finder [to] divide damages based on the available evidence.'” Decision, at 12 (quoting Restatement (Third) of Torts: Apportionment of Damages § 26 comment h.). The Court then noted that in the BNSF case the District Court apportioned liability even though neither plaintiff nor defendant argued that the injury was divisible, and that the Supreme Court found this was reasonable because the District Court had a “rational basis for determining the contribution of each.” Decision, at 13.

The City, as one of the plaintiffs, of course argues that the burden should be placed on the defendant. ExxonMobil, the only remaining non-settling defendant, argues that the burden should be placed on the plaintiff.

The Court then predicted that the New York Court of Appeals would place the burden of proof of apportioning damages on the defendant, with the provision that the defendant need only show a rational basis for apportionment.

Although ExxonMobil argued that placing the burden on defendants is akin to imposing joint and several liability, the Court reasoned that defendants are in the best position to know and argue for their appropriate market share contribution to the contamination, and, following the holding of the Supreme Court in the BNSF case, the burden of proof is less onerous in that the defendants must show only that there is a reasonable basis for the apportionment. Decision, at 18.



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