Reducing Environmental Risk

UPDATED: Federal Court Upholds $105 Million Judgment Against ExxonMobil in Bellwether Groundwater Contamination Litigation

Here’s a pop quiz: after an eleven week trial in federal court, a jury hands down a verdict of nearly $105 million against ExxonMobil for contaminating New York City’s drinking water. On appeal, the verdict is upheld. What environmental law enabled the jury to find, and the appellate court to affirm, such a large verdict? The Superfund Law? The Clean Water Act? The Resource Conservation and Recovery Act?

If you guessed any of the above, you’d be wrong.

The law that led the jury to their verdict wasn’t a federal statute. It wasn’t even an environmental statute. It was none other than New York State’s common law: a body of cases decided over the decades that establishes certain precedents and, at first glance, appears to have very little to do with protecting the environment. However, common law claims for damages arising from environmental harm have a long history in New York State, and actually predate much of today’s modern environmental legislation.

When the City of New York discovered in the early 2000’s that groundwater in a certain part of Queens was contaminated by the fuel additive Methyl Tertiary Butyl Ether (“MTBE”) – a suspected carcinogen – it didn’t file suit under the Clean Water Act, or any other environmental law for that matter. Instead, it sued ExxonMobil (one of the largest fuel refiners, and sources of MTBE in the gasoline market) under theories of negligence, trespass, and nuisance.

Environmental statutes like the Clean Water Act often charge the government with the main enforcement role, leaving injured private parties with little recourse outside of limited statutory provisions for private “citizen suits” (New York City was acting as a private party in this case as the owner of a future water supply that was damaged by ExxonMobil). But common law theories provide injured parties a much broader basis on which to sue.

During trial, the City presented evidence that ExxonMobil knew how dangerous ingestion of MTBE was for human health at the time it introduced MTBE into its gasoline in the 1980s. In addition, the City presented evidence that ExxonMobil knew that the underground storage tanks at its gas stations were prone to leak. While adding MTBE to gasoline helped it burn cleaner, and created fewer air emissions, MTBE was a suspected carcinogen and spread quickly in groundwater if it was ever leaked from an underground storage tank or spilled on the ground. Based on this evidence, the jury concluded that ExxonMobil was negligent. After the City presented additional evidence regarding the projected concentration of MTBE contamination at the time the water supply would be needed, the jury also concluded that ExxonMobil had trespassed upon the city’s property right in the groundwater, and that the contamination constituted a public nuisance.

Despite the stiff judgment in the New York City MTBE case, ExxonMobil will likely not be off the hook simply by paying the judgment. The trial and appeal were closely watched around the country by other municipalities and water districts with MTBE-contaminated groundwater as a “bellwether” of likely outcomes in other jurisdictions. New York City’s success in litigating on common law theories is likely to encourage similar lawsuits around the country. Known for appealing judgments against it, and not knuckling under them, ExxonMobil is sure to appeal one like this with such far-reaching consequences.

UPDATE: on April 22, 2014, the United States Supreme Court denied ExxonMobil’s petition for certiorari. This refusal by the country’s highest court to consider ExxonMobil’s case cements in place the Second Circuit’s 2013 decision. A copy of ExxonMobil’s petition can be found here.



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