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Jan. 28 — Did New Hampshire use its role as protector of the state's waters to fast-track an MTBE contamination suit against Exxon Mobil Corp., denying the company its right to present a defense enroute to a $236 million jury verdict?
That question—coupled with a related federal preemption issue—may intrigue the U.S. Supreme Court when it considers a certiorari petition filed by Exxon Jan. 20, but lawyers and academicians tell Bloomberg BNA the case still faces hurdles (Exxon Mobil Corp. v. New Hampshire, U.S., No. 15-00933, filed, 1/20/16).
If the high court reaches this issue, it could decide whether the use of statistical approximations to prove injury and damages violates a defendant's due process rights.
New Hampshire relied on its parens patriae powers in alleging that Exxon and other oil companies contaminated thousands of wells with the now-banned gasoline additive methyl tertiary butyl ether. That approach—and the use of aggregated statistical evidence to prove the state's case—amounted to an evidentiary end-run that avoided the individualized inquiries typically required in federal class actions, Exxon argues.
The “trial by formula” facilitated an “abstract, aggregate, statewide case” that denied Exxon its right to present an individualized defense, according to the petition.
“I think there is a good chance that the Supreme Court will take an interest in this case,” Timothy Bishop, of Mayer Brown's Chicago office, told Bloomberg BNA Jan. 28.
Bishop, an appellate lawyer experienced in environmental, class action and complex litigation, said in an e-mail that Supreme Court due process precedents give defendants the right to have “an opportunity to present every available defense.”
“As in class actions in which the Court has granted certiorari, such as the Tyson Foods case this term, New Hampshire’s use of statistical extrapolations and approximations to prove injury and damages in this parens patriae case violates that right,” said Bishop.
Bishop referred to Tyson Foods, Inc. v. Bouaphakeo, U.S., No. 14-1146, filed 3/20/15, which involves pork plant workers who claimed they were inadequately compensated for time spent donning and doffing protective equipment . That case was argued Nov. 10 and is pending decision.
“‘Aggregate' litigation is hopelessly unfair,” said Bishop. “The preemption argument adds another issue in which the Justices have shown a lot of interest, and the size of the judgment ought also to give the Court pause.”
Exxon also contends that any state law duty in the case was preempted by the Clean Air Act—which required that refiners oxygenate gasoline—when there was no feasible alternative to MBTE to meet that mandate.
Former U.S. Solicitor General Paul Clement, of Bancroft's Washington, D.C., office, is counsel for Exxon.
“Paul Clement is a very skilled Supreme Court advocate,” said Harvard law professor Richard Lazarus. “It is not easy to persuade the Supreme Court to grant review in this kind of state tort law case.”
“That is why Clement is pitching the case the way he is, in an effort to persuade the Court that the case raises the kinds of federal law issues of contemporary interest to current members of the Court,” said Lazarus, who focuses on environmental law and Supreme Court advocacy.
Alexandra Lahav, a professor at the University of Connecticut School of Law, told Bloomberg BNA Jan. 28 the petition follows a trend in which defendants describe procedures as a “trial by formula” to draw a comparison to evidentiary procedures rejected by the court in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011).
In Dukes, the Supreme Court rejected class certification of discrimination claims for thousands of Wal-Mart workers that were based on “statistical and anecdotal evidence.”
“It happened this term with the Tyson Foods case, and I think that case was improvidently granted because it did not raise questions worthy of the Court’s time,” said Lahav, who writes extensively on civil procedure and due process issues in class action litigation.
“Perhaps having learned from that case, the Court will see that this is not a trial by formula case at all,” Lahav said.
“Furthermore, many of defendant’s complaints on this score have to do with state tort law, which I don’t see the Supreme Court considering even if Exxon tries to reformulate them as due process concerns,” Lahav said, noting that both Dukes and Tyson Foods involved federal laws.
New Hampshire sued Exxon and other gasoline suppliers in 2003 for ground water contamination allegedly caused by MTBE, an octane enhancer formerly used by gasoline refiners to meet oxygenate standards set by Congress in the 1990 Clean Air Act Amendments .
Other defendants in the case settled before trial, but Exxon didn't. It defended negligence, defective design and failure to warn claims over its sale of MTBE gasoline in the state from 1995 to 2006.
After a three-month trial in New Hampshire Superior Court, the jury awarded $236 million to the state—the largest verdict ever rendered in New Hampshire .
Exxon appealed, but the New Hampshire Supreme Court rejected the company's claim that the state's use of aggregate statistical evidence was improper .
The case was based on the state's parens patriae power over its waters and an “indivisible injury” created by the contamination, rather than multiple injuries among several classes of plaintiffs in a class action, the court said.
That approach allowed the state to use aggregated statistical evidence in the case—for both public and private waters—to prove its statewide case, the court said.
Also turned aside was Exxon's claim that the Clean Air Act preempted any state-law duty imposed by New Hampshire because MTBE was the only feasible means to comply with the federal mandate.
The Clean Air Act required minimum oxygen levels in gasoline, but the state's high court said it found no preemption barrier because the federal law didn't dictate the means to do so.
Exxon contends in its petition that New Hampshire's approach—based on a sampling of six wells to extrapolate contamination of thousands of wells in the state—“used precisely the same sort of aggregate statistical evidence the Dukes plaintiffs proposed, and then some.”
Varying state court interpretations of the due process implications of Dukes further fuel the petition, according to Exxon.
The company notes that the California Supreme Court held that “trial by formula” violates federal due process (Duran v. U.S. Bank N.A., 325 P.3d 916 (Cal. 2014)), while a Pennsylvania court reached a contrary conclusion (Braun v. Wal-Mart Stores, Inc., 24 A.3d 875 (Pa. Super. 2011)).
Wal-Mart's petition for certiorari in Braun is pending (Wal-Mart Stores, Inc. v. Braun, U.S., No. 14-1123, filed, 3/17/15).
“This case is instructive, for the New Hampshire courts bent over backwards to make the State's recovery possible,” the petition states. “There is no reason why other states will not follow New Hampshire's lead.”
Exxon also contends it was unfairly held liable under state law for following federal requirements for gasoline oxygenates. “At a bare minimum, the New Hampshire courts erred by rejecting this preemption theory without even allowing Exxon to put the issue of feasibility of other alternatives to the jury,” the petition states.
New Hampshire's reply to the certiorari petition is due Feb. 22.
The law offices of Bancroft, as well as O'Melveny & Myers represent Exxon Mobil Corp. and Exxon Mobil Oil Corp.
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The petition for certiorari is available at http://src.bna.com/cht
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