Northern California Record: California PCB Cases Could Expose Businesses Everywhere

By W.J Kennedy

SACRAMENTO – Legal actions taken by ten governments on the West Coast against the chemical giant Monsanto could eventually ensnare thousands of other manufacturers (even of discontinued products) in the same types of these highly speculative, virtually defenseless actions, legal experts warn.

“Any business that makes anything could face the threat of enormous liability exposure if these lawsuits are allowed by the courts,” said Phil Goldberg of Shook, Hardy & Bacon, and director of the new Progressive Policy Institute’s Center for Civil Justice. “Businesses around the country, especially manufacturers, need to be following these cases very closely.”

The lawsuits by the cities of San Diego, Long Beach, Portland, Ore., the state of Washington, and others, claim that Monsanto, the maker of polychlorinated biphenyl (PCB), an insulation used in electronic equipment from 1935 though 1977, should cover cleanup costs of waterways contaminated by the synthetic material, now believed by some to be a carcinogen. Even though the company had manufactured a lawful product at the time, and had nothing to do with how or where the products that contained PCBs were disposed, the lawsuits have managed to gain traction in several courts.

The two plaintiffs’ firms engineering the cases, Baron & Budd and Gomez Trial Attorneys, are working together under the banner “EcoLawyers.” In their arguments for the governments, they are relying on the centuries-old, but still vague, public nuisance tort. It carries with it no statute of limitations.

In its traditional sense, the public nuisance tort has been employed by governments to stop the conduct of an individual interfering with the public good – blocking a road or other public right of way is one example. Over the years there have been attempts to stretch the law’s application well beyond that original intent.

“It’s been the fall back when an action doesn’t meet the criteria for strict liability or negligence,” said Donald G. Gifford, the Jacob A. France professor of torts at the University of Maryland Carey School of Law. “So over the years there have been some weird applications of the (public nuisance) law, but it has been only marginally successful.”

The trouble for businesses is that success in any one of the ten California cases (before eight judges) will almost certainly encourage other plaintiffs’ firms to approach governments all over the country to pursue product manufacturers, especially if the products were improperly disposed of or improperly applied by the end user.

“The sheer number of cases is cause for concern,” said one attorney familiar with the cases, who asked not to be identified. “It only takes one to gain some traction. What to watch for as these cases move along is how many other plaintiffs firms start reaching out to governments seducing them with the same legal argument.”

A successful case for the plaintiffs’ attorneys, moreover, could undermine the very law itself. Products liability law with its strict evidentiary requirements, including causation, could be “laid waste” by these actions, Gifford said.

On the side of the plaintiffs is a 2013 case brought by ten California counties where the judge ruled that the presence of lead paint in residences constituted a public nuisance, and that the companies who manufactured lead pigment and paints more than a half century ago must be responsible now for removing them. The ruling amounted to a $1.15 billion judgment against a few pigment and paint manufacturers still in business today.

The state court judge’s decision, in effect, labeled all residential properties built before 1981 a public nuisance. The Los Angeles County Boards of Real Estate said this precedent “could precipitate the worst plunge in California home values since the housing crash of 2007.”

The case is on appeal at the California Supreme Court.

So far five of the ten Monsanto cases have been dismissed (all in California), but none has been dismissed with prejudice (final judgment); they are still permitted to amend their complaints. Two cases in Oregon and two in Washington have yet to the be ruled on, but in late October, in a case brought by the city of Spokane, the judge rejected Monsanto’s argument for initial dismissal. There will be another opportunity to dismiss after discovery in a summary judgment motion. If that is denied, then the case will be set for trial.

In San Diego, the cases have the government entities turning on one another. The San Diego Airport Authority is now pointing to the City’s case against Monsanto as evidence of why the city should be named by the state of California as an additional responsible party.

Scott Barnett, executive director of San Diego Taxpayers Advocate, calls the litigation a “circular firing squad.”

“Everyone stands to lose here,” Barnett said. “The city’s largest employer, the Navy, and bio medical and high tech companies that call the city home.”

The business community, behind the National Association of Manufacturers and National Federation of Independent Business, joined against the California lead paint case and a similar case in Rhode Island. There, in 2008, the Supreme Court unanimously threw out a 2006 jury decision against three paint manufacturers, saying the lawsuit should have been dismissed at the outset because “public nuisance law simply does not provide a remedy for this harm.”

The paint manufactures weren’t so lucky in California, and the economic consequences could be dire.

An amicus filed in the California lead paint case by the business community stated in part: “Tort liability is a significant factor in a business’ consideration of whether to expand its operations, create new jobs, or provide goods and services in a given market. If …sellers of a legal product may be held liable for causing a public nuisance decades after engaging in an activity that was lawful at the time, businesses will face constant uncertainty and a disincentive to operate in California.”

Phil Goldberg, the director of PPI’s Center for Civil Justice, is a partner at Shook Hardy & Bacon LLP. Donald G. Gifford is on PPI’s Center for Civil Justice Advisory Board.

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