City of New York v. Exxon Mobil Corp: Damages Without Injury

JURIST Guest Columnist Eric Lasker of Hollingsworth LLP discusses standing and City of New York v. Exxon Mobil Corp....

It is a fundamental tenet of our constitutional system of justice that courts are limited in jurisdiction to cases or controversies involving injuries that are "concrete, particularized and actual or imminent." In Lujan v. Defenders of Wildlife, the US Supreme Court held that this injury-in-fact requirement was an "irreducible minimum of constitutional standing," essential to the proper balance of power between the three branches of government. But in a now-final ruling by the US Court of Appeals for the Second Circuit, a defendant has been held liable for more than $100 million for conduct that is causing no current injury and that a jury concluded would not cause cognizable injury even assuming a series of speculative actions over the next 25 years.

The case is City of New York v. Exxon Mobil Corp. The case arose from Exxon Mobil's oxygenation of gasoline with a chemical compound called methyl-tertiary-butyl-ether (MTBE). MTBE was added to gasoline in compliance with a federal mandate under the Clean Air Act because it helps gasoline burn more cleanly, thus reducing air pollution. At the time, the Environmental Protection Agency ("EPA") believed this environmental benefit outweighed a recognized risk that MTBE spreads more easily in groundwater than other gasoline components. However, reports of MTBE groundwater contamination in the 1990s led to a phasing out of MTBE in gasoline in the 2000s and MTBE's undisputed benefit of cleaner air has now taken a back seat to legal disputes over alleged injuries to groundwater supplies.

In 2004, the City of New York brought suit against Exxon Mobil for claimed injuries to the city's drinking water supplies. As ultimately demonstrated at trial, the city's damages claim faced a number of real world "fact checks" that should have prevented the case from proceeding. First, the city obtains its drinking water from upstate reservoirs, not the allegedly impacted groundwater. Second, the city was precluded from using the groundwater at issue because it was heavily polluted with other contaminants having nothing to do with Exxon Mobil or MTBE. Thus, the groundwater could only provide a future source of drinking water if the city builds a treatment facility to treat these other contaminants, a facility that is not even in construction and, accepting the city's expressed good faith intent, would not be in place for another 10-15 years. Third, the groundwater is not currently contaminated with MTBE above drinking water standards. Instead, the city's claim rests upon the premise that currently inactive wells would begin pumping drinking water after the construction of the separately required treatment facility and would draw more MTBE in from more distant groundwater supplies. Fourth, assuming the treatment facility was built and the wells were put in service, MTBE levels in the groundwater at their projected peak still would not exceed safe drinking water standards.

In holding that the city's claim nonetheless presented a ripe case or controversy, the Second Circuit relied upon two legal predicates: (1) that a projected future injury is sufficient to provide standing so long as there is evidence of some current, measurable impact (even if not sufficient to demonstrate present damage) and (2) that groundwater is damaged by the presence of a chemical compound even at levels within safe drinking water standards. Each of these findings raise significant questions about the vitality of standing jurisprudence in environmental cases and each open the door to new theories of liability without injury-in-fact that disregard the irreducible minimum protection against judicial overreach and unfounded plaintiff-counsel-driven litigation.

The Second Circuit's theory of standing based on potential future groundwater damage is analogous to legal theories of medical monitoring in personal injury litigation. In both cases, plaintiffs are bringing suit not for any present injury but for alleged current costs to address the possibility of some manifest injury in the future. The viability of medical monitoring as a proper basis for damages has been hotly contested for decades, with most states rejecting such claims absent evidence of a present injury, but a significant minority of states allowing such claims to proceed. Somewhat ironically, in a recent opinion issued after the Second Circuit's ruling in the MTBE litigation, the New York Supreme Court in Caronia v. Philip Morris USA 
[PDF] answered a certified question from the Second Circuit and rejected a medical monitoring claim brought by a putative class of cigarette smokers. The New York Supreme Court explained that "a threat of future harm is insufficient to impose liability against a defendant in a tort context." Thus, New York law arguably now extends broader protections against speculative future harm to land than it does to speculative future harm to human health.

The New York Supreme Court's ruling in Caronia does suggest that a medical monitoring claim would be viable if plaintiffs can demonstrate some current physical injury. The Second Circuit's reliance on alleged current low level MTBE detections in the New York City groundwater as a basis for standing could thus be argued as being consistent with the Caronia medical monitoring holding. But there is one very important difference. While medical monitoring plaintiffs seek the costs for screening tests that they allege might detect future cancers at an early stage (which only then would allow for a possible future legal action for damages caused by the cancer), the City of New York was awarded the full cost of "curing" a potential future damage to groundwater before it occurs (if it ever does).

The Second Circuit's conclusion that a plaintiff can bring suit based upon the presence in groundwater of within-safe drinking levels of a chemical gives rise to a separate set of problems. While almost always within regulatory limits and not posing any risk to human health, the presence of trace amounts of chemicals and other foreign substances in public drinking water supplies is ubiquitous. In one study, for example, the US Department of Interior Geologic Survey (USGS) sampled source water from nine community water systems for analysis of 258 man-made organic compounds and detected trace levels of more than half of the compounds in at least one source water sample, with six compounds detected in more than half the samples. The USGS identified over a dozen different business sources of such trace detections: (1) disinfection by-products, (2) fungicide-related compounds, (3) fungicides, (4) gasoline hydrocarbons, oxygenates and oxygenate degradates, (5) herbicides and herbicide degradates, (6) insecticide and insecticide degradates, (7) manufacturing additives, (8) organic synthesis compounds, (9) pavement- and combustion-derived compounds, (10) personal care and domestic-use products, (11) plant- or animal-derived biochemicals, (12) refrigerants and propellants and (13) solvents. By decoupling legal standing from safe drinking water standards, the Second Circuit thus has set precedent for an endless grab bag of potential lawsuits against broad sectors of the economy, subject solely to the whim of plaintiff's counsel and the sound discretion of trial courts to screen out such claims on non-standing grounds.

On April 18, 2014, the US Supreme Court denied Exxon Mobil's petition for writ of certiorari, cementing the Second Circuit's flawed standing analysis into law in that circuit. However, with MTBE litigation pending in other courts across the country and with the prospect of new future groundwater non-injury litigation following the Second Circuit model, the standing issues raised in the Exxon Mobil case are likely to emerge again. Now that the irreducible minimum of constitutional standing has been breached, defendants must focus their efforts on the hard task of shepherding the law back into the proper boundaries of judicial authority.

Mr. Lasker is a partner in the Washington, DC law firm Hollingsworth LLP, where he litigates a wide variety of complex civil matters, with a current focus on toxic torts, environmental litigation, Alien Tort Statute litigation and pharmaceutical products liability. Mr. Lasker has represented clients in toxics/environmental matters involving herbicides, asbestos, lead paint, non-ionizing radiation and chemical solvents and in pharmaceutical and medical device products liability matters involving antipsychotics, anti-fungals, anti-epileptics, cancer medications, cough/cold treatments, introcular and contact lenses and obstetrical drugs. Mr. Lasker also maintains an active amicus curiae practice in the US Supreme Court and other federal and state appellate courts across the country. Mr. Lasker has been recognized for his work as an American Lawyer "Litigator of the Week," a Bloomberg News "Rainmaker," a recipient of the 2012 George W. Yancey Memorial Award and the 2014 Burton Award for excellence in legal writing and as one of Law360's five Products Liability MVPs for 2013.

Suggested citation: Eric Lasker, City of New York v. Exxon Mobil Corp: Damages Without Injury, JURIST-Hotline, Apr. 23, 2014, http://jurist.org/hotline/2014/04/eric-lasker-exxon-standing.php.


This article was prepared for publication by Jason Kellam, an assistant editor with JURIST's professional commentary service. Please direct any questions or comments to him at professionalcommentary@jurist.org

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