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Applying BNSF, District Court in New York Finds “Best Available Evidence” Is Sufficient to Apportion Liability

July 22, 2009

One of the important questions left unanswered by the U.S. Supreme Court’s opinion in Burlington Northern and Santa Fe Railway Co. v. United States (“BNSF”)[1] is the quantum of proof necessary for apportionment of liability in a Superfund case. While we have not encountered a lower court decision addressing this issue under CERCLA, at least one federal district court has done so in the context of an environmental tort claim. In a decision issued last week in In re MTBE, S.D.N.Y. Case No. 00 MDL 1898, Docket No. 352 (July 14, 2009) (“In re MTBE”), District Judge Shira A. Scheindlin held that: (1) a fact finder may rely on the “available evidence” in apportioning liability among joint tortfeasors; and (2) the burden of production necessary to support a showing of divisibility is “low.”[2] The decision comes in the multidistrict MTBE products liability litigation over which Judge Scheindlin has been presiding for a number of years.[3] Judge Scheindlin previously ruled that the defendants’ liability in the case is “merely several, as opposed to joint and several.”[4] In her recent opinion, Judge Scheindlin reaffirmed that earlier ruling, over the objection of the City of New York.

Background

The MTBE litigation is a consolidated proceeding brought by 15 states, various counties and water districts against several oil companies. The case has been widely viewed as a bellwether mass tort case involving groundwater contamination. Plaintiffs are seeking more than $65 million in damages, alleging that releases of MTBE from products manufactured by defendants rendered groundwater undrinkable. In 2005, Judge Scheindlin ruled that the plaintiffs could pursue manufacturers of the MTBE gasoline additive product under a theory of “commingled liability,” without the need to show that any particular manufacturer caused their injury.

When Judge Scheindlin adopted the commingled product theory, she distinguished that theory from the more traditional theory of tort causation: “What sets the commingled theory apart from the traditional theory of causation … is that the [plaintiff] need not show that each individual defendant’s contribution, taken alone, would have caused the injury.”[5] Instead, “the plaintiff need only show that the … defendant’s MTBE contributed to th[e] commingled product” that caused the injury.[6]

Factfinder May Divide Liability “The Best It Can”

The law under CERCLA is still evolving with respect to the amount of evidence required to overcome the presumption of joint and several liability and to apportion that liability. Two weeks after BNSF was issued, the United States filed a brief in In re ASARCO LLC in which it provided the court with its reading of the decision.[7] While acknowledging that divisibility and apportionment were sanctioned by the Supreme Court, the United States downplayed the significance of the BNSF opinion, stating that the Supreme Court had merely confirmed the existing state of the law, and emphasized that parties seeking apportionment must still overcome a presumption of joint and several liability.[8]

In the MTBE litigation, the City of New York advanced a similar position, arguing that where there are “a small number of tortfeasors – fewer than 20 – the Second Restatement of Torts urges imposition of joint and several liability.”[9] Judge Scheindlin was not persuaded, noting that, when she initially adopted the commingled product liability theory, she had rejected the application of joint and several liability.[10] Judge Scheindlin specifically pointed to the Supreme Court’s opinion in BNSF, stating:

‘[W]here a correct division of liability cannot be made, the trier of fact may make it the best it can.’ This approach comports with the traditional American rule on damages, as the Supreme Court stated long ago in Story Parchment Co. v. Paterson Parchment Paper Co.:

Where the tort itself is of such a nature as to preclude the ascertainment of the amount of damages with certainty, it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for his acts. In such case, while the damages may not be determined by mere speculation or guess, it will be enough if the evidence show the extent of damages as a matter of just and reasonable inference, although the result be only approximate.[11]

The City of New York had urged Judge Scheindlin to adopt the approach of Restatement (Second) of Torts § 875, which allows for the imposition of joint and several liability where two or more actors cause a single, indivisible harm. Judge Scheindlin declined to do so, based on the fact that the commingled product theory did not require proof of actual causation, but instead allowed the plaintiff to establish liability through a demonstration that “the defendant’s conduct was a substantial factor in the harm.”[12] Because the City would only need to show that the defendants “contributed” to the commingled harm, Restatement (Second) § 875 was not on point.

In drawing this distinction, Judge Scheindlin pointed to CERCLA, where Restatement (Second) § 875 is frequently applied because “there is often no need to prove causation.”[13] This same dichotomy was highlighted in BNSF, where the Supreme Court drew a distinction between Restatement (Second) § 875, which addresses the situation where two actors cause a single, indivisible harm and § 433(a), which applies “when two or more persons acting independently caus[e] a distinct or single harm for which there is a reasonable basis for division according to the contribution of each.”[14] In such circumstances, each defendant would be subject to liability for only the portion of the total harm that he has himself caused.[15] See Restatement (Second) of Torts, §§ 433A, 881 (1976).

While Defendants Must Show Evidence Demonstrating a Reasonable Basis for Apportionment, their “Burden of Production is Low”

In addressing the burden of proof, Judge Scheindlin conceded that “the commingled product theory is novel,” and that, as a result, “there is no precedent establishing the applicable burden of proof.”[16] Accordingly, it was necessary for the court to outline its rationale for allocation of the burden of demonstrating liability, as well as to articulate the standard that must be met in order to sustain that burden.

In BNSF, the Supreme Court held that, where multiple parties cause a single harm, the burden of proving divisibility is on the parties who are advancing the claim of divisibility: “CERCLA defendants seeking to avoid joint and several liability bear the burden of proving that a reasonable basis for apportionment exists.”[17] Picking up on this approach, Judge Scheindlin noted that “[t]he burden of proving apportionment is ordinarily placed on the culpable party. This is especially true where – as here – the defendant is likely in a better position than the plaintiff to know the defendant’s share of the market.”[18]

Exxon had argued that assigning it the burden of proof would be tantamount to imposing joint and several liability. Judge Scheindlin drew a distinction between joint and several liability and the commingled product theory and, in doing so, noted another implication of BNSF decision, namely, which party will bear the risk of the orphan share or of settling parties:

There are numerous differences between several liability with the burden of persuasion concerning market share on the defendant and ordinary joint and several liability. Among other things, if liability were joint and several, Exxon would have to both: (a) seek contribution from non-parties and bear the risk of their insolvency, and (b) prove the share of settling parties rather than, as here, simply proving its own share.[19]

While placing the burden of proof on Exxon, Judge Scheindlin made clear that its burden of production was low, in order to avoid imposing the entire cost of the injury on Exxon. Here again, the court made explicit reference to the BNSF decision: “To satisfy the burden of production, Exxon need only show that there is a reasonable basis for its proposed share. Given that each party intends to call expert witnesses on the topic of market share, the jury will have sufficient evidence to support a reasonable basis for the assignment of market share to defendant, far more than was before the district court in Burlington Northern.”[20]

Conclusion

Because Judge Scheindlin had already accepted a theory of several liability when she adopted the commingled product theory, her recent decision did not require an application or set a standard for how defendants would meet their burden of showing that apportionment was appropriate. However, her decision does accept and apply the Supreme Court’s earlier rule from BNSF that a “reasonable basis” for allocating liability is all that is required, and sets the burden of production fairly low for defendants who are required to provide evidence justifying divisibility.

For more information on this decision or on the BNSF case and its implications, please contact any member of Marten Law Group’s Waste Cleanup or Environmental Litigation practice groups.

[1] 129 S.Ct. 1870 (2009).

[2] A copy of Judge Scheindlin’s opinion may be viewed at this link (PACER account required).

[3] In re Methyl Tertiary Butyl Ether (“MTBE”) Products Liability Litigation, United States District Court for the Southern District of New York, Case No. 00 MDL 1898 (SAS). Previous decisions from the In re MTBE case have been reported in this newsletter. See Products Liability: MTBE Manufacturers May Sue Under Theory of Commingled Liability Marten Law Group Environmental News (May 18, 2005).

[4] See In re MTBE, 2009 WL 1649668, at *7.

[5] Id. at *6.

[6] Id.

[7] In re ASARCO, LLC, No. 05-21207, Docket No. 11343 (Bankr. S.D.Tx. May 19, 2009). The United States’ brief is available for viewing on Westlaw at 2009 WL 1402382.

[8] Because the In re ASARCO LLC case is in the Southern District of Texas, the Fifth Circuit’s decision in In re Bell Petroleum Services, Inc., 3 F.3d 889 (5th Cir. 1993), provided the binding appellate law in the case. In rejecting the Ninth Circuit’s decision in BNSF, the Supreme Court specifically cited In re Bell with approval. 129 S.Ct. at 1381. Given this fact, it is hardly surprising that the United States would take the position that BNSF “confirmed [the] fundamental principles regarding joint and several liability” as outlined in In re Bell. Id. at 6-7.

[9] In re MTBE BNSF at 14 (quoting City’s letter outlining its argument).

[10] Id.

[11] Id. at 14 (quoting Sindell v. Abbott Laboratories, 26 Cal.3d at 613 and Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563 (1931)).

[12] Id. at 15.

[13] Id. at 15, n.48.

[14] BNSF, 129 S.Ct. at 1881 (citing United States v. Chem-Dyne Corp., 572 F. Supp. 802 (S.D. Ohio 1983)).

[15] Id. (citing Restatement (Second) of Torts, §§ 433A, 881 (1976); Prosser, Law of Torts, pp. 313-314 (4th ed. 1971)).

[16] In re MTBE BNSF at 16.

[17] 129 S.Ct. at 1881.

[18] In re MTBE BNSF at 16-17.

[19] Id. at 18 (italics in original) (citing In re New York City Asbestos Litig., 593 N.Y.S.2d 43, 46-48 (1st Dep’t 1993)).

[20] Id. at 19 (citing BNSF, 129 S.Ct. at 1882) (other citations omitted).

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