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No. 2013-0591
NEW HAMPSHIRE SUPREME COURT
________________
STATE OF NEW HAMPSHIRE,
Plaintiff-Appellee-Cross-Appellant,
v.
HESS CORPORATION, ET AL.,
Defendants-Appellants-Cross-Appellees.
________________
On Appeal from the Merrimack County Superior Court (consolidated with No. 2013-0668)
________________
OPENING BRIEF FOR APPELLANTS EXXON MOBIL CORPORATION AND EXXONMOBIL OIL CORPORATION
________________
PAUL D. CLEMENT Arguing Counsel (admitted pro hac vice) BANCROFT PLLC 1919 M Street NW, Suite 470 Washington, DC 20036 (202) 234-0090 THEODORE E. TSEKERIDES (admitted pro hac vice) WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000
BRUCE W. FELMLY (NH BAR 787) PATRICK H. TAYLOR (NH BAR 17171) MCLANE, GRAF, RAULERSON & MIDDLETON, PROFESSIONAL ASSOCIATION City Hall Plaza 900 Elm Street Manchester, NH 03101 (603) 625-6464 [email protected]
November 3, 2014
TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... iii
INTRODUCTION .......................................................................................................................... 1
QUESTIONS PRESENTED FOR REVIEW ................................................................................. 6
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED ....................................... 7
STATEMENT OF THE FACTS AND CASE ................................................................................. 8
A. The Clean Air Act Amendments of 1990 and the RFG Program ............................ 8
B. MTBE and Groundwater....................................................................................... 10
C. New Hampshire’s Knowledge of MTBE Groundwater Effects and Its Decisions to Opt-In to the RFG Program ............................................................. 11
D. New Hampshire’s Regulatory Regime .................................................................. 13
E. Procedural History ................................................................................................ 15
SUMMARY OF ARGUMENT ..................................................................................................... 16
ARGUMENT ................................................................................................................................ 20
I. Exxon Did Not Breach Any Valid State-Law Duty. .......................................................... 20
A. The Retroactive No-MTBE Duty Here Contravenes the Measured Judgments of the State’s Political Branches. ........................................................ 20
B. Federal Law Preempts the Retroactive No-MTBE Duty Here. ............................ 26
C. Failure to Warn the Sovereign Qua Sovereign Is Not a Tort. ............................... 32
II. The Superior Court Erred In Adopting Market Share Liability For The First Time In New Hampshire History. ..................................................................................... 37
A. Market Share Liability Breaks From Longstanding New Hampshire Law and Policy. ..................................................................................................... 38
B. This Would Be a Poor Vehicle for Adopting Market Share Liability.................... 42
C. There Is No Basis for Using Exxon’s Share of the Supplier Market as a Proxy for Its Fault. ................................................................................................ 48
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III. The Superior Court Deprived Exxon Of A Meaningful Opportunity To Defend Itself By Allowing The State To Prove A Statewide Case Using Aggregate Evidence And Preventing Exxon From Vindicating Its Site-Specific Defenses. .............. 50
A. Courts Have Uniformly Recognized That Individualized Questions of Law and Fact Dominate MTBE Cases and Render Aggregate Proceedings Inappropriate. ................................................................................... 50
B. This Case Cannot Be Distinguished From Every Other MTBE Case. ................. 52
C. The Superior Court Greatly Exacerbated the Prejudice to Exxon by Crafting Novel Exceptions to DeBenedetto. ......................................................... 54
IV. The Superior Court Failed To Follow This Court’s Decision In Hess. ............................. 61
A. Whether There Is Injury to a “Substantial Segment” of the Population Is a Question of Fact for the Jury, Not a Question of Law for the Judge. ................ 61
B. A Rational Jury Could Have Readily Found the State’s Proof Insufficient. ........................................................................................................... 62
V. The State’s Sampling And Future Treatment Claims Are Unripe And Do Not Support Pre-Judgment Interest. ......................................................................................... 64
A. The State’s Future Sampling and Future Treatment Claims Are Unripe. ............. 64
B. Prejudgment Interest on Future Costs Should Not Have Been Awarded. ............. 67
CONCLUSION ............................................................................................................................. 70
STATEMENT REGARDING ORAL ARGUMENT .................................................................... 70
CERTIFICATION PURSUANT TO N.H. SUPR. CT. R. 16(3)(i) ............................................... 70
CERTIFICATE OF SERVICE
iii
TABLE OF AUTHORITIES
Cases
Ali v. Fed. Bureau of Prisons, 552 U.S. 214 (2008) ................................................................................................................ 59
Appeal of State Emps. Ass’n, 142 N.H. 874 (1998) ......................................................................................................... 64, 66
Athorne v. Athorne, 100 N.H. 413 (1957) ............................................................................................................... 41
Bagley v. Controlled Env’t Corp., 127 N.H. 556 (1986) ......................................................................................................... 34, 58
Becker v. Baron Bros., 649 A.2d 613 (N.J. 1994) ........................................................................................................ 40
Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251 (1946) ................................................................................................................ 52
Bly v. Tri-Cont’l Indus., Inc., 663 A.2d 1232 (D.C. 1995) ..................................................................................................... 42
Bohan v. Ritzo, 141 N.H. 210 (1996) ............................................................................................................... 25
Borges v. Our Lady of the Sea Corp., 935 F.2d 436 (1st Cir. 1991) ................................................................................................... 68
Borough of Duryea, Pa. v. Guarnieri, 131 S. Ct. 2488 (2011) ............................................................................................................ 36
Brenner v. Am. Cyanamid Co., 699 N.Y.S.2d 848 (App. Div. 1999) ........................................................................................ 48
Buckingham v. R.J. Reynolds Tobacco Co., 142 N.H. 822 (1998) ............................................................................................................... 34
Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001) ................................................................................................................ 37
Burnham v. Guardian Life Ins. Co. of Am., 873 F.2d 486 (1st Cir. 1989) ................................................................................................... 70
Cargill’s Estate v. City of Rochester, 119 N.H. 661 (1979) ............................................................................................................... 40
iv
Carigan v. N.H. Int’l Speedway, Inc., 151 N.H. 409 (2004) ......................................................................................................... 31, 32
Case v. Fibreboard Corp., 743 P.2d 1062 (Okla. 1987) .................................................................................................... 39
Chellman v. Saab-Scania AB, 138 N.H. 73 (1993) ................................................................................................................. 26
Chiulli v. Newbury Fine Dining, Inc., 2013 WL 5494723 (D. Mass. Sept. 30, 2013) ........................................................................ 68
Conley v. Boyle Drug Co., 570 So.2d 275 (Fla. 1990)....................................................................................................... 42
Cook v. Rockwell Int’l Corp., 151 F.R.D. 378 (D. Col. 1993) ................................................................................................ 51
DeBenedetto v. CLD Consulting Engineers, Inc., 153 N.H. 793 (2006) ........................................................................................................ passim
E. Enters. v. Apfel, 524 U.S. 498 (1998) ................................................................................................................ 24
Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Const. Trades Council, 485 U.S. 568 (1988) ................................................................................................................ 37
Estate of Joshua T. v. State, 150 N.H. 405 (2004) ............................................................................................................... 32
Ferris v. Gatke Corp., 132 Cal. Rptr. 2d 819 (Cal. Ct. App. 2003) ............................................................................ 47
Fortier v. Olin Corp., 840 F.2d 98 (1st Cir. 1988) ..................................................................................................... 25
Geier v. Am. Honda Motor Co., Inc., 529 U.S. 861 (2000) .............................................................................................. 21, 27, 30, 31
Gordon v. Matthew Bender & Co., 186 F.3d 183 (2d Cir. 1999) .................................................................................................... 68
Gorman v. Abbott Labs., 599 A.2d 1364 (R.I. 1991) ...................................................................................................... 39
Goudreault v. Kleeman, 158 N.H. 236 (2009) ............................................................................................................... 57
v
Groleau v. Am. Express Fin. Advisors, Inc., 2011 WL 4801361 (D.N.H. Oct. 11, 2011) ............................................................................. 26
Gust v. Jones, 162 F.3d 587 (10th Cir. 1998) ................................................................................................. 57
Hamilton v. Beretta U.S.A. Corp., 750 N.E.2d 1055 (N.Y. 2001) ................................................................................................. 40
Healthcare Ass’n of N.Y. State v. Pataki, 471 F.3d 87 (2d Cir. 2006) ...................................................................................................... 29
Hymowitz v. Eli Lilly & Co., 539 N.E.2d 1069 (N.Y. 1989) ........................................................................................... 40, 43
In re Blanchflower, 150 N.H. 226 (2003) ............................................................................................................... 22
In re Dow Corning, 250 B.R. 298 (E.D. Mich. 2000) ............................................................................................. 47
In re Mid-Atl. Toyota Antitrust Litig., 525 F. Supp. 1265 (D. Md. 1981) ........................................................................................... 52
In re MTBE Prods. Liab. Litig., 175 F. Supp. 2d 593 (S.D.N.Y. 2001) ..................................................................................... 65
In re MTBE Prods. Liab. Litig., 2010 WL 1924708 (S.D.N.Y. May 12, 2010) ......................................................................... 69
In re MTBE Prods. Liab. Litig., 209 F.R.D. 323 (S.D.N.Y. 2002) ............................................................................................. 50
In re MTBE Prods. Liab. Litig., 488 F.3d 112 (2d Cir. 2007) ................................................................................................ 8, 15
In re MTBE Prods. Liab. Litig., 725 F.3d 65 (2d Cir. 2013) .................................................................................... 30, 31, 32, 43
In re Nassau Cnty. Consol. MTBE Prods. Liab. Litig., 2010 WL 4400075 (N.Y. Sup. Ct. Nov. 4, 2010) .................................................................... 33
In re Plaisted, 149 N.H. 522 (2003) ......................................................................................................... 22, 23
In re Related Asbestos Cases, 543 F. Supp. 1152 (N.D. Cal. 1982) .................................................................................. 42, 45
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In re State (State v. Fischer), 152 N.H. 205 (2005) ................................................................................................... 64, 65, 66
In re Union Tel. Co., 160 N.H. 309 (2010) ............................................................................................................... 27
Jefferson v. Lead Indus. Ass’n, Inc., 106 F.3d 1245 (5th Cir. 1997) ................................................................................................. 45
King v. Blue Mountain Forest Ass’n, 100 N.H. 212 (1956) ............................................................................................................... 42
Landgraf v. USI Film Prods., 511 U.S. 244 (1994) ................................................................................................................ 24
Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008) ................................................................................................... 53
Lupoli v. N. Util. Natural Gas, Inc., No. 991844, 2004 WL 1195308 (Mass. Super. Ct., Feb. 11, 2004) ........................................ 34
Martin v. Shell Oil Co., 198 F.R.D. 580 (D. Conn. 2000) ............................................................................................. 51
Maynard v. Amerada Hess, No. 99-CVS-00068 (County of New Hanover, N.C., Jan. 29, 2002) ..................................... 51
Merchs. Mut. Ins. Co. v. Bean, 119 N.H. 561 (1979) ............................................................................................................... 41
Miami Herald Pub’g Co. v. Tornillo, 418 U.S. 241 (1974) ................................................................................................................ 36
Millett v. Atl. Richfield Co., 2000 WL 359979 (Me. Super. Ct. Mar. 2, 2000) .................................................................... 51
Millis v. Fouts, 144 N.H. 446 (1999) ............................................................................................................... 32
Minuteman, LLC v. Microsoft Corp., 147 N.H. 634 (2002) ............................................................................................................... 23
Montenegro v. New Hampshire Div. of Motor Vehicles, ___ N.H. ___, 93 A.3d 290 (N.H. 2014) ................................................................................. 36
Mulcahy v. Eli Lilly & Co., 386 N.W.2d 67 (Iowa 1986) .............................................................................................. 39, 41
vii
Mutual Pharmaceutical Co. v. Bartlett, 133 S. Ct. 2466 (2013) ............................................................................................................ 30
Nance v. City of Newark, 501 F. App’x 123 (3d Cir. 2012) ............................................................................................. 68
Ocasio v. Fed. Express Corp., 162 N.H. 436 (2011) ............................................................................................................... 54
Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) ............................................................................................................ 36
Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726 (1998) ................................................................................................................ 66
Opinion of the Justices (School Financing), 142 N.H. 892 (1998) ............................................................................................................... 22
Oxygenated Fuels Ass’n v. Pataki, 158 F. Supp. 2d 248 (N.D.N.Y. 2001) ..................................................................................... 29
Payton v. Abbott Labs, 437 N.E.2d 171 (Mass. 1982) ........................................................................................... 38, 39
Philadelphia v. Lead Indus. Ass’n, 994 F.2d 112 (3d Cir. 1993) .................................................................................................... 39
Pickle v. Intl. Oilfield Divers, Inc., 791 F.2d 1237 (5th Cir. 1986) ........................................................................................... 68, 69
PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011) ............................................................................................................ 27
Preston v. Pottery by Andy, 2007 WL 4352712 (N.H. Super. Ct. Jan. 23, 2007) ................................................................ 34
Quality Carpets v. Carter, 133 N.H. 887 (1991) ............................................................................................................... 67
Reno v. Am. Civil Liberties Union, 521 U.S. 844 (1997) ................................................................................................................ 36
Riley v. Nat’l Fed’n of the Blind of N.C., Inc., 487 U.S. 781 (1988) ................................................................................................................ 36
Rumsfeld v. Forum for Academic & Institutional Rights, Inc., 547 U.S. 47 (2006) .................................................................................................................. 36
viii
Ryan v. Eli Lilly & Co., 514 F. Supp. 1004 (D.S.C. 1981) ............................................................................................ 39
S. Willow Props., LLC v. Burlington Coat Factory of N.H., LLC, 159 N.H. 494 (2009) ......................................................................................................... 25, 26
Santiago v. Sherwin Williams Co., 3 F.3d 546 (1st Cir. 1993) ........................................................................................... 39, 40, 45
Senn v. Merrell-Dow Pharm., Inc., 751 P.2d 215 (Or. 1988) .......................................................................................................... 41
Serv. Emps. Int’l Union Health and Welfare Fund v. Philip Morris Inc., 249 F.3d 1068 (D.C. Cir. 2001) .............................................................................................. 53
Shackil v. Lederle Labs., 561 A.2d 511 (N.J. 1989) ........................................................................................................ 39
Simoneau v. S. Bend Lathe, Inc., 130 N.H. 466 (1988) ......................................................................................................... 34, 38
Skipworth v. Lead Indus. Ass’n, 690 A.2d 169 (Pa. 1997) ................................................................................................... 39, 46
Smith v. Eli Lilly & Co., 560 N.E.2d 324 (Ill. 1990) .......................................................................................... 39, 40, 41
St. Paul’s Church v. Concord, 75 N.H. 420 (1910) ................................................................................................................. 67
State of Sao Paulo of Federative Republic of Braz. v. Am. Tobacco Co., 919 A.2d 1116 (Del. 2007) ...................................................................................................... 53
State v. Allard, 148 N.H. 702 (2002) ......................................................................................................... 36, 37
State v. Etienne, 163 N.H. 57 (2011) ................................................................................................................. 25
State v. Hess Corp., 161 N.H. 426 (2011) ............................................................................................... 5, 15, 61, 69
State v. Kidder, 150 N.H. 600 (2004) ............................................................................................................... 22
State v. Lead Indus., Ass’n, Inc., 951 A.2d 428 (R.I. 2008) ........................................................................................................ 70
ix
State v. Whittaker, 158 N.H. 762 (2009) ............................................................................................................... 62
Sterling v. Velsicol Chem. Corp., 855 F.2d 1188 (6th Cir. 1988) ................................................................................................. 51
Strickler v. Greene, 527 U.S. 263 (1999) ................................................................................................................ 25
Sutowski v. Eli Lilly & Co., 696 N.E.2d 187 (Ohio 1998) .................................................................................................. 39
Thibault v. Sears, Roebuck & Co., 118 N.H. 802 (1978) ................................................................................................... 25, 34, 39
Thompson v. Johns-Manville Sales Corp., 714 F.2d 581 (5th Cir. 1983) ................................................................................................... 39
Tidler v. Eli Lilly & Co., 851 F.2d 418 (D.C. Cir. 1988) ................................................................................................ 39
Trull v. Volkswagen of Am., Inc., 145 N.H. 259 (2000) ............................................................................................................... 38
U.S. Fid. & Guar. Co. v. Kancer, 108 N.H. 450 (1968) ............................................................................................................... 25
Valley Line Co. v. Ryan, 771 F.2d 366 (8th Cir. 1985) ................................................................................................... 68
Verdin v. C & B Boat Co., 860 F.2d 150 (5th Cir. 1988) ................................................................................................... 68
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) ..................................................................................................... passim
Williamson v. Handy Button Mach. Co., 817 F.2d 1290 (7th Cir. 1987) ................................................................................................. 68
Williamson v. Mazda Motor of Am., Inc., 131 S. Ct. 1131 (2011) ................................................................................................ 27, 28, 30
Yakubowicz v. Paramount Pictures Corp., 536 N.E.2d 1067 (Mass. 1989) ............................................................................................... 33
Zafft v. Eli Lilly & Co., 676 S.W.2d 241 (Mo. 1984) .................................................................................................... 39
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Constitutional Provisions
U.S. Const. amend. I ..................................................................................................................... 35
N.H. Const. pt. I, art. 22 ................................................................................................................ 35
N.H. Const. pt. I, art. 32 ................................................................................................................ 36
N.H. Const. pt. I, art. 37 ................................................................................................................ 22
Statutes
415 Ill. Comp. Stat 122/5 .............................................................................................................. 28
42 U.S.C. § 7401 ......................................................................................................................... 7, 8
42 U.S.C. § 7545 ................................................................................................................... 7, 8, 11
Ariz. Rev. Stat. § 41-2122 ............................................................................................................. 28
Cal. Code Regs. tit. 13 § 2262.6 ................................................................................................... 28
Col. Rev. Stat. § 25-7-139 ............................................................................................................. 28
Conn. Gen. Stat. § 22a-45a ........................................................................................................... 28
Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594 .................................................... 13
Ind. Code § 16-44-2-8 ................................................................................................................... 28
Iowa Code § 214A.18 ................................................................................................................... 28
Kan. Stat. § 55-527 ....................................................................................................................... 28
Ky. Rev. Stat. § 363.9053 ............................................................................................................. 28
Me. Rev. Stat. tit. 38, § 585-l ........................................................................................................ 29
Mich. Comp. Laws § 290.643 ....................................................................................................... 29
Minn. Stat. § 239.761 .................................................................................................................... 29
Mo. Rev. Stat. § 414.043 ............................................................................................................... 29
Mont. Code Ann. § 82-15-102 ...................................................................................................... 29
N.C. Gen. Stat. § 119-26.3 ............................................................................................................ 29
N.D. Cent. Code § 19-10-03.2 ...................................................................................................... 29
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N.H. Code Admin. R. Env-Dw 705 .......................................................................................... 7, 11
N.H. Code Admin. R. Env-Or 600 ............................................................................................ 7, 14
N.H. Code Admin. R. Env-Or 602.26 ........................................................................................... 14
N.H. Code Admin. R. Env-Or 605.03 ........................................................................................... 14
N.H. Code Admin. R. Env-Or 605.04 ........................................................................................... 14
N.H. Code Admin. R. Env-Ws 411 ................................................................................................. 7
N.H. Code Admin. R. Env-Ws 411 (1985) ................................................................................... 14
N.H. Code Admin. R. Env-Ws 411 (1990) ................................................................................... 14
N.J. Rev. Stat. § 26:2C-8.24 .......................................................................................................... 29
N.Y. Agric. & Mkts. Law § 192-g (McKinney 2000) ................................................................... 29
Neb. Rev. Stat. § 66-1227 ............................................................................................................. 29
Ohio Rev. Code § 3704.12 ............................................................................................................ 29
R.I. Gen. Laws § 31-37-7.1 ........................................................................................................... 29
RSA 146-A ............................................................................................................................. passim
RSA 146-C ...................................................................................................................................... 7
RSA 146-D .......................................................................................................................... 7, 14, 21
RSA 146-G ............................................................................................................................. passim
RSA 507:7-e.................................................................................................................... 4, 7, 54, 56
RSA 524-1:b.................................................................................................................................... 7
S.D. Codified Laws § 37-2-33 ...................................................................................................... 29
Vt. Stat. tit. 10, § 577 .................................................................................................................... 29
Wash. Rev. Code § 19-112-100 ..................................................................................................... 29
Wis. Stat. § 168.04 ........................................................................................................................ 29
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Regulations
Methyl Tertiary Butyl Ether (MTBE); Advance Notice of Intent to Initiate Rulemaking Under the Toxic Substances Control Act to Eliminate or Limit the Use of MTBE as a Fuel Additive in Gasoline, 65 Fed. Reg. 16,094 (Mar. 24, 2000) .................................................................................. 9, 10
Proposed Guidelines for Oxygenated Gasoline Credit Programs Under Section 211(m) of the Clean Air Act as Amended, 56 Fed. Reg. 31,154 (July 9, 1991) ....................... 8
Regulation of Fuel & Fuel Additives, 57 Fed. Reg. 13,416 (Apr. 16, 1992) ............................ 9, 20
Regulation of Fuel & Fuel Additives, 57 Fed. Reg. 47,849 (Oct. 20, 1992) .................................. 8
Other Authorities
EPA, Drinking Water Advisory: Consumer Acceptability Advice & Health Effects Analysis on MTBE (Dec. 1997), http://water.epa.gov/action/advisories/drinking/upload/2005_05_06_criteria_drinking_mtbe.pdf ..................................................................................................................... 11
Daniel J. Grimm, Accounting for Risk Disparity: An Alternative to Market Share Liability, 2006 Colum. Bus. L. Rev. 549 (2006) ..................................................................... 40
Jonathan B. Newcomb, Market Share Liability for Defective Products: An Ill-Advised Remedy for the Problem of Identification, 76 Nw. U.L. Rev. 300 (1981) ...................................................................................................................................... 41
Daniel C. Pope, N.H. Civil Jury Instructions § 23.4 (2012 ed.) ................................................... 34
Restatement (Second) of Torts § 402A ......................................................................................... 34
S. Rep. No. 106-426 (2000) ............................................................................................................ 8
INTRODUCTION
This appeal involves the largest jury verdict in New Hampshire history and some of the
most dramatic departures from established New Hampshire law ever reported. A civil judgment
in the amount of $236.4 million was rendered against Exxon for costs of investigating and
remediating past and future MTBE contamination in a largely unidentified subset of the
approximately 300,000 private groundwater wells and sites in the State. This unprecedentedly
large judgment is the product of a number of unprecedented departures from the traditional mode
of adjudicating torts under New Hampshire law. Rather than adjudicate who was responsible for
spills that contaminated particular wells, the court below adjudicated thousands of wells and sites
en masse. To do so, the court had to abandon traditional notions of causation and effectively
eliminated Exxon’s ability to defend itself by pointing to the fault of third parties for specific spills.
And rather than assign responsibility for the contamination of particular wells, the court upheld a
verdict holding Exxon liable for complying with government mandates by blending MTBE into
gasoline sold in New Hampshire, despite multiple judgments by the governor and legislature
endorsing the practice. The resulting verdict cannot be squared with bedrock principles of New
Hampshire law or the proper division of labor between the courts and the political branches.
At the outset, the judgment below rests not on the negligent handling or distribution of
gasoline, but impermissibly depends on a sweeping duty to have never used MTBE anywhere in
New Hampshire at any time. This judicially-imposed duty conflicts with the State’s own executive
and legislative decisions that ensured the longstanding and widespread use of MTBE and
effectively provides the State with an insurance policy for decisions it now regrets. Imposing
massive tort liability for conduct that was authorized by the other two branches of government
cannot be squared with basic principles of separation of powers.
MTBE was widely used in New Hampshire because, in 1991, the State chose to participate
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in the federal Reformulated Gas (“RFG”) Program, which required gasoline suppliers to add an
oxygenate in order to reduce harmful air pollution and thereby improve public health. MTBE is
one such oxygenate, and when the State opted into the RFG program in the 1990s, it knew both
that MTBE would be the overwhelmingly predominate means for suppliers to comply with the
oxygenate mandate in New Hampshire and that MTBE posed risks to groundwater. State officials
recognized that some spills of gasoline were inevitable and created insurance-like funds to allocate
costs for such spills, including one effectively dedicated to MTBE spills. After rejecting earlier
efforts to ban MTBE, in 2004, the legislature changed course, but not by imposing an immediate
no-MTBE duty. Instead, State officials phased out the use of MTBE because there was no safer,
feasible alternative available at that time and an immediate ban would have been impractical.
The imposition of tort liability for violating a sweeping no-MTBE duty cannot be
reconciled with these executive and legislative judgments. Whereas State officials chose to obtain
the air-quality benefits of MTBE’s widespread use, the Superior Court concluded that MTBE
should never have been used. Whereas State officials established an insurance scheme to remedy
inevitable contamination, the Superior Court awarded massive tort damages that ignored those
legislative schemes. And whereas State officials concluded in 2004 that MTBE should remain
lawful until 2007 to give manufacturers time to adapt distribution systems and protect the gasoline
supply, the Superior Court below made the MTBE ban retroactive to the beginning of time. The
jury’s verdict violates bedrock principles of New Hampshire law that respect the separation of
powers and preclude such a massive bait and switch. Indeed, the verdict not only violates New
Hampshire law, but is preempted by federal law. State tort law cannot impose liability on Exxon’s
actions in complying with the federal oxygenate mandate when Exxon had no safer, feasible
alternative at the time. It is no answer to any of this to suggest that state officials would have
3
legislated or regulated differently had Exxon provided them with more information about MTBE’s
groundwater risks. No other court has ever created a common-law tort duty to warn the sovereign
in its capacity as lawmaker, and with good reason: it oversteps longstanding tort liability
limitations and, particularly in this case, gives rise to grave First Amendment problems.
The Superior Court also deviated from bedrock principles of New Hampshire tort law in
an effort to assign responsibility en masse for the basic decision to bring MTBE into the state.
There was no justification for adjudicating this case on the high level of abstraction reserved for
legislative judgments. Every other MTBE case that has ever been adjudicated has been grounded
in individualized questions of law, fact, and responsibility for specific spills. Do particular wells
or aquifers contain MTBE? How concentrated is it? How did it get there? What actually caused
the spill or leak? When? Why? Who is responsible? What efforts were made to prevent it?
Would additional warnings have made a difference? Who supplied the gasoline that spilled? How
should that particular contamination be addressed? The Superior Court’s rulings impermissibly
rendered these and other individualized questions largely irrelevant and hamstrung Exxon’s effort
to defend itself. The resulting verdict is not recognizable as an ordinary tort verdict, and required
multiple deviations from settled New Hampshire law.
First, causation in MTBE cases is ordinarily individualized and site-specific, as MTBE
contamination of areas almost exclusively occurs because a particular party spilled or leaked
MTBE gasoline in the vicinity. Plaintiffs in other MTBE cases in turn have successfully relied on
the tools of traditional causation, thereby obviating any need to rely on market share liability even
in the few States that provide for it as a last resort. The Superior Court bypassed traditional
causation requirements by adopting market share liability for the first time in New Hampshire
history. Indeed, the Superior Court went beyond all other market share jurisdictions in excusing
4
the State from needing even to try to prove traditional causation. This ruling marks a radical break
from centuries of New Hampshire tort law. If any entity is to effect such a consequential break
from traditional practice, the decision should come from a legislature, not a court.
Second, unlike every other court to hear an MTBE case, the Superior Court excused the
State from needing to use individualized evidence to prove its case as to particular water supplies
or sites. Instead, the court allowed proof of injury on an aggregate basis through statewide
statistical extrapolations—resulting, for example, in an estimate that about 2% of the State’s wells
are or will be contaminated with MTBE. Other jurisdictions have dealt with claims of widespread
contamination that implicate individualized circumstances at specific wells through bellwether
trials and other devices. But no jurisdiction has simply brushed those individual circumstances
aside through the radical “Trial by Formula” the Superior Court adopted below. Wal-Mart Stores,
Inc. v. Dukes, 131 S. Ct. 2541, 2561 (2011). Exxon was effectively placed in the impossible
position of trying to prove that it is not liable for contamination in wells the State never identified
or at sites where the State could not describe the MTBE impacts, let alone connect any claimed
costs to MTBE. Indeed, Exxon was even held liable for remedying contamination that is not yet
known to exist at wells that have not yet been drilled. The resulting proceedings cannot be squared
with basic principles of New Hampshire law or equally fundamental notions of Due Process.
In particular, the Superior Court obliterated Exxon’s statutory right, pursuant to
RSA 507:7-e and DeBenedetto v. CLD Consulting Engineers, Inc., 153 N.H. 793 (2006), to
allocate liability to third parties whose fault contributed to particular MTBE contamination.
MTBE contamination of groundwater overwhelmingly occurs because particular parties spill or
leak MTBE gasoline, often from underground storage tanks. Indeed, the actions (or inactions) of
specific parties largely explain why some locations are contaminated but others are not. Exxon in
5
turn presented hundreds of pages of evidence demonstrating that myriad third parties contributed
to particular spills. The Superior Court, however, rendered this evidence largely irrelevant by
holding that Exxon could only allocate fault to third parties who were liable based on the same
claims and in the same manner as Exxon itself. That ruling is wrong, deeply prejudicial to Exxon,
and eviscerates the legislature’s general ban on joint and several liability by allowing plaintiffs to
obtain the same result through careful drafting of their complaint.
Third, the Superior Court improperly decided for itself whether the State proved that
MTBE contamination impacted a “substantial segment” of the State’s groundwater, as needed to
assert parens patriae standing on behalf of hundreds of thousands of privately-owned wells. State
v. Hess Corp., 161 N.H. 426, 433 (2011). Hess held that this was a question of fact for the jury,
not a question of law for the judge. Moreover, a rational jury could readily disagree that the State
satisfied the “substantial segment” requirement, as the State’s own witness testified that
approximately 98% of the private wells will never need treatment for MTBE.
Individually, many of these errors necessitate reversal or, at a minimum, a new trial.
Collectively, they resulted in a proceeding that cannot be reconciled with the separation of powers
or bedrock principles of New Hampshire law. When the legislature changes an existing policy, as
it did here when it eventually banned MTBE, it can change the law prospectively, or provide a
transition period. Tort law plays a valid complementary role for imposing liability on those that
use the officially-authorized substance negligently or continue its use after the ban’s effective date.
But tort law does not exist to impose massive retroactive liability for engaging in conduct the State
allowed or mandated without regard to the responsibility or causation of particular injuries.
Multiple deviations from settled law were necessary for this massive and misguided action to
proceed. This Court should correct those errors and reverse or vacate the orders on appeal.
6
QUESTIONS PRESENTED FOR REVIEW
1. Whether the State’s suit should have been dismissed due to violation of the
separation of powers. See, e.g., Defs.’ Mot. for Summ. J. on Separation of Powers Grounds (Dec.
22, 2011).
2. Whether the State’s suit should have been dismissed due to waiver. See, e.g., Defs.’
Mot. for Summ. J. Dismissing the State’s Claims on the Basis of Equitable Estoppel, Waiver, and
Laches (Dec. 15, 2011); Defs.’ Mot. to Set Aside the Verdict & For New Trial (May 9, 2013).
3. Whether the State’s claims are preempted by federal law. See, e.g., Defs.’ Mot. for
Summ. J. on Claims Preempted by Federal Law (Dec. 15, 2011); Defs.’ Mot. to Set Aside the
Verdict & For New Trial (May 9, 2013).
4. Whether the State failed to establish that Exxon departed from the applicable
standard of care simply by marketing MTBE. See, e.g., Defs.’ Mot. for J. Notwithstanding the
Verdict (May 9, 2013).
5. Whether Exxon had a duty to warn the government as sovereign, rather than as end
user or consumer. See, e.g., Defs.’ Mot. to Set Aside the Verdict & For New Trial (May 9, 2013).
6. Whether market share liability is an acceptable theory of recovery; if so, whether
market share liability is appropriate in this case; and, if so, whether the Superior Court erred in
applying it here. See, e.g., Defs.’ Mot. for Summ. J. on Causation (Dec. 15, 2011); Certain Defs.’
Brief on the Temporal Scope of Liability (Nov. 20, 2012); Defs.’ Mot. to Set Aside the Verdict &
For New Trial (May 9, 2013); Defs.’ Mot. for J. Notwithstanding the Verdict (May 9, 2013).
7. Whether the State was permitted to rely on aggregate statistical evidence rather than
individualized evidence of particular contamination of particular water supplies and sites. See,
e.g., Defs.’ Mot. to Exclude Unreliable Statewide Ops. of Pl.’s Experts Fogg, Beckett, & Hutchison
Under N.H. R. Evid. 702 & RSA 516:29-a (Jan. 24, 2011); Defs.’ Mot. to Exclude the Opinions
7
of Pl.’s Experts Fogg, Beckett, & Hutchison on Statewide Proof Issues as Irrelevant & Therefore
Inadmissible Under N.H. R. Evid. 702 (Jan. 24, 2011); Defs.’ Joint Mot. to Exclude Test. of Pl.’s
Expert Guercia Regarding Statewide Testing & Treatment Costs (Aug. 8, 2012).
8. Whether Exxon was unfairly prejudiced in its ability to present its defense under
RSA 507:7-e and DeBenedetto. See, e.g., Defs.’ Mot. to Set Aside the Verdict & For New Trial
(May 9, 2013).
9. Whether the Superior Court erroneously decided that the State had parens patriae
standing rather than submitting this question to the jury. See, e.g., Defs.’ Mot. for Non-Suit &
Directed Verdict (Feb. 26, 2013).
10. Whether the State’s future, speculative, and unknown well and site impacts are ripe
for review. See, e.g., Defs.’ Mot to Set Aside the Verdict & For New Trial (May 9, 2013); Defs.’
Mot. for J. Notwithstanding the Verdict (May 9, 2013).
11. Whether the State is entitled to prejudgment interest on the State’s claims for future
costs. See Defs.’ Mot. to Preclude Any RSA 524:1-b Prejudgment Interest Award on Future
Damages (Mar. 9, 2013).
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
Relevant provisions of the United States Constitution, New Hampshire Constitution, RSA
146-A, 146-C, 146-D, 146-G, 507:7-e, and 524-1:b, New Hampshire Code of Administrative Rules
Env-Or 600, Env-Dw 705, and Env-Ws 411, and 42 U.S.C. §§ 7401 and 7545 are set forth in the
Appendix at pages 1–187.1
1 References to the Appendix are cited as “App. [Page Number].” References to transcripts,
which were previously transmitted to the Supreme Court, are cited as “Tr. at [Page:Line–Page:Line] (Witness (if any) Date).” References to Orders being appealed, which are attached in chronological order in an addendum to this brief pursuant to New Hampshire Supreme Court Rule 16(3)(i), are cited as “Add. [Page Number].”
8
STATEMENT OF THE FACTS AND CASE
A. The Clean Air Act Amendments of 1990 and the RFG Program
In the Clean Air Act Amendments of 1990, Congress established the reformulated gas
(“RFG”) program. 42 U.S.C. § 7545(k) (2000). The RFG program mandated that all gasoline
sold in the areas with the worst smog have a minimum oxygen content of 2.0 percent. See id.
§ 7545(k) (2)(B). To meet this federal mandate, manufacturers were required to add an oxygen-
containing chemical—an “oxygenate”—to all gasoline sold in those areas. See id. § 7545(k)(5)
(banning sale of non-RFG gasoline).
Congress imposed the oxygenate mandate to reduce harmful air pollution. See id.
§ 7401(b)(1). When gasoline evaporates or is combusted, it leads to emissions of carbon
monoxide, ozone-forming volatile organic compounds and nitrous oxides, and toxic pollutants
such as benzene, a known human carcinogen. E.g., App. 801–02. An oxygenate reduces these
health hazards by allowing more complete combustion, reducing smog, and displacing airborne
toxics. E.g., App. 802; S. Rep. No. 106-426, at 4 (2000) (“Senate Report”).
Congress did not specify any particular oxygenate, but in practice the options were
extremely limited. See In re MTBE Prods. Liab. Litig., 488 F.3d 112, 126 (2d Cir. 2007). The
Environmental Protection Agency (“EPA”) allowed the use of only a handful of oxygenates, see,
e.g., Proposed Guidelines for Oxygenated Gasoline Credit Programs Under Section 211(m) of the
Clean Air Act as Amended, 56 Fed. Reg. 31,154, 31,164 (July 9, 1991), and recognized that
manufacturers would primarily use “two major oxygenates”—methyl tertiary butyl ether
(“MTBE”) and ethanol—to discharge the federal mandate, Regulation of Fuel & Fuel Additives,
57 Fed. Reg. 47,849, 47,852 (Oct. 20, 1992).
EPA fully expected that MTBE would be the “most heavily used oxygenate,” and the most
effective, stating that MTBE “result[s] in the greatest achievable reductions in toxic emissions.”
9
Regulation of Fuel & Fuel Additives, 57 Fed. Reg. 13,416, 13,424 (Apr. 16, 1992). Furthermore,
extensive evidence below confirmed that, at the time, MTBE was the only feasible oxygenate in
the Northeast. Ethanol was not widely available, especially outside the Midwest,2 and was
incompatible with the Northeast’s then-existing gasoline transportation and storage systems.3
Indeed, substantial modifications to the gasoline production and distribution processes were
required before sufficient ethanol-based RFG gasoline could be distributed outside the Midwest.4
What is more, ethanol had substantial downsides and limitations. A joint study of the states in the
Northeast explained that “[c]ombustion of ethanol-blend gasoline results in substantial (50 to 70
percent) increases of acetaldehyde emissions and ambient levels of acetaldehyde are presently far
in excess of health-based risk standards in the Northeast.” App. 804. And “[u]nless all gasoline
sold in the region contains ethanol, the blending or commingling of ethanol with non-ethanol
gasoline blends in vehicle gas tanks [would] result in a significant increase in [volatile organic
compound] emissions due to increased fuel volatility.” Id.
As expected, the federal oxygenate mandate “greatly expanded” MTBE’s use. Senate
Report at 5; see also Methyl Tertiary Butyl Ether (MTBE); Advance Notice of Intent to Initiate
Rulemaking Under the Toxic Substances Control Act to Eliminate or Limit the Use of MTBE as a
Fuel Additive in Gasoline, 65 Fed. Reg. 16,094, 16,097 (Mar. 24, 2000) (“less than 5%” of MTBE
2 Tr. at 5521:5–20, 5523:5–17, 5525:20–5527:5 (Bordvick Feb. 19, 2013); Tr. at 5604:10–17,
5605:12–19 (Burke Feb. 19, 2013); Tr. at 6805:13–18 (Dugan Mar. 5, 2013); Tr. at 7180:21–7182:14, 7252:23–7258:4, 7305:16–21, 7320:6–7323:15 (Eizember Mar. 6–7, 2013); App. 348, 662, 776, 778, 800, 805.
3 Tr. at 6805:7–12, 6880:14–16, 6887:6–19, 7081:12–7082:6, 7104:19–7107:7, 7108:12–7109:8 (Dugan Mar. 5–6, 2013); Tr. at 7305:16–21 (Eizember Mar. 7, 2013); App. 218–24, 261–63, 311–15, 348.
4 Tr. at 5509:23–5510:21, 5518:12–5520:14, 5521:21–5522:3, 5522:11–5523:4, 5524:10–14, 5525:20–5527:5 (Bordvick Feb. 19, 2013); Tr. at 5664:2–5665:5 (Burke Feb. 19, 2013); Tr. at 7107:8–7108:8 (Dugan Mar. 6, 2013).
10
in gasoline used for other reasons). The mandate also significantly improved air quality. In the
Northeast, “[t]ens of millions of … residents benefit[ted] from reduced exposure to mobile source
air toxics” removed due to the RFG program. App. 799. In New Hampshire alone, the reduction
in air pollution was equivalent to taking hundreds of thousands of cars off the road. See Tr. at
10671:17–10673:6 (Austin Mar. 27, 2013); App. 1508. The air quality benefits from RFG
containing MTBE were widely acknowledged in the years following the RFG program’s
implementation.5 MTBE also reduced the overall risk of disease by partially replacing benzene
and other potentially harmful substances in gasoline.6
B. MTBE and Groundwater
Although MTBE’s use improved air quality, there was a tradeoff with water quality
concerns because MTBE poses risks to groundwater. The EPA advises that MTBE “is very soluble
in water,” “often travels farther than other gasoline constituents,” and can be more difficult to
remediate than gasoline releases that do not contain MTBE. 65 Fed. Reg. at 16,097. EPA
expressed groundwater concerns before it approved MTBE’s use in the RFG program. E.g., App.
529 (noting in 1988 “concern about MTBE contamination of ground water” and stating that
“MTBE will probably contribute to an increase in incidents of contamination”); App. 552, 641
(noting in 1988 that “MTBE is extremely soluble in water” and can make remediation
5 Tr. at 1708:14–1709:8 (Varney Jan. 24, 2013); Tr. at 1873:19–1874:7 (Colburn Jan. 28, 2013);
Tr. at 5663:1–5664 (Burke Feb. 19, 2013); Tr. at 10628:18–10631:5, 10634:21–10635:15, 10641:23–10642:13, 10645:7–10646:5, 10668:14–20, 10670:13–10671:16, 10675:15–19 (Austin Mar. 27, 2013); App. 189, 193, 345, 353, 718, 757, 799, 801–03, 1507, 1509.
6 Tr. at 1577:18–1578:6, 1584:19–1585:2 (Varney Jan. 23, 2013); Tr. at 1945:21–1946:13 (Colburn Jan. 28, 2013); App. 768, 776, 778; see also Tr. at 6195:13–23, 6196:6–6198:8, 6208:6–6209:14, 6247:2–6248:23 (Biles Feb. 21, 2013); Tr. at 6446:15–6447:18, 6477:3–15, 6523:16–6524:13, 6546:23–6547:4, 6558:15–19, 6631:3–6, 6631:21–6632:21 (Mickelson Mar. 4, 2013); Tr. at 6701:14–21, 6761:17–6765:7, 6766:2–6767:14, 6899:7–10 (Dugan Mar. 5, 2013); Tr. at 8251:11–8252:7 (Wilson Mar. 13, 2013)); App. 251–53, 267, 271, 799.
11
“considerably more expensive”).
EPA has found “little likelihood” that 20 to 40 parts per billion (ppb) of MTBE “in drinking
water would cause adverse effects in humans.” EPA, Drinking Water Advisory: Consumer
Acceptability Advice & Health Effects Analysis on MTBE 33 (Dec. 1997),
http://water.epa.gov/action/advisories/drinking/upload/2005_05_06_criteria_drinking_mtbe.pdf.
EPA thus recommends a maximum contaminant level for MTBE of 20 to 40 ppb. Id. at 2. New
Hampshire has set its maximum contaminant level at 13 ppb, below which it does not consider
water with MTBE to pose health or safety risks. N.H. Code Admin. R. Env-Dw 705.01.
C. New Hampshire’s Knowledge of MTBE Groundwater Effects and Its Decisions to Opt-In to the RFG Program
States such as New Hampshire that were not required to use RFG could “opt-in” to the
federal RFG program at the governor’s election. 42 U.S.C. § 7545(k), (m). New Hampshire did
so in 1991, requiring the sale of federally-compliant RFG in the State’s four southeastern counties
(Merrimack, Hillsborough, Rockingham, and Strafford counties). See App. 717. In his opt-in
letter, Governor Gregg stated that “the reformulated gasoline option will enable our state to achieve
the emission reductions mandated by the Clean Air Act while having the least negative impact on
our industry, small business and consumers.” Id. The opt-in went into effect in 1995. See Tr. at
1481:4–7 (Varney Jan. 23, 2013).
When it opted in, the State knew that MTBE gasoline would be the oxygenate used in these
four counties to comply with the federal oxygenate mandate. See Tr. at 1481:8–12 (Varney Jan 23.
2013); Tr. at 7749:6–11 (Lunderville Mar. 12, 2013); App. 725. Moreover, the State knew about
MTBE groundwater impacts, as it had studied and evaluated the issue for years. See Tr. at 2663:4–
21, 2795:9–19 (McGarry Jan. 30–31, 2013). For example, in 1986, the State Department of
Environmental Services (“NHDES”) received a report about a spill at a gasoline station discussing
12
MTBE’s solubility in water and stating that it “spread[s] both farther and faster than … gasoline”
when released into groundwater. App. 306–07. It also stated that MTBE was less amenable to
treatment. See App. 308. By 1986, the Department of Health and Human Services was sending
letters to homeowners enclosing health information on MTBE. See App. 316–17. Concurrently,
one of the State’s trial experts, Marcel Moreau, published a paper entitled “MTBE as a Ground
Water Contaminant” that discussed MTBE’s high solubility and potential remediation issues. See
App. 281–92. New Hampshire received that paper in 1987 and it was included in Federal Register
notices. See Tr. at 1552:19–1553:17 (Varney Jan. 23, 2013); Tr. at 2311:10–19 (Moreau Jan. 29,
2013); Tr. at 2831:23–2834:8 (McGarry Jan. 31, 2013); App. 320–21, 364, 432–43, 530. By 1988,
if not earlier, the State knew that MTBE was “very mobile in ground water,” that it “spread[s] both
farther and faster than … gasoline,” that it was a “more soluble and more rapidly spreading ground
water contaminant than other components of gasoline,” and that “[g]round water contaminated
with MTBE is difficult to remediate” because MTBE is “more difficult to remove from
contaminated water than the other components of gasoline.” App. 281, 289–90, 306–08, 321.
In 1996, just a year after the opt-in became effective, NHDES reported that MTBE “very
readily dissolve[s] in water and therefore tend[s] to spread relatively quickly to contaminate a large
volume of water over a wide area,” and that “MTBE . . . has been found in 75 public water supply
wells.” App. 738–39. The next year, NHDES employee Fred McGarry spoke at a national
conference on MTBE remediation. See App. 755–56, 1453–60. McGarry stated that “MTBE has
been found to have a very low decay rate”; MTBE “travel[s a] considerable distance without a loss
of overall mass”; MTBE remediation requires “more frequent replacement and increasing
operating costs of treatment systems”; due to relatively high solubility, MTBE “concentrations in
groundwater are higher than other gasoline components”; and “MTBE has also impacted many
13
private wells serving single family homes.” App. 1462, 1464. McGarry believed that MTBE
“could end up being a major problem for the State.” Tr. at 2659:12–14 (McGarry Jan. 30, 2013).
The following year (1997), even with this knowledge, Commissioner Varney
recommended that New Hampshire continue to participate in the RFG program. See App. 761–
62; Tr. at 1385:19–1386:6 (Varney Jan. 23, 2013). In 1999, NHDES actually opposed two bills
that would have banned MTBE. See App. 771–79. NHDES stated that, “despite valid concerns
about the presence and effects of MTBE in groundwater, it [was] not yet clear that a less toxic,
readily available, legal alternative currently exists.” App. 772. Banning MTBE would “effectively
create an ethanol mandate,” causing “significant environmental, regulatory, and economic
ramifications” on the State’s gasoline supply. App. 846, 850. NHDES was also concerned that an
ethanol mandate “would effectively be a requirement to supply a new gasoline formulation” to the
State and that “[r]equiring a gasoline that [was] not commercially available may have significant
impacts on the supply and pricing of gasoline.” App. 852.
In 2004, New Hampshire finally enacted a law banning MTBE gasoline. RSA 146-G:12.
Recognizing the practical impossibility of complying with the federal mandate while immediately
forswearing MTBE, however, the law provided for a nearly three-year transition period, until
January 1, 2007, to allow modification of supply and distribution systems. Id. Congress repealed
the oxygenate requirement in 2005. See Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat.
594, 1076-80. MTBE gasoline has not been sold in New Hampshire since mid-2006 when that
repeal went into effect. See Tr. at 2749:14–21 (McGarry Jan. 31, 2013).
D. New Hampshire’s Regulatory Regime
It is inevitable that some gasoline spills will occur. New Hampshire accordingly has
adopted a detailed regulatory scheme for addressing what should be done when gasoline spills
occur, including how spills should be investigated and remediated and how costs should be funded.
14
See N.H. Code Admin. R. Env-Or 600 et seq.; RSA 146-D, 146-G; Tr. at 8760:1–8785:16 (Klaiber
Mar. 18, 2013). Other regulations aim to prevent spills, for example, by setting standards for
owners and operators of underground storage tanks.7 When spills do occur, the State typically puts
the initial burden on the site owner to remediate contamination. See Tr. at 1638:12–18 (Varney
Jan. 23, 2013).8 Nonetheless, any person causing a spill that contaminates groundwater is strictly
liable for the costs of cleaning, containing, and remediating the contamination. See RSA 146-A.
Recognizing that a certain number of spills are inevitable, and that companies that bring
gasoline into the State should contribute toward their cleanup, the State established two funds to
financially assist parties who are liable for gasoline spill response costs, as they are often small
businesses like local service stations. See RSA 146-D, 146-G. The funds are maintained
exclusively by fees paid by Exxon and other oil distributors. See Tr. at 805:7–12 (Fogg Jan. 16,
2013); Tr. at 4215:15–4216:2, 4285:8–4286:1 (Wimsatt Feb. 11, 2013); RSA 146-D:3(II), (VI)(b);
146-D:2(I); 146-G:1(II).
First, the Oil Discharge and Disposal Cleanup Fund (“ODD Fund”) provides financial
support for remediating any spill of gasoline from a storage tank. RSA 146-D:1; see also Tr. at
4213:13–21, 4214:2–4 (Wimsatt Feb. 11, 2013). The ODD Fund is not limited to MTBE gasoline.
Second, the Gasoline Remediation and Elimination of Ethers Fund (“GREE Fund”) provides
financial support “for the remediation of groundwater and surface water contaminated by gasoline
7 See, e.g., Tr. at 8821:9–8825:14, 8830:16–8831:13, 8868:11–8872:16, 8874:16–8875:9,
8876:4–8878:21, 8880:9–8883:19, 8889:1–8893:5, 8902:8–8903:7 (Klaiber March 18, 20, 2013); RSA 146-C; N.H. Code Admin. R. Env-Ws 411 et seq. (1985); N.H. Code Admin. R. Env-Ws 411 et seq. (1990).
8 The State itself refers to such site owners as “responsible parties.” Others can also be responsible parties. See N.H. Code Admin. R. Env-Or 602.26, 605.03, 605.04. At trial, however, the Court precluded Exxon from using the State’s own terminology, and further ordered Exxon to redact from trial exhibits all instances in which that terminology was used. See, e.g., Tr. at 1065:3–1076:14, 1150:13–1154:9. (Jan. 22, 2013).
15
ethers.” RSA 146-G:1(II); see also Tr. at 4215:2–14 (Wimsatt Feb. 11, 2013); Tr. at 4624:9–10,
4625:8–17, 4626:8–14, 4626:21–4627:7, 4636:1–2, 4637:10–12 (Beckett Feb. 12, 2013). The
GREE Fund was established “to specifically address the problem of MTBE contamination in
public and private drinking water supply wells throughout the state,” as MTBE is the only relevant
ether. App. 1244 (emphasis added). The GREE Fund is not limited to spills from storage tanks;
it covers MTBE contamination from any source. See RSA 146-G.
E. Procedural History
On September 30, 2003, the State sued Exxon for contamination of New Hampshire
groundwater with MTBE. As relevant here, the State alleged that MTBE gasoline was defectively
designed and thus should never have been used, Exxon was negligent in ever choosing MTBE as
a gasoline additive, and Exxon had failed to warn the State about the dangers of using MTBE
gasoline. The suit was removed to federal court and consolidated into multi-district litigation
pending in the Southern District of New York, before being remanded back to Merrimack County
Superior Court in 2007. See In re MTBE Prods. Liab. Litig., 488 F.3d at 135.
In 2008, the State added parens patriae claims for MTBE contamination to hundreds of
thousands of privately-owned wells. In State v. Hess Corp., 161 N.H. 426 (2011), this Court held
that the State could recover damages for private property injuries “where the injury alleged affects
the general population of a State in a substantial way,” and the damages “the State requests are
sufficiently apart from the interests of particular private parties.” Id. at 433. The Court explained
that the “substantial segment” question involved “factual issues” and was “for the trial court on
remand and for the finder of fact at trial,” and it stated that “[s]hould the case go to trial, the burden
will rest with the State to prove that it meets all of the requirements for parens patriae standing.”
Id. at 431, 433, 438.
The case proceeded to trial, and the Superior Court heard testimony from January 15, 2013,
16
through March 27, 2013, making the proceeding below one of the longest trials in New Hampshire
history. The jury ultimately returned a verdict in the State’s favor on all counts, rejected all of
Exxon’s defenses, and pursuant to market share liability set Exxon’s share at 28.94% based on a
wholesale supplier market for all gasoline. See Tr. at 12163:1–12166:21, 12168:13–12170:1 (Apr.
9, 2013); see generally App. 1393–400.
The jury awarded $816,768,018 in total damages, including $142,120,005 for past cleanup
costs; $218,219,948 for costs to characterize and cleanup 228 so-called High Risk Sites;
$305,821,030 for sampling the 300,000 private drinking water wells; and $150,607,035 for treating
those drinking wells that are found to be contaminated with MTBE at or above 13 ppb. See App.
1399. Based on the jury’s market share calculations, Exxon was ordered to pay $236,372,664. See
App. 1401. The Superior Court denied Exxon’s post-judgment motions. This appeal followed.
SUMMARY OF ARGUMENT
Having undertaken the task of adjudicating groundwater contamination statewide, the
Superior Court repeatedly had to deviate from bedrock principles of New Hampshire law to make
the trial work notwithstanding the overwhelmingly individualized circumstances that resulted in
the contamination of some wells and sites but not others. The resulting proceeding was
unrecognizable as an ordinary tort action and violates numerous precepts of New Hampshire and
federal law. The trial court dispensed with traditional principles of causation and adopted market
share liability for the first time in New Hampshire history, it ignored well-established principles
for apportioning liability and effectively precluded Exxon from defending itself by allocating
liability to others, and it imposed retroactive tort liability for conduct expressly allowed by the
executive and legislature. The unprecedented verdict is a result of unprecedented deviations from
legal rules that are essential for dividing the proper spheres of executive, legislative, and judicial
authority. It cannot stand.
17
I. Exxon did not breach any valid state-law duty. The governor and legislature made a
series of judgments that dramatically increased the use of MTBE gasoline in New Hampshire, and
then eventually phased out the sale of MTBE gasoline based on a determination that its continued
use until 2007 was better than an immediate ban in 2004. It would be fully consistent with these
judgments for a defendant to be found liable for negligently handling MTBE gasoline, contributing
to certain spills, or selling MTBE after the ban was phased in. But in light of the State’s own
decisions, Exxon cannot be held liable for merely supplying MTBE gasoline in the State. A theory
of retroactive tort liability at that level of abstraction is antithetical to the political branches’
judgments, basic principles of separation of powers, and ultimately the constitutional guarantee of
due process.
Indeed, the retroactive no-MTBE duty imposed below is preempted by the federal
oxygenate mandate because Exxon had no safer, feasible alternative for complying with the
mandate at the time. The State itself recognized that there was no safer, feasible alternative when
its officials opposed laws that would have banned MTBE in the 1990s. The legislature further
recognized the infeasibility of an immediate no-MTBE duty when it phased out MTBE’s use from
2004 until 2007. Despite all this evidence, the Superior Court refused to give Exxon’s requested
preemption instruction to allow the jury to consider the factual question of whether a safer, feasible
alternative was available at the time.
It is no answer for the State to complain that if Exxon had only provided greater warnings
to the State about MTBE groundwater risks, the State would have legislated or regulated
differently. The theory that there is a duty to warn the sovereign qua sovereign is unprecedented
and violates the longstanding rule that strict liability extends only to a product’s users or
consumers—it does not extend to governors, legislators, or regulators. Indeed, no other court in
18
New Hampshire or anywhere else has embraced such a radical theory, and doing so in this case
would raise grave First Amendment concerns.
II. The Superior Court’s felt need to adjudicate the contamination of wells en masse caused
it to distort New Hampshire tort law in other fundamental ways. Its unprecedented adoption of
market share liability is a case in point and further grounds for reversal. No one doubts that
particular sites with specific incidents of contamination exist. And experience in other cases
demonstrates that it is possible to establish responsibility for particular sites without resort to
market share liability. But any effort at applying traditional tests for causation here would have
required delving into the details of those specific sites, each with its own facts and responsible
parties—a far more difficult case for the State, and one that it determinedly sought to avoid. To
facilitate this mass adjudication, the Superior Court became the first New Hampshire court to adopt
market share liability, and it did so in circumstances that would make New Hampshire’s market
share standard the most permissive in the Nation. This Court should not follow the Superior Court
down that path.
III. By allowing the State to prove its claims on a statewide basis—as to hundreds of
thousands of wells and hundreds of sites—the Superior Court had to dispense with other
safeguards and traditional modes of proceeding. Rather than requiring the State to prove its case
spill-by-spill, as every other court to decide an MTBE case has done, the Superior Court allowed
the State to proceed by “Trial by Formula,” Wal-Mart, 131 S. Ct. at 2561, using aggregate proof
to estimate injuries that should have been proven, not estimated or extrapolated.
In particular, trying the case at this level of abstraction sharply impaired Exxon’s statutory
right to allocate fault to thousands of third parties—service station operators, junk yard owners,
and the like—who contributed to the groundwater contamination at issue here. The Superior Court
19
adopted a novel rule that third parties could only be allocated fault under DeBenedetto v. CLD
Consulting Engineers, Inc., 153 N.H. 793 (2006), based on the same claim and in the same manner
as Exxon itself—requiring Exxon to prove that the third parties knew or should have known about
MTBE’s unique chemical characteristics. These requirements are inconsistent with DeBenedetto
and violates New Hampshire statutory law, as RSA 507-7e permits allocation of fault to any party
whose fault contributes to the plaintiff’s injury, not merely some parties who contribute in some
ways with the same specific state of mind as defendants.
IV. The Superior Court further erred in answering a question of fact this Court held was
reserved for the jury: whether the State proved there was an injury to a “substantial segment” of
the State’s privately-owned wells. Moreover, a rational jury could have readily concluded that
MTBE contamination was insufficiently widespread. The State relied on an expert’s testimony
that approximately 98% of the State’s wells will never be contaminated at or above 13 ppb of
MTBE and thus never need treatment. And to conclude that even 2% of wells will ever be
contaminated at this level, the expert engaged in statistical extrapolation that was so imprecise that
the correct number could be zero—as the expert himself conceded.
V. Finally, the State’s claims for investigating and treating MTBE contamination in wells
where no contamination has been detected or is imminent, or at sites where investigations to date
have not demonstrated the presence of unaddressed contamination, should have been dismissed
because they are unripe. The State has recovered hundreds of millions of dollars for contamination
that does not and may never exist, and even for testing and treating thousands of wells that do not
yet exist. The Superior Court should never have entertained such unripe claims at all, and it added
insult to injury when it awarded the State prejudgment interest on this money to remedy a harm
that has not yet occurred.
20
ARGUMENT
I. Exxon Did Not Breach Any Valid State-Law Duty.
A. The Retroactive No-MTBE Duty Here Contravenes the Measured Judgments of the State’s Political Branches.
1. New Hampshire’s elected officials made a series of measured policy judgments that
ensured the widespread use of MTBE in the State. First, in 1991, the governor voluntarily opted-
in to the RFG program to improve air quality in New Hampshire, knowing that participating in
this program would result in a dramatic increase in MTBE’s use and knowing of MTBE’s
groundwater effects. E.g., Tr. at 1481:4–12 (Varney Jan. 23, 2013) (MTBE would be “the
oxygenate”); Tr. 7749:6–11 (Lunderville Mar. 12, 2013) (“likely” MTBE); 57 Fed. Reg. at 13,424
(MTBE would be the “most heavily used oxygenate”); App. 306–08 (informing the State that
MTBE is “very mobile in ground water,” “spread[s] both farther and faster than … gasoline,” is
“more soluble and more rapidly spreading . . . than other components of gasoline,” and is “more
difficult to remove from contaminated water than the other components of gasoline”); see also
App. 281, 289–90, 321. Second, after years of experience with MTBE in New Hampshire, the
State affirmatively chose to remain in the program. See App. 761–62. Third, in 1999, the
legislature considered but rejected two bills that would have banned MTBE. Notably, NHDES
opposed the ban because “it [was] not yet clear that a less toxic, readily available, legal alternative
currently exists.” App. 846. Specifically, NHDES was concerned that switching to ethanol could
cause “significant environmental, regulatory, and economic ramifications” on the State’s gasoline
supply and could be worse for the environment. App. 846. Finally, when the State decided in
2004 to ban MTBE, it chose to allow MTBE’s continued use until 2007, again reflecting a
judgment that continuing to use MTBE was better on balance than banning it immediately. See
RSA 146-G:12. Throughout this period, the State also made a policy determination that licensed
21
distributors, who bring gasoline into the State, should make some contribution toward the cleanup
of the inevitable spills that would occur even when they bore no direct responsibility for the spill.
See RSA 146-D:3; see also RSA 146-G:3, 4.III; RSA 146-A:3-a.I. In particular, while the State
reaffirmed that direct spillers should bear direct and primary responsibility for cleanup costs, it
also created two detailed statutory schemes—the ODD Fund and the GREE Fund—to enable direct
spillers to pay the often substantial costs of remediation. See RSA 146-D:1; RSA 146-G:1.
Imposition of a retroactive no-MTBE duty here conflicts with every one of these measured
judgments. While tort law could impose liability for negligent handling of MTBE gasoline without
contradicting the State’s judgments, the imposition of liability for simply distributing MTBE
gasoline is another matter entirely. The governor and NHDES affirmatively embraced a program
that they knew would increase MTBE’s use dramatically; NHDES actively opposed banning
MTBE in 1999 because that could cause massive supply disruptions and cause as-yet unknown
environmental harm; and the legislature chose in 2004 to allow MTBE’s use to continue until
2007—but the jury awarded massive damages here based on the theory that MTBE should never
have entered the State at all. The legislature required companies that distributed gasoline to
contribute to remediation costs via statutory schemes that continued to place primary responsibility
on direct spillers—but the Superior Court approved a tort remedy that ignored entirely the critical
intervening role of the direct spillers. And although the legislature imposed a three-year phase-out
period ending in 2007, the tort theory adopted below amounts to a complete ban that is retroactive
to the beginning of time. Compare Geier v. Am. Honda Motor Co., Inc., 529 U.S. 861, 881 (2000)
(state law duty to install an airbag “stood as an obstacle” to a federal phase-in requirement).
The retroactive no-MTBE duty here therefore conflicts with bedrock principles of the
separation of powers. It is not the prerogative of the judiciary to reweigh the advisability of the
22
other branches’ public policy choices, much less to create a retroactive duty to refrain from conduct
the governor and legislature have endorsed. This Court “leave[s] matters of public policy to the
legislature.” Opinion of the Justices (School Financing), 142 N.H. 892, 900 (1998). “[T]he
government of this state, the three essential powers thereof, to wit, the legislative, executive, and
judicial, ought to be kept as separate from, and independent of, each other, as the nature of a free
government will admit.” N.H. Const. pt. I, art. 37. This Court has repeatedly admonished that the
judiciary encroaches on the legislative power when it establishes new statewide policies. See In
re Plaisted, 149 N.H. 522, 526 (2003) (“[W]e will not undertake the extraordinary step of creating
legislation where none exists”); In re Blanchflower, 150 N.H. 226, 229 (2003) (same); State v.
Kidder, 150 N.H. 600, 604 (2004) (“It is not the function of the courts to create legislation.”).
When the political branches make a decision they know will (and in fact does) dramatically
increase the use of MTBE in the state, consider but reject bills that would have banned MTBE in
the late 1990s, and affirmatively choose to allow MTBE’s continued use until 2007, the courts are
not free to treat the distribution of MTBE gasoline before 2007 as tortious.
The Superior Court reasoned that there was no separation of powers problem because the
State sought a more ambitious recovery than that permitted by the ODD and GREE Funds. The
Superior Court emphasized that the ODD Fund “is only authorized to disburse funds to owners of
underground storage facilities, bulk storage facilities, or the land on which such facilities are
stored,” and the State sought broader damages. Add. 201–02. The court similarly concluded that
the “potential damages estimated by the State in this case dwarf the GREE Fund’s maximum
balance” of $2,500,000. Add. 202. As an initial matter, the GREE Fund’s maximum balance did
not represent the total amount of money that could be dispersed—only the amount of money that
could sit in the fund at any given time. See RSA 146-G:4 (describing fund as a “nonlapsing,
23
revolving fund”).9
More fundamentally, the limitations on recovery that the State seeks to bypass were part
and parcel of the legislature’s judgment as to the appropriate contribution from those who
distributed MTBE gasoline but may or may not have liability as direct spillers. In other words,
the legislature expressly considered the responsibility that should attach to bringing MTBE
gasoline into the State. Far from deeming such actions tortious or malum in se, the legislature
adopted a more modest contribution scheme to ensure that direct spillers retained primary
responsibility for cleaning up spills or leaks—but that the costs of those efforts were adequately
funded. The Superior Court’s dismissal of the ODD and GREE Funds as irrelevant because the
State now seeks to impose greater responsibilities on those who marketed MTBE gasoline gets
matters backwards. It is precisely when the legislature has established a tailored regulatory
framework to address a particular problem that this Court has declined to make judicial
“improvements” to the democratically-enacted scheme. See, e.g., In re Plaisted, 149 N.H. at 526;
Minuteman, LLC v. Microsoft Corp., 147 N.H. 634, 641 (2002). This Court should again defer to
the legislature’s balancing of public policy choices and not displace them by establishing a
conflicting and retroactive regulatory regime with different liability rules and remedies.
2. The imposition of massive retroactive liability for engaging in conduct expressly
9 Adding insult to injury, the Court precluded from trial all of Exxon’s evidence and argument
about the ODD and GREE Funds, ordered Exxon to redact all references to the funds from impeachment documents, and warned that “any mention of collateral source funds” would be reversible error, “regardless of which party ‘open[ed] the door.’” It nevertheless allowed the State repeatedly to elicit testimony about the Funds and to represent to the jury that it lacked sufficient funding for MTBE remediation, while prohibiting Exxon from rebutting this testimony through cross examination, impeachment, or other witnesses. See, e.g., Add. 280, 282–83, 290; App. 1369–73; Tr. at 805:1–6, 813:16–814:2 (Fogg Jan. 16, 2013); 2709:19–21, 2711:16–2714:9, 2731:2–2732:5 (McGarry Jan. 31, 2013); 3528:3–13, 3551:20–3553:18 (Lynn Feb. 5, 2013); 3901:14–3902:3, 3937:22–3938:7 (Beckett Feb. 6, 2013); Tr. at 4122:10–4123:5 (Feb. 7, 2013); 4964:11–4967:2, 5013:1–5020:23 (Hutchison Feb. 13, 2013).
24
authorized by the governor and legislature clearly violates separation of powers principles. Indeed,
the Superior Court’s failure to respect core separation of powers principles caused it to run afoul
of equally bedrock due process principles. One of the basic distinctions that distinguish legislative
and judicial power is that the legislature operates in a presumptively prospective manner, while
court decisions presumptively operate retroactively. See, e.g., Landgraf v. USI Film Prods., 511
U.S. 244 (1994). But a judicial decision can operate retroactively without raising the kind of due
process principles created by retroactive legislation only because the decision is limited to the
individual litigants, and the court does not enact new law but applies the law as it has always
existed. The decision below ignores both those separation of powers constraints: it announces a
single statewide resolution in a way that effectively reverses multiple decisions of the legislature.
It is all but inconceivable that the legislature would have reversed course in the same way and
imposed massive retroactive liability for conduct it authorized, especially for time periods during
which the legislature expressly declined to ban MTBE and then phased-in a ban to account for
practical realities. And if the legislature itself had effected such a complete reversal of course and
imposed such massive retroactive liability, it would raise Takings and Due Process Clause
problems of the first order. See, e.g., E. Enters. v. Apfel, 524 U.S. 498 (1998). Those constitutional
problems are not avoided when the same result is imposed through an extraordinary judicial
proceeding that works massive changes in statewide policy. In short, centuries-old separation of
powers principles preclude the result reached below, but if not, the result is forbidden by equally
well-settled due process principles under both the New Hampshire and United States Constitutions.
3. For similar reasons, the State’s claims should have been dismissed based on waiver, yet
the Superior Court refused to even instruct the jury on waiver. A finding of waiver may be based
“‘upon conduct under the circumstances justifying an inference of a relinquishment of’” a right.
25
S. Willow Props., LLC v. Burlington Coat Factory of N.H., LLC, 159 N.H. 494, 499 (2009); see
also U.S. Fid. & Guar. Co. v. Kancer, 108 N.H. 450, 452 (1968) (“Waiver … may be found from
action, inaction or statements.”). A “plaintiff’s decision to encounter a known risk” constitutes
waiver. Fortier v. Olin Corp., 840 F.2d 98, 101 (1st Cir. 1988) (citing Thibault v. Sears, Roebuck
& Co., 118 N.H. 802, 812–13 (1978)); cf. Bohan v. Ritzo, 141 N.H. 210, 216 (1996). And the
knowledge of state employees is imputed to the State. See, e.g., State v. Etienne, 163 N.H. 57, 91
(2011); Strickler v. Greene, 527 U.S. 263, 275 n.12 (1999). The State has conceded that the
knowledge of DES employees is deemed the Commissioner’s knowledge. See Tr. at 386:11–19
(Nov. 29, 2012).
Here, extensive record evidence showed that, with knowledge of MTBE groundwater risks,
the State opted-in to the RFG program, participated in that program for years, repeatedly opposed
banning MTBE, and ultimately decided in 2004 that continuing MTBE’s use for nearly three more
years was better for the State than an outright ban. NHDES was responsible for evaluating MTBE
gasoline, and the undisputed evidence showed that NHDES employees had knowledge of MTBE
groundwater risks. With that knowledge, Commissioner Varney recommended that the State opt-
in to the RFG program. Through the mid-1990s, NHDES gained yet more experience with MTBE
and indeed a DES employee spoke at a national conferences on MTBE remediation.10 When the
State had the opportunity in 1997 to opt out of the RFG program, Commissioner Varney
recommended that the State continue participating. In 1998 and 1999, NHDES successfully
opposed banning MTBE. And again, when the legislature banned MTBE because of its
10 EPA also knew of MTBE’s groundwater risks and communicated that knowledge to States
in the RFG program. See Tr. at 8150:2–8151:4 (Wilson Mar. 13, 2013) (“Q. Now, there came a time, I guess, in the mid 1990s or thereafter that concerns began to be raised with regard to certain elements of the RFG Program? A. Yes. Q. Specifically with regard to groundwater issues? A. Yes …. We made sure we kept our regional offices and our state partners up to speed as well.”).
26
groundwater impacts, the legislature concluded that the continued use of MTBE from 2004 to 2007
was preferable to an immediate ban. See pp. 11-13, supra.
In light of this course of conduct, the State cannot fairly turn around and seek recovery
from Exxon on the grounds that MTBE should never have been used at all. See, e.g., Groleau v.
Am. Express Fin. Advisors, Inc., 2011 WL 4801361, at *4 (D.N.H. Oct. 11, 2011) (holding that
plaintiffs’ “entire course of conduct” over a six year period justified an inference of
relinquishment). Countenancing such an abrupt about-face is the essence of unfairness.
Despite the strong case for waiver, the Superior Court refused to instruct the jury on the
issue because “the State did not know of MTBE’s characteristics, and even when it did, it acted to
protect itself.” App. 345. That failure to instruct the jury is clear error. It was not for the court
below to make this finding—it was for the jury. And as set forth above, there was ample evidence
to support a jury verdict finding waiver. The Superior Court also reasoned that a waiver instruction
was unnecessary “because the plaintiff’s misconduct instruction encompassed this affirmative
defense.” Add. 371. That reasoning is also erroneous, as misconduct and waiver are distinct
defenses that are appropriately charged separately. E.g., S. Willow Props., 159 N.H. at 499;
Chellman v. Saab-Scania AB, 138 N.H. 73, 81 (1993).11
B. Federal Law Preempts the Retroactive No-MTBE Duty Here.
1. The retroactive no-MTBE duty here is not just foreclosed by state-law principles of
separation of powers and waiver; it is also preempted by the federal Clean Air Act Amendments,
11 The failure to charge the jury on waiver also prejudiced Exxon’s misconduct defense. The
Court separately included waiver in the preliminary instructions on the first day of trial. See Tr. at 12:7–12, 19:15–20:3. (Jan. 14, 2013). By not providing the same instruction at the trial’s end, the court wrongfully signaled that there had been no waiver and thus that the central unfairness here—the State opting for MTBE then claiming that MTBE should never have been used—did not constitute wrongdoing.
27
particularly because Exxon had no safer, feasible alternative to MTBE at the time. A state law
conflicts with federal law and is preempted if, among other things, (1) it is impossible to comply
with both state and federal law, or (2) the state law “‘stands as an obstacle to the accomplishments
and execution of the full purposes and objectives of Congress.’” Geier, 529 U.S. at 899; see also
Williamson v. Mazda Motor of Am., Inc., 131 S. Ct. 1131, 1136 (2011); In re Union Tel. Co., 160
N.H. 309, 320 (2010). Geier and Williamson establish that when federal law imposes a mandate
but leaves private parties with a choice of how to comply, a state-law tort duty that would take one
option off the table obstructs federal objectives when maintaining the choice is a “significant
objective” of the federal program. Williamson, 131 S. Ct. at 1135–36; Geier, 529 U.S. at 875.
Preemption here follows a fortiori from Williamson and Geier. At the outset, if Congress
or EPA had expressly required use of MTBE, a state-law duty not to use MTBE would plainly be
preempted. E.g., PLIVA, Inc. v. Mensing, 131 S. Ct. 2567, 2577 (2011). But if there were no safer,
feasible alternative to MTBE, the federal oxygenate mandate operated in effect as an MTBE
mandate. A state law forbidding the safest, most feasible alternative for complying with the federal
mandate frustrates the federal program’s objectives, which is sufficient for conflict preemption.
Exxon introduced extensive evidence showing that there was no safer, feasible alternative.
For example, Exxon introduced evidence that the supply of ethanol was both inadequate and risky
due to its reliance on government subsidies;12 ethanol-blended gasoline could not be shipped by
12 Tr. at 1937:20–1938:1, 1995:19–1996:6 (Colburn Jan. 28, 2013); Tr. at 5521:5–20, 5523:5–
17, 5525:20–5527:5 (Bordvick Feb. 19, 2013); Tr. at 5604:10–17, 5605:12–19 (Burke Feb. 19, 2013); Tr. at 6804:8–6805:18 (Dugan Mar. 5, 2013); Tr. at 7180:21–7182:14, 7252:23–7258:4, 7289:17–7291:13, 7294:16–7297:1, 7304:17–7306:23, 7312:6–7314–7, 7320:6–7323:15, 7322:15–7323:15 (Eizember Mar. 6–7, 2013); App. 345, 348, 650, 662, 674, 686, 704, 776, 778, 786, 788–89, 800, 805–806.
28
pipeline, giving rise to a host of distribution problems;13 ethanol was not compatible with certain
vehicles and storage systems;14 the Northeast has a largely interdependent distribution system such
that one refiner could not decide to use ethanol while others were using MTBE;15 and ethanol is
less effective than MTBE at reducing harmful air pollution. See App. 804 (“It is likely … that an
immediate ban on MTBE cannot be accomplished without substantial increases in gasoline prices,
supply shortages, and a substantial increase in air toxic emissions.”).16
It is one thing to allow a state to eliminate one option when it leaves private parties with
other practical means of compliance. Cf. Williamson, 131 S. Ct. at 1134. But when there is no
real-world choice—when a private party has no safer, feasible alternative for complying with a
federal mandate—a state-law duty retroactively foreclosing that “choice” is effectively a state-law
penalty for complying with federal law. Indeed, when New Hampshire and other States have
legislated to address MTBE groundwater concerns, they have recognized the real-world conflict
between an immediate ban on MTBE and the federal mandate: they have adopted lengthy
transition periods, phasing out MTBE over time, because an immediate ban would be wholly
disruptive in terms of both practical realities and the objectives of the Clean Air Act.17 In light of
13 Tr. at 5518:12–5520:14 (Bordvick Feb. 19, 2013); Tr. at 5600:11–5601:2, 5651:2–5654:19
(Burke Feb. 19, 2013); Tr. at 5866:18–5868:13 (Stendardi Feb. 20, 2013); Tr. at 7185:21–7188:2, 7195:23–7199:19, 7304:17–7306:23 (Eizember Mar. 6–7, 2013); App. 650, 800, 805–06.
14 Tr. at 6887:6–17, 7081:12–7082:6, 7105:20–7109:8 (Dugan Mar. 5–6, 2013); App. 218–219, 223, 261–63, 311–15, 347–48.
15 Tr. 5516:15–5518:1 (Bordvick Feb. 19, 2013); Tr. 5866:18–5868:13 (Stendardi Feb. 20, 2013).
16 Tr. at 5663:16–5665:5 (Burke Feb. 19, 2013); Tr. at 10628:18–10631:5, 10634:21–10635:15, 10641:23–10642:7, 10645:7–10646:5, 10668:14–20, 10670:13–10671:16, 10675:15–19 (Austin Mar. 27, 2013); App. 189, 193, 345, 353, 718, 757, 799, 801–02, 1507, 1509.
17 Ariz. Rev. Stat. § 41-2122 (235 days); Cal. Code Regs. tit. 13 § 2262.6 (extended to 1742 days); Col. Rev. Stat. § 25-7-139 (606 days); Conn. Gen. Stat. § 22a-45a (extended to 1292 days); 415 Ill. Comp. Stat 122/5 (1096 days); Ind. Code § 16-44-2-8 (754 days); Iowa Code § 214A.18 (183 days); Kan. Stat. § 55-527 (1096 days); Ky. Rev. Stat. § 363.9053 (1266 days); Me. Rev. Stat.
29
that overwhelming evidence, the Superior Court should have found the imposition of a strict no-
MTBE duty preempted as a matter of law.
Despite ample evidence that there was no safer, feasible alternative to MTBE, the Superior
Court again refused even to instruct the jury on this issue. See Tr. at 10983:21–10992:21 (Mar.
29, 2013) (requesting instruction). At a minimum, this was error. Other courts have recognized,
in similar contexts, that preemption questions can be informed by questions of fact. For example,
in Oxygenated Fuels Ass’n v. Pataki, 158 F. Supp. 2d 248 (N.D.N.Y. 2001), the district court denied
a preemption-based summary judgment motion due to the factual disputes impacting preemption.
See id. at 259–60; see also, e.g., Healthcare Ass’n of N.Y. State v. Pataki, 471 F.3d 87, 106 (2d Cir.
2006). Here, there was more than enough record evidence to put the question whether there was
a safer, feasible alternative to the jury. See pp. 11–13, 27–28 & nn.12–16, supra.
2. The Superior Court never explained how a federal oxygenate mandate is not at least
frustrated by a retroactive duty not to use MTBE when there is no safer, feasible alternative. At
the summary judgment stage, the Superior Court rejected the purely legal argument that the State’s
claims would be preempted even if there were safer, feasible alternatives. See Add. 148. But later,
the Superior Court refused to consider the different and fact-dependent question whether
preemption would apply if Exxon had no safer, feasible alternative. See Add. 333 (court “will not
revisit” preemption); Add. 372 (“will not readdress” preemption).
Some language in the Superior Court’s rulings suggests a view that preemption never
tit. 38, § 585-l (520 days); Mich. Comp. Laws § 290.643 (1070 days); Minn. Stat. § 239.761 (1899 days); Mo. Rev. Stat. § 414.043 (1038 days); Mont. Code Ann. § 82-15-102 (251 days); Neb. Rev. Stat. § 66-1227 (93 days); N.J. Rev. Stat. § 26:2C-8.24 (1232 days); N.Y. Agric. & Mkts. Law § 192-g (McKinney 2000) (1317 days); N.C. Gen. Stat. § 119-26.3 (924 days); N.D. Cent. Code § 19-10-03.2 (123 days); Ohio Rev. Code § 3704.12 (1038 days); R.I. Gen. Laws § 31-37-7.1 (695 days); S.D. Codified Laws § 37-2-33 (123 days); Vt. Stat. tit. 10, § 577 (588 days); Wash. Rev. Code § 19-112-100 (967 days); Wis. Stat. § 168.04 (356 days).
30
applies “[i]f defendants would rather pay tort damages than change their behavior.” Add. 145.
That pay-as-you-go theory of preemption conflicts with decades of Supreme Court precedent. For
example, in Mutual Pharmaceutical Co. v. Bartlett, 133 S. Ct. 2466 (2013), the Supreme Court
squarely rejected the argument that a tort award does not trigger impossibility preemption because
it “does not impose any actual ‘legal obligation’” but instead “‘merely create[s] an incentive’” for
manufacturers to change their behavior. Id. at 2479. A fortiori, paying-as-you-go for using the
only safe, feasible means of complying with a federal mandate frustrates the objective of the
federal mandate, which is to achieve clean air via an oxygenate, not to saddle the regulated party
with hundreds of millions of dollars in damages for pursuing the only practically available course
for complying with the mandate. See also, e.g., Geier, 529 U.S. at 866; Williamson, 131 S. Ct. at
1136 (collecting cases). Other language by the Superior Court could be read to suggest that there
are “no facts” to support Exxon’s position on the absence of alternatives. Add. 372. That is clearly
erroneous, however, because there are ample facts supporting Exxon’s position. See pp. 11–13,
27–28 & nn.12–16, supra; App. 772 (NHDES Commissioner Varney stating that in 1999 that he
did not believe that “a less toxic, readily available, legal alternative currently exists”).
The Superior Court also found that the Second Circuit’s decision in In re MTBE Products
Liability Litigation, 725 F.3d 65 (2d Cir. 2013) (“Station Six”), supported its decision not to provide
Exxon’s requested instruction. Add. 372. But that decision is both distinguishable and wrong.
First, the Second Circuit held that even if preemption would preclude the imposition of tort liability
for the mere marketing of MTBE gasoline, it would not help Exxon there because the verdict was
independently supported by jury findings of “tortious conduct beyond mere use of MTBE,” for
example that Exxon “fail[ed] to exercise reasonable care when storing gasoline that contained
MTBE” at particular Exxon stations and thereby caused contamination of particular wells. Station
31
Six, 725 F.3d at 103-04. The State did not present such a “direct spiller” theory here, however.
Instead, the State deliberately sought to abstract its case beyond the negligence of direct spillers
and related third parties, and purposefully attacked the very decision to market MTBE gasoline in
New Hampshire. That distinguishes Station Six and squarely conflicts with federal law.
Second, in addressing preemption in dictum, the Second Circuit addressed only half of the
necessary analysis. The panel evaluated the significance of the jury’s finding that there was no
safer, feasible alternative for purpose of the design defect claim and dismissed it because the
standard for obstacle preemption is more demanding. See id. at 98-99. But that analysis only
addresses impossibility preemption. And when the panel addressed obstacle preemption, it ignored
the finding of no safe and feasible alternative entirely. See id. at 101–03. It gave no explanation
why state-law tort liability for using the safest feasible means of complying with a federal mandate
would not obstruct “‘the accomplishment and execution’” of Congress’ “‘full purposes and
objectives’” in imposing that mandate. Geier, 529 U.S. at 899. The silence is telling, and there is
no basis for this Court to follow reasoning the Second Circuit never articulated.
3. For similar reasons, the State failed to introduce sufficient evidence that Exxon departed
from the standard of care simply by marketing MTBE. See Carigan v. N.H. Int’l Speedway, Inc.,
151 N.H. 409, 541 (2004). As explained, the evidence presented at trial showed that manufacturers
overwhelmingly complied with the RFG program in the Northeast by using MTBE because there
was no safer, feasible alternative.18 The Superior Court rested its contrary conclusion on evidence
that a single refiner, Tosco, used ethanol. See Add. 328, 342. But Tosco’s situation was “unique”
and limited to California, a different market with a different distribution system thousands of miles
18 Exxon continued to monitor MTBE and whether there was any other feasible alternative, but
there was not. See Tr. at 7261:11–7269:22 (Eizember Mar. 6, 2013).
32
from New Hampshire. See Tr. at 5518:12–5520:14 (Bordvick Feb. 19, 2013). The State also
introduced evidence that one small refiner used ethanol in the northeast for a couple of years in
the early 1990’s during wintertime; but even that refiner used MTBE after the oxygenate
requirement went into effect year-round in 1995 because otherwise “[it] would be out of
compliance” with Clean Air Act requirements. Tr. at 5866:10–17 (Stendardi Feb. 20, 2013)
(“[T]he reason we couldn’t do it in the summer was because of the Reid vapor pressure, RVP.
When you blend with ethanol, it raises the vapor pressure by about a pound[.]”). The State thus
offered no evidence to support the notion that a reasonable supplier in New Hampshire would
never have used MTBE at any time. Without a relevant standard against which to compare Exxon’s
conduct, the State’s negligence claim is not only preempted, but also fails as a matter of state law.
See Carigan, 151 N.H. at 541; Estate of Joshua T. v. State, 150 N.H. 405, 407 (2004); Millis v.
Fouts, 144 N.H. 446, 448 (1999).
C. Failure to Warn the Sovereign Qua Sovereign Is Not a Tort.
1. It is no answer for the State to argue that contamination would have been reduced on a
statewide basis if Exxon had warned state officials about MTBE groundwater risks. This failure-
to-warn-the-state theory, accepted by the Superior Court, is wholly unprecedented, oversteps
longstanding limitations of New Hampshire tort law, and raises serious First Amendment
difficulties. To be clear, the State did not pursue a traditional failure-to-warn claim that Exxon
contributed to particular spills by failing to provide adequate warnings to retail purchasers, service
station operators, and the like. Compare Station Six, 725 F.3d at 123–24. Such a traditional claim
would have clearly implicated individualized proof of causation, see id., which would have
frustrated the State’s objective to isolate the decision to bring MTBE into the State and try this
case at an abstract level that rendered such individualized evidence irrelevant. Consistent with
that broader objective, the State instead pursued the very untraditional claim “that ExxonMobil
33
failed to adequately warn the State about the hazards of MTBE gasoline.” App. 1395 ¶ 4a
(emphasis added). As the State put it, “the question at issue in this case is whether Exxon provided
warnings to the State and, if it had, whether those warnings would have altered the State’s actions.”
App. 1360; see also Tr. at 1878:17–22 (Jan. 28, 2013); Tr. at 7724:9–15 (Mar. 11, 2013). The
State’s evidence purported to show that, if Exxon had further informed the State about MTBE
groundwater risks, the State would have legislated or regulated differently on a statewide basis,
such as by declining to participate in the RFG program. See Tr. at 1393:9–13 (Varney Jan. 23,
2013); Tr. at 1881:19–1883:9, 1883:20–1884:11, 2017:11–2018:12 (Colburn Jan. 28, 2013).
This common-law duty to warn the sovereign in its capacity as sovereign is both
unprecedented and profoundly wrong. To our knowledge, no other court in the United States has
recognized such a duty. Indeed, the few courts to address similar questions have squarely rejected
it. For example, in In re Nassau County Consolidated MTBE Products Liability Litigation, 2010
WL 4400075 (N.Y. Sup. Ct. Nov. 4, 2010), the court explained that it had been “unable to find any
products liability case suggesting that a failure to warn public officials about dangerous uses of a
product, gives rise to liability for defective products.” Id. at *15 (emphasis added). That court
similarly refused to recognize an affirmative duty to warn the general public and public officials
where “[n]o facts are alleged to indicate why th[e] affirmative duty was owed by the particular
defendants against the plaintiffs, other than the defendants’ presence in the gasoline-distribution
industry, and allegations that the defendants might have superior knowledge of the dangers of
MTBE.” Id.; see also, e.g., Yakubowicz v. Paramount Pictures Corp., 536 N.E.2d 1067, 1072
(Mass. 1989) (movie companies have no duty to warn “public officials of the dangers of film-
related violence”).
Imposing this novel duty would dramatically expand the scope of strict liability, even
34
though that is “disfavor[ed]” in New Hampshire. Bagley v. Controlled Env’t Corp., 127 N.H. 556,
559 (1986) (Souter, J.). In New Hampshire, strict liability is limited to a claim by a “user or
consumer of an unreasonably dangerous and defective product.” Id.; see also Restatement
(Second) of Torts § 402A; Buckingham v. R.J. Reynolds Tobacco Co., 142 N.H. 822, 826 (1998).
“When a risk is not apparent … the user must be adequately and understandably warned of
concealed dangers.” Thibault, 118 N.H. at 808 (emphasis added). This Court has rejected previous
attempts to expand strict liability beyond injuries to a product’s user or consumer arising from such
use or consumption. See Simoneau v. S. Bend Lathe, Inc., 130 N.H. 466, 470 (1988); Bagley, 127
N.H. at 560 (no strict liability for “the leakage of gasoline”). New Hampshire’s model jury
instruction emphasizes that “when a risk in using a product is not apparent, the user/consumer
must be adequately and understandably warned of the dangers that are not readily apparent.”
Daniel C. Pope, N.H. Civil Jury Instructions § 23.4 (2012 ed.) (emphasis added) (citing Thibault).
Thus, under New Hampshire law, “strict liability may be claimed by ‘the user or consumer of an
unreasonably dangerous and defective product.’” Preston v. Pottery by Andy, 2007 WL 4352712
(N.H. Super. Ct. Jan. 23, 2007) (quoting Bagley, 127 N.H. at 559) (emphasis added) (no claims for
injuries caused by hazardous waste); see also Lupoli v. N. Util. Natural Gas, Inc., No. 991844,
2004 WL 1195308, **6–7 (Mass. Super. Ct. Feb. 11, 2004) (no strict liability claim for gas leaks).19
The State’s failure-to-warn claim here reaches far beyond this traditional user/consumer
context. The State did not claim that it was injured because users or consumers (or even
bystanders) were inadequately warned. The State instead demands that Exxon “had to provid[e]
19 The design defect claim should therefore have been dismissed for the same reason, as the
alleged injuries arose during MTBE gasoline’s transportation, storage, or disposal when MTBE gasoline’s was exiting or had exited the stream of commerce. See App. 886–89 ¶¶ 75–92, 892–93 ¶¶ 92–94; see also Tr. at 2319:12–2320:16 (Moreau Jan. 29, 2013).
35
warnings to the State” and an inquiry into whether, if it had, “those warnings would have altered
the State’s actions” as sovereign. App. 1360; see also Tr. at 1878:17–22 (Jan. 28, 2013); Tr. at
7724:9–15 (Mar. 11, 2013).
This expansion of strict liability is especially unwarranted in this case given the federal
regulatory overlay. MTBE was approved for use in the RFG program by the EPA, and at that time
the EPA was well aware of the risks MTBE poses to groundwater. See pp. 10–11, 25 n.10, supra.
There is no suggestion that Exxon or any other MTBE manufacturer had any duty to warn the EPA
before the agency made that determination, and EPA has never made such a claim—much less that
it was inadequately warned. The notion that Exxon was nevertheless required to adequately warn
the State before the State opted into the EPA-administered RFG program thus strains credulity, and
the Court should reject it.
2. Adopting a novel failure-to-warn-the-sovereign theory would not only expand
traditional notions of New Hampshire tort law beyond recognition, but also run afoul of the First
Amendment. The State did not show that Exxon withheld or provided false or misleading
information to the State regarding MTBE, or that Exxon refused to provide information upon
government request. Nor is there any evidence that the State even requested information from
Exxon regarding MTBE when it elected to opt-in to the RFG program or anytime thereafter.
Consequently, the State’s failure-to-warn-the-sovereign theory here reduces to a rule that Exxon is
liable because it failed affirmatively to disclose to the government, on an ongoing basis, everything
it knew about the risks of MTBE to groundwater. But the First Amendment flatly precludes such
broad-based compelled disclosure.
The U.S. and New Hampshire Constitutions protect the rights to free speech and to petition
the government for redress of grievances. See U.S. Const. amend. I; N.H. Const. pt. I, arts. 22
36
(free speech), 32 (right to petition); State v. Allard, 148 N.H. 702, 706 (2002) (“[O]ur State
Constitution provides at least as much protection as the Federal Constitution[.]”). “[S]peech and
petition are integral to the democratic process.” Borough of Duryea, Pa. v. Guarnieri, 131 S. Ct.
2488, 2495 (2011). Critically, the Constitution protects “the decision of both what to say and what
not to say”; the distinction between compelled speech and compelled silence is “without
constitutional significance.” Riley v. Nat’l Fed’n of the Blind of N.C., Inc., 487 U.S. 781, 796–97
(1988). “[C]ompelled statements of fact … like compelled statements of opinion, are subject to
First Amendment scrutiny.” Rumsfeld v. Forum for Academic & Institutional Rights, Inc., 547
U.S. 47, 62 (2006); see also Miami Herald Pub’g Co. v. Tornillo, 418 U.S. 241, 258 (1974)
(unconstitutional to compel publication of responses to editorials). And even when a party
affirmatively petitions the government, its actions are generally shielded by the First Amendment.
See, e.g., Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1757 (2014)
(explaining that purpose of Noerr-Pennington doctrine is “to avoid chilling the exercise of the First
Amendment right to petition the government for the redress of grievances”).
Imposing state tort liability for not providing more information to the sovereign is
antithetical to these fundamental principles. The government has ample tools to obtain
information, and it can punish efforts to mislead government officials. But it cannot simply force
an individual or business to disclose an indeterminate amount of information, at an indeterminate
time, for indeterminate reasons, without running afoul of the First Amendment prohibition on
compelled speech and the First Amendment right to petition the government.
These constitutional concerns are exacerbated by the inherent vagueness in such a rule.
See, e.g., Reno v. Am. Civil Liberties Union, 521 U.S. 844, 871 (1997); Montenegro v. New
Hampshire Div. of Motor Vehicles, ___ N.H. ___, 93 A.3d 290, 295–96 (N.H. 2014). Indeed, it is
37
hard to imagine a broader or more amorphous imposition on First Amendment rights than an
unwritten duty to warn the sovereign with respect to the consequences of—and potentially all facts
relevant to—whatever policy decisions are under consideration by any branch of the State
government at any given time. Unlike a traditional regulatory regime with clearly-demarcated
disclosure requirements, a company would have to guess as to what information to provide, when
to provide it, in what form, to whom, and under what circumstances. These choices, moreover,
would be subject to a jury’s second-guessing. The result may well be that companies would submit
a “deluge of information” to avoid any potential state tort liability for not having submitted enough,
compare Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 351 (2001), which in turn
would magnify the burden even further.
At a minimum, there are serious doubts as to the constitutional validity of a duty to warn
the sovereign qua sovereign here. This Court therefore should construe New Hampshire tort law—
consistent with the longstanding limitation of strict liability to the user/consumer context—to
avoid the constitutional problem. See, e.g., Allard, 148 N.H. at 706-07; Edward J. DeBartolo
Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 584 (1988).
II. The Superior Court Erred In Adopting Market Share Liability For The First Time In New Hampshire History.
The judgment below rests not only on sweeping and unprecedented duties that violate state
and federal law, but also on the Superior Court’s adoption of “market share liability” for the first
time in New Hampshire history. Add. 122–23; see also App. 1386; Tr. at 11007:20–11008:4 (Mar.
29, 2013) (state abandoning traditional causation). This marks a radical break from settled New
Hampshire law and alone warrants reversal. And to make matters worse, the Superior Court
embraced a uniquely permissive variant of the doctrine. The few courts in other jurisdictions that
have used market share liability outside the unique context of DES cases have done so only after
38
the plaintiff tries but is unable to prove traditional causation. By contrast, the Superior Court here
excused the State from even needing to try under circumstances in which other courts have found
traditional notions of causation eminently workable. This novel ruling was central to the Superior
Court’s transformation of this case from a traditional lawsuit into a quasi-legislative determination.
Traditional causation is fully up to the task of ascertaining whether Exxon contributed to the MTBE
contamination in a particular water supply in a specific place, either as a spiller or gasoline supplier.
But the State did not want to be bothered with addressing that question, which would put the role
of third party spillers front and center and thus frustrate the State’s effort to put Exxon on trial on
a blanket statewide basis. The Superior Court’s adoption of a radical form of market share liability
was thus unprecedented, wrong, and critical to the misguided effort to transform a traditional tort
case into a broad policy inquiry incompatible with the separation of powers.
A. Market Share Liability Breaks From Longstanding New Hampshire Law and Policy.
The Superior Court’s adoption of market share liability for the first time in this State’s
history departs from centuries of New Hampshire law. Since its founding, New Hampshire has
steadfastly required proof of causation in all tort actions. E.g., Trull v. Volkswagen of Am., Inc.,
145 N.H. 259, 264 (2000) (“‘[C]ausation is a necessary element in both negligence and strict
liability actions.’”). Proof of causation is critical because it separates “wrongdoers from innocent
actors, and also ensures that wrongdoers are held liable only for the harm that they have caused.”
Payton v. Abbott Labs, 437 N.E.2d 171, 188 (Mass. 1982). This Court has rebuffed less radical
efforts to weaken the causation requirement. In Simoneau v. South Bend Lathe, Inc., 130 N.H. 466
(1988), for example, the Court rejected “product line” liability, which eliminates cause-in-fact for
certain acquired product lines in an effort to spread risk. This Court emphasized that “‘strict
liability is not a no-fault system of compensation,’” and “‘[t]he common-law principle that fault
39
and responsibility are elements of our legal system … will not be undermined or abolished by
“spreading” of risk and cost in this State.’” Id. (quoting Thibault, 118 N.H. at 806).
The overwhelming trend in state supreme courts and the federal courts of appeals is to
reject efforts to discard traditional causation requirements in favor of market share liability.20 The
Illinois Supreme Court has concluded, for example, that market share liability is “too great a
deviation from a tort principle which we have found to serve a vital function in the law, causation
in fact.” Smith v. Eli Lilly & Co., 560 N.E.2d 324, 344–45 (Ill. 1990). The Pennsylvania Supreme
Court has recognized that market share liability is such a “significant departure” from the rule of
proximate causation that its adoption would lead to a “distortion of liability which would be so
gross as to make determinations of culpability arbitrary and unfair.” Skipworth v. Lead Indus.
Ass’n, 690 A.2d 169, 173 (Pa. 1997) (citation and footnote omitted). And Iowa’s high court has
characterized market share liability as “a substantial departure from our fundamental negligence
requirement of proving causation,” calling it “the very legal legerdemain, at least by our long held
traditional standards, that we believe the courts should avoid.” Mulcahy v. Eli Lilly & Co., 386
N.W.2d 67, 76 (Iowa 1986). The few higher courts that have allowed market share liability have
done so almost exclusively in the “singular” context of DES cases. Hymowitz v. Eli Lilly & Co.,
20 E.g., Sutowski v. Eli Lilly & Co., 696 N.E.2d 187 (Ohio 1998) (rejecting market share
liability); Skipworth v. Lead Indus. Ass’n, 690 A.2d 169, 172-73 (Pa. 1997) (same); Gorman v. Abbott Labs., 599 A.2d 1364 (R.I. 1991) (same); Shackil v. Lederle Labs., 561 A.2d 511 (N.J. 1989) (same); Smith v. Eli Lilly & Co., 560 N.E.2d 324 (Ill. 1990) (same); Case v. Fibreboard Corp., 743 P.2d 1062 (Okla. 1987) (same); Mulcahy v. Eli Lilly & Co., 386 N.W.2d 67 (Iowa 1986) (same); Zafft v. Eli Lilly & Co., 676 S.W.2d 241 (Mo. 1984) (same); Payton v. Abbott Labs., 437 N.E.2d 171 (Mass. 1982) (same); see also Santiago v. Sherwin Williams Co., 3 F.3d 546 (1st Cir. 1993) (no market share liability under Massachusetts law); Philadelphia v. Lead Indus. Ass’n, 994 F.2d 112 (3d Cir. 1993) (no market share liability under Pennsylvania law); Tidler v. Eli Lilly & Co., 851 F.2d 418 (D.C. Cir. 1988) (no market share liability under Maryland or District of Columbia law); Thompson v. Johns-Manville Sales Corp., 714 F.2d 581 (5th Cir. 1983) (no market share liability under Louisiana law); Ryan v. Eli Lilly & Co., 514 F. Supp. 1004, 1018 (D.S.C. 1981) (no market share liability under North or South Carolina law).
40
539 N.E.2d 1069 (N.Y. 1989). Compare, e.g., Hamilton v. Beretta U.S.A. Corp., 750 N.E.2d 1055,
1068 (N.Y. 2001) (rejecting market share liability in handgun case); Becker v. Baron Bros., 649
A.2d 613, 620–21 (N.J. 1994) (rejecting it in asbestos case); Santiago v. Sherwin Williams Co., 3
F.3d 546, 551 (1st Cir. 1993) (rejecting it in lead paint case).
Market share liability distorts key incentives that are central to traditional tort law. First,
it treats “plaintiffs who cannot identify the specific manufacturer responsible for [their asserted
injuries] more favorably than one who can.” Smith, 560 N.E.2d at 338–39. “The theory thus
punishes plaintiffs who can satisfy the identification element, while creating an incentive not to
locate the particular manufacturer.” Id. at 339. That is exactly what happened here. Rather than
suing the parties responsible for the specific spills and leaks that directly caused the MTBE
contamination in particular locations—just as every other MTBE plaintiff has done in reflection
of the reality that MTBE contamination overwhelmingly occurs because somebody spilled or
leaked MTBE gasoline—the State pursued a market share theory that rendered such evidence
irrelevant to its case-in-chief.
Second, market share liability undermines the “incentive for persons engaged in various
activities to take steps to reduce the risk of injuries.” Cargill’s Estate v. City of Rochester, 119
N.H. 661, 666 (1979). With market share liability, “the benefit of safe production expenditures
are spread across the entire market, thereby watering down the liability protection afforded to the
investing company,” and “free riding competitors that fail to modify their own production
strategies siphon off a percentage of the risk-reduction benefits from a given company’s safety
expenditures.” Daniel J. Grimm, Accounting for Risk Disparity: An Alternative to Market Share
Liability, 2006 Colum. Bus. L. Rev. 549, 568–69 (2006). “[R]elatively safe producers end up
subsidizing relatively unsafe producers.” Jonathan B. Newcomb, Market Share Liability for
41
Defective Products: An Ill-Advised Remedy for the Problem of Identification, 76 Nw. U.L. Rev.
300, 317 (1981). Market share thus effectively “turns manufacturers into insurers” not only of
their own products, but also of “products made by others in the industry.” Smith, 560 N.E.2d at
344. Here, for example, Exxon spent hundreds of millions of dollars to install new underground
storage tanks to prevent spills and leaks, detect them immediately when they occur, and treat spills
effectively. See Tr. at 2553:3–6 (Curran Jan. 30, 2013); Tr. at 6542:1–21 (Mickelson Mar. 4, 2013);
Tr. at 6706:15–6707:5, 6736:11–13, 6782:7–21, 6858:6–8 (Dugan Mar. 5, 2013); App. 225, 227,
294. But with market share liability, those efforts were for naught; Exxon will pay for a portion
of the contamination caused by those with the worst practices in the industry.
If any government body is going to make the enormously consequential decision of
rejecting the sound policy arguments that undergird the traditional requirement that a plaintiff
prove causation-in-fact, it should be the legislature—not the courts. Indeed, other state supreme
courts have refused to adopt market share liability for just that reason. See Senn v. Merrell-Dow
Pharm., Inc., 751 P.2d 215, 223 (Or. 1988) (market share policy questions “involv[e] social
engineering more appropriately within the legislative domain”); Mulcahy, 386 N.W.2d at 76
(because the legislature “has not entered this field … the judicial branch [should] adhere to our
established principles of legal cause”). This Court has similarly invoked separation of powers
concerns when declining invitations to transform New Hampshire law in less dramatic ways. Cf.
Merchs. Mut. Ins. Co. v. Bean, 119 N.H. 561, 565 (1979) (observing that whether “minimum
[coverage] limits may be inadequate to compensate the injured parties for their damages is a
question for the legislature”); Athorne v. Athorne, 100 N.H. 413, 417 (1957) (“Since the question
is purely one of policy its solution is more appropriately a function of the legislature than of the
courts. It is obvious that there are competing factors.”); King v. Blue Mountain Forest Ass’n, 100
42
N.H. 212, 216-17 (1956) (refusing to extend strict liability except where legislature has so
provided). It should do the same here.
B. This Would Be a Poor Vehicle for Adopting Market Share Liability.
1. Even if market share liability could ever be appropriate under New Hampshire law, this
would be a poor case to make that first jump. The few States that allow market share liability do
so only when it is impossible for the plaintiff to identify a defendant who actually caused the injury.
See, e.g., Bly v. Tri-Cont’l Indus., Inc., 663 A.2d 1232, 1243 (D.C. 1995) (plaintiffs must prove
their “inability to trace to any specific producer or supplier [of] the hazardous product”); Conley
v. Boyle Drug Co., 570 So.2d 275, 286 (Fla. 1990) (plaintiff must make genuine attempt to locate
and identify responsible manufacturer). That is because when “a plaintiff does have [or could
obtain] information as to the identity of the defendants who caused his alleged injury, the rationale
for shifting the burden of proof … is simply not present.” In re Related Asbestos Cases, 543 F.
Supp. 1152, 1158 (N.D. Cal. 1982).
The crux of the State’s argument for market share was that different refiners’ MTBE
gasoline is “commingled” in the distribution system, making it difficult to identify the refiner that
manufactured the MTBE gasoline in any particular spill. See, e.g., Tr. at 5899:6–5900:16,
5947:15–5952:11 (Hastings Feb. 20, 2013); Add. 338–38 (discussing commingling); Add. 329–32
(same). The jury in turn found MTBE gasoline fungible and that the State “cannot trace MTBE
gasoline found in groundwater and in drinking water back to the company that manufactured or
supplied that MTBE gasoline.” App. 1396 ¶ 5b.
Even if the State introduced sufficient evidence to allow a jury to conclude that it was
unable to identify the manufacturer of particular MTBE gasoline (i.e., the refiner), experience in
other MTBE cases shows that plaintiffs can identify the supplier by tracing particular
contamination of particular sites to particular service stations or other sources of spills or leaks.
43
And it is the actions of suppliers—not to mention numerous third parties in the distribution chain—
that are critical for determining the cause of the injuries that the State is attempting to recover.
Merely refining or manufacturing MTBE gasoline did not contaminate any groundwater. That
activity took place outside of New Hampshire; it had an impact inside New Hampshire only
through the actions of suppliers, gasoline stations, and other third parties.
Other courts in turn have applied traditional causation principles to establish liability in
MTBE cases. For example, in the Station Six case, the plaintiffs succeeded in holding Exxon liable
using traditional causation principles. See 725 F.3d at 116 (“[T]he City did not rely on a market-
share theory of liability.”). This is notable because, unlike New Hampshire, New York’s highest
court has expressly adopted market share liability. See Hymowitz, 539 N.E.2d at 1073 (allowing
market share liability in DES case). The Station Six court nonetheless required the City first to try
to prove traditional causation before proceeding to market share—and because the City succeeded
in its traditional proof, the jury never answered the market share liability question. See Station
Six, 725 F.3d at 117 n.39. Similarly, the South Tahoe case—the first MTBE product liability case
ever tried—was based on individual service stations and wells; the plaintiff attempted to prove
causation by product tracing to those facilities. The Merced, Orange County, Fresno, and
Crescenta cases are similarly based on alleged spills at individual stations and product tracing to
those stations. See, e.g., App. 1112–34 (Special Verdict Form, City of Merced v. Chevron U.S.A.,
Inc., No. 148451 (Cal. Super. Ct. Feb. 9, 2012)). New Jersey has commenced a statewide MTBE
suit—but it is proceeding with an initial trial of only a handful of sites where the state will attempt
to prove causation by product tracing. See App. 921–922 (Case Mgt. Order 57, at 2–3, In re MTBE
Prods. Liab. Litig., No. 1:00–1898, MDL 1358 (SAS) M21–88 (S.D.N.Y. Jan. 14, 2010))
(addressing selection of discovery sites in New Jersey Dep’t of Envt’l Prot. v. Atlantic Richfield
44
Co., No. 08 Civ. 00312). Puerto Rico is also attempting to prove its case, which involves several
thousand sites across Puerto Rico, with traditional causation. See App. 933 (Case Mgt. Order 84,
In re MTBE Prods. Liab. Litig., No. 1:00–1898, MDL 1358 (SAS) M21–88 (S.D.N.Y. Jan. 26,
2011)) (addressing selection of discovery sites in Commonwealth of P.R. v. Shell Oil Co., No. 07
Civ. 10470).
Evidence here also indicated that proof of traditional causation would have been possible—
albeit not for the super-sized statewide case the State wanted to pursue. For example, Exxon’s
expert John O’Brien has explained that tracing title to gasoline is possible: “The paperwork exists
to determine who owns the product at any point in the supply chain. So you can determine who
owns it at any time that it’s going through from the refinery right on through to the service station.”
Tr. at 7528:11–7529:3 (O’Brien Mar. 11, 2013). Indeed, the State has Motor Fuel Distributor
Reports, which record by distributor the total amount of gasoline brought to the State by any
individual distributor, where it was delivered, the company that supplied the distributor, and the
transporter or “trucker” used to deliver the gasoline. See Tr. at 5902:4–5914:13, 6013:3–14;
6017:9–6019:16 (Hastings Feb. 20, 2013); App. 765 (identifying “Bursaw Oil” as the distributor
and transporter, and “Mobil Oil” as the supplier).
The Superior Court below, however, entirely eliminated the State’s need to even try to
prove causation-in-fact to the supplier or anyone else in the distribution chain. Allowing the State
to skip this step was not only unprecedented; it was deeply prejudicial because it shifted from the
plaintiff to the defendant the burdens of identifying (1) particular water supplies or sites with actual
or imminent MTBE contamination; (2) the third parties who were directly responsible for causing
that contamination; and (3) how, when, and why that contamination occurred, such as through
negligent maintenance of a particular underground storage tank leading to a particular leak of
45
MTBE gasoline. Knowing the who, what, why, when, where, and how of particular MTBE spills
is the necessary first step for Exxon to raise site-specific defenses, and in particular to exercise its
statutory right to allocate damages to third parties who are at fault for such contamination. See pp.
54–60, infra. In other words, by abandoning traditional causation, which would have focused on
specific sites where particular MTBE gasoline caused identified contamination, the State was
allowed to show that the manufacturer of MTBE gasoline bore some ultimate connection to MTBE
contamination, and then allocate responsibility for that contamination based on a share of the
manufacturer’s supply of any gasoline to the entire State over a number of years. Any effort to
show that intervening events were the real problem became Exxon’s burden. Thus, the radical
form of market share liability embraced below not only fundamentally reshapes causation
principles, but also reworks the burden of proof and forces the defendant to prove its innocence.
2. The abandonment of traditional causation was a critical step in allowing the State to
pursue a statewide suit unburdened by showing the actual mechanism of contamination for specific
wells. But the massive temporal and geographic scope of the State’s suit only magnifies the legal
problems with embracing market share liability. Courts have recognized that market share liability
cannot fairly apply when the claims cover an unduly long time period or a broad geographic area
because (1) there is no ascertainable “market share” across the entire span that is a reasonable
proxy for the defendant’s fault; and (2) it becomes impossible for the defendant to exculpate itself
by identifying other wrongdoers. See Santiago, 3 F.3d at 550-51; In re Related Asbestos Cases,
543 F. Supp. 1152, 1158 (N.D. Cal. 1982). For example, in a DES case the “plaintiff could narrow
the time of her exposure and of the sale of the DES to the [nine-month] time when her mother was
pregnant, at which point the existing manufacturers could be ascertained.” Jefferson v. Lead Indus.
Ass’n, Inc., 106 F.3d 1245, 1253 (5th Cir. 1997). But where the plaintiff “contemplates a less
46
finely tuned application of the doctrine,” applying market share liability creates “too much risk
that a defendant will be held liable for more harm than it caused, or, worse yet, without causing
any harm at all to the plaintiff.” Id.; see also, e.g., Skipworth, 690 A.2d at 172 (observing that “the
relevant time period in question is far more extensive” than relevant nine-month period “in a DES
case”).
Here, the jury fixed Exxon’s fault at the average percentage of Exxon’s supplier market
share for all gasoline between 1988 and 2005, treating Exxon’s fault as uniform across this entire
seventeen-year period and perfectly proportional to that blanket market share.21 But the
undisputed evidence showed that Exxon’s market participation for gasoline varied over the
period;22 that spills and leaks were not uniformly distributed across the period23 or across the
State;24 and that Exxon was not in the New Hampshire market for all gasoline in a uniform way.25
Instead, Exxon had more share some years, and less others. Major spill events depended not on
Exxon’s conduct as a supplier but what different third parties did in different areas and years; some
of the impacts that comprise the State’s damages case occurred before the period at issue, yet were
21 The special verdict form asked the following question: “What is ExxonMobil’s market share
for MTBE gasoline for the years 1988 to 2005?” The Jury wrote 28.94%. App. 1397 ¶ 5d. But even though the verdict form sought only Exxon's share of MTBE gasoline, there is no evidence of that percentage in the record; the percentage applied by the jury included both MTBE and non-MTBE gasoline, which are not fungible.
22 See App. 1498–502 (showing Hastings’ calculation of Exxon’s market share for each year). 23 See App. 1504 (showing annual MTBE site spending by year from 1989 to 2009); App.
1465–97 (reflecting date of discovery of known MTBE release sites in site numbers); App. 964 (noting that the annual discovery of leaking underground storage tank sites peaked in 1993).
24 See App. 1505 (showing distribution of MTBE release sites across the state); App. 1503 (showing distribution of high risk MTBE sites across the state); App. 1465–97 (reflecting locations of MTBE release sites).
25 See Tr. at 5635:20–5636:7, 5695:4–5699:3, 5833:15–5838:2 (Burke Feb. 19–20, 2013); Tr. at 6101:13–6104:7 (Hastings Feb. 21, 2013); Tr. at 6908:1–6 (Dugan Mar. 5, 2013); Tr. at 7350:17–7351:1 (Eizember Mar. 7, 2013); App. 828–36, 844–45.
47
included in the State’s damages case. See Tr. at 4813:10–4814:22 (Hutchison Feb. 12, 2013). As
a result, Exxon’s seventeen-year-average, statewide, slice of the wholesale market share for all
gasoline could not validly approximate its fault for contamination allegedly caused by MTBE
gasoline. And the seventeen-year scope of the State’s claims magnified the unfairness of shifting
the burden to Exxon to show that third parties were at fault (which was then further magnified by
the truncation of Exxon’s right to defend itself under DeBenedetto, see pp. 54–60, infra).
The assessment of market share liability in this case thus was not even a close substitute
for traditional causation. The State was not faced with the situation of knowing that particular
wells or sites were contaminated on specific dates yet being unable to pinpoint which supplier
provided the MTBE gasoline that ended up in that particular well. The theory of market share
liability applied below obviated any need to show particular wells, specific spills, or critical dates.
The market share theory below instead essentially makes a judgment that, because there is some
risk of groundwater contamination from any use of MTBE gasoline, the sum total of all MTBE
groundwater contamination should be borne equally by all suppliers based on a percentage of
market share—without regard to anything resembling individualized fault. That is an entirely
legislative judgment. Indeed, it bears more resemblance to the GREE Fund than to a substitute for
traditional causation in an otherwise ordinary tort case. If the GREE Fund needs to be radically
expanded, the decision should come from the legislature, not a jury wielding concepts of causation
entirely foreign to New Hampshire law.
3. Finally, no court has applied market share liability without proof that “one defendant
manufacturer’s product must be indistinguishable from the next manufacturer’s product.” In re
Dow Corning, 250 B.R. 298, 363 (E.D. Mich. 2000); e.g., Ferris v. Gatke Corp., 132 Cal. Rptr. 2d
819, 823-24 (Cal. Ct. App. 2003). Here, the jury found that all MTBE gasoline was fungible, but
48
insufficient evidence supports this finding. Crucially, the evidence showed that MTBE levels
varied across gasoline grades and by non-RFG and RFG gasoline. See Tr. at 5833:20–5838:2
(Burke Feb. 20, 2013); App. 828–36, 844–45. For example, the amount of MTBE in gasoline
ranged from less than 1% to as much as 15%. See Tr. at 532:23–533:18, 663:5–7 (Fogg Jan. 15–
16, 2013); Tr. at 5788:10–22 (Burke Feb. 20, 2012); Tr. at 7351:22–7353:4 (Eizember Mar. 7,
2013); App. 821, 828–36, 844–45. And the State itself argued that the injury associated with
MTBE contamination depended on the concentration. See Tr. at 11916:10–20 (Apr. 8, 2013)
(“[W]hen you double the amount of MTBE in the gas, then you substantially increase the risks.”).
Accordingly, just as lead paint is not fungible because different paints “contain[ed] varying
amounts of lead pigments,” Brenner v. Am. Cyanamid Co., 699 N.Y.S.2d 848, 853 (App. Div.
1999), MTBE gasoline is not fungible for purposes of market share liability.
In sum, consistent with its long history of requiring traditional causation and consistent
with the decisions of the vast majority of other state supreme courts, New Hampshire should refuse
to adopt market share liability. The legislature, not a court, is the appropriate venue for making
such an important and policy-laden decision. Moreover, this would be a poor case for adopting
market share liability, as it would put New Hampshire out at the vanguard, allowing the theory of
liability in a circumstance when even the few market share states would likely reject it.
C. There Is No Basis for Using Exxon’s Share of the Supplier Market as a Proxy for Its Fault.
Even if this Court were to adopt market share liability here for the first time in New
Hampshire history, the Superior Court applied the wrong market share. The State’s argument for
adopting market share liability was premised on evidence of adding MTBE to gasoline during the
distribution process. See Tr. at 1593:8–11 (Varney Jan. 23, 2013); Tr. at 5976:17–5977:9, 6154:19–
6155:2 (Hastings Feb. 20–21, 2013). Once MTBE gasoline entered the supply chain, it would
49
have been possible to trace ownership of the MTBE gasoline that contributed to the contamination
of specific wells (as demonstrated in other MTBE cases), but the State convinced the Superior
Court that it should not be burdened with such questions because its tort theory focused on the
decision to refine gasoline containing MTBE, which gasoline was then brought into New
Hampshire. See Tr. at 2419:20–2420:16 (Moreau Jan, 29, 2013); Tr. at 3672:21–3673:17 (Lynn
Feb. 6, 2013); Tr. at 5362:5–17, 5363:5–21 (Guercia Feb. 14, 2013). The undisputed evidence,
however, showed that MTBE is added to gasoline at the refinery; if a refiner does not add it, there
is no MTBE gasoline to be provided to New Hampshire or elsewhere. See Tr. at 5975:16–5976:4
(Hastings Feb. 20, 2013); Tr. at 10058:2–13 (Montgomery Mar. 25, 2013). Consequently, although
it was error to adopt market share liability at all, the only market share consistent with the State’s
theory for market share liability—adding MTBE during refining—was refiner market share.
The Superior Court, however, instead applied Exxon’s vastly great supplier market share,
dramatically increasing Exxon’s liability in ways inconsistent with the very reasoning and
evidence that underlay the decision to adopt market share liability in the first place. See Tr. at
10058:2–10059:23 (Montgomery Mar. 25, 2013). The difference between the two market shares
is substantial. The State’s own expert estimated that Exxon’s share of the refining market was
6.91% and Exxon’s expert identified a similar 6.4% share. See Tr. at 5963:1–4 (Hastings Feb. 20,
2013); Tr. at 10071:21–10072:3 (Montgomery Mar. 25, 2013). By contrast, the State’s expert
calculated Exxon’s supplier share at 28.94%, and the jury adopted that figure. See App. 1397 ¶
5d. Using Exxon’s supplier share thus increased Exxon’s liability by approximately $200 million,
from around $50 million to nearly $250 million. At a bare minimum, therefore, this Court should
vacate the judgment and remand to reduce the award to reflect Exxon’s relevant market share.
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III. The Superior Court Deprived Exxon Of A Meaningful Opportunity To Defend Itself By Allowing The State To Prove A Statewide Case Using Aggregate Evidence And Preventing Exxon From Vindicating Its Site-Specific Defenses.
The Superior Court’s decision to try this case at a 30,000-foot level of abstraction also
depended heavily on allowing the State to prove its case on a statewide basis using aggregate
statistical evidence (rather than individualized evidence of particular contamination of particular
water supplies and sites). This was error in itself, and the prejudice to Exxon was greatly magnified
by the court’s DeBenedetto rulings that prevented Exxon from meaningfully exercising its
statutory right to allocate liability to thousands of third parties who contributed to the MTBE
contamination at issue here.
A. Courts Have Uniformly Recognized That Individualized Questions of Law and Fact Dominate MTBE Cases and Render Aggregate Proceedings Inappropriate.
Every other court to address the issue has recognized that MTBE tort cases depend
overwhelmingly on individualized questions of law and fact, and thus are not amenable to proof
on a mass basis. For example, the MDL court refused to certify a statewide class of private well
owners whose wells had already tested positive for MTBE. In re MTBE Prods. Liab. Litig., 209
F.R.D. 323, 329 (S.D.N.Y. 2002). The court found that individualized issues pervaded the action
and that the class failed, among other things, for lack of typicality, superiority, and predominance.
There were differences “in the level of contamination that the named plaintiffs allege, the source
of the contamination, how the contamination affects each plaintiff, and the nature of relief that
each will require.” Id. at 344. “The wells of the named plaintiffs are located in varying proximity
to immediate sources of pollution…. Each site requires investigation to characterize the source or
sources of gasoline, the first step in remediating groundwater.” Id.; see also id. at 337 (“[T]he
contamination of each named plaintiff’s well comes about through a factually unique set of
circumstances, e.g., a leaking [underground storage tank] owned by Big Saver, a burst pipeline,
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etc.”). Thus, there was no such thing as a “typical” contamination site, as each location would
involve different responsible parties, different volumes released into different types of soil and/or
groundwater, with different degrees of contamination requiring differing clean-up responses.
Other courts in MDL cases have similarly rejected class treatment because of the need for
individualized proof of liability and damages. E.g., Millett v. Atl. Richfield Co., 2000 WL 359979,
at *13 (Me. Super. Ct. Mar. 2, 2000) (“The issue of causation presents a major obstacle for
plaintiffs in their attempt to have this case certified as a class action because it cannot be proven
on a class-wide basis.”); Maynard v. Amerada Hess, No. 99-CVS-00068 (County of New Hanover,
N.C., Jan. 29, 2002), Slip Op. at 2 (“Plaintiffs’ [MTBE well owner] claims raise a host of site-
specific liability, causation and damages issues.”); cf. Martin v. Shell Oil Co., 198 F.R.D. 580, 592
(D. Conn. 2000) (determining liability in MTBE case would require “extensive individualized
proof of … causation”).
These cases recognize that in MTBE cases, there is no common event (such as a single spill
or discharge from a single point) or injury to a common resource (such as a single body of water)
that ties together all or nearly all of the injuries making a mass tort amenable to common proof
with only limited individual variation. Compare Sterling v. Velsicol Chem. Corp., 855 F.2d 1188
(6th Cir. 1988) (one landfill polluting one aquifer); Cook v. Rockwell Int’l Corp., 151 F.R.D. 378,
387–89 (D. Col. 1993) (one weapons production facility polluting surrounding area). Here, there
were allegedly hundreds of different spills and leaks from individual storage tanks, junkyards, and
other locations spread all over the State that may or may not have impacted a small minority of the
300,000 different private wells in the State in different ways depending on differing local
circumstances. See Tr. at 454:6–22, 461:18–24 (Fogg Jan. 15, 2013); Tr. 4618:17–4619:23
(Beckett Feb. 12, 2013); Tr. at 8751:1–5, 10–13 (Klaiber Mar. 18, 2013). The question of who is
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at fault for any particular contamination depends on particular events at that particular site, such
as who or what caused a particular spill from a particular storage tank at a particular service station
and how that could have been prevented. As noted, it was error to dismiss these pervasive
individualized issues of causation by adopting a novel and uniquely permissive variant of market
share liability. See pp. 37–49, supra. That error was magnified when the Superior Court truncated
Exxon’s statutory right to allocate fault to third parties. See pp. 54–60, infra. But the Superior
Court also erred by allowing the State to offer aggregate proof for these inherently individualized
injuries and essentially proceed by “Trial by Formula.” Wal-Mart, 131 S. Ct. at 2561.
This is not a context like antitrust or securities fraud where damages can be fairly estimated
in the aggregate using well-settled statistical techniques that reasonably account for most
individual variability. E.g., In re Mid-Atl. Toyota Antitrust Litig., 525 F. Supp. 1265, 1284–85 (D.
Md. 1981); see also Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251 (1946). Rather, damages
in MTBE cases vary widely depending on site-specific local conditions, including how and when
the MTBE was released, the spill volume, local hydrogeology, and the nature of any past
remediation. E.g., Tr. at 3800:22–3801:5, 3809:20–3812:3 (Beckett Feb. 6, 2013); Tr. at 8751:1–
5, 8751:10–13, 8755:11–16, 8800:6–7 (Klaiber Mar. 18, 2013). For example, NHDES requires
assessment of conditions at a particular site before it will approve a remedial action plan because
remediation is “very site specific.” Tr. at 7797:7–8 (Estabrook Mar. 12, 2013); see also id. at
7801:10–7802:23, 7867:17–18; Tr. at 8761:15–8763:18 (Klaiber Mar. 18, 2013),
B. This Case Cannot Be Distinguished From Every Other MTBE Case.
In a “turning point in this litigation,” the Superior Court broke from these precedents and
allowed the State to prove its case on a statewide basis using aggregate evidence. See Add. 3, 17–
20; see also Add. 6–9. The Superior Court distinguished prior class action cases on the grounds
that the State was using aggregate evidence to prove “its own injury” to the State’s groundwater
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as an “indivisible” whole. Add. 17–20; see also App. 1155 (discussing the State’s “ability to prove
injury to some wells based upon their connectedness to other wells”). This is doubly wrong. First,
the Superior Court was simply incorrect in asserting that New Hampshire’s groundwater is “one
indivisible resource”; it is undisputed that New Hampshire contains many different aquifers that
are not physically connected. See Tr. at 3802:16–3803:13 (Beckett Feb. 6, 2013); Tr. at 9414:15–
9416:4 (Maguire Mar. 21, 2013). As the State’s experts testified, MTBE impacts vary site-to-site
depending on whether fractures in bedrock are “open and connected” at and among specific sites.
Tr. at 454:6–22, 461:18–24 (Fogg Jan. 15, 2013); see also Tr. at 4618:17–4619:23 (Beckett Feb.
12, 2013). The Superior Court’s distinction thus fails to distinguish not only prior class action
cases, but also prior parens patriae cases involving a common injury to a single resource.
Second, this purported distinction has no application to the State’s private well claims—
more than half of the State’s damages—because, even if the State has parens patriae standing to
raise claims as to private wells, but see pp. 61-64, infra, it does not change the underlying
substantive law. Parens patriae is a standing doctrine; the State must still prove “all the elements
of a prima facie tort case in the same manner as the citizens on whose behalf [it is] acting.” State
of Sao Paulo of Federative Republic of Braz. v. Am. Tobacco Co., 919 A.2d 1116, 1122 (Del. 2007)
(internal quotations omitted); see also Serv. Emps. Int’l Union Health and Welfare Fund v. Philip
Morris Inc., 249 F.3d 1068, 1073 (D.C. Cir. 2001) (parens patriae standing “is merely a species
of prudential standing” and does not alter tort elements); Louisiana ex rel. Caldwell v. Allstate Ins.
Co., 536 F.3d 418, 430–32 (5th Cir. 2008) (parens patriae antitrust damages action was an
aggregation of individual actions, where the private injured parties were the real parties in interest).
Here, the State manifestly failed to prove injury “in the same manner” required of any
individual citizen under New Hampshire law for the private wells. The State primarily relied on
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Dr. Fogg’s expert testimony that there is approximately a 2% chance that any given private well in
New Hampshire is injured—and, thus, a 98% chance that the well is not contaminated. See pp.
62–63, infra (summarizing Dr. Fogg’s testimony). If an individual citizen had presented this same
proof—without testing her own well or even identifying the well’s location—the suit would plainly
be dismissed for insufficient evidence. The same result should follow here. The Superior Court
also explained that using individualized evidence would be impractical and not “cost effective.”
Add. 19 (internal citation omitted). But expedience is no excuse for dispensing with the ordinary
modes of proceedings that ensure a defendant has a fair opportunity to mount a defense. See, e.g.,
Wal-Mart, 131 S. Ct. at 2552–53.
C. The Superior Court Greatly Exacerbated the Prejudice to Exxon by Crafting Novel Exceptions to DeBenedetto.
1. Greatly exacerbating the problems with this statewide, market-share-based “Trial by
Formula,” the Superior Court issued a series of DeBenedetto rulings that deviate from clear
precedent and denied Exxon a meaningful opportunity to prove that third parties contributed to at
least part of the alleged harm. New Hampshire rejects pure joint and several liability and instead
generally requires that damages must be apportioned based on “the proportionate fault of each of
the parties.” RSA 507:7-e(I); DeBenedetto v. CLD Consulting Eng’rs, Inc., 153 N.H. 793, 799
(2006). New Hampshire’s statute allows apportionment “to all parties contributing to the
occurrence giving rise to an action, including those immune from liability or otherwise not before
the court.” DeBenedetto, 153 N.H. at 804; see also Ocasio v. Fed. Express Corp., 162 N.H. 436,
444 (2011) (fault “may be apportioned to immune nonparties”). Accordingly, Exxon has a
statutory right reinforced by this Court’s precedents to show that third parties “contribut[ed] to the
occurrence[s] giving rise to [the] action,” namely the contamination of groundwater with MTBE.
The Superior Court’s decisions to allow the State to prove its case on an aggregate rather
55
than a site-specific basis and to use market share, rather than traditional, causation put Exxon in a
difficult position: These decisions shifted to Exxon the burden of identifying third parties who
were at fault for causing particular contamination of particular wells—when the State had never
even identified the vast majority of the contaminated wells in the first place. The same shift
occurred for the sites, whether for past or future costs, where the aggregate presentation of
hundreds of sites forced Exxon to present in a short-cut fashion some examples of third-party
contribution without being allowed to present the specific details of the sites at issue. Exxon
nevertheless vigorously asserted its rights to demonstrate the responsibility of third parties,
submitting an 800-page offer of proof identifying “several thousand ‘non-litigants,’ including …
gasoline suppliers, gasoline importers, foreign refiners, domestic refiners, distributors, trucking
companies, and persons with leaking underground storage tanks,” and others “who may be
responsible at known release sites, such as marinas, junkyards, and airfields.” Add. 40–42. In
that, and subsequent, offers of proof, Exxon “describ[ed its] legal theories for asserting claims
against each of the named categories of DeBenedetto parties.” Add. 41.
The Superior Court, however, brushed aside that massive demonstration of third-party
responsibility by crafting a novel “same claim and manner” rule that eviscerated Exxon’s statutory
right to allocate fault to third parties. First, although DeBenedetto holds that the right to allocate
extends to “all parties contributing to the occurrence giving rise to an action,” 153 N.H. at 804
(emphasis added), the Superior Court held that Exxon had to “link each DeBenedetto party to a
claim made by the State.” Add. 52 (emphasis added). For example, Exxon identified numerous
third parties who were strictly liable to the State, pursuant to RSA 146-A, for causing the discharge
of oil into particular groundwater sites. See Add. 207. The Superior Court held, however, that
Exxon could not allocate fault to such third parties because the State had dropped its RSA 146-A
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claims. See Add. 209–10.
Second, and crucially, the Superior Court ruled that it was not enough for Exxon to show
that third parties’ negligence contributed to MTBE contamination. Exxon had to “demonstrat[e]
that a nonparty had some knowledge of MTBE or its characteristics, or should have had some
knowledge,” yet breached the duty of care arising from that knowledge. Add. 222; see also Add.
211–13, 310.26 Exxon thus not only had to identify third parties who were responsible based on
the same legal theories the State raised against Exxon (defective product, negligence, and failure
to warn), but also needed to prove that they were negligent in the same manner as Exxon—which
in turn depends on third parties’ knowledge.
2. The Superior Court’s “same claim and manner” rule is foreclosed by statutory text and
this Court’s precedents. At the outset, RSA 507:7-e provides that liability is apportioned based on
the “proportionate fault of each of the parties.” RSA 507:7-e(I)(a). On the face of the statute, the
ability to allocate liability to a third party thus does not depend on whether the third party
contributed to the injury in the same manner as the defendant; what matters is simply whether the
third party’s fault contributed at all. DeBenedetto confirms this natural reading, explaining that
the statute reaches “all parties contributing to the occurrence giving rise to an action.” 153 N.H.
at 804 (emphasis added); see also id. at 798 (referring to “all parties who causally contribute to an
accident”). And DeBenedetto itself apportioned liability to a third party on a different claim and
in a different manner: The primary defendant was held liable for negligently driving a car by
running a red light, but this Court held that liability could be apportioned to a third party
government agency for improperly designing the intersection. See id. at 795–96, 804.
26 The Superior Court similarly struck Exxon’s DeBenedetto disclosures for failing to align
with the State’s failure to warn and design defect claims, which again turned on subjective knowledge of MTBE’s chemical characteristics. Add. 214–18.
57
To support its “same claim and manner” rule, the Superior Court relied on the statement in
Goudreault v. Kleeman, 158 N.H. 236 (2009), that “a defendant who raises a non-litigant
apportionment defense essentially becomes another plaintiff who must seek to impose liability on
a [non-litigant] just as [a] plaintiff seeks to impose it on him.” Add. 52. But Goudreault merely
held that the defendant “carries the burdens of production and persuasion” on those third-party
allocation defenses, akin to an affirmative defense. Goudreault, 158 N.H. at 256. Thus while
Goudreault suggests that the defendant must prove up its claims in the same procedural manner as
the plaintiff, nothing in Goudreault remotely suggests that defendants are limited to the same
substantive claims as the plaintiffs. If anything, Goudreault supports Exxon, as it states that
whether a driver who caused a motor vehicle accident can allocate damages to a third-party doctor
for post-accident medical malpractice depends on whether there is evidence that the malpractice
“exacerbated [the plaintiff’s] foot and ankle injuries.” Id. at 257 (discussing Gust v. Jones, 162
F.3d 587, 591–94 (10th Cir. 1998)). But under the Superior Court’s misguided “same claim and
manner” rule, the doctor’s malpractice would be irrelevant, unless the doctor somehow helped
produce the traffic accident assailed in the plaintiff’s complaint.
Further underscoring the error of the “same claim and manner” rule, it would often allow
plaintiffs to obtain joint and several liability against deep-pocketed defendants simply through
artful pleading, a result that flies in the face of the statute and the New Hampshire policy it reflects.
For example, rather than suing a doctor in a medical malpractice case, the plaintiff could choose
to sue only a drug or device manufacturer on a products liability theory—preventing the
manufacturer from raising any third-party defense, as no third party would be liable on a product
liability theory. Giving plaintiffs broad leeway to choose whether to seek joint and several liability
violates the legislature’s judgment that joint and several liability should generally be foreclosed.
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3. The Superior Court’s rulings about third-party negligence are also deeply flawed. It is
“well established law in this State” that when a violation of a strict-liability statute “result[s] in the
damage that the statute was apparently intended to guard against,” it “constitutes legal fault in the
same manner as does the causal violation of a common-law standard of due care, that is, causal
negligence.” Bagley, 127 N.H. at 561-62 (internal quotation marks omitted). RSA 146-A in turn
provides that “[a]ny person who … directly or indirectly causes … the discharge of oil into … any
… groundwater of this state, or in a land area where oil will ultimately seep into any …
groundwater,” is strictly liable for the costs of containment, cleanup, and removal. Id. 146-A:3-
a(I); see also RSA 146-A:2-I-a (“discharge” means “the release or addition of any oil to land,
groundwater or surface water”); id. 146-A:2-III (“oil” means “petroleum products and their by-
products of any kind, and in any form”). Accordingly, under Bagley, it is prima facie evidence of
negligence that “any” person spilled “any” amount of “any kind” of petroleum product (including
MTBE gasoline) that entered “any” groundwater and thereby caused harmful contamination. That
contamination is “the damage that the statute was apparently intended to guard against.” Bagley,
127 N.H. at 561-62.
The Superior Court, however, applied its “same claim and manner” rule to prevent Exxon
from relying on Bagley and RSA 146-A to allocate fault to hundreds of third parties that the State
has itself identified as responsible for particular spills of MTBE gasoline. The court held that it is
“irrelevant to this case” that a nonparty has a categorical duty “pursuant to RSA 146-A not to
discharge oil” into the water supply; a third party must owe a specific “duty of care not to discharge
products containing MTBE in order to be liable in this case.” Add. 212 (emphasis added).
There is no basis in the statute, Bagley, or general principles of tort law for reading this
broad statutory duty designed to combat any gasoline-related groundwater contamination to
59
exclude one particular kind of gasoline or kind of pollution. RSA 146-A creates a strict-liability
duty for “any person” not to cause the discharge of “any” oil of “any kind” into “any” groundwater.
“[R]ead naturally, the word ‘any’ has an expansive meaning, that is, one or some indiscriminately
of whatever kind.” Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 219 (2008) (quotation marks
omitted). That expansive reading is further confirmed where, as here, the word “any” is “repeated
four times.” Id. at 220. Moreover, RSA 146-A creates an expansive duty not to spill any gasoline
into a water supply because any such spill creates a risk of harmful groundwater pollution. See
RSA 146-A:1 (“The purpose of this chapter is to cope with the problem of pollution from the
spillage or discharge of oil, recognizing the damage resulting to vegetation, marine, animal and
bird life from such pollution.”). It thus makes no sense to exclude gasoline containing MTBE
from this otherwise blanket duty.
The Superior Court’s theory also proves too much. The Superior Court appeared to suggest
that MTBE groundwater impacts would not be reasonably foreseeable to a person who spilled
MTBE gasoline unless the person knew about MTBE’s particular groundwater risks. See Add.
212–13. But that same reasoning extends to virtually any gasoline-related groundwater
contamination. “[G]asoline is a complex mixture containing highly toxic compounds,” including
“benzene, toluene, ethyl benzene, and xylenes,” “toxic compounds that . . . adversely affect public
health.” App. 796, 799, 808. For example, on the Superior Court’s theory, a third-party spiller
who negligently caused groundwater contamination with benzene—“a known human carcinogen,”
Tr. at 1865:22–1866:2 (Colburn Jan. 28, 2013)—would only be liable if the third party knew or
should have known about benzene’s particular chemical properties and the risks benzene poses to
groundwater. That cannot be right. The general duty of reasonable care and the statutory duty not
to cause the discharge of any oil into any groundwater supply extends to “[a]ny” person, not just
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those with chemistry degrees.
The Superior Court’s ruling also sweeps far too broadly in another respect. While the
knowledge of the specific properties of MTBE might be relevant in some cases—e.g., where the
clean-up efforts would be sufficient for non-MTBE gasoline but not MTBE gasoline—there are
other cases where it would make little difference. A third party who spilled gasoline and undertook
no remediation efforts whatsoever should not somehow benefit from the possibility that ordinary
remediation efforts would have proven insufficient, when in fact, the third party did not lift a finger.
This ruling was deeply prejudicial. A service station owner or junk yard operator who
handles gasoline negligently or recklessly and, as a result, spills MTBE gasoline and contaminates
nearby groundwater would be liable in tort for contributing to that contamination—yet the Superior
Court’s rulings effectively absolved those third parties of responsibility for their wrongdoing, and
instead put Exxon alone on the hook. Furthermore, to allocate fault to such a third party under the
court’s construct, Exxon first needed to prove the third-party spiller’s state of mind regarding
MTBE—and as to thousands of third parties across the State at once. This ruling thus placed
Exxon in an impossible position, as the inquiry into any third party’s state of mind is inherently
individualized and not susceptible to common proof. Cf. Wal-Mart, 131 S. Ct. at 2553 (employer’s
subjective reasons for adverse employment action are inherently individualized). The one-two
punch of the court’s DeBenedetto rulings led directly to the improbable result that, although MTBE
almost always enters groundwater because a third party spilled, leaked, or otherwise mishandled
MTBE gasoline, not a single third party bore any responsibility for any MTBE contamination in
New Hampshire. App. 1400 ¶ 4. That verdict is a telling signal of the Superior Court’s core error
in trying this case at too high a level of generality without regard to the individualized questions
of law and fact that pervade this and all other MTBE cases.
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IV. The Superior Court Failed To Follow This Court’s Decision In Hess.
A. Whether There Is Injury to a “Substantial Segment” of the Population Is a Question of Fact for the Jury, Not a Question of Law for the Judge.
The Superior Court further erred in deciding for itself whether the State had proven the
underlying factual predicate needed to have parens patriae standing as to the private well claims
here. In Hess, this Court held that the State could not establish parens patriae standing without
proving an “injury to a ‘substantial segment’ of its population.” 161 N.H. at 433 (internal quotation
marks omitted). The Court identified numerous disputed factual questions that could be relevant
to this inquiry, including whether there is “widespread MTBE contamination in privately owned
wells throughout the [S]tate”; whether the MTBE concentration “exceeded the state action level
for notification of adjacent well owners”; whether gas stations “in a given area … sold gasoline
containing MTBE”; and whether the 2007 U.S. Geological Survey indicated that an area had “high
incidences of MTBE contamination.” Id. at 437–38. Given these fact-intensive questions, the
Court left it “for the trial court on remand and for the finder of fact at trial.” Id. at 438. The Court
made the same point elsewhere, stating that, “[s]hould the case go to trial, the burden will rest with
the State to prove that it meets all of the requirements for parens patriae standing.” Id.
The Superior Court violated this Court’s command and instead decided the substantial
segment issue as a “question of law” addressed to the court. Add. 325, 343–44. The error is
particularly glaring because the Superior Court itself initially agreed that the “substantial segment”
question was “highly fact based and hotly contested,” App. 997, and involved “fact-intensive
evaluations,” Add. 185. Accordingly, the Superior Court explained that “the State must make a
more substantial showing of site-specific contamination to overcome a directed verdict on this
issue at trial.” Add. 182 (“site-specific” means “evidence linking a particular discharge location
to the State’s concern regarding contaminated wells in the vicinity”). Only later did it reverse
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course, answering the question itself as a matter of law.
B. A Rational Jury Could Have Readily Found the State’s Proof Insufficient.
If the Superior Court had put the “substantial segment” question to the jury, the jury could
have readily concluded that the State had not carried its burden of proof, as the State’s evidence of
injurious MTBE contamination in private wells was flimsy. Once again, the State introduced no
evidence of particular spills, leaks, or even sales of MTBE gasoline in particular areas to support
its claim that MTBE would injure particular private wells—and much less that it would do so in a
pervasive and widespread manner. The State instead relied on aggregate, abstract proof—here,
the testimony of an expert witness, Dr. Fogg, who used a series of statistical extrapolations to
estimate the extent of injury on a statewide (rather than individualized) basis, and even then
concluded that approximately 98% of the private wells will never need treatment for MTBE.
Whether to credit and how much to weigh an expert’s testimony are quintessential jury
questions. E.g., State v. Whittaker, 158 N.H. 762, 773 (2009). Exxon forcefully cross-examined
and rebutted Dr. Fogg’s testimony to show that it was ends-oriented, and a rational jury could have
credited Exxon’s criticisms and witnesses rather than Dr. Fogg. For example, to estimate the extent
of contamination in RFG counties, Dr. Fogg started with a USGS study covering only 100 private
wells—and which found that 98 of them had no contamination above the maximum contaminant
level (“MCL”). See Tr. at 970:2–19 (Fogg Jan. 17, 2013); App. 853–60. Dr. Fogg multiplied the
2% detection rate found in the USGS study by the estimated number of private wells in RFG
counties (about 150,000), turning 2 wells into 2,975 wells. See Tr. at 967:21–975:14 (Fogg Jan.
17, 2013); App. 1158. Tellingly, the statistical confidence of this back-of-the-envelope projection
was so low that Dr. Fogg himself admitted that the margin of error included the possibility that
zero private wells currently have MTBE contamination above the MCL. See Tr. at 1019:5–21
(Fogg Jan. 17, 2013).
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If Dr. Fogg had used this same data set for non-RFG counties, he would have projected
zero wells contaminated above the MCL, for the USGS identified not a single well outside the four
RFG counties with MTBE contamination above 13 ppb. See Tr. at 969:6–970:1, 978:6–9 (Fogg
Jan. 17, 2013); App. 853–60. Thus Dr. Fogg used a different data set for non-RFG counties—
from which, not coincidentally, he arrived at a higher number of wells. Despite conceding that
this data set was biased because it reflects test results of wells whose owners already suspected
contamination, see Tr. at 981:1–982:9 (Fogg Jan. 17, 2013), Dr. Fogg nonetheless extrapolated
from that biased data to project that 2,568 wells are currently contaminated above the MCL in non-
RFG counties. See Tr. at 978:10–19, 982:10–21, 997:18–1001:19, 1005:19–1009:11 (Fogg Jan.
17, 2013); App. 853–60. Finally, using the same biased data set, Dr. Fogg projected that fewer
than 1% of future private wells in New Hampshire—287 private wells out of an estimated 50,000
to be built over the next twenty years—will contain MTBE at or above the MCL. See Tr. at 720:9–
722:5, 947:10–17 (Fogg Jan. 16–17, 2013); App. 1506.
Given the weakness of the State’s evidence, a rational jury could readily have found that a
“substantial segment” of the population was not injured.27 The Superior Court’s “substantial
segment” ruling alone thus is sufficient basis for vacating and remanding for a new trial. It is also
hugely important, as more than half of the damages award relates to the private well claims. See
App. 1399 ¶ 3. Moreover, the court’s inclusion of claims involving nearly 300,000 private wells
into this one action greatly magnified its other errors regarding the State’s use of aggregate proof
and the restrictions on Exxon’s right to use individualized evidence to prove third-party liability
for particular spills. Without the private well claims, this case still would have involved hundreds
27 For this reason, even if the Superior Court could have decided the parens patriae issue as a
matter of law, its holding was erroneous.
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of release sites, which would be challenging enough in one litigation. But including the private
well claims increased its size exponentially, magnifying all of these problems.
V. The State’s Sampling And Future Treatment Claims Are Unripe And Do Not Support Pre-Judgment Interest.
A. The State’s Future Sampling and Future Treatment Claims Are Unripe.
The Superior Court also erred in allowing the State to claim more than $300 million in
damages for the costs of testing private wells for possible MTBE contamination, $150 million to
treat whatever contamination is found in the wells in the future, and another $218 million for
anticipated generalized costs to characterize—in some cases to re-characterize—and clean up
release sites that are already being addressed under the New Hampshire regulatory clean-up
scheme. These claims are unripe and should be dismissed. Indeed, they extend to wells that have
not been identified and are not yet contaminated—including 50,000 wells that do not even exist—
as well as sites that have already been closed by the State after having proceeded through the clean-
up scheme. See Tr. at 5316:22–5317:3, 5318:23–5319:23 (Guercia Feb. 14, 2013). Once again,
this ruling dramatically increased the scope of this suit and took the Superior Court into territory
where no common law court has gone before.
“Ripeness relates to the degree to which the defined issues in a case are based on actual
facts … and are capable of being adjudicated on an adequately developed record.” Appeal of State
Emps.’ Ass’n, 142 N.H. 874, 878 (1998) (internal quotation marks, citation, and alteration omitted).
This Court looks to (i) “the fitness of the issue for judicial determination,” and (ii) “the hardship
to the parties if the court declines to consider the issue.” In re State (State v. Fischer), 152 N.H.
205, 210 (2005) (internal citation omitted). “[A] claim is fit for decision if the issues raised are
primarily legal, do not require further factual development, and the challenged action is final.” Id.
(internal quotation marks, citation, and alteration omitted). Hardship requires “an impact on the
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parties sufficiently direct and immediate as to render the issue appropriate for judicial review at
this stage.” Id. (internal quotation marks, citation, and alteration omitted).
First, the State did not present proof of actual or imminent contamination to particular
private wells; this claim rested only on the possibility that some unidentified private wells would
have harmful MTBE contamination that testing would detect.28 That puts the cart before the horse
and is unripe. For example, the MDL court overseeing the federal MTBE cases disallowed
damages to test and monitor existing wells in the absence of proof of a “threat of imminent harm”;
the mere possibility of contamination was not enough. In re MTBE Prods. Liab. Litig., 175 F.
Supp. 2d 593, 607–11 (S.D.N.Y. 2001) (“The imminence requirement ensures that courts do not
entertain suits based on speculative or hypothetical harms[.]” (internal quotation marks omitted)).
Second, the State’s claims for treatment of future private-well impacts are even more
uncertain, remote, and contingent. For example, Dr. Fogg projected that 50,000 new wells will be
dug over the next twenty years, and, of these, 49,813 will require no treatment; only 287 are
predicted to have contamination above the MCL. See Tr. at 720:9–21, 947:10–17 (Fogg Jan. 16–
17, 2013). Of course, the State cannot identify which 287 wells will require treatment, as they do
not exist. Moreover, all of Dr. Fogg’s projections are extraordinarily contingent and hypothetical.
He estimated the movement of MTBE plumes, past and future, over decades while admitting that
28 Similarly, for the 228 sites for which projected costs were allowed, the State presented no
evidence on a site-by-site basis of whether any additional work is actually needed. See, e.g., Tr. at 3951:1–3953:1, 3959:18, 4427:10–4428:5, 4534:23–4535:16, 4544:9–4545:15, 4569:14–21 (Beckett Feb. 6, 11–12, 2013); Tr. at 4888:2–11; 4895:14–4903:7, 4953:4–4954:3, 49554–4964:9, 4969:12–4977:1 (Hutchison Feb. 13, 2013). Indeed, it was undisputed that 49 of these sites have not had any MTBE contamination at levels above the State’s standard of 13 ppb since 2008, see, e.g., Tr. at 4518:19–4520:19 (Beckett Feb. 12, 2013), and that the State has no authority to require or perform any further MTBE characterization or clean up at these sites. See, e.g., Tr. at 3548:13–20 (Lynn Feb. 5. 2013). In addition, 23 of the 228 sites have been closed by the State based on its determination that no further work is needed. See Tr. at 4448:13–4449:7 (Beckett Feb. 11, 2013).
66
plume movement depends on numerous, uncertain “controlling factors.” Tr. at 721:10–19 (Fogg
Jan. 16, 2013); see also id. at 675:3–21, 698:3–20. Among others, there are “zones of different
[subsurface] materials that cause the groundwater to move in different rates, and these rates of
movement are determined by properties of the geologic system,” which Dr. Fogg had to assume.
Tr. at 724:16–20 (Fogg Jan. 16, 2013); see also id. at 724:21–24 (noting that “groundwater can
move through a sand at some rate, but . . . clay doesn’t allow the groundwater to move nearly as
fast”). He also had to estimate the hydraulic conductivity of bedrock, which also impacts plume
movement. See Tr. at 1144:1–1145:20 (Fogg Jan. 22, 2013). Other variables included “how strong
the source [of MTBE] is, how concentrated is the MTBE at the source of the contamination, and
how long does it last.” Tr. at 734:9–12 (Fogg Jan. 16, 2013). MTBE’s groundwater concentration
also changes with precipitation, which Dr. Fogg attempted to predict for the next 20 years. See id.
at 748:12–750:20. And, the ultimate number of MTBE impacts varies with the number of
operating wells in the plume’s path, which again is unknown and indeed subject to change over
time. See id. at 737:1–22. In sum, given all of the unknown, unknowable, and unaccounted-for
variables that are necessary to estimate future MTBE impacts, Dr. Fogg’s projections required
exactly the kind of speculative and uncertain factual guess work that renders an asserted injury
unripe. See In re State (State v. Fischer), 152 N.H. at 210; Appeal of State Emps.’ Ass’n, 142 N.H.
at 878; Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726, 733–34 (1998).
The Superior Court disagreed, reasoning that the State’s “injury causing the future harm
has already occurred”; the “injury occurred when MTBE entered State waters.” Add. 116. On this
view, the State was simply seeking “future damages … to measure the extent of the harm caused”
by that past injury. Id. Not so. Again, the Superior Court’s error relates to super-sizing this suit.
Whatever the merit of calculating future damages when there is concrete current contamination at
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issue, the State’s future- or unknown-injury claims here are different. First, unlike where a plaintiff
claims injury to specific wells, the State here is claiming damages to hundreds of thousands of
wells drawing from myriad aquifers that may or may not suffer different injuries depending on
different local conditions at different times in the next two decades. Second, the State’s evidence
is not concrete and particularized; the State has relied on aggregate projections about what is likely
to happen to its groundwater as an abstract whole or what may have been unaddressed as part of
already-performed site cleanup. No court in New Hampshire history had ever entertained such an
abstract, hypothetical claim; the court below should not have been the first.
B. Prejudgment Interest on Future Costs Should Not Have Been Awarded.
The Superior Court exacerbated its error by awarding prejudgment interest on the total
judgment amount, or $236,372,664, when $195,243,134 of those damages—nearly 83%—were
for the State’s claims for investigating, testing, characterizing, and treating alleged MTBE
contamination in New Hampshire’s private wells and future costs for site investigation and
remediation. Prejudgment interest on those future costs fails to serve the compensatory purpose
of RSA 524:1-b and thus should not have been awarded. New Hampshire’s prejudgment interest
statute, RSA 524:1-b, provides that in all civil proceedings other than debt collection “there shall
be added forthwith by the clerk of court to the amount of damages interest thereon from the date
of the writ or the filing of the petition to the date of judgment even though such interest brings the
amount of the judgment beyond the maximum liability imposed by law.” The “words in the statute
itself are the touchstone of the legislature’s intention,” but the Court interprets those words “so as
to effectuate their evident purpose.” Quality Carpets v. Carter, 133 N.H. 887, 889 (1991)
(quotation marks omitted). “If the literal significance of statutory language, as applied to the facts
of a particular case, makes the meaning absurd, strange, or inexplicable, it cannot be adopted as
the only test of the legislative purpose.” St. Paul’s Church v. Concord, 75 N.H. 420, 423 (1910).
68
The “primary purpose” of prejudgment interest statutes is “to compensate a damaged party
for the loss of use or the unlawful detention of money.” Id. (internal quotation marks and citation
omitted). An award of prejudgment interest reflects the fact that money has time value; thus, when
a jury awards damages for past harms, interest must be added to compensate the plaintiff for the
money’s lost use. E.g., Chiulli v. Newbury Fine Dining, Inc., 2013 WL 5494723, at *3 (D. Mass.
Sept. 30, 2013). Prejudgment interest is not designed to “make the plaintiff more than whole” or
“penalize the wrongdoer.” Id. (internal quotation marks and citation omitted).
Interpreting RSA 524:1-b in light of this purpose shows that it is inapplicable to the future
harms here. Prejudgment interest on future harms “does not serve the purpose of compensation
for loss.” Valley Line Co. v. Ryan, 771 F.2d 366, 377 (8th Cir. 1985). Future cost “damages
compensate future harm, for which no interest could possibly have accrued before trial.” Verdin v.
C & B Boat Co., 860 F.2d 150, 158 (5th Cir. 1988) (emphasis in original). Thus, prejudgment
interest on future compensation is an oxymoron and a windfall. See Chiulli, 2013 WL 5494723,
at *3. And, the federal rule is “that prejudgment interest should not be awarded on damages for
future loss.” Borges v. Our Lady of the Sea Corp., 935 F.2d 436, 444 (1st Cir. 1991).29
The Superior Court agreed that Exxon had “accurately state[d] that the purpose of the pre-
judgment interest statute is to reimburse the prevailing party with the value of the loss of use of a
monetary award during the pendency of litigation.” Add. 393–94. But it found that prejudgment
interest was justified in light of “evidence that the damage to [New Hampshire’s] waters had
already been done” and evidence that “MTBE had already been imported into the State.” Add.
29 See also Nance v. City of Newark, 501 F. App’x 123, 129 (3d Cir. 2012) (“[P]rejudgment
interest is not available under state or federal law on any portion of the award that might be attributable to future economic loss.”); Gordon v. Matthew Bender & Co., 186 F.3d 183, 185–86 (2d Cir. 1999) (same); Williamson v. Handy Button Mach. Co., 817 F.2d 1290, 1298 (7th Cir. 1987); Pickle v. Int’l Oilfield Divers, Inc., 791 F.2d 1237, 1241 (5th Cir. 1986).
69
394. In the Superior Court’s view, the fact that the State’s expenses would be borne in the future
“does not mean that it did not suffer the loss of use of these monies prior to the jury’s verdict in
this case.” Id. It concluded that had the money been available to the State earlier, “the cost to test
and remediate would be lesser now.” Id.
The Superior Court’s analysis is flawed on multiple levels. At the outset, as set forth above,
the State’s future-injury claims are for injuries that have not yet occurred or been identified. In
any event, the award for future costs itself compensates the State for expenses associated with
MTBE investigations and remediation; it is not compensating the State for decreased water “value”
or other loss to the water itself. Hess, 161 N.H. at 437 (holding that “claims for diminution in
value of private property, lost business expenditures and other business and economic losses
resulting from MTBE contamination properly belong to private parties”). As compensation for
future expenses, the economic loss to the State will not arise until the expenses are incurred in the
future. See Pickle v. Intl. Oilfield Divers, Inc., 791 F.2d 1237, 1241 (5th Cir. 1986). It is of no
moment that the impetus for the State’s future expenditures began in the past. Thus, in cases
involving future pain and suffering, the courts have held prejudgment interest inapplicable on the
future portion of the damage award even though the injury giving rise to the future pain had already
occurred. See id. Indeed, under similar circumstances the MDL Court denied the City of New
York’s claim for pre-verdict interest, acknowledging that because “the damages awarded in this
case already took into account the lapse in time between the alleged date of the City’s loss and the
date of the verdict, granting entry of pre-verdict interest would be improper.” In re MTBE Prods.
Liab. Litig., 2010 WL 1924708, at *3 (S.D.N.Y. May 12, 2010). Thus, at the very least, this Court
should vacate the prejudgment interest award for the State’s future costs.
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CONCLUSION
There is much at stake in this case besides the largest civil verdict in New Hampshire
history. This case also constitutes the most radical departure from time-tested precedent and core
principles of state and federal law in New Hampshire history. There is no doubt that the Superior
Court commendably expended enormous effort overseeing the proceedings below—much of it in
response to the State’s novel and ever-shifting theories. But to meet the unique demands and scope
of claims as the State chose to frame them, the Superior Court repeatedly departed from established
precedent. And in so doing, the Superior Court erred in ways that were not only massively
prejudicial to Exxon, but also massively consequential to the path of the law in New Hampshire.
The Superior Court’s erroneous rulings implicate some of the most elemental aspects of the State’s
justice system, including separation of powers, causation, proof, fault, standing, and ripeness—to
say nothing of fundamental precepts of federal law. If the verdict is permitted to stand, the result
will be a dramatic change in New Hampshire law and practice. That should not occur. It is “‘the
duty of all courts of justice to take care, for the general good of the community, that hard cases do
not make bad law.’” State v. Lead Indus., Ass’n, Inc., 951 A.2d 428, 480-81 (R.I. 2008) (quoting
Burnham v. Guardian Life Ins. Co. of Am., 873 F.2d 486, 487 (1st Cir. 1989)).
For the reasons set forth above, this Court should reverse the judgment below or, at a
minimum, it should vacate and remand for a new trial.
STATEMENT REGARDING ORAL ARGUMENT
Pursuant to Supreme Court Rule 16(h), Exxon respectfully submits that due to the number,
complexity, and exceptional importance of the questions presented in this appeal, oral argument
before the full court for more than fifteen minutes per side is warranted. Mr. Clement will argue.
CERTIFICATION PURSUANT TO N.H. SUPR. CT. R. 16(3)(I)
Decisions of the Superior Court appealed in this action are in the accompanying addendum.
PaulD. ClsvrpurArguing Counsel(admittedpro hac vice)
BANCROFT PLLC1919 M StreetNWSuite 470Washington, DC 20036(202) 234-0090
TueoooR¡E. Ts¡rpzuops(admittedpro hac vice)
WEIL, GOTSHAL & MANGES LLP767 FifthAvenueNew York, New York 10153(212) 310-8000
November 3,2014
BRUcE W. F¡t-urv AR 787)Parnrcr H. Tavlon (NH Ban l7l7l)MCLANE, GRAF, RAULERSON &MIDDLETON, PROFESSIONALASSOCIATION
City Hall Plaza900 Elm StreetManchester, NH 03101(603) 62s-6464bruce.felmly@mclane. com
CERTIFICATE OF' SERYICE
I hereby certify that on November 3, 2014,I served the foregoing Opening Brief For
Appellants Exxon Mobil Corporation And Exxonmobil Oil Corporation, as well as its
accompanying Addendum and Appendix, by hand-delivering two copies thereof to K. Allen
Brooks, Esq., Senior Assistant Attorney General, Chiet Environmental Protection Bureau, Ofïice
of Attorney General, 33 Capitol Street, Concord, NH 03301, counsel for the State of New
Hampshire.
BRuce W Farvrv (NH