Exceptional Case: Battle Against Big Oil Nets Record Settlement for New York Firm

When law firms go up against Big Oil companies in the courtroom, it’s impossible to overlook the Herculean task at hand.

This was the situation in which New York firm Weitz & Luxenberg found itself, along with about a dozen other plaintiffs’ lawyers, fighting to prove that the oil industry knew that a chemical additive in gasoline would contaminate groundwater supplies.

“It’s amazing to come into a court date and look at this,” says attorney Robin L. Greenwald. “You really can see the resources that you’re up against.”

The MTBE litigation, as it is known (for methyl tertiary butyl ether), has a lengthy and complex history, which dates back to the mid-1990s when products liability suits were first brought against companies that spilled gasoline, claiming that those spills contaminated drinking water with the chemical. Although most reports about MTBE note that it gives off the taste and odor of turpentine, it actually emits terpene, which some have described as almost sweet-smelling.

MTBE was first introduced in the late 1970s to replace lead as an additive in gasoline. An oxygenate—it helps fuel burn more efficiently and reduces ozone pollution. It wasn’t used on a grand scale until 1990 when the Clean Air Act mandated the use of oxygenated fuel additives. High doses of the chemical were found to cause cancer in rats in testing by scientists, although the health effects of ingestion of small amounts remain unknown.

The results of MTBE litigation have been mixed, and the battle has been a contentious one from the start, with the defendant oil companies being painted as reckless profiteers, and plaintiffs’ lawyers being labeled litigious and greedy.

In October 2000, more than 100 MTBE cases were combined into a multi-district litigation in a federal district court in the Southern District of New York. This became known as MDL 1358 I. The court denied the plaintiffs’ attempt to certify the case as a class-action lawsuit.

In late 2003, the suit was reactivated as a different animal. Where MDL I was brought on behalf of private well owners, MDL II represented public and private water providers in the business of delivering water to households and businesses.

Weitz & Luxenberg was selected as plaintiffs’ liaison counsel, and Greenwald assumed that role in the midst of MDL II litigation. The firm acted as counsel of record for the Suffolk County Water Authority and the County of Suffolk, and United Water of New York—two of the four focus cases of the MDL that would help shape decisions in the hundreds of other cases.

“Suffolk is the largest provider of drinking water from groundwater systems in the country,” Greenwald says, noting that it has more than 500 drinking supply wells.

In contrast to previous suits that targeted flagship stations responsible for leaks or spills, this novel litigation targeted the oil industry itself for its decision to use MTBE in its gasoline.

New York Banned MTBE in 2003, and it is banned in 22 other states.

“We said, as an industry, you made a decision to use a product that you knew was defective and knew was going to cause groundwater contamination around the country,” Greenwald says, “We weren’t saying that 20 years from now all of America will be riddled with cancer because they drank water with MTBE. We were saying that you can’t put a chemical in a product that you know is going to get into water without doing appropriate studies to determine its health impact. It didn’t even do a chronic ingestion study on rats.”

The stakes in the case were huge, and in its defense, Big Oil pulled no punches. It tried to have the suits dismissed for violations of the statute of limitations, and also for jurisdiction, claiming that the responsibility to clean up wells belonged to state agencies. It utilized Congressional mandates and the Clean Air Act of 1990, saying that the use of MTBE was all but required by law to reduce carbon emissions in gasoline.

“They argued here that the EPA authorized the use of MTBE in the regulation. And it did,” says Greenwald. “It said that MTBE was a choice among other choices. But that choice still required the industry to determine its safety before using it.”

Another hard-fought issue in the case, according to Greenwald, was the defendants’ causation argument, whereby they said the plaintiffs were responsible for proving which company’s gas ended up in the contaminated drinking water. The plaintiffs argued that this case was unique, since the defendant oil companies use a single pipeline from Texas that combines various sources of gasoline.

“It’s a commingled product,” Greenwald argues.

A major hurdle in the case was cleared when federal Judge Shira A. Scheindlin decided that it was impossible to identify whose molecule of gasoline contaminated the well because of the commingling of the product.

In May, the MDL case settled for $424 million, making it the largest settlement in the history of MTBE litigation, with $73.2 million earmarked for Suffolk County Water Authority (after attorneys’ fees and expenses), which supplies water to more than 1.1 million customers in the county. According to the settlement, the defendants did not admit any wrongdoing.

Settling defendants include BP, Chevron, Citco and Sunoco, among others. Several other companies named in the suit did not join the global settlement.

Though monies from the settlement are not earmarked for particular uses, it is expected that the funds will contribute to a massive clean-up effort of contaminated water supplies.

New York banned MTBE in 2003, and it is banned in 22 other states. The oil companies no longer use the additive.

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Exceptional Case: Battle Against Big Oil Nets Rec […]