In Re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation

10-4135-cv (L), 10-4329-cv (XAP)
In re: MTBE Prods. Liability Litig.
United States Court of Appeals
FOR THE SECOND CIRCUIT
August Term, 2011
(Argued: May 23, 2012 Decided: July 26, 2013)
Docket Nos. 10-4135-cv (L), 10-4329-cv (XAP)
IN RE: METHYL TERTIARY BUTYL ETHER (“MTBE”)
PRODUCTS LIABILITY LITIGATION
B e f o r e:
PARKER, HALL, and CARNEY, Circuit Judges.
_____________________________
After an eleven-week bellwether trial and years of related litigation, the District
Court entered a $104.69 million judgment for the City of New York, the New York
City Water Board, and the New York City Municipal Water Finance Authority
(collectively, the “City”) and against Exxon Mobil Corporation, Exxon Mobil Oil
Corporation, and Mobil Corporation (collectively, “Exxon”). The jury found Exxon
liable under New York tort law for contaminating City-owned wells in Queens by its
release of the chemical methyl tertiary butyl ether (“MTBE”), which Exxon used as
a gasoline additive from the mid-1980s through the mid-2000s, and whose use New
York State banned as of 2004. On appeal, Exxon challenges the verdict, arguing
primarily that the City’s common law claims are preempted by the federal Clean
Air Act, which, from the mid-1990s through 2004, required use of gasoline
oxygenates, such as MTBE, in New York City. Exxon also argues that because
(among other reasons) the jury projected MTBE levels equal to the State’s
maximum contaminant level, the City’s injury was not legally cognizable; that the
City’s action was not ripe for adjudication (or alternatively, that it was barred by
the statute of limitations); that the City failed sufficiently to prove the elements of
negligence, trespass, public nuisance, and failure-to-warn; and that the District
Court erred in its handling of alleged jury misconduct. On cross-appeal, the City
faults the District Court for instructing the jury to offset its damages award by the
cost of remediating pre-existing contamination, and for its ruling that, as a matter
of law, the City was not entitled to an award of punitive damages. For the reasons
set forth below, we AFFIRM the decision of the District Court in its entirety.
___________________________
PAUL D. CLEMENT, Bancroft PLLC, Washington, DC
(Traci L. Lovitt, Nicholas W. Haddad, Jones Day,
New York, NY; Peter John Sacripanti, James A.
Pardo, Lauren E. Handel, McDermott Will &
Emery LLP, New York, NY, on the brief), for
Defendants-Appellants-Cross-Appellees Exxon
Mobil Oil Corporation, Exxon Mobil Corporation,
and Mobil Corporation.
PAUL M. SMITH, Jenner & Block LLP, Washington,
DC (Susan E. Amron, Assistant Corporation
Counsel, New York City Law Department, New
York, NY; Victor M. Sher, Sher Leff LLP, San
Francisco, CA, on the brief), for Plaintiffs-
Appellees-Cross-Appellants the City of New York,
the New York City Water Board, and the New York
City Municipal Water Finance Authority.
Donald W. Fowler, Eric G. Lasker, Hollingsworth
LLP, Washington, DC; Donald D. Evans, American
Chemistry Council, Washington, DC; Thomas J.
Graves, American Coatings Association, Inc.,
Washington, DC; Quentin Riegel, National
Association of Manufacturers, Washington, DC;
Elizabeth Milito, NFIB Small Business Legal
Center, Washington, DC; Robin S. Conrad,
National Chamber Litigation Center, Inc.,
Washington, DC, for amici curiae American
Chemistry Council, American Coatings Association,
the National Association of Manufacturers, the
NFIB Small Business Legal Center, and the
Chamber of Commerce of the United States of
America, in support of Defendants-Appellants-
Cross-Appellees.
Joseph R. Guerra, James R. Wedeking, Sidley
Austin LLP, Washington, DC, for amici curiae
2
National Petrochemical and Refiners Association
and American Petroleum Institute, in support of
Defendants-Appellants-Cross-Appellees.
Michael B. Mukasey, Anne E. Cohen, Debevoise &
Plimpton LLP, New York, NY; Hugh F. Young, Jr.,
Product Liability Advisory Council, Inc., Reston,
VA, for amicus curiae The Product Liability
Advisory Council, Inc., in support of Defendants-
Appellants-Cross-Appellees.
Michael E. Wall, Natural Resources Defense
Council, San Francisco, CA, Johanna Dyer, Natural
Resources Defense Council, New York, NY, for
amicus curiae Natural Resources Defense Council,
in support of Plaintiffs-Appellees-Cross-Appellants.
Paula T. Dow, Attorney General of New Jersey,
George N. Cohen, Richard F. Engel, Deputy
Attorneys General, Trenton, NJ; Michael Axline,
Miller, Axline & Sawyer, Sacramento, CA, for
amicus curiae New Jersey Department of
Environmental Protection, in support of Plaintiffs-
Appellees-Cross-Appellants.
_______________________________
Table of Contents
I. BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A. MTBE and Its Effects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
B. The Clean Air Act and the Reformulated Gasoline Program. . . . . . . 11
C. The City’s Water-Supply System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
D. The City’s Claims.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
E. The Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1. Phase I: Future Use of the Station Six Wells. . . . . . . . . . . . . . 16
2. Phase II: Peak MTBE Concentration
in the Station Six Wells. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3. Phase III: Liability and Statute of Limitations. . . . . . . . . . . . 23
a. Injury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
b. Causation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
c. Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3
d. Statute of Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
e. Phase III Jury Verdict. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
F. Punitive Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
G. Juror Misconduct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
H. Post-Trial Motions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
II. DISCUSSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
A. Preemption.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
1. Federal Preemption of State Law. . . . . . . . . . . . . . . . . . . . . . . 44
2. Conflict Preemption: the Impossibility Branch. . . . . . . . . . . . . 47
a. The Import of the Jury’s Finding on the
City’s Design-Defect Claim. . . . . . . . . . . . . . . . . . . . . 49
b. Considering Ethanol as a Possible
Alternative to MTBE . . . . . . . . . . . . . . . . . . . . . . . . . 52
3. Conflict Preemption: the Obstacle Branch. . . . . . . . . . . . . . . . 54
4. Tortious Conduct Beyond Mere Use of MTBE.. . . . . . . . . . . . . 60
B. Legal Cognizability of Injury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
1. Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
2. Injury As a Matter of New York Law.. . . . . . . . . . . . . . . . . . . . 68
C. Ripeness and Statute of Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . 72
D. Sufficiency of the Evidence as to Injury and Causation. . . . . . . . . . . 79
1. The Jury’s 10 ppb MTBE Peak Concentration Finding. . . . . . 80
2. The Jury’s Consideration of Market Share Evidence. . . . . . . . 84
E. New York Law Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
1. Negligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
2. Trespass.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
3. Public Nuisance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
4. Failure to Warn.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
F. Juror Misconduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
G. The City’s Cross-Appeals for Further Damages.. . . . . . . . . . . . . . . . 106
1. Compensatory Damages Offset. . . . . . . . . . . . . . . . . . . . . . . . 107
2. Punitive Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
III. CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
_______________________________
SUSAN L. CARNEY, Circuit Judge:
Exxon Mobil Corporation, Exxon Mobil Oil Corporation, and Mobil
Corporation (collectively, “Exxon”) appeal from an amended judgment entered in
4
favor of the City of New York, the New York City Water Board, and the New York
City Municipal Water Finance Authority (collectively, “the City”) on September 17,
2010, in the United States District Court for the Southern District of New York
(Shira A. Scheindlin, Judge), following an eleven-week jury trial and post-trial
proceedings. The case was selected to serve as a bellwether trial in certain long-
running multidistrict litigation, consolidated in the District Court, that concerns
contamination of groundwater by the organic chemical compound methyl tertiary
butyl ether (“MTBE”).1
As described in greater detail below, this extended litigation arose from the
intensive use of MTBE as a gasoline additive by Exxon and other gasoline
companies in the New York area from the 1980s through the first half of the 2000s,
when a state ban on MTBE brought the era to an end. Treatment with MTBE
increased the oxygen content of gasoline and mitigated harm to air quality caused
by automobile emissions, thereby furthering the goals of the Clean Air Act, 42
U.S.C. §§ 7401-7671q, as amended from time to time. Because of spillage and
1
The path of this litigation is charted in a number of District Court opinions, as well as one
opinion of our own Court. See In re MTBE Prods. Liab. Litig., 175 F. Supp. 2d 593 (S.D.N.Y. 2001)
(MTBE I); In re MTBE Prods. Liab. Litig., 379 F. Supp. 2d 348 (S.D.N.Y. 2005) (MTBE II); In re
MTBE Prods. Liab. Litig., 457 F. Supp. 2d 324 (S.D.N.Y. 2006) (MTBE III); In re MTBE Prods. Liab.
Litig., 458 F. Supp. 2d 149 (S.D.N.Y. 2006) (MTBE IV); In re MTBE Prods. Liab. Litig., 488 F.3d 112(2d Cir. 2007) (MTBE V); In re MTBE Prods. Liab. Litig., 2007 WL 1601491 (S.D.N.Y. June 4, 2007)
(MTBE VI); In re MTBE Prods. Liab. Litig., 644 F. Supp. 2d 310 (S.D.N.Y. 2009) (MTBE VII); In re
MTBE Prods. Liab. Litig., 643 F. Supp. 2d 446 (S.D.N.Y. 2009) (MTBE VIII); In re MTBE Prods.
Liab. Litig., 2009 WL 2634749 (S.D.N.Y. Aug. 25, 2009) (MTBE IX); In re MTBE Prods. Liab. Litig.,
2009 WL 3347214 (S.D.N.Y. Oct. 19, 2009) (MTBE X); In re MTBE Prods. Liab. Litig., 2010 WL
1328249 (S.D.N.Y. Apr. 5, 2010) (MTBE XI); In re MTBE Prods. Liab. Litig., 739 F. Supp. 2d 576(S.D.N.Y. 2010) (MTBE XII).
5
leakage from gasoline stored in underground tanks, however, MTBE-treated
gasoline was released into the ground, contaminating groundwater supplies. MTBE
causes water to assume a foul smell and taste, and has been identified as an animal
carcinogen and a possible human carcinogen. In 1990, Congress identified MTBE
as one of several additives that gasoline suppliers might use to satisfy new federal
oxygenate requirements set forth in amendments to the Clean Air Act, calling for
the creation of a “reformulated gasoline” program. In 2005, however, Congress
ended that program.
In this suit, the City sought to recover from Exxon for harm caused by the
company’s introduction of gasoline containing MTBE into a system of water wells in
Queens known as the Station Six Wells. Although not currently operative, the City
alleged that the Station Six Wells are a significant component of its overall plan to
deliver potable water to its residents without interruption over many years to come.
Without significant treatment of the water drawn by those wells, the City would be
unable to rely on their eventual use, and it alleged that this inability constituted a
serious and compensable harm under various State tort law and other legal
theories.
Because of the matter’s complexity, the trial proceeded in several phases.
Phase I of the trial addressed whether the City established that it intends in good
faith to use the Station Six Wells as a source of drinking water in the future. The
jury answered that question in the affirmative. In Phase II, the jury was asked
6
whether MTBE will be in the Station Six Wells when those wells begin operating,
and at what peak level MTBE will be found. Again answering in the affirmative,
the jury concluded that the concentration of MTBE will peak at 10 parts per billion
(“ppb”) in 2033.
Phase III addressed questions of liability and damages. In Phase III, the
jury found Exxon liable to the City under New York law for negligence, trespass,
public nuisance, and failure-to-warn; the jury found that Exxon was not liable,
however, on the City’s design-defect and private nuisance claims. The jury then
calculated a gross compensatory award reflecting its assessment of the damage to
the wells caused by MTBE contamination generally. It offset this award by
amounts it attributed to the damage caused by the introduction of MTBE by
companies other than Exxon and by preexisting contamination by other chemicals.
The result was the jury’s finding — and the court’s imposition — of a damages
award of $104.69 million, plus pre-judgment and post-judgment interest, for the
City.
After ruling that, as a matter of law, Exxon’s conduct provided an inadequate
basis for assessing punitive damages in the City’s favor, the District Court did not
permit the City to proceed with a proposed Phase IV, in which the jury would have
addressed that question. The District Court then entered judgment on the claims
submitted to the jury pursuant to Federal Rule of Civil Procedure 54(b), holding in
abeyance any proceedings on the City’s additional claims under the Toxic
7
Substances Control Act, 15 U.S.C. §§ 2601-2692 (creating liability for, inter alia,
failing to inform the EPA of known risks associated with the use of a chemical), and
under New York State Navigation Law § 181(5) (creating liability for oil spillage).
On appeal, Exxon contends that: (1) the City’s claims are preempted by the
Clean Air Act; (2) the City has suffered no cognizable injury; (3) the City’s claims
are not ripe (or, in the alternative, are barred by the statute of limitations); (4) the
City failed to prove injury or causation; (5) the City’s claims fail as a matter of New
York law; and (6) the District Court abused its discretion by failing to declare a
mistrial as a result of alleged juror misconduct. In its cross-appeal, the City
contends that the District Court erred by: (1) declining to allow a punitive damages
phase to proceed; and (2) requiring the jury to offset its gross damages finding by an
amount attributable to preexisting contamination.
For the reasons that follow, we AFFIRM the judgment of the District Court
in its entirety.
I. BACKGROUND
We begin by setting forth in some detail the factual background and
providing an account of the district court proceedings. We then turn to a discussion
of the key legal issues raised by Exxon’s appeal: primarily, preemption, legal
cognizability of injury, ripeness, and sufficiency of the evidence with regard to
injury and causation and as to specific elements of each of the City’s New York state
law tort claims. We next briefly address Exxon’s juror misconduct claim. Finally,
8
we discuss the City’s arguments regarding the jury’s calculation of its damages and
the District Court’s denial of its claim for punitive damages.
Unless otherwise noted, the following facts are either undisputed or are
viewed in the light most favorable to the City. See Tepperwien v. Entergy Nuclear
Operations, Inc., 663 F.3d 556, 561 n.1 (2d Cir. 2011).
A. MTBE and Its Effects
MTBE is an organic chemical compound derived from methanol and
isobutylene. Until the mid-2000s, MTBE was widely used in certain regions of the
United States, including in New York State, as a fuel oxygenate, i.e., an additive
that reduces harmful tailpipe emissions by increasing the octane level in gasoline.
By virtue of its chemical properties, however, spilled MTBE spreads easily into
groundwater supplies. The Environmental Protection Agency (“EPA”) advises:
MTBE is capable of traveling through soil rapidly, is very soluble in
water . . . and is highly resistant to biodegradation . . . . MTBE that
enters groundwater moves at nearly the same velocity as the
groundwater itself. As a result, it often travels farther than other
gasoline constituents, making it more likely to impact public and private
drinking water wells. Due to its affinity for water and its tendency to
form large contamination plumes in groundwater, and because MTBE is
highly resistant to biodegradation and remediation, gasoline releases
with MTBE can be substantially more difficult and costly to remediate
than gasoline releases that do not contain MTBE.
Methyl Tertiary Butyl Ether (MTBE); Advance Notice of Intent to Initiate
Rulemaking Under the Toxic Substances Control Act to Eliminate or Limit the Use
9
of MTBE as a Fuel Additive in Gasoline, 65 Fed. Reg. 16094, 16097 (proposed Mar.
24, 2000) (to be codified at 40 C.F.R. Part 755).
Contamination of groundwater supplies by MTBE is undesirable because
MTBE has a “very unpleasant turpentine-like taste and odor that at low levels of
contamination can render drinking water unacceptable for consumption.” Id.Further, although MTBE has not been classified as a human carcinogen by either
the EPA or the National Toxicology Program, see Testimony of Sandra Mohr (“Mohr
Testimony”), Trial Transcript (“Tr.”) at 3055:7; id. at 3097:5-6, some toxicological
studies “show [that MTBE] can cause [DNA] mutations,” Testimony of Kenneth
Rudo (“Rudo Testimony”), Tr. at 3262:18-19, which “can possibly lead to cancer,” id.
at 3267:22-23. But see Mohr Testimony, Tr. at 3104:20-21 (testifying that “MTBE
is at best a weak mutagen and may not be particularly mutagenic at all”).
New York law limits the concentration of contaminants permitted in drinking
water. See N.Y. Comp. Codes R. & Regs. tit. 10, § 5-1.1 (ap). If the concentration of
a particular contaminant exceeds the relevant “maximum contaminant level”
(“MCL”), the water may not be served to the public. See id. § 5-1.30. From 1989
through December 23, 2003, the MCL for MTBE was 50 ppb.2 N.Y. Comp. Codes R.
& Regs. tit. 10, § 5-1.52 (2002). Effective as of December 24, 2003, the MCL for
MTBE was reduced to 10 ppb. Id. § 5-1.52 (2003).
2
New York’s MCL is denominated in micrograms per liter; this measure is equivalent to
parts per billion. See, e.g., Zane Satterfield, What Does ppm or ppb Mean?, Nat’l Envtl. Servs. Ctr.,
W. Va. Univ., at 1 (2004), http://www.nesc.wvu.edu/ndwc/articles/ot/fa04/q&a.pdf.
10
Effective January 1, 2004, New York State banned the use of MTBE in
gasoline. See N.Y. Agric. & Mkts. Law § 192-g (2000).
B. The Clean Air Act and the Reformulated Gasoline Program
The Clean Air Act, 42 U.S.C. §§ 7401-7671g, first passed in 1955 and
amended in 1965 to impose nationwide emission standards for automobiles,
establishes a comprehensive regulatory scheme to “protect and enhance the quality
of the Nation’s air resources so as to promote the public health and welfare” and
“encourage and assist the development and operation of regional air pollution
prevention and control programs.” 42 U.S.C. § 7401(b). See generally Motor
Vehicle Mfrs. Ass’n of U.S., Inc. v. New York State Dep’t of Envtl. Conservation, 17
F.3d 521, 524-28 (2d Cir. 1994) (tracing development of Clean Air Act).
In 1990, Congress amended the Clean Air Act to establish the Reformulated
Gasoline Program (“RFG Program”). See Pub. L. No. 101-549, § 219, 104 Stat.
2399, 2492-2500 (1990). The RFG Program mandated the use of “reformulated
gasoline” — gasoline enhanced with certain additives — in metropolitan areas with
significant concentrations of ambient ozone. See 42 U.S.C. § 7545(k) (2000). Its
goal was to obtain the “greatest reduction [achievable] in emissions of ozone
forming volatile organic compounds (during the high ozone season) and emissions of
toxic air pollutants (during the entire year).” Id. § 7545(k)(1).
As relevant here, the RFG Program required that reformulated gasoline
consist of at least two percent oxygen by weight. Id. § 7545(k)(2)(B). Refiners and
11
suppliers met this requirement by adding oxygenates such as MTBE to their
gasoline. The Clean Air Act did not mandate the use of any particular oxygenate.
Rather, the EPA identified several additives, including MTBE, that refiners and
suppliers could blend into reformulated gasoline and thereby satisfy the
requirements of the RFG Program.3 See, e.g., 40 C.F.R. § 79.56(e)(4)(ii)(A)(1)(i)
(2000); id. § 80.46(g)(9)(i).
Fifteen years later, in 2005, Congress altered its approach and again
amended the Clean Air Act — this time, to eliminate the oxygenate requirement for
reformulated gasoline. Energy Policy Act of 2005, § 1504, Pub. L. 109-58, 119 Stat.
594, 1076-77 (amending 42 U.S.C. § 7545).
C. The City’s Water-Supply System
The City’s water-supply system provides drinking water to over eight million
customers within City limits, and to one million customers in upstate New York.
Phase III Joint Pretrial Order (“JPTO”) Statement of Undisputed Facts ¶ 41. The
City’s system relies largely upon water that is drawn from three upland reservoir
systems and then transported into the City through a network of aqueducts and
tunnels. Id. ¶¶ 41-43. Major components of the City’s system are aging and in need
of maintenance and repair. Id. ¶ 44.
3
The additives identified by the EPA included ethanol, MTBE, ethyl tertiary butyl ether,
tertiary amyl methyl ether, and diisopropyl ether. See, e.g., 40 C.F.R. § 79.56(e)(4)(ii)(A)(1)(i) (2000);
see also MTBE V, 488 F.3d 112, 126 (2d Cir. 2007).
12
In the late 1980s, an intergovernmental task force organized by the City’s
Mayor (the “Task Force”) assessed the City’s long-term water supply needs and
proposed ways for the City to meet those needs. Id. ¶ 26. Among other things, the
Task Force recommended that the City investigate the feasibility of using
groundwater from the Brooklyn-Queens Aquifer System — a thick layer of
permeable soil and rock beneath Brooklyn and Queens through which groundwater
moves — to supplement the City’s existing surface-water system. Id. ¶ 27. The
investigation led to a report issued in 1999, recommending that the City use local
groundwater for “potable drinking water supply” and that the City treat the
groundwater at several regional treatment facilities, or “well clusters.” Id. ¶¶ 29-
30.
One of those well clusters is in Jamaica, Queens, and is known as Station Six
(the “Station Six Wells”). The quality of the water at those wells is the subject of
this appeal. Purchased by the City in 1996, the Station Six Wells were formerly
managed by the Jamaica Water Supply Company. Most of the Station Six Wells
draw from the shallowest aquifer beneath Queens. Id. ¶¶ 11, 15-16, 76, 93.
The City first detected MTBE in the Station Six Wells in April 2000, when
readings from untreated water drawn from one well showed MTBE concentrations
of 0.73 ppb and readings from another well showed MTBE concentrations of 1.5
ppb. Id. ¶¶ 108, 111. Testing conducted three years later, in January 2003, showed
that MTBE levels had reached 350 ppb in one of the wells. Id. ¶ 109.
13
At no point since acquiring them in 1996 has the City pumped water from
any of the Station Six Wells into its drinking water distribution system. Id. ¶ 79. A
treatment facility there is in the planning stages, but construction has not begun.
D. The City’s Claims
In October 2003, the City sued Exxon and twenty-eight other petroleum
companies, complaining of injuries to its water supply from gasoline containing
MTBE. Over the following year, the City amended its complaint to include twenty-
six additional petroleum company defendants. All defendants except Exxon settled
before trial. The City’s Fourth Amended Complaint (the “Amended Complaint”),
filed March 9, 2007, governed the claims against Exxon tried during the Station Six
bellwether trial.
In the Amended Complaint, the City sought to recover “all costs and damages
. . . that it has incurred, is incurring, and will incur from investigating, cleaning,
detecting, monitoring, preventing, abating, containing, removing, and remediating”
the harm caused by MTBE “to the City’s groundwater well system as a result of
contamination of the soil and/or the aquifer from which these wells draw water.”
Am. Compl. ¶ 1. The City alleged that the petroleum company defendants
“distributed, sold, manufactured, supplied, marketed, and designed MTBE . . . when
they knew or reasonably should have known that MTBE . . . would cause damage to
the groundwater” in and around Jamaica, Queens. Id. ¶ 3. In particular, the City
asserted that the petroleum company defendants knew at relevant times that
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MTBE was highly soluble in groundwater, see id. ¶ 100, that MTBE was highly
prone to spreading widely from a spill point, see id. ¶¶ 88-89, and that underground
gasoline tanks in which reformulated gasoline was stored leaked regularly, see id.
¶¶ 92-94.
The City asserted the following ten causes of action:
• strict liability for defective design of the gasoline, based on the “unreasonably
dangerous and foreseeable risk to groundwater” posed by MTBE, id. ¶ 131;
• strict liability for failure-to-warn, based on defendants’ “strict duty to warn
against latent dangers resulting from foreseeable uses of [MTBE] that
[d]efendants knew or should have known about,” id. ¶ 136;
• negligence, based on defendants’ breach of their duty “not to place into the
stream of commerce a product that was in a defective condition and . . .
unreasonably dangerous to groundwater resources,” id. ¶ 143;
• civil conspiracy, based on an “industry-wide conspiracy to suppress
information regarding the threat that [MTBE] posed to groundwater
resources,” id. ¶ 150;
• public nuisance, based on “interfere[nce] with and . . . damage to a public or
common resource that endangered public property, health, safety and
comfort,” id. ¶ 161;
• private nuisance, based on “contamination now interfering with the City’s
rights as property owner,” id. ¶ 173;
• trespass, based on the “placement of . . . MTBE on and in property owned by
the City without permission or right of entry,” id. ¶ 177;
• violation of Section 181(5) of the New York State Navigation Law, which
proscribes the “discharge [of] any kind or any form of petroleum, including
wastes or byproducts of petroleum,” id. ¶ 182;
15
• violation of Section 349 of the New York State General Business Law, based
on defendants’ “statements and representations that MTBE was
environmentally safe, when in fact they knew or should have known that
MTBE posed a substantial threat to groundwater resources,” id. ¶ 188; and
• violation of the federal Toxic Substances Control Act, 15 U.S.C. § 2614(3)(B),
based on defendants’ failure to inform the EPA of the risks associated with
MTBE, id. ¶¶ 196-202.
The City sought compensatory damages of $300 million and punitive
damages in an amount to be determined at trial.
E. The Trial
The City’s design-defect, failure-to-warn, negligence, public nuisance, private
nuisance, and trespass claims were tried to a jury beginning in August 2009. The
trial, which lasted for approximately eleven weeks, culminated in a jury verdict
finding Exxon liable on four claims (failure-to-warn, negligence, public nuisance,
and trespass), and acquitting Exxon of liability on two (design-defect and private
nuisance). Portions of the trial proceedings relevant to this appeal are recounted
below.
1. Phase I: Future Use of the Station Six Wells
Phase I addressed a threshold issue: because the City was not using the
Station Six Wells as a source of drinking water at the time of trial (nor is it now),
the jury was asked to determine whether the City intended to use those wells for
that purpose in the future. The District Court’s interrogatories to the jury
instructed that, to recover on any theory, the City had to “prove[ ], by a fair
16
preponderance of the credible evidence, that it intends, in good faith, to begin
construction of the Station 6 facility within the next fifteen (15) years,” and that the
City “intends, in good faith, to use the water from the Station 6 wells, within the
next fifteen (15) to twenty (20) years, either to supply drinking water to its
residents or to serve as a back-up source of drinking water if needed due to
shortages in other sources of supply (or both).” Phase I Interrogatory Sheet.
The City’s Phase I witnesses included James Roberts, the Deputy
Commissioner of the New York City Bureau of Water and Sewer Operations of the
New York City Department of Environmental Protection (“DEP”). Roberts testified
that although the City was not then using the Station Six Wells, it had not
abandoned them. Testimony of James Roberts (“Roberts Testimony”), Tr. at 339:3-
4. To the contrary, Roberts explained, because the wells the City acquired from the
Jamaica Water Supply Company are the “the so[le] source of water that lies within
the [C]ity’s bounds that [the City] controls . . . it’s a no-brainer that [the City] would
want to be able to utilize that resource when and if necessary.” Id. at 340:24 to
341:2. Roberts testified further that the Commissioner of DEP had decided that a
treatment facility would be built at Station Six, id. at 358:12-18, and that the City
was in the early stages of designing the facility, id. at 357:2-13. According to
Roberts, design and construction costs would total approximately $250 million. Id.
at 357:16-19.
17
The jury also heard testimony from Kathryn Garcia, the Assistant
Commissioner for Strategic Projects at DEP. Garcia described Station Six as
“absolutely a priority matter” for the City. Testimony of Kathryn Garcia (“Garcia
Testimony”), Tr. at 436:14. She testified that “Station 6 has always been a decision
that has been made and to my knowledge has never been revisited,” and that she
had “never heard any conversation about . . . maybe we shouldn’t do Station 6.” Id.
at 439:3-7. According to Garcia, the City had yet to construct a treatment facility at
Station Six because “[w]e have been struggling with our capital budget in terms of
having enough money for all of our needs.” Id. at 435:9-10. In 2008 and 2009,
however, the Mayor and City Council approved budgets that included funding for
the project. Id. at 440:5-24.
William Meakin, the former Chief of Dependability and Risk Assessment at
DEP, also testified about the impact of budget issues on Station Six. Meakin
reiterated that the City is “committed to designing and building Station 6.”
Testimony of William Meakin (“Meakin Testimony”), Tr. at 612:6-7. According to
Meakin, the City had yet to do so for only one reason: “money, the funding.” Id. at
612:10.
The City also presented the testimony of Steven Lawitts, the Acting
Commissioner of DEP. Lawitts confirmed that he had approved the design and
construction of a treatment facility at Station Six and that the Mayor and the City
Council had ratified that decision by providing for a facility in the City’s budget.
18
Testimony of Steven Lawitts (“Lawitts Testimony”), Tr. at 680:3-11. Lawitts agreed
that “if the City had the money for Station 6, . . . that project [would] go forward.”
Id. at 681:10-12; see also id. at 683:2-5 (answering “yes” to the question, “From your
perspective as [C]ommissioner, is money the only reason Station 6 hasn’t been built
yet?”). When asked for his view about the importance of Station Six, Lawitts
explained that:
Station 6 will be a critical element in ensuring our ability to continue to
deliver adequate quantities of water, because the Station 6 project will
allow us to tap an additional source of water that we’re not currently
tapping, and provide an additional 10 million gallons per day of treated
drinking water to be able to be distributed throughout the New York City
water system.
Id. at 681:18-24. Lawitts explained that an additional 10 million gallons of water
per day “would be enough water to supply on average about 80,000 people.” Id. at
682:2-3.
At the conclusion of Phase I, the jury found that the City had proven its good
faith intent to begin construction of the Station Six facility within the next fifteen
years. The jury also found that the City intends to use the Station Six Wells within
the next fifteen to twenty years as a back-up (rather than primary) source of
drinking water.
2. Phase II: Peak MTBE Concentration in the Station Six Wells
In Phase II, the jury was asked whether the City had proven “that MTBE
will be in the groundwater of the capture zone of the Station 6 wells when they
19
begin operat[ing]” as a back-up source of drinking water, with “capture zone”
defined as “the groundwater that will be drawn into the Station 6 wells when they
begin operation.” Phase II Interrogatory Sheet. It was also asked “[a]t what peak
level will MTBE be found in the combined outflow of the Station 6 wells, and when
that will occur,” with “combined outflow” defined as “the combination of all the
water from all the wells that goes into the treatment facility.” Id.The City’s principal witness during Phase II was David Terry, a
hydrogeologist who testified about two groundwater models he created to estimate
future levels of MTBE contamination in the Station Six Wells. According to Terry,
hydrogeologists use groundwater models “to understand the flow of groundwater
and how contaminants move through the groundwater system.” Testimony of
David Terry (“Terry Testimony”), Tr. at 1890:18-20. Terry explained that, in
developing a groundwater model,
[y]ou have certain inputs that you use, pumping rates of wells, locations
of contamination sites and inside the computer there’s information sort
of like a road network, but instead it tells about how groundwater flows
under, where the aquifers are, which direction it’s traveling, how fast it
moves. Then [it] can run a certain set of situations we want to
investigate and get out there, such as where the contamination will move
to, what concentration it will be, how long it will last at a certain location.
Id. at 1891:6-14.
The first of Terry’s two models was a “groundwater flow model.” Id. at
1893:22-1895:15. Terry used this model, which was developed by the United States
Geological Survey and shows “where the groundwater flows” and “how fast it
20
moves,” id. at 1893:23-24, to predict the likely size and shape of the Station Six
capture zone, id. at 1895:21-1896:9. He did so by populating the model with a
“proposed pumping scenario” provided by City planners. Id. at 1896:12-20. The
“proposed pumping scenario” included information about the location of various
wells at and near Station Six, their anticipated activation dates, and the
anticipated rates at which they would pump. Id. at 1901:14-20. Terry explained
that in estimating the Station Six capture zone, “[w]e really can’t look at Station 6
by itself because there are other wells near Station 6, and when those wells pump
they affect the water flow direction at the wells near Station 6.” Id. at 1896:16-19.
His testimony also made clear that his prediction of the size and shape of the
Station Six capture zone was based on the City’s proposed pumping scenario, which
could change over time. Id. at 1902-12; 2087:17-21; 2210:8-10.
The second of Terry’s two models was a “transport model.” Terry explained
that a transport model
really rides on top of the flow model. [The transport] model describes how
contaminants move through the groundwater system. So the flow model
is actually describing the flow of groundwater from place to place and the
transport model is sort of describing on top of that how the contamination
moves through the system.
Id. at 1894:17-23. Terry used the transport model to make “numerical projections”
about “how high of a concentration of MTBE will occur at Station 6 in the future,
and how long it will last.” Id. at 2013:2-5. Like his flow model, Terry’s transport
21
model relied upon specific assumptions about proposed pumping scenarios that
could change over time. Id. at 2013:17-21.
Terry used his flow and transport models to perform two different analyses.
His “Analysis 1” was designed to ascertain “future peak concentrations at Station
6.” Id. at 2016:9-10. Relying on actual ground water quality information gathered
in 2004 for sample locations in the vicinity of Station Six, Analysis 1 predicted that
the concentration of MTBE in the combined outflow of the Station Six Wells would
peak at 35 ppb in 2024. Id. at 2067:17-19.
Terry’s “Analysis 2” was designed to determine how long MTBE
contamination at Station Six would last if well usage began in 2016. Id. at 1906:8-
18; 2015:9-11. As part of this analysis, Terry identified twenty-two known gasoline
release sites in the vicinity of Station Six and assumed different release volumes at
each site. Id. at 2073:7-16; 2074:6-8. Analysis 2 predicted that if no more than 50
gallons of gasoline were released at each site, MTBE concentration in the combined
outflow of the Station Six Wells would be undetectable. Pl. Ex. 1682. But if 500
gallons of gasoline were released at each site, MTBE concentration would peak at
approximately 6 ppb and last through at least 2040. Id. And if 2,000 gallons of
gasoline were released at each site, MTBE concentration would peak at
approximately 23 ppb and also last through at least 2040. Pl. Ex. 14862. Terry
opined that the 2,000-gallon release scenario was “relatively conservative,” Terry
22
Testimony, Tr. at 2075:19-20, but “probably the most realistic of [the] scenarios,” id.
at 2075:6-8.
Exxon had no affirmative burden to establish an alternative measure of
MTBE contamination at Station Six, and it did not proffer a competing model. It
did, however, present the testimony of an expert who concluded that Terry’s models
were “fatal[lly] flaw[ed],” Testimony of Thomas Maguire (“Maguire Testimony”), Tr.
at 2432:20-22, and that the methods Terry employed were “scientifically [in]valid,”
id. at 2444:2-5.
At the conclusion of Phase II, the jury found that the City had proven that
“MTBE will be in the groundwater of the capture zone of the Station 6 wells when
they begin operation.” Phase II Interrogatory Sheet. The jury found further that
the concentration of MTBE in the combined outflow of the Station Six Wells will
peak at 10 ppb in 2033. Id.
3. Phase III: Liability and Statute of Limitations
Phase III dealt with liability and statute of limitations issues. As to liability,
the jury was asked (1) whether the City “is, or will be, injured by the MTBE that
will be in the combined outflow of the Station 6 wells”; (2) whether Exxon “was a
cause of the City’s injury” as either a “direct spiller” of MTBE gasoline or a
“manufacturer, refiner, supplier, or seller” of MTBE gasoline; (3) whether Exxon
was liable on the City’s design-defect, failure-to-warn, trespass, private nuisance,
public nuisance, and negligence claims; and (4) what amount of compensatory
23
damages should be awarded to the City. Phase III Interrogatory Sheet. As to the
statute of limitations, the jury was asked whether Exxon had proven “that the City
did not bring its claims in a timely manner.” Id.a. Injury
The jury was instructed that, in determining whether the City is or will be
injured by MTBE contamination at Station Six, the “question is whether the [C]ity
has proven by a fair preponderance of the credible evidence that a reasonable water
provider in the [C]ity’s position would treat the water to reduce the levels or
minimize the effects of the MTBE in the combined outflow of the Station 6 wells in
order to use that water as a back-up source of drinking water.” Tr. at 6604:5-10.
In support of its claim that a reasonable water provider in its position would
treat the water in the Station Six Wells, the City presented a number of witnesses,
including Dr. Kathleen Burns, who testified about the toxicological characteristics
of MTBE. In Dr. Burns’s opinion, MTBE “is an animal carcinogen,” “a probable
human carcinogen,” and “a probable human mutagen.” Testimony of Kathleen
Burns (“Burns Testimony”), Tr. at 2809:10-22. Describing mutagenicity, Dr. Burns
advised, “It only takes one molecule . . . of MTBE interacting with DNA[ ] to start to
initiate the sequence that will give us an abnormal reproducing cell line and
ultimately lead to cancer.” Id. at 2829:12-14.
Similarly, Dr. Kenneth Rudo, a toxicologist, testified that MTBE is both
“mutagenic” and a “probable human carcinogen.” Testimony of Kenneth Rudo
24
(“Rudo Testimony”), Tr. at 3265:23-3266:2. As a mutagen, MTBE can change the
way human DNA is expressed. Id. at 3266:3-18. According to Dr. Rudo, at even the
lowest levels of exposure in drinking water, MTBE can cause mutations that lead to
cancer. Id. at 3267:21-24.
The City also presented expert testimony about the taste and odor
characteristics of MTBE. Harry Lawless, a professor in Cornell University’s food
science department, testified about his review of the scientific literature regarding
the proportion of the population that is sensitive to the taste and smell of MTBE in
drinking water at various concentration levels. Testimony of Harry Lawless
(“Lawless Testimony”), Tr. at 2888:20-25. Based on his review, Lawless opined that
50 percent of the population would detect MTBE in drinking water at 14 to 15 ppb;
25 percent of the population would detect MTBE in drinking water at 3 to 4 ppb;
and 10 percent of the population would detect MTBE in drinking water at 1 to 2
ppb. Id. at 2889:18-22. Lawless also testified that “if [he] was in a consumer
products company and 10 percent of the population noticed a change in the product,
that would be a problem.” Id. at 2890:3-5.
In addition, the City called Steven Schindler, Director of Water Quality for
the City’s Bureau of Water Supply, whose responsibilities include monitoring the
City’s water supply for quality issues and investigating consumer complaints
relating to water quality. Testimony of Steven Schindler (“Schindler Testimony”),
Tr. at 2927:19-22; id. at 2938:17-20. Schindler testified that
25
consumers “expect[ ] their water to be relatively free of taste and odor” and that
“there is a very close link between how the water tastes and smells [and] public
confidence.” Id. at 2942:13-19. According to Schindler, if “10 percent of the
population . . . detect[ed] taste and odor in their water. . . that’s going to undermine
ultimately the public con[fidence] in our water supply.” Id. at 2943:9-13.
For its part, Exxon presented the testimony of Dr. Sandra Mohr, who
disputed Drs. Burns’s and Rudo’s account of MTBE’s effects on human health. Dr.
Mohr testified that neither the EPA nor the National Toxicology Program has
classified MTBE as a human carcinogen. Mohr Testimony, Tr. at 3055:7; id. at
3097:5-6. According to Dr. Mohr, “[t]here is no human data that MTBE is a
carcinogen, and there is very limited animal data.” Id. at 3055:14-15. Indeed, in
Dr. Mohr’s opinion, “MTBE is not carcinogenic in humans.” Id. at 3087:1; see also
id. at 3056:3 (“I don’t think that it’s a carcinogen at all.”). As for MTBE’s mutagenic
properties, Dr. Mohr testified that the scientific literature shows “that MTBE is at
best a weak mutagen and may not be particularly mutagenic at all.” Id. at 3104:20-
21.
b. Causation
The City advanced three theories of causation, each of which was tied to its
theories of liability. First, it alleged that Exxon caused damage to the City as a
“direct spiller” of gasoline containing MTBE. In this vein, the City asserted that
Exxon owned or controlled underground storage tank systems at six gasoline
26
stations in Queens, and that MTBE leaked from these tanks into the groundwater.
Tr. at 6605:1-8. The jury was instructed that it should find that Exxon was a cause
of the City’s injury as a “direct spiller” if the City showed by a preponderance of the
evidence that (1) “[a]t the time that [Exxon] owned or controlled some or all of these
underground storage systems, they leaked gasoline containing MTBE” and (2)
“these leaks caused or will cause an injury to the [C]ity’s Station 6 wells.” Id. at
6605:8-15. The jury was also instructed that “[a]n act or omission is regarded as a
cause of an injury if it is a substantial factor in bringing about the injury; that is, if
it has such an effect in producing the injury that reasonable people would regard it
as a cause of the injury.” Id.Second, the City alleged that Exxon caused damage to the Station Six water
supply as a “manufacturer, refiner, supplier, or seller” of gasoline containing
MTBE. Under this theory, Exxon could be held liable for manufacturing, refining,
supplying, or selling MTBE-treated gasoline that leaked or spilled from service
stations not owned or controlled by Exxon. Thus, the jury was instructed that it
should find that Exxon was a cause of the City’s injury as a “manufacturer, refiner,
supplier or seller” of MTBE gasoline if the City showed by a preponderance of the
evidence that Exxon’s “conduct in manufacturing, refining, supplying or selling
gasoline containing MTBE was a substantial factor in causing the [C]ity’s injury.”4
4
None of the parties have objected to this formulation, which varied from time to time in the
district court proceedings, but which we take to address Exxon’s liability as wholesale “seller” of
MTBE-treated gasoline, as distinct from its liability for direct spills occurring as a retail “seller.”
27
Id. at 6606:2-11. The jury was further instructed that, “[i]n making this decision,
you should consider how much, if any, of the gasoline containing MTBE that was
delivered to the locations that are the sources of the MTBE that injured or will
injure the Station 6 wells came from gasoline containing MTBE that was
manufactured, refined, supplied or sold by [Exxon].” Id. at 6606:12-17. And it was
informed that, in deciding whether Exxon’s conduct was a significant factor in
bringing about the City’s injury, it could “consider as circumstantial evidence
[Exxon’s] percentage share of the retail and/or supply market for gasoline
containing MTBE in Queens or [in] any other region that [it] determine[d] is
relevant.” Id. at 6606:17-20.
Third, the City alleged that Exxon could be liable as a “contributor” to the
City’s injury pursuant to an alternative theory — known as the “commingled
product theory” or “manufacturer or refiner contribution” — developed by the
District Court for purposes of the underlying MDL. Pursuant to this theory, which
the jury would consider only if it rejected the City’s other two theories of liability:
when a plaintiff can prove that certain gaseous or liquid products (e.g.,
gasoline, liquid propane, alcohol) of many refiners and manufacturers
were present in a completely commingled or blended state at the time and
place that the harm or risk of harm occurred, and the commingled
product caused plaintiff’s injury, each refiner or manufacturer is deemed
to have caused the harm. A defendant [can] exculpate itself by proving
that its product was not present at the relevant time or in the relevant
place, and therefore could not be part of the commingled or blended
product.5
5
MTBE VII, 644 F. Supp. 2d at 314 (internal quotation marks omitted).
28
Thus, the District Court instructed that jury that it “will find that [Exxon]
contributed to the [C]ity’s injury in its capacity as a manufacturer or refiner” if the
City showed by a preponderance of the evidence that:
[1] the MTBE that injured or will injure the [C]ity comes from many
refiners and manufacturers, whether because the gasoline from any
source is co-mingled at the source and includes [Exxon] MTBE product,
or because the MTBE product in the ground came from multiple sources[ ]
[o]ne of which is an [Exxon] source and is now co-mingled in the
groundwater; [2] that the combined co-mingled MTBE product of many
refiners and manufacturers injured or will injure the [C]ity; and [3] that
when the co-mingled MTBE product injured or will injure the [C]ity, it
included or will include some MTBE from gasoline containing MTBE that
was manufactured or refined by [Exxon].
Id. at 6607:15-6608:6.
c. Damages
The jury was instructed that if it found Exxon liable on any of the City’s
causes of action, “then [it] must award the [C]ity sufficient damages to compensate
the [C]ity for losses caused by [Exxon’s] conduct.” Tr. at 6634:20-22. This damages
determination took place in four stages. First, the jury was instructed to determine
the “sum of money that compensates [the City] for all actual losses the [C]ity
proves, by a fair preponderance of the credible evidence, that it has sustained, or
will sustain in the future, as a result of MTBE in the Station 6 wells.” Id. at
6635:8-13. Next, in view of Exxon’s contention that the water in the Station Six
capture zone was also polluted with non-MTBE contaminants such as
29
perchloroethylene,6 the jury was instructed to reduce the City’s damage award by
any amount attributable to the “cost of treating [the] other contaminants [at Station
Six] in isolation.” Id. at 6637:11-15. Next, the jury was provided a list of the
petroleum companies that had settled with the City prior to trial and instructed to
“decide the percentage of the total fault borne by these other companies as
compared to [Exxon’s] fault.”7 Id. at 6638:1-4. Finally, the jury was asked to
determine whether “the [C]ity was negligent in its use of gasoline containing MTBE
and, if so, whether the [C]ity’s negligent conduct was a substantial factor in causing
its own injury.” Id. at 6638:17-20. If the jury found that the City’s negligence was a
substantial factor in causing its own injury, then it was instructed to “apportion the
fault between the [C]ity, [Exxon], and any other companies [it found] liable.” Id. at
6639:7-10.
In an effort to quantify its damages, the City called Marnie Bell, a
groundwater treatment expert who testified about the cost of treating the MTBE at
Station Six. Bell explained that it is “standard engineering practice to design a
treatment system to treat the water to below an MCL” because “[d]esigning a
treatment system to treat the water to just below an MCL would place a water
6
Perchloroethylene (also known as “PCE,” “perc,” or tetrachloroethylene) is a solvent used in
the dry cleaning and textile processing industries. When the City purchased the Station Six Wells,
they were contaminated with PCE. Historically, the concentration of PCE in the Station Six Wells
has exceeded the MCL for PCE, rendering the water non-potable.
7
It appears as though, in proving the percentage of fault attributable to the settling
defendants, Exxon relied principally on evidence of each defendant’s share of the New York gasoline
market during the relevant period.
30
utility at risk for violating the MCL and possibly delivering contaminated water to
its customers.” Testimony of Marnie Bell (“Bell Testimony”), Tr. at 5881:14-18. In
addition, Bell explained, New York State “require[s] that treatment systems for the
removal of organic contamination [such as MTBE] be designed to remove the
contaminant to the lowest practical level.” Id. at 5881:19-22.
Bell identified two “proven and reliable technologies” for removing MTBE
from groundwater: granular-activated carbon (“GAC”) and air-stripping.8 Id. at
5861:5-7. She estimated that, assuming the concentration of MTBE at Station Six
peaked at 10 ppb, as the jury concluded during Phase II, building and operating a
GAC facility would cost approximately $250 million in 2009 dollars, id. at 5886:9-
10, while building and operating an air-stripping facility would cost approximately
$127 million in 2009 dollars, id. at 5896:5-8. According to Bell, however, “[t]here
are a number of factors that may make [air-stripping] less desirable,” including
noise and the size of the necessary equipment. Id. at 6044:4-9.
In arriving at her estimates, Bell projected the costs of a treatment facility
over a forty-year timeframe because “Terry’s modeling . . . showed MTBE
concentration sustaining at significant levels out to 2040. And we projected those
trends outwards to try and identify the entire timeframe in which Station 6 would
need to provide MTBE treatment.” Id. at 5885:16-20. In addition, Bell testified
8
GAC is a type of charcoal the “extreme[ ] poro[sity]” of which “allows it to remove certain
types of contaminants from water.” Id. at 5861:15-19. Air-stripping is a process that uses blowing
air to remove contaminants from water. Id. at 5921:21-22.
31
that, although she understood Station Six would be used as a back-up source of
drinking water (as the jury concluded during Phase I), the “only reasonable
assumption to make [in projecting the cost of a treatment facility] was that the
facility would need to operate continuously.” Id. at 5886:21-22. As Bell explained,
“[t]he [C]ity has a number of planned repairs on its tunnels and aqueducts. There
is the potential for a failure of that supply. And when the system needs to operate,
it needs to operate continuously for as long as it is needed.”9 Id. at 5886:22-5887:1.
d. Statute of Limitations
The jury was also asked to consider Exxon’s contention that the City had
failed to bring its claims within the applicable three-year statute of limitations.10
As to this issue, the jury was instructed that Exxon bore the burden of showing by a
preponderance of the evidence that, at some time before October 31, 2000, i.e., more
than three years before the City filed suit, (1) “there was a sufficient level of MTBE
in the capture zone of the Station 6 wells such that if the wells were turned on, the
level of MTBE in the combined outflow of the Station 6 wells would have injured
the [C]ity at that time,” and (2) “the [C]ity knew at that time or reasonably should
have known that there was a sufficient level of MTBE in the capture zone of the
Station 6 wells . . . to cause an injury.” Tr. at 6631:16-6632:2.
9
Bell also testified that if one of the less-contaminated wells at Station Six were taken
offline, the concentration of MTBE in the combined outflow of the remaining wells would reach 15
ppb. Bell Testimony, Tr. at 5860:10-20.
10
New York law imposes a three-year statute of limitations for toxic tort actions. N.Y.
C.P.L.R. 214-c(2).
32
In support of its contention that the City’s claims were time-barred, Exxon
relied principally on the testimony of William Yulinsky, the Director of
Environmental Health and Safety in DEP’s Bureau of Waste Water Treatment.
Yulinsky testified that, as early as September 1999, he received a memorandum
from a City consultant who noted that, “considering that numerous potential
sources of MTBE exist within [one] mile of Station 6, the need to treat for MTBE
should be anticipated, particularly in conjunction with the high concentrations of
PCE reported nearby.” Testimony of William Yulinsky (“Yulinsky Testimony”), Tr.
at 5781:24-5782:8. Yulinsky also testified that by August 2000, the City was
“looking at station modifications for Station 6 to treat a variety of things,” including
MTBE. Id. at 5768:1-9. Yulinsky explained, however, that in 1999 and 2000 “it
was way too soon to determine what we were going to need to treat for.” Id. at
5772:6-8.
e. Phase III Jury Verdict
At the close of Phase III, the jury found that the City “is, or will be injured”
by the MTBE that will be in the combined outflow of the Station Six Wells. Phase
III Interrogatory Sheet. It also found that Exxon was a cause of the City’s injury as
both a direct spiller of gasoline containing MTBE and as a manufacturer, refiner, or
seller of such gasoline. Id. In view of these findings, it did not consider whether
Exxon could be held liable as a “contributor” to the City’s injury pursuant to a
“commingled product theory” of liability. Id. As for the City’s substantive claims,
33
the jury found that the City had proven Exxon’s liability for failure-to-warn,
trespass, public nuisance, and negligence, but not design-defect or private nuisance.
Id.
After concluding that Exxon had failed to prove that the City’s claims were
untimely, the jury turned to the question of damages. Id. First, the jury concluded
that the City would be fairly and reasonably compensated by an award of $250.5
million. Id. Next, it determined that the cost associated with reducing levels of
non-MTBE contaminants in the Station Six Wells was $70 million. Id. Finally, it
attributed 42 percent of the fault for the City’s injury to petroleum companies other
than Exxon. Id. The jury’s final award to the City was therefore $104.69 million.
F. Punitive Damages
As previously noted, the City also sought punitive damages based on Exxon’s
allegedly reckless disregard of the risks and dangers inherent in supplying gasoline
containing MTBE. In support of its claim for punitive damages, the City pointed to
certain evidence it had adduced during Phase III, as well as other evidence it
proffered and intended to adduce during a punitive-damages phase of the trial. The
City’s evidence fell into six general categories.11
11
The summary provided here is drawn from the District Court’s discussion of the evidence
presented during Phase III and proffered for the punitive phase, see MTBE X, 2009 WL 3347214, at
*1-3, as well as from the City’s letter brief in support of a punitive phase, see Letter of Victor M.
Sher, Oct. 8, 2009.
34
The first category of evidence pertained to Exxon’s knowledge of the effect of
MTBE on the taste and odor of drinking water. The City argued that its evidence
raised an inference that Exxon knew, as early as the mid-1980s, that the presence
of MTBE might render water undrinkable. For example, Robert Scala, former
director of the Research and Environmental Health Division at Exxon, testified that
in 1984 he drafted a paper for Exxon and the American Petroleum Institute in
which he raised concerns about the taste and odor of MTBE and other gasoline-
associated compounds, and that others at Exxon shared his concerns. Testimony of
Robert Scala (“Scala Testimony”), Tr. at 3239:11-3239:20. The City also pointed to
an internal memorandum prepared by Exxon employee Barbara Mickelson in 1984,
in which Mickelson concluded that “low, non-hazardous, analytically non-detectable
levels of MTBE continue to be a source of odor and taste complaints in affected
drinking water.” Pl. Ex. 272. In addition, the City cited a memorandum prepared
by Exxon employee Jack Spell in 1984, in which Spell described to his Exxon
supervisors a Shell Oil report concluding that “approximately 5 parts per billion (in
water) is the lower level of detectability” for MTBE. Pl. Ex. 5506.
The second category of evidence pertained to Exxon’s knowledge of the health
effects of MTBE. Although the parties disagree about the impact of MTBE on
human health, the City presented evidence that, construed in its favor, raised an
inference that as early as the 1980s, Exxon knew that MTBE posed potential health
risks. For example, the City cited a memorandum Spell forwarded to his Exxon
35
supervisors in early 1987, which advised that “MTBE has been identified as a
health concern at the state and federal level when it is a contaminate [sic] in either
ground water or air.” Pl. Ex. 5506. The City also highlighted a slideshow prepared
by Exxon in 1995, in which Exxon stated that its strategy was to “continue to
monitor data on MTBE in groundwater” and to participate in ongoing studies of
MTBE’s toxicity. Pl. Ex. 477. In addition, the City introduced a 1999 Exxon study
that observed, “With uncertain human health and environmental potential effects,
public concerns about the need for control or elimination of MTBE in gasoline has
accelerated.” Pl. Ex. 580.
The third category of evidence pertained to Exxon’s knowledge of the
difficulties of remediating MTBE spills. For example, in the same 1984
memorandum in which she remarked upon MTBE’s taste and odor characteristics,
Barbara Mickelson also noted that “MTBE, when dissolved in ground water, will
migrate farther than BTX [another petrochemical] before soil attenuation processes
stop the migration.” Pl. Ex. 272. In a memorandum prepared the following year,
Mickelson explained that “the inclusion of MTBE in Exxon gasoline is of concern as
an incremental environmental risk” in part because “MTBE has a much higher
aqueous solubility than other soluble gasoline components,” “MTBE has a higher
differential transport rate than other soluble gasoline components,” and “MTBE . . .
cannot be removed from solution to below detectable levels by carbon adsorption
and must be treated by more complicated and expensive air stripping columns.” Pl.
36
Ex. 292. Based on these considerations, in the 1985 memorandum Mickelson
“recommend[ed] that from an environmental risk point of view[,] MTBE not be
considered as an additive to Exxon gasolines on a blanket basis throughout the
United States.” Id.The fourth category of evidence pertained to Exxon’s knowledge that its own
underground storage tanks leaked gasoline. For example, in a 1984 memorandum
to his supervisors, Jack Spell identified a series of “ethical and environmental
concerns that are not too well defined at this point,” including the “possible leakage
of SS [service station] tanks into underground water systems of a gasoline
component that is soluble in water to a much greater extent.” Pl. Ex. 247.
Similarly, Barbara Mickelson noted in another 1984 memorandum that Exxon had
“62 ground water clean up activities underway.” Pl. Ex. 271. The following year, in
a memorandum in which she “reviewed the environmental risks from retail service
station underground storage systems associated with the addition of MTBE,”
Mickelson noted that MTBE’s elevated aqueous solubility “can be a factor in
instances where underground storage tanks develop a leak which ultimately may
find its way to the underground aquifer.” Pl. Ex. 283. For his part, Robert Scala
testified that he was aware by the 1980s that Exxon had begun to replace
underground storage tanks “[p]resumably because they either leaked or had a
potential to leak.” Scala Testimony, Tr. at 3229:5-8; see also Pl. Ex. 228
(Underground Tank Failure Report 1982 Year-End Summary); Pl. Ex. 782
37
(Underground Tank Program). These tank problems extended well into the 1990s.
In March 1998, for example, Exxon prepared a slide show in which it noted that
“268 UST [underground storage tank] system releases occurred between 1993-
1996.” Pl. Ex. 1026. The slides reflect both Exxon’s belief that future MTBE
releases were likely through tank failure, and that the company had plans and
training in place to minimize the risk of releases.
The fifth category of evidence pertained to Exxon’s knowledge of MTBE
contamination in New York. On this score, the City offered a 1998 survey,
completed by Exxon employee Mike Meola, of MTBE contamination levels at
potable and monitor wells near 98 retail sites in the state. Pl. Ex. 3074. The
survey showed average MTBE concentrations of 50,000 to 100,000 ppb, with peak
concentrations reaching 1,000,000 ppb in some monitor wells. Id. The survey did
not suggest, however, that Exxon understood precisely how MTBE contamination
would affect groundwater located some distance away from a leaking tank. Indeed,
a 1987 Exxon memorandum introduced by the City suggests that at that time
Exxon theorized that MTBE’s “apparent faster migration . . . is mitigated by the
rapid dilution of the material and its faster disappearance from a site.” Pl. Ex.
2636. Nor did the City present evidence suggesting that, before 1998, Exxon knew
that MTBE contamination in New York State occurred at significant levels.
The final category of evidence pertained to Exxon’s candor about its
knowledge regarding MTBE. The City presented disputed evidence that, construed
38
in the City’s favor, suggested Exxon hid its knowledge of MTBE’s deleterious
characteristics from regulators, gas station owners and operators, and others. For
example, when asked in deposition whether Exxon informed independent station
owners that its gasoline contained MTBE, Robert Larkins, the Exxon executive who
approved MTBE’s use in the mid-1980s, responded that Exxon “didn’t uninform
them.” Deposition of Robert P. Larkins, 467:23-468:04, Mar. 6, 2008 (emphasis
added). The City also offered evidence suggesting that Exxon minimized MTBE’s
dangers in public statements. For example, in 1987, the Oxygenated Fuels
Association’s MTBE Committee, acting on behalf of Exxon and others, told the EPA
that “there is no evidence that MTBE poses any significant risk of harm to health or
the environment.” Pl. Ex. 5507.
At the close of Phase III of the trial, Exxon moved to preclude the jury from
considering an award of punitive damages, arguing that the City’s evidence was
insufficient as a matter of law to establish the requisite degree of malice,
recklessness, or wantonness. The District Court granted Exxon’s motion, reasoning
that the City had not shown that Exxon’s conduct “created either significant actual
harm or a substantial risk of severe harm to the Station Six wells.”12
G. Juror Misconduct
During the jury’s Phase III deliberations, the District Court received a
telephone call from Juror No. 2, who reported that Juror No. 1 had “cursed,”
12
See MTBE X, 2009 WL 3347214, at *8.
39
“insulted,” and threatened to “cut” her. Tr. at 6994:10-13. Juror No. 2 also reported
that “[e]verybody is afraid of” Juror No. 1 and “[n]obody is willing to stand up to
her.” Id. at 6995:1-2. The next day, Exxon moved to excuse Juror No. 1 from
further service, and requested that the District Court ask the remaining jurors
whether, in Juror No. 1’s absence, they felt “they [could] reach a decision based on
their own views, own conscientious views, rather than on threats, coercion or
duress.” Id. at 6992:11-22.
After observing that Juror No. 1 “has been a worrisome juror for a long time”
and suggesting that “she is the juror whose voice we can hear through the doors as
being loud and being abusive,” the District Court proceeded to ask each juror
individually whether he or she felt able to deliberate without fear of duress or
threat. Id. at 6993:1-7. After several jurors denied feeling threatened and
responded unequivocally that they could reach their own verdicts, the District Court
stated that it had “occurred” to the court “that Juror No. 2 is very fragile and that
rather than excusing Juror No. 1, it might be Juror No. 2 has an overblown view of
what’s occurring,” recalling a prior occasion when Juror No. 2 had cried in court. Id.
at 7007:13-24. The District Court then questioned Juror No. 2, who stated, “I can’t
make my own decision.” Id. at 7011:2.
After completing the interviews, the District Court concluded that it was
“absolutely confident that nobody feels threatened other than Juror No. 2, [who]
says she no longer feels she can reach her own verdict[,] [s]o it strikes me that she
40
ought to be excused.” Id. at 7013:2-5. Counsel for Exxon agreed that “if [Juror No.
2] cannot go forward, then she needs to be excused,” id. at 7013:24-25, but moved
for the dismissal of Juror No. 1 “for threatening [Juror No. 2] with physical
violence,” id. at 7014:3-4. The District Court denied the motion, expressing its view
that the “violence”
may partly be in [Juror No. 2’s] mind. There were ten people deliberating
and nobody felt threatened at all. I watched their demeanor. They
seemed calm. They seemed reasonable. They really thought it was, you
know, just almost surprising that I was talking to them. I sensed no
concern on any other juror’s part.
Id. at 7014:5-10; see also id. at 7015:15-17 (“If there had been a threat of violence,
somebody else would have reported it. Nobody did.”).
At defense counsel’s request, the District Court then agreed to re-interview
Juror No. 2 so that the contents of the previous night’s telephone call could be
placed on the record. During this second interview, Juror No. 2 recounted that the
previous day the other members of the jury “said I was stupid, I can’t form my own
opinion because it doesn’t match the rest of them. And I feel — I feel that I’m not
safe.” Id. at 7017:9-12. She also stated that she had been “threatened to be cut”
earlier in the week, and “threatened with a fork” one to two weeks earlier. Id. at
7017:17-7018:21.
After formally dismissing Juror No. 2, the District Court summoned the other
jurors for a “talk about civility” during which it instructed them to “[m]ake every
attempt . . . to reach a verdict, and to do so without . . . shouting, without cursing,
41
without any threatening, if that has happened, and I can’t know that, I wasn’t
there.” Id. at 7020:11-7022:9. After the jury resumed its deliberations, counsel for
Exxon moved for a mistrial “based on the further developing facts that in fact there
wasn’t a threat of violence but an actual instrument was used in the jury room, at
least in the mind of [Juror No. 2].” Id. at 7022:14-17. The District Court denied the
motion. Defense counsel then observed that the court had never asked Juror No. 1
if she had in fact threatened violence, to which the District Court responded, “That’s
true. [Juror No. 1] is going to deny that. People usually don’t admit to crimes.” Id.
at 7023:2-3.
H. Post-Trial Motions
Following the conclusion of Phase III, Exxon moved for judgment as a matter
of law and in the alternative for a new trial or remittitur. The District Court denied
the motion.13 As relevant here, the District Court held that the City’s claims were
not preempted and were ripe for adjudication; that the City’s claimed injury was
legally cognizable; that the jury’s verdicts as to injury and damages were supported
by sufficient evidence; that it was not unreasonable for the jury to reject Exxon’s
statute of limitations defense; and that the incident of alleged juror misconduct did
not warrant a new trial. Exxon renews these arguments on appeal, and we turn to
them now.
13
See MTBE XII, 739 F. Supp. 2d at 614.
42
II. DISCUSSION
A. Preemption
Exxon contends that, in light of the jury’s verdict in its favor with regard to
the City’s design-defect claim, the City’s remaining state law tort claims conflict
with and are therefore preempted by the Reformulated Gasoline Program
established by the Clean Air Act Amendments of 1990 (the “RFG Program” or the
“1990 Amendments”). Its argument proceeds in three main parts. First, Exxon
emphasizes that federal law required it to add an oxygenate to its gasoline. Second,
Exxon proposes that the jury’s rejection of the City’s strict liability, design-defect
claim amounts to an affirmative finding that no safer, feasible alternative to MTBE
existed as a means to comply with the RFG Program. Finally, because adding
MTBE to its gasoline was, Exxon argues, the “safest feasible means” of complying
with the federal oxygenate requirement, the jury’s $104.6 million verdict
impermissibly penalized the company for merely following federal law, and runs
contrary to the Congressional purpose and objective of the 1990 Amendments to
improve air quality while remaining sensitive to costs.
We are not persuaded. In the Clean Air Act Amendments of 1990, Congress
did not require Exxon to use MTBE in its gasoline. The jury’s rejection of the City’s
design-defect claim in this litigation is not equivalent to an affirmative finding that
MTBE was the safest feasible oxygenate — much less that MTBE was the only
available oxygenate. But even if Exxon had no safer, feasible alternative to MTBE
43
as a means of complying with the RFG Program’s oxygenate requirement, the jury
did not impose liability solely because of Exxon’s use of MTBE in its gasoline.
Rather, to hold Exxon liable on every claim other than design-defect, the jury was
required to find not only that the company used MTBE, but that it engaged in
additional tortious conduct, such as failing to exercise ordinary care in preventing
and cleaning up gasoline spills. For these reasons, and as detailed further below,
we reject Exxon’s argument that the jury’s verdict conflicts with and is therefore
preempted by the Clean Air Act Amendments of 1990.
1. Federal Preemption of State Law
We review a district court’s preemption analysis de novo. N.Y. SMSA Ltd.
P’ship v. Town of Clarkstown, 612 F.3d 97, 103 (2d Cir. 2010).
The Supremacy Clause of the United States Constitution provides that
federal law “shall be the supreme Law of the Land; and the Judges in every State
shall be bound thereby, any Thing in the Constitution or Laws of any State to the
Contrary notwithstanding.” U.S. Const. art. VI, cl. 2. From this constitutional
principle, it follows that “Congress has the power to preempt state law.” Arizona v.
United States, 132 S. Ct. 2492, 2500 (2012). In every preemption case, accordingly,
we ask whether Congress intended to exercise this important and sensitive power:
“the purpose of Congress is the ultimate touchstone.” Wyeth v. Levine, 555 U.S.
555, 565 (2009) (internal quotation marks omitted).
44
The Supremacy Clause and our federal system contemplate, of course, a vital
underlying system of state law, notwithstanding the periodic superposition of
federal statutory law. Thus, as the Supreme Court has repeatedly instructed, “in
all pre-emption cases . . . we start with the assumption that the historic police
powers of the States were not to be superseded by the Federal Act unless that was
the clear and manifest purpose of Congress.” Id. (internal quotation marks and
alterations omitted). In light of this assumption, the party asserting that federal
law preempts state law bears the burden of establishing preemption. See id. at 569;
Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255 (1984). Imposing state tort law
liability for negligence, trespass, public nuisance, and failure-to-warn — as the jury
did here — falls well within the state’s historic powers to protect the health, safety,
and property rights of its citizens. In this case, therefore, the presumption that
Congress did not intend to preempt state law tort verdicts is particularly strong.
See, e.g., U.S. Smokeless Tobacco Mfg. Co. v. City of N.Y., 708 F.3d 428, 432-33 (2d
Cir. 2013).
The Supreme Court has recognized three typical settings in which courts will
find that Congress intended to preempt state law. First, when Congress expressly
provides that a federal statute overrides state law, courts will find state law
preempted if, applying standard tools of statutory construction, the challenged state
law falls within the scope of Congress’s intent to preempt. See, e.g., Medtronic, Inc.
v. Lohr, 518 U.S. 470, 484 (1996). Second, when Congress legislates so
45
comprehensively in one area as to “occupy the field,” we may infer from the federal
legislation that Congress intended to preempt state law in that entire subject area.
Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372 (2000) (internal quotation
marks omitted). Third, when neither of the first two categories applies but state
law directly conflicts with the structure and purpose of a federal statute, we may
conclude that Congress intended to preempt the state law. In the latter case, we
will find a conflict with preemptive effect only in two circumstances: first, when
“compliance with both federal and state regulations is a physical impossibility,” and
second, when the state law “stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress.” Arizona, 132 S. Ct. at
2501 (internal quotation marks omitted).
The parties agree that the Clean Air Act and its 1990 Amendments contain
no explicit preemption directive expressing a Congressional intent to override
state tort law, and Exxon does not argue that Congress intended to occupy any field
relevant here.14 Rather, Exxon relies on the third form of preemption analysis —
conflict preemption — to sustain its preemption argument. Accordingly, we address
the two branches of conflict preemption in turn.
14
The Clean Air Act (apart from the now-repealed 1990 Amendments) does speak to related
state law in one subsection, which provides (with certain exceptions) that “no State (or political
subdivision thereof) may prescribe or attempt to enforce, for purposes of motor vehicle emission
control, any control or prohibition respecting any characteristic or component of a fuel or fuel
additive in a motor vehicle or motor vehicle engine.” 42 U.S.C. § 7545(c)(4)(A). Exxon does not argue
that this provision has any bearing on this case; nor do we see it as relevant to our analysis.
46
2. Conflict Preemption: the Impossibility Branch
The Supreme Court has adopted various formulations of the “impossibility”
branch of conflict preemption. In an early expression of the doctrine, the Court
endorsed a narrow view: that federal law will preempt state law on this theory only
when “compliance with both federal and state regulations is a physical
impossibility.” Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43
(1963). In recent years, the Court has applied a more expansive analysis and found
“impossibility” when “state law penalizes what federal law requires,” Geier v.
American Honda Motor Co., 529 U.S. 861, 873 (2000), or when state law claims
“directly conflict” with federal law, American Telephone & Telegraph Co. v. Central
Office Telephone, Inc., 524 U.S. 214, 227 (1998) (“AT&T”). See generally Wyeth,
555 U.S. at 589-90 (Thomas, J., concurring) (tracing the Court’s use of the
impossibility doctrine). Even understood expansively, “[i]mpossibility preemption is
a demanding defense,” Wyeth, 555 U.S. at 573, and we will not easily find a conflict
that overcomes the presumption against preemption.
Exxon argues that the 1990 Amendments effectively required it to use
MTBE, yet the jury’s verdict in effect prohibits the use of MTBE and consequently
subjects Exxon to requirements with which it is impossible to comply. This
argument is unavailing. State law here neither “penalizes what federal law
requires” nor “directly conflicts” with federal law.
47
As an initial matter, the 1990 Amendments did not require, either expressly
or implicitly, that Exxon use MTBE. Although the 1990 Amendments required that
gasoline in certain geographic areas contain a minimum level of oxygen, see 42
U.S.C. § 7545(k)(2)(B) (2000), they did not prescribe a means by which
manufacturers were to comply with this requirement. The EPA identified MTBE as
one additive that could be used to “certify” gasoline, see MTBE V, 488 F.3d at 114,
but certification of a fuel meant only that it satisfied certain conditions in reducing
air pollution, see 42 U.S.C. § 7545(k)(4)(B). Neither the statute nor the regulations
required Exxon to use MTBE, rather than other oxygenates, such as ethanol, in its
gasoline.15
Conceding, as it must, that federal law did not explicitly mandate its use of
MTBE, Exxon contends that, as a practical matter, it had no choice but to use
MTBE to comply with the federal oxygenate requirement, because MTBE was in
fact the “safest, feasible” oxygenate available to satisfy its federal obligation.
Appellants’ Br. at 27. In support, it relies on the jury’s rejection of the City’s
design-defect claim.
15
This case is therefore distinguishable from Geier, 529 U.S. at 865, on which Exxon relies.
In Geier, the Court concluded that federal motor vehicle safety standards preempted a tort suit
against a car manufacturer based on the car’s lack of a driver’s side airbag. The federal regulation
there at issue “deliberately provided the manufacturer with a range of choices among different
passive restraint devices.” Id. at 875. Here, the choice of oxygenate options is a means towards
improving air quality, and the existence of the choice itself is not critical to furthering that goal. See
Williamson v. Mazda Motor of America, Inc., 131 S. Ct. 1131, 1137 (2011) (“[U]nlike Geier, we do not
believe here that choice is a significant regulatory objective.”).
48
a. The Import of the Jury’s Finding on the City’s Design-
Defect Claim
As noted above, the City’s design-defect theory was that Exxon bore strict
liability for the City’s damages because of the “unreasonably dangerous and
foreseeable risk to groundwater” posed by Exxon’s treatment of its gasoline with
MTBE. Am. Compl. ¶ 131. Thus, the jury was asked the following on a special
verdict form: “Has the City proven, by a fair preponderance of the credible evidence,
that there was a safer, feasible alternative design at the time [Exxon’s] gasoline
containing MTBE was marketed?” Phase III Interrogatory Sheet. The jury
responded by checking the box labeled, “No.” Id. Exxon would have us construe
this finding as an affirmative determination that the company could not comply
with federal law without using MTBE. This argument is flawed for two reasons.
First, Exxon commits a logical fallacy in assuming that the jury’s rejection of
the City’s design-defect claim amounted to an affirmative finding that MTBE was
the safest, feasible oxygenate. To prevail on its design-defect claim, the City bore
the burden of proving, by a preponderance of the evidence, the existence of a safer,
feasible alternative to MTBE. In rejecting the City’s claim, the jury found only that
the evidence was not sufficient to meet the City’s burden. It did not also find,
affirmatively, that MTBE was the safest feasible oxygenate available to satisfy the
federal oxygenate requirement.16
16
Indeed, had neither party introduced any evidence regarding oxygenates other than
MTBE, the jury would have had no choice but to arrive at the same verdict. Carried to its logical
49
Second, the standard for establishing the absence of a “safer, feasible design”
and thereby defeating strict liability in tort is different from, and less demanding
than, the standard for establishing impossibility preemption. The District Court
instructed the jury that in evaluating the City’s design-defect claim, it was to
consider “the risks, usefulness, and costs of the alternative design as compared to
the product the defendant did market.” Tr. at 6611:23-6612:2. This instruction
correctly stated New York law, which requires jurors to consider the costs of
alternative designs when assessing a products liability claim. See, e.g., Cover v.
Cohen, 61 N.Y.2d 261, 266-67 (1984) (holding that liability in a design-defect case
requires a balancing of “the product’s risks against its utility and costs and against
the risks, utility and cost of the alternatives”); Lancaster Silo & Block Co. v.
Northern Propane Gas Co., 427 N.Y.S.2d 1009, 1014 (4th Dep’t 1980) (“In a design
defect case the court is concerned with the balancing of the alternative designs
available against the existing risk while taking into account the cost of the proposed
alternative.”).
The standard for establishing impossibility preemption is different. See
Wyeth, 555 U.S. at 573. The party urging preemption must do more than show that
state law precludes its use of the most cost-effective and practical means of
complying with federal law — it must show that federal and state laws “directly
conclusion, Exxon’s argument implies that even in such a case — that is, even in the total absence of
evidence one way or the other — a jury verdict against the City on this count would be equivalent to
an affirmative finding that in fact there was no safer, feasible alternative to MTBE. This cannot be
so. The jury’s verdict simply does not stretch that far.
50
conflict.” AT&T, 524 U.S. at 227. If there was any available alternative for
complying with both federal and state law — even if that alternative was not the
most practical and cost-effective — there is no impossibility preemption. Thus, the
District Court correctly held that “[i]mpossibility does not depend on whether
events in the physical world would have made it difficult to comply with both
standards, but on whether the two standards are expressly incompatible.”17 The
jury’s rejection of the City’s design-defect claim, without more, does not satisfy the
impossibility standard for conflict preemption.
Exxon responds that it could have met the heightened impossibility standard
had the jury been properly instructed. The company sought the following
instruction: “If you find that [Exxon] has shown, by a preponderance of the credible
evidence, that ethanol was not a safer or feasible alternative to MTBE at the time
that [Exxon] was deciding what oxygenate to use to comply with the federal Clean
Air Act Amendments, then you will find that the City’s defective design product
liability claim is preempted by federal law and that the City cannot recover on that
claim against [Exxon].” Supp. App. 82. The District Court declined to give this
instruction, citing its concerns about explaining the concept of preemption to the
jury. The court also noted that preemption was partially a legal issue, and
concluded that the design-defect interrogatory — which asked whether the City had
17
MTBE III, 457 F. Supp. 2d at 335.
51
proven the existence of a safer, feasible alternative — would resolve any relevant
factual questions.
Exxon was not entitled to its proposed instruction because that instruction
misstated the law. See PRL USA Holdings, Inc. v. U.S. Polo Ass’n, Inc., 520 F.3d
109, 117 (2d Cir. 2008). The proposed instruction borrowed the “safer or feasible
alternative” language from the design-defect instruction. But, as we have
explained, the design-defect standard — which required the jury to balance the
costs and utility of alternative designs as they compared to MTBE — is different
from the standard for impossibility preemption.18
b. Considering Ethanol as a Possible Alternative to MTBE
To meet its burden with respect to the impossibility branch of conflict
preemption, Exxon needed to demonstrate that it could not comply with the federal
oxygenate requirement by using a compound other than MTBE. At trial, the City
argued that Exxon could have used ethanol to comply with federal law. On appeal,
Exxon offers three reasons to support its position that it could not have used
ethanol in its gasoline: the supply of ethanol was insufficient; suppliers could not
18
Exxon also argues that the District Court “flip-flop[ped],” by initially agreeing that
preemption was a question of fact, but then reversing course once the jury found in Exxon’s favor on
the design-defect claim. We do not read the transcript of the charging conference in this way.
Nowhere did the District Court suggest that a jury finding of “no safer, feasible alternative” would
establish preemption. Quite the contrary: the court was justifiably skeptical that “feasibility” was
the appropriate standard to establish a conflict sufficient to find that state law was preempted.
Similarly, the District Court reasonably questioned the significance (for preemption purposes) of a
jury finding that Exxon had “no safer, feasible alternative.” See Tr. at 5513:7-9 (explaining that, by
asking the jury whether the City has proven the existence of a safer, feasible alternative, Exxon “will
have at least preserved the factual finding of this jury, for what it is worth”); id. at 5515:9-11 (“[M]y
leaning is to have the fact issue preserved, not the legal issue, so to speak.”).
52
ship ethanol through pipelines; and ethanol-containing gasoline could not be mixed
with other manufacturers’ MTBE-containing gasoline. Even when viewed in the
light most favorable to Exxon, however, the evidence adduced at trial was
insufficient to support these proffered reasons for finding impossibility preemption.
First, Exxon’s expert conceded that the supply of ethanol could adjust to meet
increased demand. O’Brien Testimony, Tr. at 4467:4-13, 4484:7-10. Second, he
testified that ethanol could be transported using trains, trucks, or barges, and that,
at the time of trial, producers were using trains to ship ethanol across the country.
Id. at 4458:19-24, 4484:22-25. Another Exxon witness testified that in early 1995,
the company began using ethanol to meet its Clean Air Act obligations at gas
stations in the Midwest; until that time, the company had been using MTBE in that
region.19 Testimony of Raymond McGraw (“McGraw Testimony”), Tr. at 4799:14-23.
Finally, although Exxon points to no part of the record in which it offered evidence
quantifying the costs of using ethanol, the City introduced evidence regarding a
1993 study performed by an industry trade group, at the behest of the federal
government, to determine the cost of using ethanol as an oxygenate. The study
concluded that using ethanol instead of MTBE during the relevant time period
would increase the cost of manufacturing gasoline by 6.2 cents per gallon; a similar
study by the EPA put the cost at 1.9 cents per gallon, and the City’s expert
19
In addition, since New York banned MTBE in 2004, Exxon has used ethanol rather than
MTBE in the state. Eizemberg Testimony, Tr. at 5624:16-5625:24.
53
estimated the cost as 3.5 cents per gallon.20 Tallett Testimony, Tr. at 4274:13-18;
id. at 4275:15-4276:2; id. at 4276:16-4277:3.
One can imagine a case in which a state law imposes such enormous costs on
a party that compliance with a related federal mandate is effectively impossible.
But this is not such a case. At most, the evidence adduced at trial showed that
using ethanol instead of MTBE would have increased Exxon’s production costs to an
extent that was far from prohibitive.21 Exxon has not shown that economic and
logistical hurdles rendered compliance with the federal mandate by using ethanol
instead of MTBE impossible for the purposes of preemption analysis.22
3. Conflict Preemption: the Obstacle Branch
The second branch of conflict preemption — the obstacle analysis — is in play
when state law is asserted to “stand[ ] as an obstacle to the accomplishment and
20
The City’s expert also testified that the “national average cost of the type of gasoline which
was supplied into the Northeast in 1995” was $1.22 per gallon. Tallett Testimony, Tr. at 4274.
21
The Supreme Court’s recent decision in Mutual Pharmaceutical Co. v. Bartlett, 133 S.Ct.
2466 (2013), is therefore distinguishable. In that case, the Court held that the plaintiff’s New
Hampshire-law design-defect claim against a drug manufacturer was preempted by federal laws that
prohibited the manufacturer from modifying the chemical composition or labeling of the allegedly
defective drug. In so holding, the Court rejected the notion that the drug manufacturer could avoid
the impossibility of complying with both federal and state law “by simply leaving the market” for the
drug at issue. Id. at 2478. In this case, by contrast, we specifically conclude that Exxon could have
used compounds other than MTBE to oxygenate its gasoline in compliance with federal law. Exxon
thus was not required to leave the relevant market in order to comply with both federal and state
law.
22
Of course, as we have already noted and as we explain further in the text, Exxon incurred
tort liability not for the mere use of MTBE, but because it engaged in additional tortious conduct,
such as failing to exercise reasonable care in storing gasoline at service stations it owned or
controlled. The jury’s verdict is not equivalent to a state law prohibition on the use of MTBE.
54
execution of the full purposes and objectives of Congress.” Arizona v. United States,
132 S. Ct. 2492, 2505 (2012) (internal quotation marks omitted).
Obstacle analysis — which appears to us only an intermediate step down the
road to impossibility preemption — precludes state law that poses an “actual
conflict” with the overriding federal purpose and objective. Mary Jo C. v. N.Y. State
& Local Ret. Sys., 707 F.3d 144, 162 (2d Cir. 2013). Obstacle analysis has been
utilized when federal and state laws said to conflict are products of unrelated
statutory regimes. What constitutes a “sufficient obstacle” is “a matter of judgment,
to be informed by examining the federal statute as a whole and identifying its
purpose and intended effects.” Id. (internal quotation marks omitted). As with the
impossibility branch of conflict preemption, “the purpose of Congress is the ultimate
touchstone,” Wyeth, 555 U.S. at 565 (internal quotation marks omitted), and “the
conflict between state law and federal policy must be a sharp one,” Marsh v.
Rosenbloom, 499 F.3d 165, 178 (2d Cir. 2007) (internal quotation marks omitted).
A showing that the federal and state laws serve different purposes cuts against a
finding of obstacle preemption. See id. at 180 (“On a fundamental level, [the federal
law] and [state law] serve different purposes, reinforcing our conclusion that they do
not actually conflict.”).
The burden of establishing obstacle preemption, like that of impossibility
preemption, is heavy: “[t]he mere fact of ‘tension’ between federal and state law is
generally not enough to establish an obstacle supporting preemption, particularly
55
when the state law involves the exercise of traditional police power.” Madeira v.
Affordable Hous. Found., Inc., 469 F.3d 219, 241 (2d Cir. 2006). Indeed, federal law
does not preempt state law under obstacle preemption analysis unless “the
repugnance or conflict is so direct and positive that the two acts cannot be
reconciled or consistently stand together.” Id. (internal quotation marks omitted
and emphasis added).
To determine whether a state law (or tort judgment) poses an obstacle to
accomplishing a Congressional objective, we must first ascertain those objectives as
they relate to the federal law at issue. The Supreme Court’s decision in Wyeth is
instructive in this regard. In holding that FDA approval of a prescription drug’s
label did not preempt a failure-to-warn claim asserted under state law, the Court
relied in large part on the legislative history of the relevant federal law. The Court
noted, for instance, that Congress declined to enact an express preemption provision
for prescription drugs, although it had enacted such a provision for medical devices
in the same statute. The Court also explained that it was appropriate to give “some
weight to an agency’s views about the impact of tort law on federal objectives when
the subject matter is technical and the relevant history and background are
complex and extensive.” 555 U.S. at 576 (internal quotation marks and alteration
omitted).
The purpose of the 1990 Amendments was to achieve a “significant reduction
in carbon monoxide levels.” S. Rep. No. 101-228, at 3503 (1989). Exxon agrees but
56
asserts that “Congress made clear that feasibility mattered,” and that the 1990
Amendments sought to reduce air pollution without imposing economic burdens on
gasoline manufacturers. Appellants’ Br. at 29. Through its verdict, Exxon argues,
the jury effectively concluded that Exxon should have used ethanol rather than
MTBE.23 But ethanol was costly. By — in effect — mandating its use
retrospectively, the State (speaking through the jury’s verdict) has imposed
substantial financial burdens on Exxon, a result that conflicts with Congress’s
purpose in passing the Amendments. Ergo, the jury’s verdict under state tort law is
preempted by the 1990 Amendments to the Clean Air Act.
In support of its argument, Exxon cites two statutory provisions reflective of
Congressional concern about the costs of complying with the Amendments. First,
Exxon emphasizes that, in the statute, Congress instructed the EPA to take “into
consideration the cost of achieving . . . emissions reductions” when drafting
regulations under the Clean Air Act Amendments at issue in this case. 42 U.S.C.
§ 7545(k)(1) (2000). Immediately following this language, however, Congress also
instructed the EPA to consider “any nonair-quality and other air-quality related
health and environmental impacts.” Id. At the heart of the City’s suit is the claim
that Exxon’s use of MTBE caused adverse “health and environmental impacts” on
the City. That Congress instructed the EPA to take into account “nonair-quality”
23
The record does not appear to demonstrate why Exxon could not have used any of the
other additives identified in the RFG Program Amendments, but the parties do not dispute that
ethanol was the primary available alternative to MTBE as an oxygenate.
57
effects on the environment suggests a Congressional intent to permit — not
preempt — suits like this one.
Second, Exxon cites a provision of the Amendments that authorized the EPA
to waive the oxygenate requirement if the Administrator determined it would be
“technically infeasible” to manufacture gasoline that also met the emission
standard for a different pollutant, oxides of nitrogen, or “NOx.”24 42 U.S.C.
§ 7545(k)(2)(A) (2000). But, as already described, Exxon has not shown that use of
an oxygenate other than MTBE would have been “technically infeasible” as opposed
to simply somewhat more expensive. And in any event, Exxon offers nothing to
suggest that by using the phrase “technically infeasible,” Congress really meant
“more expensive.”
We also note that in 1999, the EPA concluded that a Nevada proposal
effectively banning MTBE did not conflict with the Clean Air Act. See EPA,
24
The provision to which Exxon cites reads in full as follows:
(A) NOx emissions
The emissions of oxides of nitrogen (NOx) from baseline vehicles when using the
reformulated gasoline shall be no greater than the level of such emissions from
such vehicles when using baseline gasoline. If the Administrator determines
that compliance with the limitation on emissions of oxides of nitrogen under the
preceding sentence is technically infeasible, considering the other requirements
applicable under this subsection to such gasoline, the Administrator may, as
appropriate to ensure compliance with this subparagraph, adjust (or waive
entirely), any other requirements of this paragraph (including the oxygen
content requirement contained in subparagraph (B)) or any requirements
applicable under paragraph (3)(A).
42 U.S.C. § 7545(k)(2)(A) (2000) (emphases added).
58
Approval and Promulgation of Implementation Plans; Nevada State
Implementation Plan Revision, Clark County, 64 Fed. Reg. 29573, 29578-79 (June
2, 1999). Additionally, in the Energy Policy Act of 2005, Pub. L. No. 109-58, 119
Stat. 594 (codified at 42 U.S.C. § 13389), Congress considered including a safe
harbor provision that would have immunized MTBE producers and distributors
from state tort liability, but ultimately chose not to do so. See 149 Cong. Rec.
S15212 (daily ed. Nov. 20, 2003) (statement of Sen. Dianne Feinstein); 151 Cong.
Rec. H6949 (daily ed. July 28, 2005) (statement of Rep. Bart Stupak) (“I am happy
that the ‘safe harbor’ provisions for manufacturers of MTBE that were in the House
bill were dropped.”). Of course, neither of these actions necessarily reflects the
intent of Congress as a whole when it amended the Clean Air Act in 1990. But this
evidence provides further circumstantial support for our conclusion that Exxon has
not established Congressional objectives sufficiently at odds with state law to
require that state law be set aside under the doctrine of conflict preemption. See
Wyeth, 555 U.S. at 567, 576-77 (considering subsequent federal legislative history,
as well as the relevant agency’s views, in analyzing whether state law was subject
to conflict preemption). In sum, although these legislative materials demonstrate
that Congress was sensitive to the magnitude of the economic burdens it might be
imposing by virtue of the Reformulated Gasoline Program and perhaps sought to
limit them, they hardly establish that Congress had a “clear and manifest intent” to
preempt state tort judgments that might be premised on the use of one approved
59
oxygenate over a slightly more expensive one. Madeira, 469 F.3d at 249 (internal
quotation marks omitted).
4. Tortious Conduct Beyond Mere Use of MTBE
Even were we to accept Exxon’s argument that the 1990 Amendments
preclude imposition of a post hoc state law penalty based on its use of MTBE, the
judgment of the District Court would not be preempted because the jury’s verdict
did not rest solely on the company’s use of MTBE in its gasoline. Rather, all of the
City’s successful claims required the jury to find that Exxon both used MTBE and
committed related tortious acts, such as failing to exercise reasonable care when
storing gasoline that contained MTBE. We agree with the City that “Exxon could
have complied with federal and state law by using MTBE without engaging in
tortious acts.” Appellees’ Br. at 38.
As we have observed, the jury considered six claims: direct-spiller negligence,
failure-to-warn, trespass, public nuisance, private nuisance, and design-defect. Five
of these claims (all but design-defect) required the jury to find that Exxon engaged
in additional tortious conduct; as to these claims, the mere use of MTBE would not
have caused the company to incur liability. See Tr. at 6629:18-20 (direct-spiller
negligence); id. at 6615:18-24 (failure-to-warn); id. at 6618:7-11 (trespass); id. at
6628:5-9 (public nuisance); id. at 6621:5-6 (private nuisance).25
25
Only on the remaining claim, design-defect, could Exxon have been held liable solely for
its use of MTBE. But the jury found that Exxon was not liable under a design-defect theory.
60
Tellingly, Exxon adopted this view earlier in the litigation. Indeed, the
company’s proposed jury instructions stated that if the jury found that “ethanol was
not a safer or feasible alternative to MTBE,” then it “will find that the City’s
defective design product liability claim is preempted by federal law and that the
City cannot recover on that claim against [Exxon].” Deferred Joint Supp. App. at 82
(emphasis added). And Exxon initially argued to the District Court that “Congress
and EPA preempted only in the narrow area of fuel design, while preserving
participation in the federal administrative process and state remedies against those
who spill gasoline.”26 Although Exxon has since reversed course, we think the
company had it right the first time.
For these reasons, we affirm the District Court’s determination that the
claims on which the jury returned a verdict for the City are not preempted by
federal law.
B. Legal Cognizability of Injury
Exxon contends that, as a matter of law, the presence of MTBE at levels
below the MCL cannot constitute cognizable injury. According to Exxon, because
the jury found at the conclusion of Phase II that MTBE concentrations in the
Station Six outflows will peak at 10 ppb — a level equal to the current MCL — the
26
MTBE V, 488 F.3d at 135 (quoting Opp’n to Remand 29).
61
City has not been injured.27 It is not entirely clear whether Exxon’s argument is
that the City therefore lacks standing or that the City therefore fails to state a
claim under New York law. Framed either way, however, we find the argument
unpersuasive.
To pursue a claim in federal court, a plaintiff must satisfy the requirements
of constitutional standing, a principle established by the “case or controversy”
requirement of Article III of our Constitution. See Lujan v. Defenders of Wildlife,
504 U.S. 555, 560 (1992). Constitutional standing makes three demands: First,
“the plaintiff must have suffered an ‘injury in fact.’” Id. Second, “there must be a
causal connection between the injury and the conduct” of which the plaintiff
complains. Id. And third, “it must be likely, as opposed to merely speculative, that
the injury will be redressed by a favorable decision.” Id. at 561 (internal quotation
marks omitted). These demands “function[ ] to ensure, among other things, that the
scarce resources of the federal courts are devoted to those disputes in which the
parties have a concrete stake.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.
(TOC), Inc., 528 U.S. 167, 191 (2000).
The injury-in-fact requirement is satisfied when the plaintiff has suffered “an
invasion of a legally protected interest, which is (a) concrete and particularized and
(b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560
27
The jury’s 10 ppb finding in Phase II informed its conclusion in Phase III that a reasonable
water provider in the City’s position would remediate the MTBE contamination at Station Six.
62
(internal footnote, citations, and quotation marks omitted). As our prior opinions
have explained, however, “[t]he injury-in-fact necessary for standing need not be
large[;] an identifiable trifle will suffice.” LaFleur v. Whitman, 300 F.3d 256, 270
(2d Cir. 2002) (internal quotation marks omitted).
Standing is “the threshold question in every federal case.” Disability
Advocates, Inc. v. N.Y. Coalition for Quality Assisted Living, Inc., 675 F.3d 149, 156
(2d Cir. 2012) (internal quotation marks omitted). Once this threshold is crossed, a
plaintiff must still establish the elements of its causes of action to proceed with its
case. Cf. Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006) (“[A]n
injury-in-fact need not be capable of sustaining a valid cause of action under
applicable tort law.”). To prevail on most of its claims, the City was required to
show that it suffered an injury actionable under New York law. See Atkins v. Glens
Falls City Sch. Dist., 53 N.Y.2d 325, 333 (1981) (noting that injury is an element of
a negligence claim); Copart Indus. v. Consolidated Edison Co. of N.Y., 41 N.Y.2d
564, 568-70 (1977) (same as to public nuisance claim); Howard v. Poseidon Pools,
Inc., 72 N.Y.2d 972, 974 (1988) (same as to failure-to-warn claim); cf. Hill v.
Raziano, 880 N.Y.S.2d 173, 175 (2d Dep’t 2009) (noting that “nominal damages are
presumed from a trespass even where the property owner has suffered no actual
injury”).
Whether a plaintiff has standing to sue is a question of law, and accordingly
we review the District Court’s ruling de novo. Disability Advocates, 675 F.3d at
63
156. Whether contamination at levels below the applicable MCL is actionable
under New York law also presents a question of law accorded de novo review. See
Ins. Co. of N. America v. Pub. Serv. Mut. Ins. Co., 609 F.3d 122, 127 (2d Cir. 2010).
1. Standing
Before trial, the District Court concluded that the City had standing to bring
its claims even if the alleged contamination did not exceed the MCL. The court
reasoned that, “while the MCL may serve as a convenient guidepost in determining
that a particular level of contamination has likely caused an injury, the MCL does
not define whether an injury has occurred.”28
We agree with the District Court that, for standing purposes, the MCL does
not define whether injury has occurred. It strikes us as illogical to conclude that a
water provider suffers no injury-in-fact — and therefore cannot bring suit — until
pollution becomes “so severe that it would be illegal to serve the water to the
public.” Appellees’ Br. at 54. This is especially so in view of a New York water
provider’s statutory duty and commonsense obligation to protect or remediate
groundwater before contamination reaches the applicable MCL. See 10 N.Y. Comp.
Codes R. & Regs. tit. 10 § 5-1.12(a) (requiring water suppliers to take certain
remedial actions after determining that one or more MCLs “are or may be exceeded”
or that “any deleterious changes in raw water quality have occurred” (emphases
28
MTBE IV, 458 F. Supp. 2d at 158.
64
added)); see also id. at § 5-1.71(a) (requiring water suppliers to exercise “due care
and diligence in the maintenance and supervision of all sources of the public water
systems to prevent, so far as possible, their pollution and depletion”). We decline to
hold that the MCL constitutes a bar beneath which a water provider can never
suffer injury-in-fact.
That the MCL does not define whether a water provider has suffered injury
for standing purposes is confirmed by the City’s identification of several specific,
deleterious effects of MTBE at below-MCL levels. For example, the City offered
testimony from a toxicologist, who opined that “even at the lowest levels of exposure
. . . in drinking water,” MTBE is a mutagen “that can cause a mutation which can
possibly lead to cancer.” Rudo Testimony, Tr. at 3267:21-24. It also offered
testimony from a taste and odor expert, who opined that “25 percent of the
population would detect [MTBE] at 3 to 4 parts per billion, and that 10 percent of
the population would detect it down at 1 or 2 parts per billion.” Lawless Testimony,
Tr. at 2889:20-22. And it presented testimony from the City’s Director of Water
Quality, who noted that “the public [is] accustomed to receiving water that is . . .
free of taste,” and that, if it served water at MTBE levels as low as 1 or 2 ppb, the
City would be adversely affected by consumer complaints from the “10 percent of
the population that can detect taste and odor in their water” at those levels, thereby
undermining public confidence in the City’s water supply. Schindler Testimony, Tr.
at 2943:9-13.
65
Our conclusion as to the proper lens through which to view the MCL as it
relates to the question of standing finds further support in LaFleur v. Whitman,
300 F.3d 256 (2d Cir. 2002), where we held that a plaintiff may suffer injury-in-fact
from air pollution that falls below federal regulatory pollution thresholds. In
LaFleur, a private plaintiff brought suit under the Clean Air Act, seeking review of
the EPA’s decision not to object to the state’s issuance of an operating permit to a
facility that converted municipal waste and sewage sludge into ethanol and carbon
dioxide. Id. at 259. The facility operator challenged plaintiff’s standing on the
ground that “the ambient level of the regulated air pollutant to be released by the
facility . . . would be well below” the applicable regulatory standards. Id. at 269.
We rejected the challenge, concluding that the plaintiff, who worked in an adjacent
shopping center and was likely to be exposed to the facility’s emissions, had
sufficiently alleged an injury-in-fact. Id. at 270. This was so, we held, “even if the
ambient level of air pollution does not exceed” the relevant regulatory standards.
Id. at 271.
The standing cases cited by Exxon neither bind nor persuade us. For
example, Exxon cites City of Greenville, Ill. v. Syngenta Crop Protection, Inc., 756
F. Supp. 2d 1001 (S.D. Ill. 2010), for the proposition that “the city’s claimed
remediation costs did not establish standing because they were unnecessary to meet
the city’s statutory obligation to provide clean water.” Appellants’ Br. at 44. But
Exxon’s gloss on City of Greenville is inaccurate. In fact, the City of Greenville
66
court held that “a water provider may demonstrate an injury in fact even if its
finished water does not exceed an MCL if its use of the water to meet its statutory
obligations to the public [to provide clean water] becomes more costly because of a
defendant’s conduct.” 756 F. Supp. 2d at 1007 (expressing “agree[ment]” with
MTBE IV). As the City of Greenville court aptly explained, “it seems an extremely
bad rule to require a public water supplier to provide overly contaminated water to
the public before it can seek redress from one responsible for the contamination.”
Id. Although the court later mused that it might be difficult to establish injury
where the cost to remediate drinking water is not tied to a “specific, imminent
threat of [contamination] in excess of the MCL,” it did not establish the bar that
Exxon urges us to adopt. Id. at 1008.
Exxon’s reliance on Iberville Parish Waterworks District No. 3 v. Novartis
Crop Protection, Inc., 45 F. Supp. 2d 934 (S.D. Ala. 1999), is also unavailing. In
Iberville, two public water providers sued a producer of herbicide for contamination
allegedly caused by the herbicide’s chemical component, atrazine. Id. at 936. In
finding that the public water providers lacked constitutional standing, the Iberville
court asserted that “[b]ecause both [water providers] are in compliance with [the
applicable] drinking water standards, it cannot be said that either has suffered any
actual invasion of a legally protected interest.” Id. at 941-42. But this conclusion
was unsupported by any discussion or analysis, so we find it unpersuasive. Indeed,
it is doubly unpersuasive in view of the factual differences between that case and
67
this one. Although the plaintiffs in Iberville sought recovery for costs associated
with monitoring and remediating atrazine contamination, the evidence showed that
a significant proportion of those costs were unrelated to the alleged contamination.
Id. at 939-42. For example, one of the plaintiffs had installed a filtration system,
not to remove atrazine, but rather “to improve the taste and clarity of [the] water
and, in [so] doing, to maintain [its] competitive edge over bottled water
manufacturers.” Id. at 941. Here, by contrast, the costs incurred and projected by
the City to treat the water at Station Six are directly related to MTBE
contamination.
2. Injury As a Matter of New York Law
Of course, to recover on most of its state-law claims, the City was required to
do more than establish standing — it was required to show, among other things,
that it suffered actual injury as a matter of New York tort law. See Atkins, 53
N.Y.2d at 333 (negligence); Copart Indus., 41 N.Y.2d at 568-70 (public nuisance);
Howard, 72 N.Y.2d at 974 (failure-to-warn); cf. Hill, 880 N.Y.S.2d at 174 (no injury
requirement for trespass claim). To the extent Exxon argues that New York law (as
distinguished from the doctrine of constitutional standing) bars recovery where the
alleged contamination does not exceed the MCL, that argument, too, fails.
We agree with the District Court that, in determining whether the City had
established injury as a matter of New York law, the relevant question for the jury
was whether “a reasonable water provider in the [C]ity’s position would treat the
68
water to reduce the levels or minimize the effects of the MTBE in the combined
outflow of the Station 6 wells in order to use that water as a back-up source of
drinking water.” Tr. at 6604:5-10. This standard strikes a proper balance. On the
one hand, it recognizes that “even clear, good-tasting water contains dozens of
contaminants at low levels,” and therefore demands more than de minimis
contamination before a water provider may establish injury.29 The standard
requires that plaintiffs adduce evidence demonstrating that the contamination rose
to a level requiring treatment for various reasons pertaining both to the City’s
general water supply needs and the specific water well in question. On the other
hand, it recognizes that, as the City showed at trial, a public water provider may be
injured by contamination at levels below the applicable MCL.
Several New York state-court decisions in the lead-paint context support this
conclusion by holding that whether a plaintiff has suffered injury from
contamination at levels below an applicable regulatory threshold is a question of
fact for the jury. In Cunningham v. Spitz, 630 N.Y.S.2d 341, 341 (2d Dep’t 1995),
for example, the court found “triable issues of fact as to whether the plaintiff . . .
was injured as a result of his exposure to lead, notwithstanding the fact that his
29
MTBE VI, 2007 WL 1601491, at *6 (“On its journey through the water cycle as rain,
surface water, and groundwater in an aquifer, water collects many contaminants of various types:
bacteria, parasites, heavy metals, organic compounds (including MTBE), inorganic compounds, and
even radioactive substances. This water is eventually pumped from a well to a treatment facility,
where many of these contaminants are removed or reduced in concentration before the water is
pumped to a consumer’s home.”).
69
blood-lead level did not fall within scientifically accepted definitions of lead
poisoning.” Likewise, in Singer v. Morris Avenue Equities, 895 N.Y.S.2d 629, 631
(N.Y. Sup. Ct. Jan. 5, 2010), the court rejected the contention that the plaintiff had
not been injured as a matter of law where her blood-lead level was lower than the
level defined by the New York City Health Code as constituting lead poisoning.30
See also Peri v. City of New York, 798 N.Y.S.2d 332, 339-40 (N.Y. Sup. Ct. Mar. 28,
2005) (same), aff’d, 843 N.Y.S.2d 618 (1st Dep’t 2007), aff’d, 11 N.Y.3d 756 (2008).
Here, too, it was for the jury to determine whether for New York law purposes the
City had been injured by MTBE contamination.
The state-law injury cases to which Exxon cites do not alter our conclusion.
For example, in City of Moses Lake v. United States, 430 F. Supp. 2d 1164 (E.D.
Wash. 2006), the court granted summary judgment to defendants on tort claims
arising out of their alleged contamination of Moses Lake’s drinking wells with the
chemical trichloroethylene. Id. at 1167. In holding that, under Washington law,
Moses Lake had not been injured, the court observed that the contamination giving
rise to suit fell below the applicable MCL. Id. at 1185. But in Moses Lake, the
MCL served as simply one factor in the court’s analysis. The court also noted that
30
We reject Exxon’s suggestion that Cunningham and its progeny are no longer good law in
New York. The two cases upon which Exxon relies for this proposition — Santiago v. New York City
Board of Health, 779 N.Y.S.2d 474 (1st Dep’t 2004), and Arce v. New York City Housing Authority,
696 N.Y.S.2d 67 (2d Dep’t 1999) — do not overrule Cunningham. The Santiago court never dealt
with the merits of the claim presented there, and instead dismissed it on res judicata grounds. 779
N.Y.S.2d at 476. And in Arce, the court set aside a verdict where the record contained no reliable
evidence showing that plaintiff’s blood-lead level was actually elevated at all. 696 N.Y.S.2d at 68-69.
70
the level of trichloroethylene in the affected aquifers was “imperceptible to human
senses” and that Moses Lake “continue[d] to supply drinking water via its [allegedly
affected] wells.” Id. at 1184. In addition, Moses Lake failed to adduce “any
evidence of an actual existing danger” posed by the contamination. Id. Here, by
contrast, the City presented extensive evidence showing that a reasonable water
provider in the City’s position would treat the Station Six Wells before using them
as a back-up water supply.
Exxon’s reliance on Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88(4th Cir. 2011), is similarly infirm. In Rhodes, private plaintiffs sought recovery for
du Pont’s alleged contamination of the municipal water supply with
perfluorooctanoic acid and “the resulting presence of [the chemical] in their blood.”
Id. at 93. In affirming the district court’s grant of summary judgment to du Pont on
plaintiffs’ negligence claim, the Fourth Circuit held that “[t]he presence of [the
chemical] in the public water supply or in the plaintiffs’ blood does not, standing
alone, establish harm or injury for purposes of proving a negligence claim under
West Virginia law.” Id. at 95. “In such situations,” according to the Fourth Circuit,
“a plaintiff also must produce evidence of a detrimental effect to the plaintiffs’
health that actually has occurred or is reasonably certain to occur due to a present
harm.” Id. Here, by contrast, the City has adduced evidence showing the specific
injuries it suffered as a result of MTBE contamination at Station Six: that MTBE is
a probable human carcinogen, that it can be detected at 1-2 ppb by ten percent of
71
the population, and that even if only ten percent of the population taste it, the
confidence of the public in the water supply would be undermined. And, based on
this evidence, a jury could easily determine that a reasonable water provider in the
City’s position would treat the water in the Station Six Wells to reduce the levels or
minimize the effects of MTBE in order to use the water as a back-up source of
drinking water.
In sum, we reject Exxon’s contention that the New York MCL for MTBE
determines whether the City has been injured either for standing purposes or for
purposes of establishing injury as a matter of New York tort law. We decline
Exxon’s invitation to adopt a bright-line rule that would prevent a water provider
from either bringing suit or prevailing at trial until its water is so contaminated
that it may not be served to the public. The MCL does not convey a license to
pollute up to that threshold.
C. Ripeness and Statute of Limitations
Exxon contends that the City’s claims are unripe because “it is deeply
uncertain whether the City’s usufructuary interest in Station 6 will ever suffer an
injury.”31 Appellants’ Br. at 34. Exxon points out that Station Six is not currently
being used, and in fact cannot be used until the City builds a facility to treat
preexisting PCE contamination. According to Exxon, the City’s case “thus requires
31
Under New York law, the City does not actually own the water in Station Six; it simply
owns the right to use that water. See Sweet v. City of Syracuse, 129 N.Y. 316, 335 (1891). This is
referred to as a “usufructuary” interest. Id.72
proof of a series of contingent and factually intensive predictions about the distant
future” that render the City’s injury unripe for resolution. Id. We disagree,
principally because Exxon’s argument conflates the City’s injury with its damages.
“‘Ripeness’ is a term that has been used to describe two overlapping threshold
criteria for the exercise of a federal court’s jurisdiction.” Simmonds v. INS, 326 F.3d
351, 356-57 (2d Cir. 2003). The first such requirement — which we refer to as
“constitutional ripeness” — is drawn from Article III limitations on judicial power.
Id. at 357; see also Reno v. Catholic Social Servs., Inc., 509 U.S. 43, 57 n.18 (1993).
The second such requirement — which we refer to as “prudential ripeness” — is
drawn from prudential reasons for refusing to exercise jurisdiction. Simmonds, 326
F.3d at 357; see also Reno, 509 U.S. at 43 n.18. Both constitutional ripeness and
prudential ripeness “are concerned with whether a case has been brought
prematurely.” Simmonds, 326 F.3d at 357.
The doctrine of constitutional ripeness “prevents a federal court from
entangling itself in abstract disagreements over matters that are premature for
review because the injury is merely speculative and may never occur.” Ross v. Bank
of America, N.A. (USA), 524 F.3d 217, 226 (2d Cir. 2008) (internal quotation marks
omitted). This aspect of the ripeness doctrine overlaps with the standing doctrine,
“most notably in the shared requirement that the plaintiff’s injury be imminent
rather than conjectural or hypothetical.” Id. (internal quotation marks and
alterations omitted). In most cases, that a plaintiff has Article III standing is
73
enough to render its claim constitutionally ripe. See Simmonds, 326 F.3d at 358;
Ross, 524 F.3d at 226. Here, our determination above that the City has satisfied
the requirements of Article III standing leads us easily to conclude that its claims
are constitutionally ripe; we therefore focus only on prudential ripeness. Ross, 524
F.3d at 226.
The doctrine of prudential ripeness “constitutes an important exception to the
usual rule that where jurisdiction exists a federal court must exercise it,” and
allows a court to determine “that the case will be better decided later.” Simmonds,
326 F.3d at 357 (emphasis omitted). Prudential ripeness is “a tool that courts may
use to enhance the accuracy of their decisions and to avoid becoming embroiled in
adjudications that may later turn out to be unnecessary.” Id. In determining
whether a claim is prudentially ripe, we ask “whether [the claim] is fit for judicial
resolution” and “whether and to what extent the parties will endure hardship if
decision is withheld.” Id. at 359; see also Thomas v. Union Carbide Agric. Prods.
Co., 473 U.S. 568, 581 (1985). A district court’s “ripeness determination is . . . a
legal determination subject to de novo review.” Conn. v. Duncan, 612 F.3d 107, 112
(2d Cir. 2010).
According to Exxon, the District Court effectively “asked the jury to peer into
a crystal ball and make myriad predictions about what might or might not occur
decades from now depending on how the [City] uses a facility that it has not yet
started to build and that it might never complete.” Appellants’ Br. at 35. The
74
speculative nature of the jury’s task demonstrates, Exxon says, that the claims are
prudentially unripe for adjudication. As we observed above, however, this
argument mistakenly conflates the nature of the City’s claimed damages with its
injury.
The City’s theory of its legal injury is that, by contaminating the water in the
Station Six Wells with MTBE, Exxon interfered with the City’s right to use that
water. Exxon’s extensive discussion of the current disuse of the Station Six Wells
and the future steps required to use them addresses the scope of the damages
flowing from the injury, not whether there is an injury at all. The City’s claims are
prudentially ripe. It brought suit only after testing showed the presence of MTBE
in the Station Six Wells. The Amended Complaint therefore alleged a present
injury — namely, that Station Six had already been contaminated with MTBE. As
we have explained, whether that injury was significant enough for the City to
prevail on its claims under New York law was a question for the jury.
In addition, although in bringing suit the City sought to recover past,
present, and future damages flowing from Exxon’s conduct, there is nothing
unusual about such a claim. See, e.g., Davis v. Blige, 505 F.3d 90, 103 (2d Cir.
2007) (“When [an] injury occurs, the injured party has the right to bring suit for all
of the damages, past, present and future, caused by the defendant’s acts.” (internal
quotation marks omitted)). Nor is the City’s claim rendered prudentially unripe by
75
the possibility that its damages may prove too speculative to support recovery.32
Whether a particular damages model is supported by competent evidence sufficient
to render it non-speculative is analytically distinct from whether the underlying
claim is ripe for adjudication.
We also note that dismissing the City’s claims as unripe would work a
“palpable and considerable hardship.” Thomas, 473 U.S. at 581 (internal quotation
marks omitted). Under New York law, a plaintiff asserting a toxic-tort claim must
bring suit within three years of discovery (or constructive discovery) of its injury.
See N.Y. C.P.L.R. 214-c(2). In Jensen v. General Electric Co., 82 N.Y.2d 77 (1993),
the New York Court of Appeals held that the common law “continuing-wrong”
doctrine — pursuant to which a recurring injury is treated as “a series of invasions,
each one giving rise to a new claim or cause of action” — does not reset the statute
of limitations in the toxic-tort context. Id. at 85 (internal quotation marks omitted).
As the District Court observed, “the City brings a traditional recurring injury claim”
in the sense that its injury is continuing: MTBE is in the Station Six Wells and will
be for the foreseeable future.33 Under Jensen, the statute of limitations began to
run as to all of the City’s claims arising out of its continuing injury — past, present,
32
To the extent Exxon argues that the City’s claims are unripe because the City has yet to
use the Station Six Wells, we note the jury’s finding in Phase I that the City has a good faith intent
to use those wells within the next fifteen to twenty years. Phase I Interrogatory Sheet. Exxon,
which had ample opportunity to convince the jury otherwise, does not challenge this finding on
appeal.
33
MTBE IX, 2009 WL 2634749, at *4.
76
and future — when the City first discovered that it had been injured. Id. at 82-83.
In light of this single trigger for the statute of limitations, dismissing the City’s
claims as unripe would effectively foreclose the possibility of relief — a hardship
and inequity of the highest order.
Exxon responds that even if the City’s claims are ripe, they are barred by the
statute of limitations because the City first discovered that it had been injured more
than three years before bringing suit. See N.Y. C.P.L.R. 214-c(2). As we have
explained, the City contends that it was injured when the concentration of MTBE at
Station Six rose to a level at which a reasonable water provider would have treated
the water. At trial, Exxon bore the burden of establishing that the City knew or
should have known before October 31, 2000 — i.e., three years before the City filed
suit — that it had been injured. See id.; Bano v. Union Carbide Corp., 361 F.3d
696, 709-10 (2d Cir. 2004). Ultimately, the jury rejected Exxon’s statute-of-
limitations argument, concluding at the end of Phase III that Exxon failed to prove
“that the City did not bring its claims in a timely manner.” Phase III Interrogatory
Sheet. On appeal, we understand Exxon to contend that no reasonable juror could
have reached such a conclusion.
In support of this contention, Exxon draws our attention to two pieces of
evidence which, it says, establish that the City’s suit was time-barred. The first
piece of evidence came from William Yulinsky, Director of Environmental Health
and Safety in DEP’s Bureau of Waste Water Treatment, who testified that as early
77
as 1999 the City recognized that because “numerous potential sources of MTBE
exist[ed] within [one] mile of Station 6, the need to treat for MTBE should be
anticipated.” Yulinsky Testimony, Tr. at 5781:17-5782:15. But Yulinsky’s
testimony that the City anticipated a future need to remediate MTBE does not
prove that the City knew in 1999 that Station Six had already been contaminated
or that the contamination was significant enough to justify an immediate or specific
remediation effort.
The second piece of evidence to which Exxon points is the City’s April 2000
discovery that one of the Station Six Wells had experienced “some exposure” to
MTBE. Specifically, the City conceded that “MTBE was first detected in raw water
drawn from Well 6D on April 18, 2000 at a concentration of 1.5 [ppb]” and that
“MTBE was first detected in raw water drawn from Well 33 on April 18, 2000 at a
concentration of 0.73 [ppb].” Phase III JPTO, Statement of Undisputed Facts
¶¶ 108, 111. But Exxon has not identified sufficient evidence to establish that, in a
case such as this involving a core municipal function and implicating an unusually
compelling public interest, a reasonable juror was required to find that a reasonable
water provider would have treated groundwater containing MTBE at these
concentrations. We therefore conclude that a reasonable juror could have found
that Exxon failed to show that the City learned of its injury before October 31, 2000.
78
D. Sufficiency of the Evidence as to Injury and Causation
We turn now to Exxon’s challenge to the sufficiency of the evidence
underlying the jury’s verdict as to injury and causation. Exxon argues that the
jury’s peak MTBE finding and its damages calculation are based on speculation,
and that the District Court erred in permitting the jury to consider “market share
evidence” as circumstantial proof of Exxon’s role in causing the City’s injury. For
these reasons, according to Exxon, the District Court should have granted its
motion for judgment as a matter of law. As discussed below, we reject these
challenges.
“We review a district court’s denial of a motion for judgment as a matter of
law de novo.” Manganiello v. City of New York, 612 F.3d 149, 161 (2d Cir. 2010).
“In so doing, we apply the same standards that are required of the district court.”
Id. (internal quotation marks and brackets omitted). A court may grant a motion
for judgment as a matter of law “only if it can conclude that, with credibility
assessments made against the moving party and all inferences drawn against the
moving party, a reasonable juror would have been compelled to accept the view of
the moving party.”34 Piesco v. Koch, 12 F.3d 332, 343 (2d Cir. 1993).
34
Exxon also moved in the District Court for a new trial or remittur. The District Court
denied the motions, and we review its decision for abuse of discretion. See Leibovitz v. New York
City Transit Auth., 252 F.3d 179, 184 (2d Cir. 2001) (new trial); Cross v. New York City Transit
Auth., 417 F.3d 241, 258 (2d Cir. 2005) (remittitur). A district court “ordinarily should not grant a
new trial unless it is convinced that the jury has reached a seriously erroneous result or that the
verdict is a miscarriage of justice.” Hygh v. Jacobs, 961 F.2d 359, 365 (2d Cir. 1992) (internal
quotation marks omitted). As for remittitur, where, as here, the damages at issue are awarded in
connection with state law claims, the district court is “obliged to review the award under [state] law.”
79
1. The Jury’s 10 ppb MTBE Peak Concentration Finding
The only expert witness to quantify the amount of MTBE that will be in the
Station Six outflow was hydrogeologist David Terry, who employed multiple
analyses to do so, as described above. Using one analysis — Analysis 1 — Terry
opined that MTBE concentration would peak at 35 ppb in 2024. Using a different
analysis — Analysis 2 — Terry opined that, depending on spill volume, the peak
concentration could range from de minimis levels to approximately 23 ppb, and
could last through at least 2040. For its part, the jury concluded in Phase II that
the concentration of MTBE at Station Six will peak at 10 ppb in 2033.
On appeal, Exxon challenges the jury’s conclusion on two grounds. First, it
notes that, notwithstanding the jury’s Phase I finding that the City will use Station
Six as a back-up source of drinking water, Terry based his models on the
assumption that Station Six will operate on a continuous basis. According to
Exxon, this allegedly erroneous assumption renders Terry’s models fatally flawed
and the jury’s verdict without any evidentiary basis. Second, Exxon argues that
because Terry’s expert opinion and the jury’s verdict differ, the latter must have
been based on impermissible speculation.
Cross, 417 F.3d at 258. Under New York law, a damages award must be reduced if it “deviates
materially from what would be reasonable compensation.” N.Y. C.P.L.R. § 5501(c); see also Cross,
417 F.3d at 258. As we explain in the text, we reject Exxon’s challenge to the sufficiency of the
evidence underlying the jury’s verdict. For the same reasons, we also reject Exxon’s new-trial and
remittitur arguments.
80
As for Exxon’s first argument, it is true that the jury concluded during Phase
I that the City would use the water from the Station Six Wells “as a back-up source
of drinking water if needed due to shortages in other sources of supply.” It is also
true that Terry’s analyses assumed that Station Six would run on a continuous
basis for twenty-four years. Terry Testimony, Tr. at 2155-:11-25; id. at 2212:22-
2213:13. But that assumption is not necessarily inconsistent with the jury’s back-
up source finding. Indeed, several City witnesses testified that, given the
unpredictability of water emergencies and the need to repair existing infrastructure
periodically, water providers customarily plan, as a matter of prudent practice, for
continuous use of back-up water facilities. For example, Terry himself testified that
it is the “normal[ ]” practice to assume continuous use when planning for back-up
wells “because no one really knows at the outside how they’re going to use the well.
They might think it’s a standby well or something and something happens and they
need to use the well, so in that case you want to have enough treatment for that
scenario.” Id. at 2213:8-13. Steven Schindler, Director of Water Quality for the
City’s Bureau of Water Supply, testified that “[y]ou never know how long a backup
supply is going to be needed,” especially given the City’s plans to “tak[e]
components of [its] system off line for long periods of time, meaning years.”
Schindler Testimony, Tr. at 2945:7-19. And Marnie Bell, called by the City to
describe the costs of designing a treatment facility at Station Six, testified that the
“[p]lanned replacement of tunnels, aqueducts, emergencies, [and] failure of these
81
facilities” required the City “to plan for the worst case in designing and costing a
treatment plant.” Bell Testimony, Tr. at 6017:16-6018:4. Given this evidence, a
rational juror could conclude that Terry’s analyses were probative of peak-MTBE
concentrations at Station Six — even though the analyses assumed a continuous-
pumping scenario.35
Exxon’s second argument is that the jury’s peak-MTBE verdict was
“irrational,” and must be set aside, because it did not mirror Terry’s peak-MTBE
prediction. Appellants’ Br. at 55. We disagree. The role of an expert is not to
displace the jury but rather to “provid[e] the groundwork . . . to enable the jury to
make its own informed determination.” United States v. Duncan, 42 F.3d 97, 101
(2d Cir. 1994). Accordingly, the jury is “free to accept or reject expert testimony,
and [is] free to draw [its] own conclusion.” Berger v. Iron Workers Reinforced
Rodmen, Local 201, 170 F.3d 1111, 1121 (D.C. Cir. 1999); see also Schroeder v. The
Tug Montauk, 358 F.2d 485, 488 (2d Cir. 1966) (“[I]t was within the province of the
[trier of fact] to weigh [conflicting expert evidence] and accept or reject the whole or
35
For the same reason, we reject Exxon’s contention that the City’s proof of its damages was
somehow faulty because, in calculating the cost of a treatment facility, Bell assumed that Station Six
would operate continuously. The jury was entitled to credit Bell’s testimony that in designing and
building such a facility, a prudent water provider would assume continuous use, even if Station Six is
to serve as a back-up source of drinking water. Bell Testimony, Tr. at 6017:16-6018:4. Further, the
jury’s measure of damages — $250.5 million, before the offsets for proportional liability for other
tortfeasors and damage attributable to preexisting contamination — was consistent with the City’s
evidence that the net present value of maintaining and operating a treatment system at Station Six
to remove MTBE present at 10 ppb was approximately $250 million. See, e.g., id. at 5886:9-10 (“For
the 10 ppb [scenario], the total cost would be approximately $250 million.”). The District Court
therefore did not abuse its discretion in denying Exxon’s motion for a new trial on damages or, in the
alternative, remittitur.
82
a part of each [expert’s] testimony.”). And we have consistently held that expert
testimony that “usurps . . . the role of the jury in applying [the] law to the facts
before it” by “undertak[ing] to tell the jury what result to reach” or “attempt[ing] to
substitute the expert’s judgment for the jury’s” is inadmissible. Nimely v. City of
New York, 414 F.3d 381, 397 (2d Cir. 2005) (internal quotation marks and
alteration omitted).
As an initial matter, we note, as did the District Court, that the jury’s peak-
MTBE finding fell within the range of possible outcomes predicted by Terry’s
analyses. Terry testified that because he lacked perfect information about the
amount of gasoline spilled in the vicinity of Station Six, he based his analyses on a
range of variables. For example, in Analysis 1, Terry predicted future MTBE
concentrations using groundwater quality information taken in 2004 for sample
locations near Station Six. And in Analysis 2, he predicted future MTBE
concentrations and the duration of such concentrations by identifying known spill
sites and assuming spill volumes of 50 gallons, 500 gallons, and 2,000 gallons.
Analysis 1 suggested peak MTBE concentrations of 35 ppb, while Analysis 2
suggested peak MTBE concentrations ranging from de minimis levels (assuming
spill volumes of 50 gallons) to approximately 23 ppb (assuming spill volumes of
2,000 gallons).36 The jury’s finding that the concentration of MTBE at Station Six
36
Although Terry explained that the principal purpose of Analysis 2 was to estimate “how
long the MTBE concentrations will be present [at Station Six] in the future,” Terry Testimony, Tr. at
2015:14-15, nothing in his testimony suggests that he meant for the jury to disregard Analysis 2’s
peak-MTBE figures.
83
would peak at 10 ppb falls squarely within Terry’s range. This strikes us as highly
persuasive evidence that the jury’s finding was not irrational. Cf. Robinson v.
Shapiro, 646 F.2d 734, 744 (2d Cir. 1981) (upholding damage award greater than
figure calculated by plaintiff’s expert).
Further, Terry’s models only predicted future MTBE concentrations at
Station Six. These predictions were based on a set of assumptions about a number
of factors, including spill volume, timing, and the uses to which Station Six would
be put. The jury evidently accepted some of Terry’s assumptions and rejected
others, which it was entitled to do. Exxon’s contrary argument would threaten to
“denigrate[ ] the historic and practical abilities of the jury,” Medcom Holding Co. v.
Baxter Travenol Laboratories, Inc., 106 F.3d 1388, 1398 (7th Cir. 1997), by forcing
upon it a binary choice: either accept Terry’s testimony in whole or reject it in
whole. This is not the law. See Berger, 170 F.3d at 1121; Schroeder, 358 F.2d at
488.
For these reasons, we reject Exxon’s contention that the jury’s peak MTBE
finding was based on impermissible speculation.
2. The Jury’s Consideration of Market Share Evidence
According to Exxon, the jury’s Phase III verdict as to Exxon’s liability as a
manufacturer, refiner, supplier, or seller of gasoline containing MTBE must also be
84
reversed because it was impermissibly based on a market-share theory of liability.37
“Market share liability provides an exception to the general rule that in
common-law negligence actions, a plaintiff must prove that the defendant’s conduct
was a cause-in-fact of the injury.” Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222,
240 (2001). Where the theory of proof called market-share liability is permitted, a
defendant may be held liable absent any showing that it caused or contributed to
the plaintiff’s injury; instead, a defendant may be presumed liable to the extent of
its share of the relevant product market. Hymowitz v. Eli Lilly & Co., 73 N.Y.2d
487, 511-12 (1989).
According to Exxon, the District Court permitted the imposition of market-
share liability in contravention of New York law when it instructed the jury that in
evaluating whether Exxon’s conduct in manufacturing, refining, supplying or
selling gasoline containing MTBE was a substantial factor in causing the City’s
injury, the jury could “consider as circumstantial evidence [Exxon’s] percentage
share of the retail and/or supply market for gasoline containing MTBE in Queens or
[in] any other region that you determine is relevant.” Tr. at 6606:17-20. We
disagree with Exxon and conclude that the instruction appropriately applied New
37
As explained above, the jury ultimately considered two theories of causation. Under the
first theory — which the District Court called “direct spiller causation” — the jury was asked to
consider whether Exxon-owned underground storage tanks located in the vicinity of Station Six
leaked gasoline containing MTBE and, if so, whether these leaks injured the City. Under the second
theory — which the District Court called “manufacturer, refiner, supplier, or seller causation” — the
jury was asked to consider whether MTBE from gasoline that was manufactured, refined, supplied,
or sold by Exxon was a cause of the City’s injury. The jury found that the City had proven by a fair
preponderance of the evidence that Exxon was a cause of the City’s injury as a direct spiller and as a
manufacturer, refiner, supplier, or seller. Phase III Interrogatory Sheet.
85
York law. The District Court did not impose market-share liability upon Exxon; it
simply permitted the jury to draw upon market-share data as one piece of
circumstantial evidence that Exxon caused the City’s injury.
As an initial matter, we note that the City did not rely on a market-share
theory of liability. To the contrary, it identified the “exact defendant whose product
injured” it — Exxon. Cf. Hymowitz, 73 N.Y.2d at 504 (allowing recovery
notwithstanding plaintiffs’ inability to identify the manufacturer of injurious
product). Indeed, as explained below, the City adduced testimony establishing that
Exxon gasoline found its way into every underground storage tank in Queens
during the relevant period. This is a case in which a defendant faces liability
because of evidence linking its own product to the plaintiff’s injury.
Under New York law, an act or omission is regarded as a legal cause of an
injury “if it was a substantial factor in bringing about the injury.” Schneider v.
Diallo, 788 N.Y.S.2d 366, 367 (1st Dep’t 2005). The word “substantial” means that
the act or omission “had such an effect in producing the injury that reasonable
people would regard it as a cause of the injury.” Rojas v. City of New York, 617
N.Y.S.2d 302, 305 (1st Dep’t 1994) (internal quotation marks omitted). In
endeavoring to prove that Exxon’s conduct as a manufacturer, refiner, supplier, or
seller of gasoline was a “substantial factor” in bringing about its injury, the City
adduced three principal pieces of evidence. First, the City presented expert
testimony that, because gasoline from different manufacturers was commingled
86
before distribution, Exxon gasoline “ended up in each of the retail gas stations in
Queens and in their underground storage tanks” between 1985 and 2003.
Testimony of Bruce Burke (“Burke Testimony”), Tr. at 4103:7-10. As a result, when
“there were leaks from those tanks and MTBE gasoline came through those
leaks . . . there was some Exxon MTBE gasoline in the tanks [that] presumably
went into the leaks.” Id. at 4104:14-20. Second, the City presented expert
testimony that Exxon supplied approximately twenty-five percent of the gasoline
sold in Queens between 1986 and 2003. Testimony of Martin Tallett, Tr. at 4278:9-
10; id. at 4281:8-11. And third, the City presented expert testimony that “[l]eaks
happen at gas stations . . . on a fairly routine basis.” Testimony of Marcel Moreau
(“Moreau Testimony”), Tr. at 1115:15-16.
Viewed in context, the market share data adduced by the City served merely
as some proof that sufficient quantities of Exxon gasoline were delivered to gas
stations in the vicinity of Station Six to make it more likely than not that Exxon
gasoline played a substantial role in bringing about the City’s injury. Like the
District Court, we perceive a difference between employing market-share data in
this fashion and imposing liability based solely on a defendant’s share of the market
for a dangerous product, absent any evidence that the defendant’s own product
directly caused some of the harm alleged. Here, the City did not use market share
data as a substitute for showing that Exxon contributed to the contamination of
87
Station Six. Cf. Hymowitz, 73 N.Y.2d at 504. Instead, it used such data to help
quantify the scope of that contribution.38
The cases upon which Exxon relies are distinguishable. In Tidler v. Eli Lilly
& Co., 851 F.2d 418 (D.C. Cir. 1988), the D.C. Circuit declined to allow plaintiffs to
employ a market-share theory of liability in connection with their state-law claims
for DES exposure where the relevant state courts had not squarely addressed the
availability of market-share liability. Id. at 425. In City of St. Louis v. Benjamin
Moore & Co., 226 S.W.3d 110, 115-16 (Mo. 2007), the Supreme Court of Missouri
held that, under Missouri law, a plaintiff may not employ a market-share theory of
liability in lieu of identifying the precise defendant whose product injured it. And
in Martinez v. Skirmish, U.S.A., Inc., No. 07-5003, 2009 WL 1437624 (E.D. Pa. May
21, 2009), the court reached a similar result under Pennsylvania law. Id. at *4.
Neither Tidler, City of St. Louis, nor Martinez deal with the different question
presented here: whether market-share data can serve as part of the mosaic of
circumstantial evidence that helps the jury determine the scope of the defendant’s
contribution to the plaintiff’s injury.
Under the circumstances of this case, we find that the District Court’s
instruction was not improper. We also find that, based on the evidence described
above, a reasonable jury could conclude that Exxon’s conduct as a manufacturer,
38
For its part, Exxon appears to have relied on market share evidence to prove the
percentage of fault attributable to other tortfeasors.
88
refiner, supplier, or seller of gasoline containing MTBE was indeed a substantial
factor in bringing about the City’s injury.39
E. New York Law Claims
Exxon contends that even if we reject its arguments as to preemption, legal
cognizability, and ripeness, and its challenge to the sufficiency of the evidence of
injury and causation, the judgment below must be reversed because the jury’s
verdicts as to the City’s claims of negligence, trespass, nuisance, and failure-to-
warn are unsupported by the evidence. We disagree and conclude that, viewed in
the light most favorable to the City, the evidence supported the jury’s verdict. See
Chin v. Port Auth. of N.Y. & N.J., 685 F.3d 135, 150-51 (2d Cir. 2012) (“In
reviewing the sufficiency of the evidence in support of a jury’s verdict, we examine
the evidence in the light most favorable to the party in whose favor the jury
decided, drawing all reasonable inferences in the winning party’s favor.” (internal
quotation marks omitted)).
1. Negligence
To prevail on a negligence claim under New York law, a plaintiff must show
“[1] a duty on the part of the defendant; [2] a breach of that duty by conduct
39
We need not address Exxon’s challenge to what it describes as the District Court’s “novel
‘commingled product ‘alternative liability theory.” Appellants’ Br. at 61. That independent,
alternative theory dispensed with the substantial-factor requirement and would have permitted the
City to establish causation based on evidence that Exxon manufactured or refined any amount of
commingled MTBE gasoline contaminating Station Six. See, e.g., MTBE XII, 739 F. Supp. 2d at 608-
09; MTBE VII, 644 F. Supp. 2d at 314-15, 318-19; MTBE II, 379 F. Supp. 2d at 377-79. Because the
jury never rendered a verdict on the commingled product theory, it is not at issue here.
89
involving an unreasonable risk of harm; [3] damages suffered by the plaintiff; and
[4] causation, both in fact and proximate, between the breach and the plaintiff’s
harm.” McCarthy v. Olin Corp., 119 F.3d 148, 161 (2d Cir. 1997) (internal
quotation marks and citations omitted).
At trial, the City argued that Exxon was negligent as a “direct spiller” of
gasoline containing MTBE because Exxon failed to ensure that such gasoline was
properly stored and dispensed at service stations it owned or controlled. According
to the City, gasoline leaked from Exxon’s underground storage tanks, causing
MTBE to enter the soil, the groundwater, and the Station Six Wells. Exxon argues
that the evidence was insufficient to show that it breached its duty of care. In
Exxon’s view, the evidence showed that the technology it used to prevent leaks and
contain spills was consistent with measures that other station owners used.
Additionally, Exxon asserts, gasoline stations inevitably spill gasoline into the
surrounding environment, even when employees exercise great care. Because the
City failed to distinguish between negligent and non-negligent spills, Exxon argues,
the jury’s verdict is unsupported by the evidence.
Viewed in the light most favorable to the City, the evidence supported the
jury’s negligence verdict. The record provided ample evidence of gasoline spills and
leaks at Exxon-controlled stations, and the jury could have concluded that these
releases were negligent. For example, the jury heard testimony about a series of
gasoline releases from an Exxon service station located at 113-21 Merrick
90
Boulevard in Queens, within the “capture zone” of the Station Six Wells. In 1996,
an inexperienced employee caused a gasoline leak when changing filters on a
gasoline dispenser. Three years later, one of the station’s tanks failed a “vacuum”
test, meaning that the tank was leaking and required repairs. And in 2001,
employees encountered gasoline-contaminated soil when working on the station’s
piping system; upon further exploration, they discovered six 550-gallon storage
tanks buried under the station — tanks that were unregistered, and that the
station owner did not know existed. An earlier test of the groundwater underneath
the station revealed an MTBE concentration of 1,500 ppb — thirty times the then-
current MCL.
The jury also heard testimony about steps Exxon could have taken to
prevent, or at least mitigate the damage from, these contamination incidents.
Marcel Moreau, the City’s expert on underground gasoline storage, explained that
Exxon could have implemented “vapor monitoring,” which would have permitted
station operators to detect leaks more quickly. Moreau Testimony, Tr. at 3378:22.
He also explained that Exxon could have installed remediation systems at its
stations, which would have permitted station operators to begin the clean-up
process as soon they detected a gasoline leak. Id. at 3379:3-10. Moreau testified
that, to his knowledge, Exxon did not implement either of these measures at its
stations. Id. at 3380:15-17. In addition, according to Moreau, after the 1996 leak at
the Merrick Boulevard station from an improperly-installed filter, Exxon employees
91
did not perform a “chemical analysis or anything else to determine what was
contaminated and what was not. They just went by nose.” Id. at 1270:16-19.
The jury was entitled to credit this testimony and conclude that the exercise
of reasonable care required Exxon to implement the measures identified by Moreau.
Contrary to Exxon’s argument, these devices were not simply a “wish list.” Moreau
testified that vapor detection technology was available in the 1980s, and that, in a
1986 paper recognized by at least one petroleum trade group, he and others warned
about the dangers of MTBE and emphasized the importance of effective leak-
detection systems. Id. at 3345:2-14. An internal Exxon memorandum from 1984
explained that MTBE migrated farther in groundwater than other contaminants
and had lower “odor and taste thresholds.” Pl. Ex. 272. A memorandum dated two
years later observed that federal and state authorities had identified MTBE as a
health concern. Pl. Ex. 5506. Evidence of Exxon’s timely knowledge of the
particular dangers of MTBE, combined with evidence about remedial measures
available as early as the 1980s, was sufficient to allow the jury to determine that
Exxon breached the standard of ordinary care.
2. Trespass
To prevail on a trespass claim under New York law, a plaintiff must show an
“interference with [its] right to possession of real property either by an unlawful act
or a lawful act performed in an unlawful manner.” New York State Nat’l Org. for
Women v. Terry, 886 F.2d 1339, 1361 (2d Cir. 1989) (citing Ivancic v. Olmstead, 66
92
N.Y.2d 349, 352 (1985)). “[W]hile the trespasser, to be liable, need not intend or
expect the damaging consequence of his intrusion, he must intend the act which
amounts to or produces the unlawful invasion, and the intrusion must at least be
the immediate or inevitable consequence of what he willfully does, or [what] he does
so negligently as to amount to willfulness.” Phillips v. Sun Oil Co., 307 N.Y. 328,
331 (1954). In a trespass case involving the “underground movement of noxious
fluids,” a plaintiff must show that the defendant “had good reason to know or expect
that subterranean and other conditions were such that there would be passage [of
the pollutant] from defendant’s to plaintiff’s land.” Id.Exxon asserts that the City failed to establish the first element of trespass —
an interference with its water rights. We address this assertion only briefly
because it simply repackages two arguments we have already rejected. First, Exxon
contends that an interference has not occurred because, according to the jury, the
peak MTBE concentration in the Station Six Wells will not exceed 10 ppb. But as
already explained, New York courts have held that a plaintiff may suffer injury
from contamination at levels below an applicable regulatory threshold. See
Cunningham v. Spitz, 630 N.Y.S.2d 341, 341 (2d Dep’t 1995); Peri v. City of New
York, 798 N.Y.S.2d 332, 339-40 (N.Y. Sup. Ct. Mar. 28, 2005), aff’d, 843 N.Y.S.2d
618 (1st Dep’t 2007), aff’d, 11 N.Y.3d 756 (2008). Here, the jury found that a
reasonable water provider would have treated the MTBE-contaminated water at
Station Six. And the record contains sufficient evidence to support this conclusion.
93
Second, Exxon contends that it did not interfere with the City’s water rights
because the City has never actually used Station Six. Again, however, Exxon
conflates the City’s injury with its damages. The City alleged, and proved to the
jury’s satisfaction, that the City intends to use the Station Six Wells, that MTBE
will be within the capture zone of those wells when they begin operation, and that a
reasonable water provider would treat the water to remove the MTBE. An
interference has occurred. Whether the City actually uses Station Six goes to the
calculation of its damages. Cf. Hill v. Raziano, 880 N.Y.S.2d 173, 175 (2d Dep’t
2009) (“[N]ominal damages are presumed from a trespass even where the property
owner has suffered no actual injury to his or her possessory interest.”).
Exxon also contends that the District Court erred by failing to instruct the
jury that a defendant is liable for trespass only if it “‘had good reason to know or
expect that subterranean and other conditions were such that there would be
passage [of the pollutant] from defendant’s to plaintiff’s land.’” Appellees’ Br. at 73
(quoting Phillips, 307 N.Y. at 331) (alteration in original). In fact, the District
Court’s instruction conveyed this element of trespass. The relevant portion of the
that instruction, which is set out in the margin,40 required the jury to find that
40
After explaining the element of causation and then defining “intent,” the District Court
gave the following instruction:
In this case, if you find that [Exxon] did not know that the gasoline containing MTBE
that it manufactured, refined, sold and/or supplied would be spilled, and that the
property of MTBE would cause it to spread widely and rapidly in groundwater, or that
although [Exxon] knew these things, these things did not make it substantially certain
that its gasoline containing MTBE would leak from the gasoline distribution system and
enter groundwater, including the groundwater in the capture zone of the Station 6 wells,
94
Exxon knew (1) “the gasoline containing MTBE that it manufactured, refined, sold
and/or supplied would be spilled,” (2) “the propert[ies] of MTBE would cause it to
spread widely and rapidly in groundwater,” and (3) as a result, it was “substantially
certain that [Exxon’s] gasoline containing MTBE would leak from the gasoline
distribution system and enter groundwater, including the groundwater in the
capture zone of the Station 6 wells.” Tr. at 6620:1-15. These instructions,
particularly the third requirement, satisfy Phillips.
Finally, we reject Exxon’s argument that its actions as a “mere refiner and
supplier” of gasoline were “too remote from any actual spills or leaks to be deemed
an ‘immediate or inevitable’ cause of any trespass.” Appellants’ Br. at 73-74
(quoting Phillips, 307 N.Y. at 331). In State v. Fermenta ASC Corp., 656 N.Y.S. 2d
342 (2d Dep’t 1997), plaintiff Suffolk County Water Authority determined that
several of its wells had been contaminated by a chemical known as TCPA, a natural
byproduct of a widely-used herbicide called Dacthal. The water authority sued the
exclusive manufacturer and distributor of Dacthal on several legal theories,
including trespass. In affirming the trial court’s denial of summary judgment to the
manufacturer on the trespass claim, the Second Department explained that “it is
then [Exxon] did not commit a trespass.
If you find, however, that [Exxon] acted with the requisite intent; namely, [Exxon] knew
that its conduct made it substantially certain that MTBE would enter the groundwater,
including the groundwater in the capture zone of the Station 6 wells, then [Exxon] did
commit a trespass.
Tr. at 6620:1-15.
95
enough that the defendants’ actions in directing consumers to apply Dacthal to the
soil [were] substantially certain to result in the entry of TCPA into [Suffolk County
Water Authority] wells.” Id. at 346.
Fermenta is squarely on point. Just as the manufacturer in Fermenta knew
that consumers would apply its product to the soil, here the jury concluded that
Exxon “knew that the gasoline containing MTBE that it manufactured, refined, sold
and/or supplied would be spilled.” Tr. at 6620:2-3. And just as the actions of the
manufacturer in Fermenta were substantially certain to cause contamination, here
the jury concluded that it was “substantially certain that [Exxon’s] gasoline
containing MTBE would leak from the gasoline distribution system and enter
groundwater, including the groundwater in the capture zone of the Station 6
wells.”41 Id. at 6620:7-9.
3. Public Nuisance
A public nuisance “is an offense against the State and is subject to abatement
or prosecution on application of the proper governmental agency.” Copart Indus. v.
Consolidated Edison Co. of N.Y., 41 N.Y.2d 564, 568 (1977). To prevail on a public
nuisance claim under New York law, a plaintiff must show that the defendant’s
41
Exxon cites Abbatiello v. Monsanto Co., 522 F. Supp. 2d 524, 542 (S.D.N.Y. 2007), which
summarily dismissed a trespass claim against a manufacturer of products containing harmful
chemicals, even though the complaint alleged that the manufacturer knew its products would enter
plaintiffs’ land. Relying on Phillips, the court in Abbatiello concluded without explanation that the
contamination was not the “immediate or inevitable consequence” of the manufacturer’s actions. Id.(quoting Phillips, 307 N.Y. at 331). Here, as we have already explained, the jury’s finding that Exxon
was “substantially certain that its gasoline containing MTBE would leak from the gasoline
distribution system and enter groundwater,” Tr. at 6620:6-8, satisfied the requirements set forth in
Phillips.
96
conduct “amounts to a substantial interference with the exercise of a common right
of the public,” thereby “endangering or injuring the property, health, safety or
comfort of a considerable number of persons.” 532 Madison Ave. Gourmet Foods v.
Finlandia Ctr., 96 N.Y.2d 280, 292 (2001).
Exxon argues that the jury’s rejection of the City’s design-defect claim
forecloses the City’s public-nuisance claim because it establishes that Exxon acted
in the safest feasible way, and that Exxon therefore did not “substantially” interfere
with a public right.42 Again, however, Exxon overreads the jury’s design-defect
verdict. The jury concluded that the City failed to establish that a safer, feasible
alternative design existed — a determination, which, as we have explained,
required the jury to balance the costs of using MTBE against the alternatives.
Exxon overreaches insofar as it construes this verdict as an affirmative finding that
MTBE was the safest available oxygenate.
We also reject Exxon’s contention that its conduct as a supplier of gasoline
was too “remote from Station 6” to support the jury’s public nuisance verdict.
Appellants’ Br. at 74. Under New York law, “[e]very one who creates a nuisance or
participates in the creation or maintenance thereof is liable for it.” Penn Cent.
Transp. Co. v. Singer Warehouse & Trucking Corp., 447 N.Y.S.2d 265, 267 (1st
Dep’t 1982) (internal quotation marks omitted); see also Restatement (Second) of
42
Exxon also argues that the jury’s finding that MTBE concentrations in Station Six will
never exceed the MCL establishes as a matter of law that Exxon’s “interference” was not
“substantial.” Here, Exxon simply reiterates its earlier argument about the legal significance of the
MCL. We are unpersuaded for the reasons already discussed.
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Torts § 834 (“One is subject to liability for a nuisance caused by an activity, not only
when he carries on the activity but also when he participates to a substantial extent
in carrying it on.”). As we have explained, the City adduced evidence showing that
Exxon manufactured gasoline containing MTBE and supplied that gasoline to
service stations in Queens. In addition, the City offered testimony that Exxon knew
station owners would store this gasoline in underground tanks that leaked, and
introduced evidence that Exxon knew specifically that tanks in the New York City
area leaked. The record also shows that Exxon was aware of MTBE’s tendency to
spread quickly once released into groundwater. In sum, the evidence supports a
finding that Exxon knew that MTBE gasoline it manufactured would make its way
into Queens, where it was likely to be spilled, and once spilled, would likely
infiltrate the property of others.
Despite this evidence, Exxon argues that the City failed to show that Exxon’s
operations occurred “near the relative geographic areas of the plaintiffs’ wells.”
Appellants’ Br. at 74 (internal quotation marks omitted). In support of this
position, Exxon relies on In re Nassau County Consolidated MTBE (Methyl Tertiary
Butyl Ether) Products Liability Litigation, 918 N.Y.S.2d 399, 2010 WL 4400075(N.Y. Sup. Ct. Nassau County 2010) (unpublished table decision) (“Nassau
County”), a decision also addressing MTBE contamination in public water supplies
by various gasoline suppliers. In Nassau County, the trial court concluded that to
be liable for a public nuisance, the defendant (or its agent) must have participated
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in the nuisance-causing activity while on land that was “neighboring or contiguous”
with the plaintiff’s property. Id. at *9. The court therefore held that only those
defendants who “conduct[ed] . . . operations near the relative geographic areas of
the plaintiffs’ wells” could be liable for public nuisance and dismissed public
nuisance claims against defendants whose “operations terminate before reaching
Nassau County or Suffolk County (where the alleged contamination has taken
place), and [whose] link to the plaintiffs’ injury is that they supplied most of the
gasoline that was eventually transported near the plaintiffs’ wells.” Id. at *8, 10.
Nassau County has not been subjected to the scrutiny of any higher state
court, and we question whether, on further review, New York law will be found to
support liability for public nuisance only if the defendant engaged in the nuisance-
causing conduct from land that directly adjoins the plaintiff’s land.43 But even
43
Our sister Circuits have reached differing conclusions when presented with common law
nuisance claims against a manufacturer who was not in geographic proximity to the plaintiff.
Compare Tioga Pub. School Dist. No. 15 v. U.S. Gypsum Co., 984 F.2d 915, 920 (8th Cir. 1993)
(holding that, under North Dakota law, “nuisance . . . does not afford a remedy against the
manufacturer of an asbestos-containing product to an owner whose building has been contaminated
by asbestos following the installation of the product in the building”), and City of Bloomington, Ind.
v. Westinghouse Elec. Corp., 891 F.2d 611, 614 (7th Cir. 1989) (holding that, under Indiana law, a
manufacturer of electrical equipment was not liable for nuisance when third parties disposed of its
products incorrectly, causing contamination); with Team Enters., LLC v. W. Inv. Real Estate Trust,
647 F.3d 901, 912 (9th Cir. 2011) (“A defendant may be liable [under California law] for assisting in
the creation of a nuisance if he either (1) affirmatively instructs the polluting entity to dispose of
hazardous substances in an improper or unlawful manner, or (2) manufactures or installs the
disposal system.” (citations omitted)). These cases turn in large part, however, not on the geographic
proximity of the defendant to the nuisance but on whether the defendant knew that its product
would endanger public health, and whether the defendant took steps to mitigate the risks associated
with its product. See City of Bloomington, 891 F.2d at 614 (“The uncontested record shows that
when alerted to the risks associated with PCBs, [the defendant] made every effort to have [the third
party] dispose of the chemicals safely.”); cf. Tioga, 984 F.2d at 920 (“[L]iability for damage caused by
a nuisance thus turns on whether the defendant is in control of the instrumentality alleged to
constitute a nuisance, since without control a defendant cannot abate the nuisance.”). As we have
explained, in this case the jury could have concluded (and evidently did conclude) that Exxon knew of
99
assuming the trial court’s interpretation of public nuisance doctrine is correct,
Nassau County does not undermine the jury’s verdict.
We note, as an initial matter, that the City sought to hold Exxon liable as
both a direct spiller of MTBE gasoline and as a manufacturer, refiner, supplier, and
seller of MTBE gasoline, and that the jury’s verdict on public nuisance did not
distinguish between these theories of causation. Nassau County’s discussion of
geographic proximity is relevant only to the extent that the jury held Exxon liable
for public nuisance as a manufacturer of MTBE gasoline; Nassau County permitted
claims to go forward against direct-spiller defendants, i.e., defendants who “had
gasoline discharges near the plaintiff[’]s wells.” Id. at *10.
But even if we assume the jury held Exxon liable only as a manufacturer of
MTBE, Nassau County is distinguishable. Here, unlike in Nassau County, the
evidence showed that Exxon conducted “operations near the relative geographic
areas” of the Station Six Wells. Exxon owned or controlled multiple service stations
near Station Six; Exxon’s gasoline “ended up in each of the retail gas stations in
Queens and in their underground storage tanks” between 1985 and 2003, Burke
Testimony, Tr. at 4103:7-10; and, based on that activity alone, the jury could have
found that Exxon marketed gasoline to retail customers in Queens. Exxon’s
extensive involvement in the Queens gasoline market belies any claim that its
conduct was too geographically remote to sustain liability for public nuisance.
the dangers of MTBE and failed to take actions to mitigate MTBE contamination.
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4. Failure to Warn
Under New York law, a plaintiff may recover in strict products liability
“when a manufacturer fails to provide adequate warnings regarding the use of its
product.” Rastelli v. Goodyear Tire & Rubber Co., 79 N.Y.2d 289, 297 (1992). This
is because a manufacturer “has a duty to warn against latent dangers resulting
from foreseeable uses of its products of which it knew or should have known.” Id.The duty to warn extends “to third persons exposed to a foreseeable and
unreasonable risk of harm by the failure to warn.” McLaughlin v. Mine Safety
Appliances Co., 11 N.Y.2d 62, 68-69 (1962).
Exxon argues that the District Court erred when it “instructed the jury that
[Exxon] had a duty to warn, inter alia, ‘the city water providers and the public’ of
dangers arising from the addition of MTBE into gasoline.”44 Appellants’ Br. at 67-
68. We reject Exxon’s suggestion that, as a categorical matter, neither the City nor
the public are reasonably foreseeable users of gasoline containing MTBE, and
therefore that Exxon owed the City and the gasoline-using public no duty to advise
them of the hazards of use. Cf. Moreau Testimony, Tr. at 3380:3-17 (testifying that
44
We note that Exxon mischaracterizes the District Court’s instruction. The District Court
did not instruct the jury that Exxon owed a duty to warn; it merely noted that “[t]he [C]ity . . .
contends that” Exxon failed to warn “distributors, customers, station owners, its employees, gasoline
truck drivers, and the city water providers and the public” of the dangers of gasoline containing
MTBE. Tr. at 6613:24-14:3 (emphasis added). In more general instructions on the duty to warn, the
District Court properly instructed the jury that the “manufacturer of a product that is reasonably
certain to be harmful if used in a way that the manufacturer should reasonably foresee, is under a
duty to use reasonable care to give adequate warnings to foreseeable users of the product of any
danger known to it or which in the use of reasonable care it should have known and which the
reasonable user of the product ordinarily would not discover.” Tr. at 6615:4-10.
101
“a public education campaign,” informing “everybody who was pumping gas” about
the dangers of MTBE, was necessary to reduce MTBE contamination).
In any event, the focus of the City’s evidence on its failure-to-warn claim
pertained not to warnings Exxon gave the City or the general public but rather to
warnings it gave to gas station operators. Although Exxon disputes whether a
warning to station operators would have reduced MTBE contamination, a
contention we address below, nowhere does Exxon argue that it lacked a duty to
warn station operators of the special dangers of its product. And the evidence
showed that although operators were warned generally about the risks of spilling
gasoline, they were not warned about the special risks associated with gasoline
containing MTBE. For example, Michael J. Roman, an Exxon employee at the time
of his testimony, said that Exxon did not advise its customers to test for the
presence of MTBE when they discovered gasoline contamination at a spill site; nor
did Exxon provide any information to operators about the environmental problems
associated with MTBE in particular. Testimony of Michael J. Roman (“Roman
Testimony”), Tr. at 3496:17-3497:3. Roman explained that Exxon “did not want to
confuse our customers” and that “the real issue is gasoline, that we do not want it
leaking or spilled into the ground.” Id. at 3494:16-3495:20.
We are also unpersuaded by Exxon’s argument that it had no duty to warn
anyone because the dangers of spilling gasoline are common knowledge. The City’s
claim is not that it was injured by spilled gasoline but rather that it was injured by
102
spilled gasoline containing MTBE. The evidence at trial showed that MTBE has an
unusual propensity to spread widely in groundwater if spilled, and that it is
especially difficult to clean up. The harmful effects of spilling gasoline containing
MTBE are therefore different (and more severe) than the effects of spilling
untreated gasoline. Given the unique properties of MTBE, we reject the suggestion
that a gasoline supplier complies with its duty to warn of the dangers of gasoline
containing MTBE by complying with its duty to warn of the dangers of gasoline that
does not contain MTBE. See Liriano v. Hobart Corp., 92 N.Y.2d 232, 242 (1998)
(“[T]he open and obvious defense generally should not apply when there are aspects
of the hazard which are concealed or not reasonably apparent to the user.”).45
Finally, Exxon argues that the jury’s failure-to-warn verdict must be rejected
because the City did not establish that gas station operators and other foreseeable
users would have changed their behavior had they been warned of the dangers of
MTBE. To the contrary, the record contains ample evidence from which the jury
could have concluded that warnings about MTBE would have reduced
contamination in the Station Six Wells. For example, the jury heard testimony that
gas stations chose not to replace leaky underground storage systems in the 1980s
and 1990s because they believed that doing so would be more costly than paying for
45
We also reject Exxon’s argument that it had no duty to warn the City about the dangers of
MTBE because, by 1997, the City was aware of these dangers. Exxon began using MTBE in its
gasoline long before 1997, and the City’s eventual knowledge did not relieve Exxon of its duty to
provide adequate warnings before 1997 (to say nothing of its continuing duty to warn gas station
owners).
103
the consequences of continued leakage. We think the jury could have inferred that
station owners would have acted differently had they been warned specifically
about the dangers of MTBE. As one City expert testified: “Without MTBE, a-gallon-
a-day leak most of the time isn’t going to get you in very big trouble. But a-gallon-
a-day leak with MTBE is a whole different animal; it changes the game. You are
now in a whole different ballpark. You need to pay attention to those kinds of
releases, and no one was really paying attention on that scale in the 1980s and
through most of the 1990s.”46 Moreau Testimony, Tr. at 3350:22-51:3. It is not
surprising that the jury credited this evidence; indeed, the testimony accords with
common sense.
F. Juror Misconduct
Finally, Exxon argues that it is entitled to a new trial because the District
Court failed to dismiss Juror No. 1. According to Exxon, after the District Court
dismissed the threatened juror (Juror No. 2), it was “incumbent” upon it “to dismiss
the threatener” or, at a minimum, to ask Juror No. 1 whether she had actually
threatened Juror No. 2. Appellants’ Br. at 75-76. The District Court’s failure to
dismiss Juror No. 1 was prejudicial, Exxon contends, because Juror No. 2 was, it
46
The court in In re Nassau County, 2010 WL 4400075, at *16, dismissed the plaintiffs’
failure-to-warn claim after concluding that (1) the defendants “did not manufacture the product or
have any superior knowledge regarding the risk of harm,” (2) “there is no duty to warn generally of
public dangers or a duty to warn public officials,” and (3) “it is unlikely that additional warnings to
end-users regarding the specific characteristics of MTBE would have been effectual in preventing
injury to the plaintiff water districts.” Here, the evidence was sufficient for the jury to find that
Exxon manufactured the gasoline, that Exxon had superior knowledge regarding the risk of harm,
and that additional warnings would have been effective in preventing harm. To the extent that In re
Nassau County suggests a different conclusion, we find its reasoning unpersuasive.
104
alleges, “a holdout juror and it is inconceivable that another juror would dare
disagree with Juror [No.] 1 after seeing the fate of Juror [No.] 2.” Id. at 75.
We “review a trial judge’s handling of alleged jury misconduct for abuse of
discretion.” United States v. Gaskin, 364 F.3d 438, 463 (2d Cir. 2004). In so doing,
we bear in mind that “[c]ourts face a delicate and complex task whenever they
undertake to investigate reports of juror misconduct . . . during the course of a
trial.” United States v. Thomas, 116 F.3d 606, 618 (2d Cir. 1997). A trial judge
enjoys especially “broad flexibility” when the allegations of misconduct “relate to
statements made by the jurors themselves, rather than to outside influences.”
United States v. Sabhnani, 599 F.3d 215, 250 (2d Cir. 2010) (internal quotation
marks omitted). Even if a party moving for a mistrial shows that the court abused
its discretion, however, it must also demonstrate that “actual prejudice” resulted.
United States v. Abrams, 137 F.3d 704, 709 (2d Cir. 1998) (per curiam).
We see no abuse of discretion in the District Court’s decision to dismiss Juror
No. 2 and not Juror No. 1, and certainly no prejudice. After diligently and
exhaustively inquiring of each juror individually whether he or she felt under any
threat, pressure, or coercion to render a verdict in either party’s favor, the District
Court, relying on its observations of the jurors’ demeanors as well as their responses
to its careful questioning, concluded with “absolute[ ] confiden[ce] that nobody feels
threatened other than Juror No. 2.” Tr. at 7013:2-3. The record amply supports
that conclusion, and there is no cause for us to second-guess it. Moreover, given the
105
District Court’s dismissal — with the agreement of both sides — of Juror No. 2, its
decision not to ask Juror No. 1 whether she actually threatened Juror No. 2 was
reasonable. After all, the court had not only ensured that each remaining juror felt
capable of rendering an independent decision, but also had instructed each to vote
his or her own conscience. In any event, the District Court’s conclusion that none of
the remaining jurors felt he or she was deliberating under threat, pressure, or
coercion is fatal to Exxon’s argument that “it is inconceivable that another juror
would dare disagree with Juror [No.] 1 after seeing the fate of [holdout] Juror [No.]
2” — and, with it, Exxon’s theory of prejudice. Appellants’ Br. at 75. With this
established, we easily conclude that the relief Exxon sought — removal of Juror No.
1 — would have done nothing to change the outcome of the case; it would simply
have left an eight- rather than nine-person verdict. For these reasons, we affirm
the judgment of the District Court denying Exxon’s motion for a mistrial.
G. The City’s Cross-Appeals for Further Damages
We turn now to the City’s arguments on cross-appeal. The City first argues
that the jury should not have been instructed to reduce its compensatory damages
award to account for the cost to the City of treating pre-existing contamination at
Station Six. It further contends that the court erred in ruling that, as a matter of
law, the City was not entitled to recover punitive damages from Exxon.
106
1. Compensatory Damages Offset
At trial, Exxon argued that any compensatory damages awarded to the City
should be reduced by the necessary cost of remediating the other contaminants,
such as PCE, present in the Station Six capture zone. The District Court agreed,
and instructed the jury:
[i]f you find that [Exxon] has shown, by a fair preponderance of the
credible evidence, that the costs of treating the other contaminants in
isolation can be fairly estimated, then you must reduce the [C]ity’s
damage award for treating MTBE by the cost of treating these other
contaminants in isolation.
Tr. at 6637:11-15. The jury found that the cost of removing pre-existing
contamination — namely, PCE — was $70 million, and reduced its $250.5 million
compensatory damages award accordingly.
The City argues that the District Court’s instruction to the jury to reduce any
compensatory damages award to account for the pre-existing PCE contamination
was a legal error that “unfairly rewarded Exxon and penalized the City for a mere
fortuity.”47 Appellees’ Br. at 90. Because the wells in which Exxon caused MTBE
contamination happened also to be contaminated with PCE, the City asserts, the
$70 million damages reduction results in a windfall for Exxon which, as the
tortfeasor, should bear the entire cost of decontamination as a matter of principle.
Moreover, the City argues, no offset should be available because the MTBE
47
“We review jury instructions de novo to determine whether the jury was misled about the
correct legal standard or was otherwise inadequately informed of controlling law.” Crigger v.
Fahnestock & Co., Inc., 443 F.3d 230, 235 (2d Cir. 2006) (internal quotation marks omitted).
107
treatment costs are costs to “remedy a trespass,” and permitting an offset “sanctions
continuation of the trespass.” Id. at 93.
We disagree. The City’s argument misapprehends the nature of
compensatory damages, which are designed not to punish the wrongdoer, but to
compensate the victim for injuries actually suffered or expected to be suffered. See
McDougald v. Garber, 73 N.Y.2d 246, 253-54 (1989) (“The goal is to restore the
injured party, to the extent possible, to the position that would have been occupied
had the wrong not occurred.”). Here, it is undisputed that the PCE that is present
at Station Six precludes the City from serving the water, even absent any MTBE
contamination. Indeed, the City purchased the Station Six Wells from the Jamaica
Water Supply Company in response to complaints about the quality of Company-
supplied water, intending to use the wells as a back-up water supply. The pre-
existing contamination of that source required the City to build a treatment plant
before it could effectuate its purpose in purchasing the wells — i.e., serving potable
water in the future. Thus, the City expected to incur the cost of PCE
decontamination.48 The jury fixed that cost at $70 million. Awarding $250.5
million in “compensatory” damages to the City (before apportioning liability to other
parties responsible for the MTBE contamination) would therefore result in a
windfall to the City, not to Exxon. On these facts, we have little trouble concluding
48
Indeed, were drinking water wells purchased in fully efficient markets, one would expect
the price at which the City purchased the wells to be discounted by the cost a reasonable water
supplier could expect to incur when later decontaminating the water.
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that the District Court’s instruction to the jury to reduce the City’s damages award
by the cost of treating other pre-existing contaminants was correct.
2. Punitive Damages
We review de novo a district court’s determination that the evidence is
insufficient to permit a reasonable jury to consider awarding punitive damages.
Farias v. Instructional Sys., Inc., 259 F.3d 91, 101 (2d Cir. 2001). We will uphold
that determination if, drawing all inferences in the plaintiff’s favor, there is no
genuine issue of material fact and the defendant is entitled to judgment foreclosing
a punitive damages award as a matter of law. See Schonfeld v. Hilliard, 218 F.3d
164, 172 (2d Cir. 2000).
“Punitive damages, in contrast to compensatory damages, are awarded to
punish a defendant for wanton and reckless or malicious acts and to protect society
against similar acts.” Rivera v. City of New York, 836 N.Y.S.2d 108, 117 (1st Dep’t
2007). In New York, the standard for conduct warranting an award of punitive
damages “has been variously described but, essentially, it is conduct having a high
degree of moral culpability which manifests a conscious disregard of the rights of
others or conduct so reckless as to amount to such disregard.” Home Ins. Co. v.
American Home Prods. Corp., 75 N.Y.2d 196, 203 (1990) (internal quotation marks
and citations omitted). Such conduct “need not be intentionally harmful but may
consist of actions which constitute wilful or wanton negligence or recklessness.” Id.
at 204. Punitive damages are appropriate where the defendant “acted with actual
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malice involving an intentional wrongdoing” or where such conduct amounted to a
“wanton, willful or reckless disregard of plaintiffs’ rights.” Ligo v. Gerould, 665
N.Y.S.2d 223, 224 (4th Dep’t 1997).49
Our Court has observed that “the recklessness that will give rise to punitive
damages [under New York law] must be close to criminality.” Roginsky v.
Richardson-Merrell, Inc., 378 F.2d 832, 843 (2d Cir. 1967) (Friendly, J.); accord
Home Ins. Co., 75 N.Y.2d at 203 (referring to punitive damages as “a sort of hybrid
between a display of ethical indignation and the imposition of a criminal fine”
(internal quotation marks omitted)). Such recklessness may be found where the
defendant “is aware of and consciously disregards a substantial and unjustifiable
risk that such result will occur or that such circumstance exists.” Roginsky, 378
F.2d at 843 (internal quotation marks omitted). We focus on the “nature and
degree” of the risk and ask whether “disregard thereof constitutes a gross deviation
from the standard of conduct that a reasonable person would observe in the
situation.” Id. (internal quotation marks omitted).
A punitive damages award cannot be sustained under New York law unless
“the very high threshold of moral culpability is satisfied,” Giblin v. Murphy, 73
N.Y.2d 769, 772 (1988), because punitive damages are “a social exemplary remedy,
49
The Appellate Divisions in New York are divided over whether punitive damages must be
shown by clear and convincing evidence or a preponderance of the evidence. Compare Randi A. J. v.
Long Island Surgi-Ctr., 842 N.Y.S.2d 558, 568 (2d Dep’t 2007), and Munoz v. Puretz, 753 N.Y.S.2d
463, 466 (1st Dep’t 2003) (requiring clear and convincing evidence), with In re Seventh Judicial Dist.
Asbestos Litig., 593 N.Y.S.2d 685, 686-87 (4th Dep’t 1993) (requiring preponderance of the evidence).
The standard of proof does not affect our disposition of the City’s cross-appeal.
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not a private compensatory remedy,” Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354,
358 (1976) (internal quotation marks omitted). See also State Farm Mut. Auto. Ins.
Co. v. Campbell, 538 U.S. 408, 416 (2003) (observing that punitive damages “are
aimed at deterrence and retribution”). Accordingly, to warrant imposing punitive
damages, the reckless conduct at issue must be “sufficiently blameworthy” that
punishing it “advance[s] a strong public policy of the State.” Randi A. J. v. Long
Island Surgi-Ctr., 842 N.Y.S.2d 558, 564 (2d Dep’t 2007) (internal quotation marks
omitted). To analyze “the egregiousness of a tortfeasor’s conduct, and the
corresponding need for deterrence,” courts must “take into account the importance
of the underlying right or public policy jeopardized by the tortfeasor’s conduct.” Id.
at 565. “[T]he more important the right at issue, the greater the need to deter its
violation.” Id.At the close of Phase III of the trial, Exxon moved to preclude the jury from
considering an award of punitive damages, arguing that the City’s evidence was
insufficient as a matter of law to establish the requisite degree of malice,
recklessness, or wantonness. The District Court granted the motion, concluding
that the City had not shown that Exxon’s conduct created either severe actual harm
or a severe risk of potential harm to the Station Six Wells. Throughout its analysis,
the court discounted the City’s evidence of Exxon’s “general awareness of the
dangers of MTBE” because “the narrow question presented by this motion is
whether the City has produced or proffered sufficient evidence to allow a reasonable
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jury to conclude that [Exxon’s] conduct with respect to Station Six” warranted the
imposition of punitive damages.50 The court observed that “the vast majority of the
conduct that produced the City’s injury led to persistent levels of MTBE in the
capture zone of Station Six that are well below the MCL in place at the time the
conduct occurred.”51 This fact was relevant because, although a reasonable jury
could conclude that the City was injured by MTBE levels below the MCL,
“punishing [Exxon] for its contribution to this injury would not advance a strong
public policy of the State or protect against a severe risk to the public.”52 The
District Court also noted the lack of “credible evidence from which a jury could
conclude that the risk of harm to the City, resulting from [Exxon’s] conduct,
significantly outstripped the actual harm caused by that conduct.”53
The City offers a number of reasons in support of its contention that the
District Court erred in ruling on its punitive damages claim as a matter of law
instead of submitting it to the jury. The City contends that “[t]he fact that Exxon’s
conduct also had nationwide effects does not eliminate its status as conduct ‘with
respect to Station Six’” and that the court was wrong “to consider only the ultimate
outcome of Exxon’s conduct” given that the jury “clearly could have viewed Exxon’s
50
MTBE X, 2009 WL 3347214, at *5.
51
Id. at *6.
52
Id.53
Id. at *7.
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conduct as meriting punishment and deterrence.” Appellees’ Br. at 87-88. The City
further argues that the jury’s finding that the combined outflow of the wells will not
exceed the MCL is irrelevant because that “outcome” was “fortuitous,” and the
inactivity of the Station Six Wells “does nothing to mitigate Exxon’s harmful
conduct.” Id. at 88-89 (emphasis added). Finally, the City contends that whether a
jury could conclude that the risk of harm significantly exceeded the actual harm
caused was irrelevant because “the actual harm that Exxon caused was severe.” Id.
at 89.
In response, Exxon argues that punitive damages must be precluded because,
at all relevant times, its use of MTBE in gasoline was authorized by law; the jury
found that there was no “safer, feasible alternative” to MTBE (an assertion we have
already rejected); and, in any event, the City offered no evidence that any member
of the public has ever been harmed by MTBE in the Station Six Wells. Exxon
observes that there is no “genuine dispute” that the presence of MTBE in Station
Six’s capture zone was well below the 50 ppb MCL in place until December 2003,
and that “New York’s public policy, as expressed in its regulations, permits the
presence of MTBE in drinking water at the level found by the jury.” Appellants’
Reply Br. at 54. Exxon further argues that there is no need to deter further conduct
specifically relating to the use of MTBE in New York because New York banned
MTBE in 2004 and Congress repealed the oxygenate requirement in 2005. Finally,
in response to the City’s evidence of Exxon’s “general awareness that exposure to
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high concentrations of MTBE over long periods of time could cause injury,” Exxon
argues that such general awareness “cannot prove that [Exxon] knew years earlier,
when it was making the decision to use MTBE, that its MTBE gasoline would cause
some still-future injury to Station 6.” Appellants’ Reply Br. at 56.
We believe that Exxon has the better of this argument and that the District
Court properly held that no reasonable jury could conclude, by at least a
preponderance of the evidence, that Exxon was “aware of and consciously
disregard[ed] a substantial and unjustifiable risk” that a reasonable water provider
would, as a result of Exxon’s manufacture and supply of MTBE-containing gasoline
in New York, be forced to treat its water supply for MTBE contamination.
Roginsky, 378 F.2d at 843 (internal quotation marks omitted) (emphasis added).
Exxon was required by law to use an oxygenate in the gasoline it manufactured and
supplied. The vast majority of the evidence marshaled by the City related to
Exxon’s knowledge of the potential effects of MTBE on the odor and taste of water
and on the health of those consuming it, as well as MTBE’s tendency to spread
quickly upon leakage through underground storage tanks or spills. But there is no
evidence demonstrating that Exxon understood precisely how MTBE contamination
at spill sites — including the contamination it discovered in New York in 1998 —
would affect groundwater located some distance away from those sites. In fact, the
City’s evidence suggests that Exxon originally believed MTBE would dissipate to
extremely low contaminant levels in groundwater. On these facts, no reasonable
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jury could conclude that Exxon recklessly disregarded a known risk that its conduct
in the vicinity of Station Six, taken alone, would result in contaminant levels
exceeding those that a reasonable water provider would tolerate — the relevant risk
to be considered in determining whether Exxon’s conduct constituted “a gross
deviation from the standard of conduct that a reasonable person would observe in
the situation.” Id.What is especially telling on this issue is the jury’s projection that the
concentration of MTBE at Station Six would peak at 10 ppb in 2033. This
projection speaks not only to the “ultimate outcome of Exxon’s conduct,” Appellees’
Br. at 89, but also to the substantiality of the risk, inherent in supplying and
distributing MTBE-containing gasoline, that a reasonable water provider would one
day be required to decontaminate its water of MTBE. In light of this projection, we
do not believe that a reasonable jury could also find that Exxon’s conduct created a
substantial and unjustifiable risk that the persistent levels of MTBE in Station Six
would exceed a reasonable water provider’s tolerable MCL, thereby risking
substantial injury to the interest of New York residents in potable drinking water.
This is particularly so in the context of Congress’s mandate to use an oxygenate and
the City’s tolerance of a 50-ppb concentration of MTBE in its drinking water during
the time when most of Exxon’s allegedly reckless conduct occurred.54 For these
54
We express no view on and do not consider the propriety of penalizing Exxon for its
conduct at other sites in other states, for a New York jury may punish only the acts giving rise to
plaintiff’s injury. Frankson, 886 N.Y.S.2d at 721-22. Nor does our conclusion as to the availability of
punitive damages in this bellwether case on this particular record foreclose the availability of
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reasons, we affirm the District Court’s determination that the evidence was
insufficient as a matter of law to permit the jury to consider an award of punitive
damages.
III. CONCLUSION
To summarize: We conclude that the state law tort verdict against Exxon is
not preempted by the federal Clean Air Act. We conclude that the jury’s finding
that the MTBE levels in Station Six Wells will peak at 10 ppb in 2033 — the MCL
for MTBE since 2004 — is not inconsistent with a conclusion that the City has been
injured. We conclude that the City’s suit was ripe because the City demonstrated a
present injury, and that the City’s suit was not barred by the statute of limitations.
We conclude that the jury’s verdict finding Exxon liable under state tort law
theories is not precluded by the jury’s concurrent conclusion that the City had not
carried its burden, in the design-defect context, of demonstrating a feasible, cost-
reasonable alternative to MTBE available to satisfy the standards of the now-
repealed Reformulated Gasoline Program. We conclude that Exxon’s demand for a
retrial because of an incident of juror misconduct is unavailing. And we conclude
that the jury properly offset the gross damages award by amounts it reasonably
attributed to cleanup of contaminants other than MTBE, and that the City was not
entitled to a jury determination of Exxon’s liability for punitive damages.
punitive damages in other MTBE cases before the District Court.
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For the foregoing reasons, we AFFIRM the judgment of the District Court in
its entirety.
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