City of Modesto v. Dow Chem. Co., 19 Cal. App. 5th 130

Background

City of Modesto, Modesto Sewer District No.1 and the Redevelopment Agency sued dry cleaners, PCE manufacturers (Dow, PPG/Axiall), and a distributor (R.R. Street) for groundwater and soil contamination from perchloroethylene (PCE) across many sites in Modesto; litigation spanned ~14 years with multiple trial phases and appeals.
Plaintiffs sought recovery of investigation and remediation costs under the Polanco Redevelopment Act (incorporating Water Code §13304 and aspects of CERCLA/HSAA) and nuisance/product-liability theories; many defendants settled leaving five active defendants on appeal.
Technical context: PCE is a dense non‑aqueous phase liquid (DNAPL) that sinks, is persistent, slowly dissolves into groundwater, and is hard to remediate; dry‑cleaning equipment and practices (separator water, still bottoms, cartridge handling, sniffer steam‑outs, spills/dumping) produced PCE releases.
In an earlier decision (Modesto I), the appellate court held manufacturers could be liable under the Polanco Act when they took affirmative steps directed toward improper disposal (e.g., creating systems or instructing users), but mere placement of solvent in commerce without more (failure to warn) did not create Polanco Act liability.
On remand, trial courts applied Modesto I differently: one treated defendant conduct in the aggregate as evidencing liability; another imposed a stricter, site‑by‑site “specific instruction” causation test (instruction received, relied on, and was the mechanism of contamination). The present opinion rejects the stricter causation test.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper causation standard for Polanco Act liability	Polanco I allows liability where defendant's affirmative steps (including instructions, promotion of expertise, failure to correct) taken as a whole were a substantial factor in creating nuisance and contamination	Modesto I requires a heightened, site‑by‑site chain: plaintiff must show a specific instruction was received, relied on, and caused the site's contamination	Court: reject heightened test; apply ordinary substantial‑factor causation using circumstantial evidence; vacate Phase IV ruling and remand
Scope of who is a “responsible party” under Polanco Act/Water Code §13304	Manufacturers who created/assisted in creation of disposal systems or instructed improper disposal can be responsible parties	Manufacturers are remote suppliers and not liable absent control or direct discharge	Court: Modesto I remains correct — affirmative steps toward improper disposal can create liability; mere placement in commerce without more is not enough
Applicability of CERCLA/HSAA burden‑shifting and causation rules	City argued Polanco incorporates CERCLA standards so defendants must disprove causation once response costs triggered	Defendants argued CERCLA standards don't replace causation proof here	Court: CERCLA/HSAA liability features (strict, joint & several, retroactive) incorporated as to categories they govern but do not eliminate plaintiff's burden to prove causation in this context
Admissibility of circumstantial proof vs. direct proof of reliance	City: circumstantial evidence (industrywide instructions, promotional conduct, course of dealings, timing) suffices to infer causation	Defendants: require direct evidence linking each instruction to each dry cleaner and to each contaminated site	Court: direct proof of every link not required; reasonable inferences from circumstantial evidence can satisfy substantial‑factor causation

Key Cases Cited

City of Modesto Redevelopment Agency v. Superior Court, 119 Cal.App.4th 28 (2004) (Polanco I — manufacturers may be liable when they take affirmative steps toward improper disposal)
City of San Diego v. U.S. Gypsum Co., 30 Cal.App.4th 575 (1994) (limits on converting products liability into nuisance claims)
Selma Pressure Treating Co. v. Osmose Wood Preserving Co., 221 Cal.App.3d 1601 (1990) (designer/supplier liability where they assisted in creating disposal that threatened water supply)
Saelzler v. Advanced Group, 25 Cal.4th 763 (2001) (causation cannot rest on mere possibility or speculation)
Merrill v. Navegar, Inc., 26 Cal.4th 465 (2001) (need for evidence linking defendant conduct to harm)
Viner v. Sweet, 30 Cal.4th 1232 (2003) (causation standard: more likely than not; proof may be circumstantial)
Stevens v. Parke, Davis & Co., 9 Cal.3d 51 (1973) (circumstantial evidence of promotion can support causation against drug manufacturer)
O'Neil v. Crane Co., 53 Cal.4th 335 (2012) (limits on imposing liability for harms caused by others’ products used later; exceptions where defendant product contributed substantially)
Wilson v. Superior Court, 227 Cal.App.4th 579 (2014) (substantial‑factor causation suffices; no requirement that unlawful inducement be sole cause)