In Re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation
725 F.3d 65
| 2d Cir. | 2013Background
- The City of New York sued Exxon Mobil for contaminating the Station Six groundwater wells in Queens with MTBE, a gasoline oxygenate used widely from the 1980s until New York banned MTBE in 2004. The case was a bellwether MDL trial.
- An 11-week jury trial proceeded in phases: (I) City’s good-faith intent to use Station Six as a backup drinking-water source (jury: yes); (II) whether MTBE will be in the wells and peak concentration (jury: peak 10 ppb in 2033); (III) liability and damages (jury found Exxon liable for negligence, trespass, public nuisance, and failure-to-warn; awarded $250.5M gross, offset for other contaminants and settling defendants, net $104.69M).
- The jury rejected the City’s strict design-defect claim. The District Court barred a punitive-damages phase as a matter of law. Post-trial motions were denied.
- Exxon challenged the verdict on multiple grounds on appeal: federal preemption under the Clean Air Act (RFG oxygenate requirements), lack of legally cognizable injury (MTBE at or below MCL), ripeness/statute of limitations, insufficiency of proof on causation/injury and use of market-share evidence, jury misconduct, and damages offsets; City cross-appealed on punitive damages and the offset instruction.
- The Second Circuit affirmed in full, holding (inter alia) that: the state-law verdict was not preempted by the Clean Air Act; MTBE below MCL can still be cognizable injury for standing and under New York law; the claims were ripe and not time-barred on the record; the evidence supported liability and damages; the juror-misconduct handling was not an abuse; and punitive damages were properly rejected as a matter of law on the record.
Issues
| Issue | Plaintiff's Argument (City) | Defendant's Argument (Exxon) | Held |
|---|---|---|---|
| Preemption (Clean Air Act RFG program) | State tort recovery allowed; CAA did not require MTBE specifically and does not preempt state tort law imposing additional duties for spills/leaks. | RFG oxygenate requirement made use of MTBE effectively mandatory; state tort verdict penalizes compliance with federal law and is preempted (impossibility/obstacle). | Rejected preemption. CAA did not compel MTBE; jury found Exxon liable for tortious acts beyond mere use of MTBE (e.g., negligent storage/cleanup), so no impossibility or obstacle preemption. |
| Legal cognizability of injury / Standing (MTBE = 10 ppb, equal to post‑2004 MCL) | City suffered concrete injury: lost use/need to treat wells, taste/odor and health concerns, and will bear treatment costs — suffices for Article III and NY tort injury even below MCL. | No cognizable injury where contamination does not exceed regulatory MCL; no standing or state-law injury. | Rejected Exxon. MCL is not the sole test for injury; below‑MCL contamination can be a legally cognizable injury for standing and under New York law where a reasonable water provider would treat the water. |
| Ripeness & statute of limitations | Claims are ripe because contamination is present and injury is ongoing; statute of limitations depends on discovery and was for the jury to decide. | Claims are unripe/speculative because Station Six not in use and future use/harms are contingent; moreover, City discovered contamination earlier, so claims time‑barred. | Claims are constitutionally and prudentially ripe; plaintiff had present injury. Jury reasonably found City did not discover actionable injury more than three years before suit — statute-of-limitations defense rejected. |
| Causation, sufficiency, damages, and remedies (market-share, offsets, punitive) | Proof (hydrogeology, treatment-cost experts, market/supply evidence) supports causation, credible peak estimate (10 ppb), and damages; offsets for preexisting contaminants are permissible; punitive damages warranted by Exxon’s early MTBE knowledge and conduct. | Terry’s modeling was flawed/speculative; jury improperly relied on market‑share evidence; damages speculative; punitive damages preempted or unsupported; jury misconduct required a new trial. | Evidence sufficed. Jury peak (10 ppb) was within expert range and not speculative; market‑share/supply evidence was admissible circumstantial proof of causation (not sole basis for liability); offset for preexisting PCE was proper; juror‑misconduct handling was not an abuse and no prejudice shown; punitive damages appropriately rejected as a matter of law on the record. |
Key Cases Cited
- Wyeth v. Levine, 555 U.S. 555 (2009) (preemption analysis; presumption against preempting state law tort remedies)
- Geier v. American Honda Motor Co., 529 U.S. 861 (2000) (state law penalizing what federal law requires can yield conflict preemption)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing: injury‑in‑fact, causation, redressability)
- Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) (express preemption and statutory‑construction principles)
- Hymowitz v. Eli Lilly & Co., 73 N.Y.2d 487 (1989) (New York market‑share liability doctrine)
- In re MTBE Products Liability Litigation, 488 F.3d 112 (2d Cir. 2007) (MDL precedent interpreting federal/regulatory context of MTBE litigation)