In late 1998, the City of Modesto (the City), the City of Modesto Sewer District No. 1 (the Sewer District) and the Modesto Redevelopment Agency (the RDA) sued various retail dry cleaning businesses (dry cleaners) operating in Modesto together with
This action has engendered nearly 14 years of litigation, including three detours to this court, and five trial phases. A final judgment was entered in November of 2011, and an amended judgment in May 2012. To the extent it can be summarized in one sentence, the judgment awarded plaintiffs damages with respect to three dry cleaning sites, including an award of punitive
An issue that has been central to this litigation from the outset is the interpretation and application of the Polanco Redevelopment Act ( Health & Saf. Code, § 33459 et seq. ) (the Polanco Act),
Thereafter, the Polanco Act claims were tried two times, with respect to different contaminated sites, before two different judges, with different results. In the second proceeding, the trial court concluded that Modesto I implied a special causation standard was applicable to the Polanco Act claims. In the published portion of this opinion we hold that no special causation standard applies and we will, accordingly, vacate the trial court's ruling and order on the Phase IV Polanco Act claims.
In the unpublished portion of the opinion we address the remaining issues on appeal. We will vacate the trial court's pretrial ruling with respect to plaintiffs' nuisance claims; the punitive damages award against defendant, the Dow Chemical Company (Dow) in Phase I; and the trial court's directed verdict on grounds of no present injury as to various sites in Phase III. Our determinations with respect to the statute of limitations, the denial of equitable relief, the amended judgment, the prevailing parties and the allocation of settlement credits will be described in the course of the opinion.
II. GENERAL BACKGROUND
We begin by providing some general technical information about the characteristics of PCE, how it can contaminate groundwater, how it is used and reused in dry cleaning equipment, and how it was released into the environment. This is not a comprehensive discussion of the evidence but is intended only to supply context for our discussion of the issues on this appeal.
Perchloroethylene, also known as tetrachloroethylene, is a molecule containing chlorine atoms and carbon atoms. It is also characterized as a "volatile halogenated organic compound," a "halogenated hydrocarbon", a "chlorinated solvent" or a "chlorinated hydrocarbon". As shorthand, it is referred to as "perc" or PCE. All chlorinated hydrocarbons, like all solvents other than water, are "toxic." In 1978, the National Institute for Occupational Safety Hazards (NIOSH) recommended that PCE be handled as if it were a human carcinogen. In 1980 the State of California began regulating PCE as a hazardous waste. In 1984, when the Resource Conservation Recovery Administration (RCRA) was reauthorized, its regulations brought "small dry cleaners" under the same requirements as major hazardous waste sources, with respect to PCE.
The California Department of Health Services has set the maximum contamination level (MCL) for PCE in drinking water at 5 parts per billion based on its finding that PCE potentially causes cancer in humans. Applying this standard, if one cup of PCE were completely dissolved in water, it could contaminate 24 million gallons of groundwater. There are also regulations to prevent migration of PCE vapors in concentrations that could cause cancer. All parties agree that the applicable regulatory standards are not arbitrary and address genuine public health risks.
PCE is a colorless liquid, and is therefore difficult to see once released into soil. It is a cleaning solvent used by dry cleaners and also in degreasing operations. Because in its pure form it is a dense non-aqueous phase liquid (DNAPL), it is heavier than water and so when placed in water it will sink and sit below the water. This is distinguished from a light non-aqueous phase liquid (LNAPL), such as gasoline, that is lighter than water and will therefore float on top. PCE also has lower viscosity (internal friction) than water and so it is very mobile and can move quickly to penetrate, for example, small cracks or joints in concrete. PCE does not readily dissolve in water-thus, "non-aqueous"-although it will dissolve very slowly over time. PCE is also quite volatile, meaning it will quickly become a gas when it is heated or released into soil where it mixes with the soil gas.
As is explained below, PCE is particularly "persistent" and "long lived" compared to other contaminants, making it extremely difficult to accomplish complete remediation.
B. The Flow and Transport of PCE in a Groundwater System
The City of Modesto uses groundwater as a primary source of its drinking water supply. The hydrologic cycle for groundwater is fairly straightforward. The
When released into the ground, PCE can also remain in liquid form and will sink through the subsurface to the water table. Unlike gasoline-which is a LNAPL and will tend to float on top of the water table-PCE is a DNAPL and so will continue to move past the water table and through the saturated zone. Because it dissolves into water only very slowly, it creates a long-term continuing source of contamination to any groundwater that comes in contact with it.
Small releases of pure PCE will tend to penetrate only into the vadose zone because it gets "pulled apart" as both a gas and a liquid and will eventually get trapped in the soil pores-much like a small amount of coffee will be absorbed into and trapped in a sugar cube. When more PCE is added, however-either a larger release or repeated releases-the PCE breaks out and penetrates deeper. Even if it pools or perches on the fine-grained soil layers, it can still stair-step down through the subsurface and reach the capillary fringe and-if there is enough PCE-the water table. If PCE is being cleaned out of the groundwater, the PCE that pools or has been trapped above the water table will continue to move into the water table-a process called "back diffusion"-and thus is another long term source of groundwater contamination. PCE that has been trapped in the subsurface can also move downward during a "recharge event;" the PCE can dissolve into the rainwater and be released from the vadose zone, and is yet another long-term source of contamination.
PCE that pools on top of fine-grained layers will stop moving vertically but then will begin to move in other directions due to differing soil strata and "fine textural changes" in the sand; as a result, PCE will have a very
C. The Use, Reuse and Release of PCE and PCE Residue at Dry Cleaners
As we have described, PCE is particularly "persistent" and "long lived" compared to other compounds, making it difficult to remediate but advantageous for industrial use because it can be reused after being distilled back to its pure state. Dry cleaning equipment therefore has the capacity to do that. Here we provide an elementary description of how the various machines work.
From the 1950's to the 1970's, dry cleaners used what is now referred to as "first generation" equipment. In that iteration, the washer and the dryer were separate machines. In this equipment PCE was continuously pumped into, and drained out of, the washer from a tank on the bottom of the machine into the basket containing the clothing. As the solvent drained out it was sent through a filter, to clean out the solids, dyes and soil being removed from garments, before it was pumped back into
The "second generation" machines were used from the 1970's to the mid-1980's. This equipment operated in the same way, but combined the washing and drying functions into one "dry-to-dry" machine. Also, after reclaiming most of the vapor, some residual vapors were vented into the air at end of the dry cycle. An operator, however, could add a "sniffer" (carbon adsorber) to capture the vapors. These were very large and contained perhaps 100 pounds of charcoal or carbon in which the vapors were caught.
The "third generation" machines were used from the mid-1980's to the mid-1990's. These were also dry-to-dry machines, but used refrigeration coils instead of water to cool the vapor, which was far more efficient in turning vapors to liquid for recovery. The fourth generation machines added a built-in carbon adsorber to filter out the last traces of PCE vapors before the door to the machine was opened.
Reclaiming dryers (or "reclaimers") operate with hot air, so the solvent on the clothing vaporizes. Those vapors are continually blown out of the
The water separator is a device by which any water-even just from humidity in the air-is removed from the recaptured solvent. All used solvent, no matter from where it is reclaimed or distilled, must go through the water separator before it is reused. The water separator operates by gravity. Because PCE is heavier than water, it will settle to the bottom of the separator. It is then siphoned out by a drain that is piped back to the tank. The water, called "contact water" or "separator wastewater" is drained out through a different pipe located higher in the separator, and was (during the pertinent time period) sent either down a drain or into a pail, depending on how the machine had been set up. All contact water has a certain amount of PCE left in it, because the separation is "imperfect."
As noted, some dry cleaners added a sniffer, or carbon adsorber, to collect solvent vapors. To release the solvent from the sniffer, live steam would be applied to the charcoal bed to release the solvent as vapor; the steam and vapors were then vented to the pipe with the cooling coils where they would condense and go to the water separator. This process creates significantly more separator wastewater than other reclaiming processes because of the large amount of steam.
The final major piece of equipment is the still, which is used to clean the solvent. All solvent is periodically sent to the still, because it will accumulate residual oil, grease, wax, detergent and other impurities. The solvent is heated with steam coils until it begins to vaporize. The vapors are sent through pipes with cooling coils and then to the water separator. The residue, that is, what remains behind after the PCE is vaporized, is called "still bottom residue" or "muck."
Even after draining the filter for 24 hours there could be as much as a gallon and a half of PCE remaining in the filter. At some point prior to 1984, a process was developed by which, like cleaning out a sniffer, high pressure steam was used to release the remaining PCE from the filter cartridge, although it could never remove 100 percent. This was accomplished by a "solvent recovery system" or SRS. The cartridges were placed into a tank and steam was released into the tank to vaporize the PCE which, again, goes to the water separator. This involves a great deal of steam, and creates a "tremendous" amount of contact water-up to 20-25 gallons.
In very general terms, PCE releases into the environment occurred as a result of equipment failures or leaks during operation or maintenance of the machine or the water separator, leaks in joints or valves due to vibration of equipment, and leaks or spills during solvent delivery or transfers which are flushed to the outdoors, or which permeate the concrete floors, or seep through the cracks or joints in the floors. PCE releases also occurred as a result of tossing filter cartridges into the garbage, tossing muck into the trash or into dumpsters, or "out the back door"; and by PCE disposal practices which have been described as "dumping" or "back lot burial." PCE also entered the soil by releases of separator water on the ground or down the drain and into the sewer system, thence out of sewer pipes into the ground.
In addition, those servicing the dry cleaners on behalf of the manufacturers or distributors performed tests to check on the amount of detergent in the solvent. The dry cleaners did not want that liquid to be put back in the machines because it used a strong dye, so as a practical matter the test liquid, which contained about 25 percent PCE, was poured down the drain.
D. Contamination of Soils, Groundwater and Wells in Modesto
Defendants do not dispute that the soils at many dry cleaning sites in Modesto are contaminated by PCE. It is also not the subject of serious dispute that this contamination has dispersed through the subsurface and into the groundwater at many sites. PCE contamination can enter a municipal supply well by migrating with the groundwater generally according to the natural gradient, but when it is near a well, it will come within the "cone of draw" and will be captured and pumped into the well.
The residents of Modesto rely on groundwater wells to produce most of
PCE has been detected in four of the City's wells, and two were removed from service after exceeding the state-mandated MCL. The parties dispute whether and when the third and fourth wells (or additional wells) will exceed the MCL for PCE.
This action was filed as a result of the PCE contamination from the dry cleaning sites in Modesto.
III. PROCEDURAL HISTORY
A. Overview
B. The Parties to the Appeal
The City of Modesto is a plaintiff and the principal appellant. The RDA also filed a separate action, which was consolidated with the City's action. In 2012, however, the legislature effectively dissolved all redevelopment agencies. (§ 34172.) The City became the RDA's "successor agency" by operation of law (§ 34173), and pursues the RDA's appeal, together with the City Attorney of Modesto who, representing the People of the State of California, seeks a nuisance injunction. The Modesto Sewer District No. 1 was also a plaintiff and a cross-defendant but is involved in this appeal only with respect to the cost award entered against it. For ease of reference we will refer to all plaintiffs as "the City."
The operative complaints named 28 defendants. Along the way, however, most of the defendants settled, and there now remain only five active participants. They are: two dry cleaning establishments, Modesto Steam Laundry (MSL) and Estate of Shantilal Jamnadas, dba Halford's Cleaners (Halford's); two PCE manufacturers, the Dow Chemical Company (Dow) and Axiall Corporation, the successor in interest to PPG Industries, Inc. (PPG); and one PCE distributor, R.R. Street & Company (Street), which also manufactured some equipment used by the dry cleaners. Dow is the sole cross-appellant on the issue of punitive damages.
C.-L.
A. Modesto I and the Causation Standard
Plaintiffs contend that in the Phase IV Polanco Act bench trial, the court erred in applying an exceptionally stringent standard of causation based on its erroneous interpretation of Modesto I . We agree and our analysis follows.
1. The Precise Issue on Appeal
2. The Polanco Act
We begin our discussion with a summary of the Polanco Act and then provide a more detailed description of how that law was interpreted in Modesto I.
The trial court aptly summarized the Act's core provisions. " 'The Polanco Act involves cleanup of the release of hazardous substances in the context of a redevelopment project.' [Citation.] Subject to certain statutory conditions, the Act authorizes
The term "responsible party" is defined by reference to two other laws. First, the Act incorporates a provision of the HSAA (§ 25323.5, subd. (a)(1)), which, in turn, incorporates CERCLA's definition of "covered persons" for purposes of liability (
3. The Modesto IDecision
Early on in this case, the manufacturer defendants filed a motion for summary adjudication of the Polanco Act and negligence per se claims. They argued they were not "responsible parties" under the Polanco Act because they neither themselves discharged the PCE nor did they control any site where the discharges occurred. The trial court granted the motion, ruling that the manufacturers were not "responsible parties" under the statute because in order for a party to "cause" a discharge "you have to have some sort of physical control or the ability to stop it from happening." ( Modesto I , supra ,
In the decision, we first rehearsed the statutory language. As we have already
To answer that question we noted, first, that environmental legislation by which government exercises its traditional power to regulate public nuisances should be construed in light of common law principles bearing on nuisance, citing Leslie Salt Co. v. San Francisco Bay Conservation etc. Com. (1984)
The first principle, which has "long been the law in California," is that " ' "[n]ot only is the party who maintains the nuisance liable but also the party or parties who create or assist in its creation are responsible for the ensuing damages." ' [Citation.]" ( Modesto I , supra ,
Our second principle was a limiting one. We concluded that, "[w]hile liability for nuisance is broad, ... it is not unlimited" and the " City of San Diego [v. U.S. Gypsum Co. (1994)
We then proceeded to the next question: Whether, in this case, "the Polanco Act claims fall within the realm of nuisance or of products liability;" that is, "has city presented evidence that the defendants assisted in the creation of a nuisance, or only that they produced or supplied defective products?" (
We agreed with the first conclusion-"that those who create or assist in creating a system that causes hazardous wastes to be disposed of improperly, or who instruct users to dispose of wastes improperly, can be liable under the law of nuisance." ( Modesto I , supra , 119 Cal.App.4th at pp. 40-41,
At the other end of the spectrum, the City had argued that liability for nuisance can be fixed by proving only that defendants manufactured and sold solvents to dry cleaners with knowledge of the hazards of those substances and without alerting the dry cleaners to proper methods of disposal. ( Modesto I , supra ,
We, accordingly, held that "those who took affirmative steps directed toward the improper discharge of solvent wastes-for instance , by manufacturing a system designed to dispose of wastes improperly or by instructing users of its products to dispose of wastes improperly-may be liable under [ ( Wat. Code § 13304, subd (a) ) ] but those who merely placed solvents in the stream of commerce without warning adequately of the dangers of improper disposal are not liable under that section of the [code]." ( Modesto I , supra ,
4. Defendants' Interpretation of Modesto I is Rejected
On remand, the trial court reconsidered the matter, and issued a tentative decision denying the motion. The court explained: "[With regard to t]he solvent manufacturer defendants, the Court of Appeal instructed that simply placing this material in the stream of commerce without warnings would not
The trial court pointed out, however, that the question before it was not whether it could make findings on causation, but only whether there were sufficient facts that would "rationally allow a juror" to make such findings. Rejecting defendants' arguments, the trial court affirmed its tentative ruling, concluding that, under the standard articulated in Modesto I , a reasonable juror could find a violation of the Polanco Act based on the evidence before the court.
The trial court again rejected defendants' interpretation of Modesto I . The judge identified the "critical inquiry" as "whether the defendants' [PCE manufacturers'] actions, taken as a whole, 'created or assisted in the creation of the nuisance.' " As that court explained, "[t]he appellate Court cited the giving of 'instructions' as an example of something that may 'assist in the creation' of a nuisance, but did not suggest that this is the only conduct that would qualify." The court noted that Modesto I identified one limitation on the otherwise broad liability for nuisance viz., that the law of nuisance is not intended
The trial court then quoted the language by which it would be guided. " '[T]hose who took affirmative steps directed toward the improper discharge of solvent wastes-for instance by manufacturing a system designed to dispose of wastes improperly or by instructing users of its products to dispose of wastes improperly-may be liable under the statute, but those who merely placed solvents in the stream of commerce without warning adequately of the dangers of improper disposal are not liable under that section of the [Water Code].' City of Modesto,
The court found, in addition, that at the time the manufacturers were holding themselves out as experts, they knew that PCE could cause groundwater contamination; that Street employees visited Modesto Steam over the course of two decades and during those visits poured PCE from "titration tests" into the drain; and that the manufacturers delayed too long in correcting their communications to their customers concerning the improper waste handling and disposal practices. "The record, taken as a whole," the court concluded, "establishes that the manufacturer defendants are 'responsible parties' under the Polanco Act ... because they 'created or assisted in the creation of a nuisance.' "
5. Defendants' Modesto I Causation Theory is Accepted
The trial court's rejection of defendants' causation theory in the first Polanco Act trial did not deter them from making the
The City, for its part, urged the court not to focus on the manufacturers' disposal instructions in isolation but to look at the totality of defendants' conduct over decades, in addition to the provision of instructions, to determine whether all of their activities in the marketplace, including a failure to take corrective action, could be found to have assisted in creating the PCE pollution, citing as an example, the findings of the judge in the Phase II trial. The City argued that the correct inquiry is "what did defendants do in
In the end, the trial court agreed with defendants. Although the court accurately summarized the reasoning and holding of Modesto I , it interpolated into that opinion the proof requirements which defendants had championed. Noting that the Polanco Act implicitly requires proof that "defendant's conduct caused the discharge in question," the court observed that Modesto I did not spell out the "kind of factual showing a plaintiff must make in order to prove that a solvent manufacturer's improper disposal instruction(s) caused a release of PCE. (Italics added.)" It nevertheless decided that specific proof requirements "follow" from Modesto I 's holding: "First, the user must have received the instruction(s). Second, the user must have disposed of hazardous waste in a manner consistent with the instruction(s). Third, the contamination for which cost recovery is sought under the Act must have been caused by a release mechanism contained in the instruction(s) and employed by the user[,] ... since the release could have been caused by an operator acting independently of a defendant's instruction(s) or by some other event unrelated to the actions of a defendant. Finally, with respect to the release of PCE, the user must have purchased the defendant's solvent, since the manufacturers in this case only provided PCE-related information to their customers and end users."
The trial court specifically rejected the City's argument that the court should consider whether other conduct-including whether defendants touted their expertise and individualized services with respect to PCE and its disposal; whether defendants promoted reliance by their customers on defendants' expertise; and whether, once defendants knew that PCE could contaminate groundwater, they failed to send out corrective information about disposal practices-to determine whether defendants were responsible parties. The court concluded that Modesto I neither requires nor even suggests that these factors are relevant. The court specifically rejected consideration of "whether Defendants' actions,
6. Analysis
a. Modesto I did not address causation
To begin with, the trial court's focus on the provision of disposal instructions to the exclusion of all other potentially relevant factors is not supported by the holding of Modesto I . As the judge in Phase II observed, Modesto I
More to the point, Modesto I simply did not address the issue of how causation must be proven. Defendants argue that Modesto I requires proof of a special "chain of causation," demonstrating by direct evidence that a specific disposal instruction was received, read and acted on by a specific dry cleaner, which act caused contamination at a specific site. In support, they cite and emphasize phrases in the Modesto I opinion indicating that those whose involvement in discharges is "remote and passive" or who have "no active involvement" in activity that is "directly connected with the disposal of solvents" cannot be liable under the Polanco Act. But these phrases merely explain how we construed the term "responsible party" in the statute; they say nothing about proof of causation. As the trial court correctly observed, the Modesto I opinion did not address the quantum or nature of proof required to prove the causation element of liability. In short, nothing in the opinion either states or implies that any unusual or special causation test would apply.
b. The substantial factor test of causation
Defendants also contend, however, that the substantial factor causation test requires this same heightened standard of proof. Defendants begin by reciting some basic legal principles, such as, that liability cannot be premised on a mere possibility of causation, nor on probabilities that are, at best, evenly balanced, nor on speculation
"Although a finding of causation may not be based on mere speculation or conjecture, such finding may be predicated on reasonable inferences drawn from circumstantial evidence." ( Smith v. Lockheed Propulsion Co. (1967)
Defendants cite Viner v. Sweet (2003)
In Viner the high court found no reason to except transactional malpractice from the traditional "but for" standard applied in malpractice cases. ( Id . at pp. 1240-1242,
So, for example, in Wilson , plaintiff brought a qui tam action against a drug company (BMS) alleging it provided lavish gifts to physicians and members of formulary committees to induce them to prescribe BMS's drugs. Plaintiff alleged that "as a result of kickbacks BMS provided to them" the physicians and formulary committees selected BMS's drugs, and submitted insurance claims therefor, in violation of a statute prohibiting the employment of persons to procure patients to obtain insurance benefits. ( Wilson , supra ,
The court of appeal reversed. It concluded the trial court erred when it ruled that plaintiffs must establish not only that BMS's conduct was a substantial factor resulting in the prescriptions, but also that it was essential to the result, i.e., "that if the prescription would have been written even without BMS's unlawful inducement, the unlawful conduct cannot be found to have caused the prescription and claim." ( Wilson , supra ,
The court affirmed the jury's verdict. It concluded there was "adequate circumstantial evidence in the record...to support a reasonable inference by the jury that [the physician] was induced to prescribe the drug for [the decedent] because of Parke, Davis' overpromotion. Like many others of the profession, he had been exposed to the promotional tactics employed by Parke, Davis. It is reasonable to assume that the company's efforts consciously or subconsciously influenced him."
Defendants also contend that product identification is, itself, always required for liability because one manufacturer may not
Finally, defendants argue that permitting abatement liability to be imposed on manufacturers without proof of each causal link-"that a specific affirmative instruction was received, read, and acted on by a particular drycleaner, and then resulted in contamination at a given site"-would be adverse to public policy, citing Ferguson v. Lieff, Cabraser, Heimann & Bernstein (2003)
In Ferguson , our high court held that allowing plaintiffs in a malpractice action to recover, as compensatory damages, the punitive damages their
In O'Neil , the plaintiff had not been exposed to any asbestos-containing product manufactured or sold by the defendant, but only to the products of others used to replace, many years later, the packing and gaskets in defendant's pumps and valves. The court declined to impose liability because a manufacturer could not " 'reasonably be expected to foresee the risk of latent disease arising from products supplied by others that may be used with the manufacturer's product years or decades after the product leaves the manufacturer's control.' " ( O'Neil , supra , 53 Cal.4th at pp. 364-365,
Defendants cite to the principle that " 'proximate cause "is ordinarily concerned, not with the fact of causation, but with the various considerations of policy that limit an actor's responsibility for the consequences of his conduct." ' [Citation.]" ( Ferguson , supra ,
The measure of proof for causation should be no different here than that applied in any other similar action. As noted previously, the plaintiff need only " ' "introduce evidence which affords a reasonable basis for the conclusion that it is more likely than not that the conduct of the defendant was a
c. CERCLA Liability Standards Do Not Apply
The City advanced below and advances here an alternative argument to support causation. It contends that the Polanco Act incorporated by reference CERCLA's "scope and standard of liability" (§ 33459.4, subd. (c)) and therefore, under CERCLA case law, the defendants bear the burden of proving that they did not cause the release that triggered the response costs, citing United States v. Alcan Aluminum Corp. (2d Cir. 1993)
7. Conclusion
Defendants argued and the trial court concluded that Modesto I set up a special proof standard under the Polanco Act, viz, that causation can be demonstrated only by proof that a specific disposal instruction was received by a dry cleaner who read, relied on and followed the instruction and by that act caused the contamination, to the exclusion of any other evidence that might be relevant to prove defendants assisted in creating the pollution. This is not a fair reading of the opinion. Modesto I did not set limits on how causation was to be proven; it articulated a liability standard that required, as a threshold matter, that the provider of the product be something more than a mute, passive supplier. "Those [manufacturers] who took affirmative steps directed toward the improper discharge of solvent wastes-for instance, ... by instructing users of its products to dispose of wastes improperly-may be liable under [that statute]" but those who merely placed solvents in the stream of commerce without warning about the dangers of improper disposal are not liable. ( Modesto I , supra ,
Under the substantial factor test there may or may not be sufficient evidence to support liability for the Phase IV sites but that question has not been put to us, and will have to be resolved on remand.
B.-H.
V. DISPOSITION
The order denying reconsideration of the summary adjudication of the nuisance claims is vacated and the matter is remanded with directions to deny the motions for summary adjudication on the nuisance claims and to conduct further proceedings.
The punitive damages award against Dow in the Phase I proceeding is reversed.
The decision and order denying relief in the Phase IV proceeding is reversed and the matter is remanded for further proceedings.
The further proceedings ordered herein shall not include R.R. Street and Company.
The amended judgment is vacated as void.
The prevailing party determinations with respect to Phases III and IV are
The order allocating settlement credits is vacated.
In all other respects we affirm the judgment entered on November 15, 2011.
All parties shall bear their own costs on appeal except for those costs comprised of attorney's fees to which a party may be entitled pursuant to statute, which shall be determined in the first instance in the trial court.
We concur:
Ruvolo, P.J.
Streeter, J.
Certified for Partial Publication.
Notes
Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, Sections I, II, III.B. and Section IV.A. (except subsection 1. ) of this opinion are certified for publication.
All unattributed statutory cites are to the Health and Safety Code.
See footnote *, ante .
See footnote *, ante .
See footnote *, ante .
The federal statute provides that four categories of persons or entities are, in essence, strictly liable for clean-up costs resulting from hazardous substances: (1) those who own or operate the facility; (2) those who previously owned or operated the facility when the hazardous substances were released; (3) those who arranged for disposal or treatment, or for transportation for disposal or treatment, of the hazardous substances found at a treatment facility; and (4) those who accepted hazardous substances for transport, disposal or treatment at a site chosen by that person, that results in a release or threatened release. (
The "assistance and advice" alleged to have been received from the chemical suppliers is not described in the opinion and, as we describe below, it does not play any part in the court's liability analysis or its holding.
For context, here are examples of the instructions and guidance that was provided by Dow for disposal of PCE and PCE waste. Material Safety Data Sheets (MSDS's) were given to dry cleaners through distributors when they purchased PCE. In 1971 the MSDS's instructed users to flush large spills to the ground and to mop up small spills and bury them. Throughout the rest of the 1970's, the MSDS's instructed that if there were "small leaks" of PCE the user should "[m]op up, wipe up or soak up immediately. Remove to out of doors." The "disposal method" prescribed for PCE was to send it to a reclaimer, but "[i]n some cases it can be transported to an area where it can be placed on the ground and allowed to evaporate safely." Similar instructions regarding "small leaks" were provided in MSDS's issued in the 1980's. In that period, however, the MSDS's "strongly discouraged" dumping unused PCE "into sewers, on the ground or into any body of water." Dow's "Dry Cleaning: A Basic Handbook DOWPER Solvents for the '80s," providing "information and instruction" about solvent and dry cleaning equipment, was among the literature distributed not just to customers, but also at trade shows, seminars and by mail. In the discussion on equipment, these handbooks indicate that contact water from the water separator is "drawn off and discarded."
In their Phase I trial brief (on the strict liability and negligence claims) defendants made a similar causation argument. They argued the manufacturer had to be directly linked to a release of its product, thence to the pollution. Defendants repeated that argument in a motion for nonsuit, in closing argument to the jury, and yet again in motions for judgment notwithstanding the verdict. Neither the jury nor the judge were persuaded.
In connection with this issue, we asked the parties to address at oral argument the nuisance jury instruction relied upon by the court in the Phase II Polanco Act trial, because the record suggested that defendants had agreed this was the applicable standard. As pertinent here, the instruction states, (1) the City claims "it suffered harm because one or more of the defendants created a public nuisance;" (2) to establish that claim the City must prove (inter alia) that a defendant "affirmatively instructed users to dispose of wastes improperly resulting in a condition that obstructed the free use of city property ," and that "the defendant's conduct was a substantial factor in causing harm to the City." [Emphasis added.] At oral argument, defendants contended the italicized part of the instruction separately required a heightened degree of proof of a direct link between a disposal instruction and the identified contamination. We disagree. The language on its face requires no such direct linkage, but only proof that defendants' disposal instructions resulted in obstructing free use of property and that defendants conduct was a substantial factor in creating that harm. We also note, in passing, that it does not appear any such heightened degree of proof was used when the jury applied this instruction in Phase I.
In their petition for rehearing, defendants disclaim that they ever "insisted ... that causation could be proven only by direct evidence." But defendants did insist-and argued that the trial court insisted-on proof that dry cleaners read, relied upon and followed defendants' instructions. "As Judge Goldsmith made clear, the evidence must show that the reason the drycleaner [disposed of the PCE waste consistent with defendants' instructions] was that she or he read and acted on [ ] the instruction[s]." (Italics added.) Defendants do not explain how those facts could be proven other than by direct evidence.
The court also alluded to expert testimony that advertising and promotion of the drug "played a role" in inducing physicians to prescribe the drug when it was not sound practice to do so. But the court appeared to conclude that even in the absence of that testimony, the jury could find that the doctor's negligent prescription of the drug was a "foreseeable consequence of the extensive advertising and promotional campaign." (Stevens , supra ,
It is reasonable to expect that on remand liability could be found if the correct causation standard is utilized. This is because: (1) the vast bulk of the evidence pertaining to the Polanco Act bench trials was presented during the preceding jury trials (Phases I and III); (2) application of the traditional causation test resulted in a finding of liability under the Polanco Act in Phase II based on the evidence in Phase I; and (3) according to defendants , the "same facts" were adduced in Phases I and III.
See footnote *, ante .