By Andrew H. Perellis

Where individual questions overwhelm questions common to the class, a class action cannot be maintained. This simple concept has met with mixed results when applied to the question of whether a class action can proceed for claims based on contaminated groundwater underlying the property of putative class members.

The determination of whether individual questions overwhelm often rests on disputed facts. In such instance, according to the Seventh Circuit, it is error for the trial court to make the class determination without first receiving evidence on the dispute. Parko v. Shell Oil Co., No. 13-8023 (Jan. 17, 2014).

The relevant facts in Parko were, first, that there may have been multiple sources of contamination other than from the named defendants and, second, the contaminated groundwater was ­not the drinking water supply for the putative class members. The lower court certified the class without receiving evidence.

The Seventh Circuit reversed. It found that class members could have experienced different levels of contamination caused by different polluters, thus implying different damages. In addition, if the value of properties varied significantly, then the diminution would vary by property either in terms of absolute dollars or by percentage of market value, which would need to be considered by the trial court to determine if individual issues predominated.

Of particular significance to the Court was the fact that the groundwater was not being used as a drinking water supply. As such, it was uncertain as to whether that contamination could cause any diminution in property value at all. (“As long as there is no danger…[its] underground presence should not affect property values.”) The lower court’s certification rested on the untested opinion of the plaintiff’s expert that benzene levels in the groundwater were the common cause of the loss of property values alleged by the plaintiff. Defendants were entitled to contest that assertion, according to the Seventh Circuit, since if the expert’s evidence was rejected, there would be no basis for the claim to support the class. (“Benzene in the water supply is one thing; benzene in the groundwater that does not feed into the water supply is quite another.”)

The Parko case is a welcome development to counterbalance the Seventh Circuit’s prior ruling in Mejdreck v. Met Coil Systems Corp., 319 F.3d. 910 (7th Cir. 2003), a case upholding class certification for damages arising from groundwater contamination. In that case, however, there was a single source of groundwater contamination and the contamination impacted the drinking water supply. While Parko distinguished its fact situation from that in Mejdreck, it remains uncertain whether in future cases, merely using contaminated groundwater as a drinking water supply will be adequate to support class certification, i.e., the common question of damage is established. Even in such cases, there are significant individual issues that could overwhelm common class questions of liability and the existing damages. Stay tuned.