By Andrew H. Perellis, Alex W. Karasik, and Patrick D. Joyce

Seyfarth Synopsis: In a toxic tort class action stemming from automotive and dry cleaning facilities’ alleged contamination of groundwater near Dayton, Ohio, the Sixth Circuit affirmed an Ohio federal district court’s grant to certify seven common issues for classwide treatment under Rule 23(c)(4). Shortly thereafter, the four Defendant companies filed a petition for a rehearing en banc, arguing that the Sixth Circuit misapplied Rules 23(b)(3) and 23(c)(4).

This ruling is important for businesses to have on their radar since it represents another federal appellate court relaxing the barriers to issue-class certification.

Case Background

In Martin et al. v. Behr Dayton Thermal Products LLC, et al, No. 17-3663 (6th Cir. 2018), the Plaintiff residents alleged that the company Defendants released volatile organic compounds and other hazardous substances into the groundwater beneath their properties. The complaint alleged eleven causes of action: (1) trespass; (2) private nuisance; (3) unjust enrichment; (4) strict liability; (5) negligence; (6) negligence per se; (7) battery; (8) intentional fraudulent concealment; (9) constructive fraud; (10) negligent misrepresentation; and (11) civil conspiracy. Id. at *4. Plaintiffs sought Rule 23(b)(3) class certification as to liability for five of their eleven causes of action—private nuisance, negligence, negligence per se, strict liability, and unjust enrichment. In the alternative, they requested Rule 23(c)(4) certification of seven common issues.

The District Court held although Plaintiffs’ proposed classes satisfied Rule 23(a)’s prerequisites, Ohio law regarding injury-in-fact and causation meant that Plaintiffs could not meet Rule 23(b)(3)’s predominance requirement. Id. Accordingly, the District Court denied certification of the two proposed liability-only classes. The District Court then addressed Plaintiffs’ alternate request for issue-class certification under Rule 23(c)(4), considering whether predominance constituted a threshold requirement that must be satisfied with respect to the entire action before a court may certify certain issues, Id. at 4-5. Noting that this question has resulted in a conflict between several other circuits, the District Court adopted the “broad view,” and rejected treating predominance as a threshold requirement and certified seven issues for class treatment. Id. at 5. The District Court concluded its class certification decision by stating that it would “establish procedures by which the remaining individualized issues concerning fact-of-injury, proximate causation, and extent of damages can be resolved” and noting that any such procedures would comply with the Reexamination Clause of the Seventh Amendment. Id.  

Thereafter, Defendants filed a Rule 23(f) petition, arguing that the District Court reached the wrong conclusion on the interaction between Rules 23(b)(3) and 23(c)(4) and that, even under the broad view, the issue classes were insufficient. Defendants also raised Seventh Amendment arguments, citing the District Court’s mention of a potential procedure involving the use of a Special Master to resolve remaining issues. On appeal, the Sixth Circuit’s review was limited to the District Court’s decision to certify issue classes under Rule 23(c)(4). Id. at 6.

The Sixth Circuit’s Decision

The Sixth Circuit affirmed the District Court’s certification of issue classes under Rule 23(b)(3). As an initial matter, the Sixth Circuit explained that appellate courts across the country have disagreed about how Rule 23(b)(3)’s requirements interact with Rule 23(c)(4). Id. at 7. Under the “broad view,” which has been adopted by the Second, Fourth, Seventh, and Ninth Circuits, courts applied the Rule 23(b)(3) predominance and superiority prongs after common issues had been identified for class treatment under Rule 23(c)(4). Id. The broad view permits utilizing Rule 23(c)(4) even where predominance has not been satisfied for the cause of action as a whole. Id. (citations omitted). In contrast, the “narrow view,” adopted by the Fifth and Eleventh Circuits, prohibits issue classing if predominance has not been satisfied for the cause of action as a whole. Id. at 8 (citations omitted). Other circuits, including the Third and Eighth Circuits, have adopted a functional, superiority-like analysis instead of either view.

After evaluating the above approaches, the Sixth Circuit elected to adopt the “broad view” approach, holding (1) it does not risk undermining the predominance requirement since it instructs courts to engage in the predominance inquiry after identifying issues suitable for class treatment; (2) it flows naturally from Rule 23’s text, which provides for issue classing “[w]hen appropriate,” and (3) the concomitant application of Rule 23(b)(3)’s superiority requirement ensures that courts will not rely on issue certification where there exist only minor or insignificant common questions, but instead where the common questions render issue certification the superior method of resolution. Id. at 9. Accordingly, the Sixth Circuit held that a requirement that predominance must first be satisfied for the entire cause of action would undercut the purpose of Rule 23(c)(4) and nullify its intended benefits. Id. at 10.

Applying the “broad view” approach, the Sixth Circuit held that because each issue may be resolved with common proof and because individualized inquiries do not outweigh common questions, the seven issue classes that the district court certified satisfy Rule 23(b)(3)’s predominance requirement. Id. at 12. Further, regarding the superiority requirement, the Sixth Circuit held that the district court correctly noted that issue certification will ensure that property owners in the affected area will have an opportunity to litigate their claims, and that by trying these common questions to a single jury, this procedure also saves time and scarce judicial resources. Id. at 14. Accordingly, the Sixth Circuit held that the District Court did not abuse its discretion by certifying issue classes under Rule 23(c)(4) since the predominance and superiority requirements were met.

The Sixth Circuit also rejected the Defendants’ Seventh Amendment arguments, noting that the district court has not formalized any procedures for resolving either the common issues or the remaining individualized inquiries. Id. at 14-15. As such, the Sixth Circuit affirmed the District Court’s issue-class certification decision.

On July 31, 2018, the Defendant companies filed a petition for rehearing en banc, requesting that the entire appeals court reconsider Sixth Circuit’s affirmation of the District Court’s issue-class certification.

Implications For Businesses

For businesses located in states within the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee) that are facing class action lawsuits, these companies must be cognizant that the Sixth Circuit has adopted the “broad view” of Rule 23, meaning it will be easier for plaintiffs to obtain certification of issue classes. This ultimately affords the plaintiffs’ class action bar some leverage in regards to expanding their cases and potentially increasing exposure.

From an environmental law perspective, harm to property or bodily injury, and the amount of compensation due, are almost always highly individualized and will predominate other issues.  Under the “narrow view,” class actions for toxic tort actions would be inappropriate.  However, under the “broad view,” the toxic tort class can proceed and litigate broad issues establishing the defendant’s release of contaminants and the extent of contamination.  After the issues are resolved on a class-wide basis, mini-trials or alternate proceedings are needed to establish the individualized damages incurred by each class member.  The broad view, now adopted by the Sixth Circuit, provides a plaintiff group with significant leverage against the allegedly polluting company because the contamination issues can be litigated as a class.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of Seyfarth’s Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

iStock_000042612884_MediumSeyfarth Synopsis: The Eighth Circuit found that a class action could not be sustained in an environmental pollution case because “the class lacks the requisite commonality and cohesiveness to satisfy Rule 23.”

In Karl Ebert v.  General Mills, Inc., No. 15-1735 (8th Cir. May 20, 2016), the United States Court of Appeals for the Eighth Circuit found that the District Court erred in certifying a  proposed class of plaintiffs in an environmental pollution case because “the class lacks the requisite commonality and cohesiveness to satisfy Rule 23.” The case was remanded for further proceedings at the District Court.

In this its appeal to the Eighth Circuit, General Mills, Inc., challenged the District Court’s grant of class certification because each plaintiff will need to prove individualized issues of injury, causation, and damages.

In the underlying litigation the plaintiffs, all owners of residential properties in a Minneapolis neighborhood near a General Mills facility, sued General Mills, alleging that the company caused trichloroethylene (TCE) to be released onto the ground and into the environment near the plaintiffs’ neighborhood. The plaintiffs claimed that, as a result of the contamination, TCE vapors migrated into the surrounding residential area, threatening the health of the residents and diminishing the value of their property.

For nearly thirty years, General Mills participated in groundwater clean-up and remediation efforts in the plaintiffs’ neighborhood under the direction of, and in conjunction with, the federal government and the State of Minnesota. In late 2011, in cooperation with the State of Minnesota, General Mills began to evaluate the potential of migration of TCE in the form of vapor from shallow groundwater to the soil above. As noted by the District Court, General Mills installed vapor mitigation systems (VMSs) in 118 homes in the neighborhood.

The plaintiffs first learned of the TCE vapor contamination in 2013, and each of the named plaintiffs received customized VMSs. Seeking to represent a class, the residents asserted five legal claims: (1) violation of CERCLA; (2) common law negligence; (3) private nuisance; (4) willful and wanton misconduct; and (5) violation of the Resource Conservation and Recovery Act. Personal injury claims were not included in the complaint, in a deliberate attempt to avoid class certification problems. This will be discussed below.

The District Court found that the requirements of Federal Rule of Civil Procedure 23 were satisfied, and certified the proposed class. However, the Eighth Circuit reversed, finding that the class lacked the requisite commonality and cohesiveness to satisfy Rule 23.

Specifically, the Eighth Circuit noted that the District Court had attempted to artificially narrow the issues and the class membership so as to create class standing by first excluding personal injury claims and any plaintiffs with identifiable personal injury claims, and then by limiting claims to whether injunctive relief would be warranted. The District Court had bifurcated the action into two phases. It first certified a class under Rule 23(b)(2) to determine whether injunctive relief was appropriate. It then set up a second phase under Rule 23(b)(3) to determine the money-damage portion of the case  .

The Eighth Circuit noted that the use of this sort of “hybrid certification,” insulating the (b)(2) class from (b)(3) the money-damage portion of the case, is “an available approach that is gaining ground in class action suits.” Newberg on Class Actions § 4:38. While Rule 23(b)(3) requires common questions of law or fact to predominate over questions affecting only individual members, Rule 23(a)(2) requires only the establishment of a common question pertaining to an injury suffered by all class members. In this case, though, the Circuit Court concluded that this action could not proceed as a class under either Rule 23(b)(2) or Rule 23(b)(3).

As to Rule 23(b)(2), the Eighth Circuit found the central required element of “cohesiveness” to be lacking. For relief as a class, “the relief sought must perforce affect the entire class at once,” citing Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2558 (2011). As a result, the Eighth Circuit found that “[i]t is the disparate factual circumstances of class members that prevent the class from being cohesive and thus unable to be certified under Rule 23(b)(2).”

For Rule 23(b)(3), the Eighth Circuit concluded that individual issues would predominate the inquiry. Notwithstanding the District Court’s attempt to exclude questions on individualized exposure, the Eighth Circuit found: “any limitations in the initial action are, at bottom, artificial or merely preliminary to matters that necessarily must be adjudicated to resolve the heart of the matter.”

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.

By Andrew H. Perellis and Craig B. Simonsen

The Third Circuit Court of Appeals yesterday resuscitated a proposed class action alleging the release of toxic emissions from a coal-fired power plant, finding that the Clean Air Act does not preempt certain state law claims brought by property owners. Bell, et al., v. Cheswick Generating Station, No. 12-4216 (3rd Cir. August 20, 2013).

The putative class was made up of individuals who owned or inhabited residential property within one mile of a coal-fired electrical generation facility in Springdale, Pennsylvania. The plaintiff had alleged that the coal-fired power plant operation, maintenance, control and use of the generating station had caused property damage, the inhalation of odors, and the deposit of coal dust. Procedurally, the case was removed to the federal District Court, which then found that the CAA preempted the property owners state law claims.

The Third Circuit ruled on this as a matter of first impression: “whether the Clean Air Act preempts state law tort claims brought by private property owners against a source of pollution located within the state.” The Court concluded that based on the plain language of the CAA and controlling Supreme Court precedent, such source state common law actions are not preempted.

The Court in its decision reviewed the preemption question under the CAA in reference to the Supreme Court’s 1987 decision in International Paper Co. v. Ouellette, 479 U.S. 481 (1987). International Paper had dealt with the Clean Water Act. In that case, the Supreme Court found that “nothing in the [Clean Water Act] bars aggrieved individuals from bringing a nuisance claim pursuant to the laws of the source State.”

The Court concluded that “[w]e see nothing in the Clean Air Act to indicate that Congress intended to preempt source state common law tort claims.”

By Andrew H. Perellis and William R. Schubert

A recent Government Accountability Office report (GAO-13-252) called on EPA to improve its management of alternatives to National Priorities List placement.

The report found that at most sites that EPA deems eligible for NPL placement, EPA uses an alternative approach so that the site can be remediated without being placed on the National Priorities List.

The “Other Cleanup Activity” (OCA) deferral, under which EPA defers cleanup oversight to a separate entity outside the Superfund program, is an alternative approach that EPA frequently employs at NPL-eligible sites, the report stated.  Most OCA deferrals involve state agency oversight (although OCA deferrals may also defer cleanup oversight to federal agencies, Indian tribes, and private parties).

According to the report, EPA’s lack of a coherent playbook for executing and tracking OCA deferrals creates the risk of inconsistency.  The report included examples of apparent inconsistencies in EPA’s policies and practices.  For example, EPA’s regional offices appeared to hold different views on how to define the different types of OCA deferrals and the circumstances warranting each type.  (Notably, differences in the States’ environmental policies can also bear on these variations.  The report made some note of this factor.)

By Andrew H. Perellis

Can a toxic tort class action be maintained where class certification was denied in a materially similar case?

As noted in an item posted by our partners in The Workplace Class Blog, in Baker v Home Depot USA, Inc., No 11-CV-06768 (N.D. Illinois, Jan. 24, 2013), the court granted a motion striking the class allegations at the pleadings stage based upon the principle of comity. As a result of the ruling, plaintiffs were unable to pursue a class claim alleging that Home Depot falsely promoted as safe the purchase and use of wood treated with Chromium Copper Arsenate for residential use. Absent the class allegations, plaintiffs’ action reduced to simple claims based on products liability and negligence.

Philip L. Comella recently published an article in the American Bar Association’s Environmental Litigation and Toxic Torts Committee Newsletter (July 2012) 13:2, entitled “Nine Tips for Taking an Effective Deposition in an Environmental Case.”

The article contains practical tips on how to get the most out of a deposition involving environmental claims, though the tips can apply to virtually any area of law.

By Andrew H. Perellis and Ilana R. Morady

After the U.S. Supreme Court issued its transformative decision in Dukes, et al. v. Wal-Mart Stores, Inc., No. 10–277 (June 20, 2011), holding that plaintiffs alleging employment discrimination had failed to demonstrate the existence of common questions sufficient for class certification under Federal Rule of Civil Procedure 23(a)(2), we wrote about two cases that applied Dukes in the toxic torts context: Michigan State Court Issues One Of The First Opinions Applying Dukes In A Non-Employment Class Action Setting, July 20, 2011 and Supreme Court’s Tightening of Class Action Standards in Dukes Relied on by Third Circuit to Defeat Proposed Medical Monitoring and Toxic Tort Class, August 26, 2011. A new case from Louisiana shows that the trend of courts relying on Dukes in the toxic torts context continues.

In Kieta Alexander, et al. v. Norfolk Southern Corporation, et al., the Supreme Court of Louisiana held that the plaintiffs had not satisfied the commonality requirement for class certification under Louisiana’s equivalent of Rule 23(a)(2). The plaintiffs sued several railroad and chemical companies after ethyl acrylic fumes leaked from valves on two railroad cars. Approximately twenty people were treated at the scene for chemical exposure. The district court granted the plaintiffs certification, and the appellate court affirmed, but the Supreme Court found that the lower courts had erred because each member of the proposed class would have had to offer different facts to establish liability and damages at trial.

The Court based its decision on testimony from toxicologists that only a fraction of the population would exhibit physical symptoms of exposure to ethyl acrylic fumes at the “extremely low concentrations” involved in the release. Moreover, the symptoms complained of (for example, coughing, nausea, and eye irritation) are “common symptoms with a myriad of causes.” If the plaintiff class were to be certified, the Court held, “the class would degenerate into a series of individual trials.”

Kieta confirms that Dukes continues to have far-reaching implications. The bar for plaintiffs attempting to demonstrate commonality has been raised, not just in the federal employment discrimination context, but in the state toxic torts context as well.

By Andrew H. Perellis and William R. Schubert

The Montana Supreme Court recently held that the statute of limitations provided no defense to a defendant even though the plaintiffs had not asserted their nuisance and trespass claims until decades after the initial discovery of contamination.

In Burley v. Burlington Northern & Santa Fe Railway Co., Mont., No. 11-0021 (Feb. 07, 2012), the Montana Supreme Court, answering a certified question from a federal district court, concluded that migrating groundwater contamination fell within the “continuing tort exception,” thus tolling the statute of limitations on the theory that each migration of contamination onto the plaintiffs’ properties constitutes a new tort. Hence, the tortious conduct does not cease merely because the defendant has ceased the activity that created the contamination or because the contamination has stabilized in terms of concentrations beneath a plaintiff’s property.

The court noted that the nuisance would be considered temporary and ongoing – and thus not subject to the statute of limitations – so long as it is “reasonably abatable.” Conversely, if the contamination was not reasonably abatable, then the harm would be complete and the nuisance permanent. A permanent nuisance would be subject to the statute of limitations. However, Montana follows the discovery rule, and the court stated in dicta that “a plaintiff would be required to bring an action within the limitations period when the plaintiff knows, or reasonably should know, of a permanent injury.” Hence, mere knowledge of the existence of contamination may be insufficient to trigger the running of the limitations period, instead requiring actual or constructive knowledge that the contamination is not reasonably abatable.

The court determined that whether contamination is reasonably abatable is generally a question of fact for the jury. Thus, a defendant litigating  a contamination case in Montana is likely to have to proceed through trial in order to establish its statute of limitations defense.

The court also concluded that contaminated property may be reasonably abatable even in cases where total decontamination and restoration of the property to its pre-contamination state is not possible. Mitigation that reduces property damage could qualify as reasonable abatement. The court purported to adopt the standard set forth in the Restatement (Second) of Torts § 839 to determine whether a reduction or decrease in the contamination would be reasonable. It stated that the trier of fact should consider the ease with which a tortfeasor could abate the harm, and additional factors, such as: (1) the cost of the abatement; (2) the type of property affected; (3) the severity of the contamination; and (4) the length of time necessary to remediate the pollution.