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From Products Liability Law Daily, November 19, 2013

Petition seeking reinstatement of $1.5 billion verdict against Exxon denied review

By Eric Larsen, P.E.

The U.S. Supreme Court has denied a petition seeking reinstatement of a jury award of more than $1.5 billion in compensatory and punitive damages against Exxon Mobil Corp. Following the trial in the underlying case, a Maryland jury had awarded more than $1.5 billion to over 450 plaintiffs who had asserted damages relating to a 26,000 gallon gasoline spill. In a February 26, 2013 decision, the Maryland Court of Appeals reversed the jury’s verdict (Exxon Mobil Corp. v. Albright, 433 Md. 303 (2013)). The petition before the Supreme Court questioned whether the decision by the Maryland Court of Appeals violated the Fifth and Fourteenth Amendments to the United States Constitution (Albright v. Exxon Mobil Corp., Dkt. No. 13-383, cert. denied November 18, 2013).

Background. The case involves alleged damages resulting from a gasoline spill from a fueling station located in Jacksonville, Maryland that resulted in contamination of an underground aquifer. On January 13, 2006, an Exxon contractor unknowingly drilled a hole in an underground gasoline feed line at the Jacksonville Exxon station. The leak was detected by the electronic leak detection system at the station, which automatically shut down the gasoline supply line. The contractors sent to investigate the cause of the leak detection system alarm erroneously concluded that no actual leak existed. Rather, the technicians concluded that the alarm resulted from a problem with a submersible pump motor. After replacing the motor, the technicians recalibrated the leak detection system such that the alarm system could no longer detect the actual leak when the fuel system was reactivated. About a month later, the fuel system was shut down after inventory discrepancies were reported. By that time, more than 26,000 gallons of gasoline had been released into the ground, subsequently contaminating the underground aquifer.

Rather than being served by a municipal water supply system, the community of Jacksonville relies largely on private wells. The 466 residents and business proprietors of Jacksonville filed suit against Exxon for damages stemming from the contamination of their water supply. The plaintiffs’ suit asserted claims for negligence, strict liability for an abnormally dangerous activity, private nuisance, trespass to land, and fraudulent concealment. Compensatory damages were sought for diminution in value and loss of use and enjoyment of real property, emotional distress for fear of loss of property value, medical monitoring, and emotional distress for fear of contracting cancer. A jury awarded the plaintiffs nearly $500 million in compensatory damages, and more than $1 billion in punitive damages.

On appeal, the Maryland Court of Appeals overturned the jury’s verdict, reversing all but a few of the judgments against Exxon. The few cases that were remanded for retrial can proceed only on claims for diminution of property value.

With respect to fears of contracting cancer in the future, the Maryland Court of Appeals found that there was insufficient evidence of actual exposure to give rise to a reasonable fear. The court determined that the persons actually exposed to methyl t-butyl ether (MTBE, a component in gasoline) as a result of the Jacksonville Exxon leak, but at levels below the relevant U.S. EPA and Maryland Department of Environment action levels, could not demonstrate an objective, reasonable fear of developing cancer. Action levels set by the EPA and the Maryland Department of Environment are concentrations above which exposure to contaminants is deemed generally to be unsafe for human health.

Question before the Supreme Court. In the petition to the U.S. Supreme Court, the petitioners asked:

“Did the Maryland Court of Appeals deprive petitioners of property, or take their property without compensation, including the fundamental right to sue for damages for toxic contamination of their sole source of potable water, by treating regulatory ‘action levels’ as a bar to relief in violation of an emphatic legislative prohibition, and by repudiating and nullifying multiple settled rules of common law establishing the right to compensation, all in violation of the Fifth and Fourteenth Amendments to the United States Constitution?”

The decision of the Maryland Court of Appeals is left standing.

The case number is Docket No. 13-383.

Attorneys: Peter G. Angelos, H. Russell Smouse (Peter G. Angelos, P.C.) for the petitoners.

Companies: Exxon Mobil Corp.

MainStory: TopStory ChemicalNews DamagesNews

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