SUSAN L. CARNEY, Circuit Judge:
Table of Contents
I. BACKGROUND....................................................................79
A. MTBE and Its Effects......................................................80
B. The Clean Air Act and the Reformulated Gasoline Program...................81
C. The City's Water-Supply System............................................81
D. The City's Claims.........................................................82
E. The Trial.................................................................83
1. Phase I: Future Use of the Station Six Wells..........................83
2. Phase IP Peak MTBE Concentration in the Station Six Wells.............85
3. Phase IIP Liability and Statute of Limitations........................86
a. Injury............................................................87
b. Causation.........................................................88
c. Damages...........................................................89
d. Statute of Limitations............................................90
e. Phase III Jury Verdict............................................91
F. Punitive Damages..........................................................91
G. Juror Misconduct..........................................................94
H. Post-Trial Motions........................................................95
II. DISCUSSION....................................................................95
A. Preemption................................................................95
1. Federal Preemption of State Law.......................................96
2. Conflict Preemption: the Impossibility Branch.........................97
a. The Import of the Jury's Finding on the City's Design-Defect
Claim...........................................................98
b. Considering Ethanol as a Possible Alternative to MTBE............100
3. Conflict Preemption: the Obstacle Branch.............................101
4. Tortious Conduct Beyond Mere Use of MTBE.............................103
B. Legal Cognizability of Injury............................................104
1. Standing.............................................................105
2. Injury As a Matter of New York Law...................................107
C. Ripeness and Statute of Limitations......................................109
D. Sufficiency of the Evidence as to Injury and Causation...................112
1. The Jury's 10 ppb MTBE Peak Concentration Finding....................113
2. The Jury's Consideration of Market Share Evidence....................115
E. New York Law Claims......................................................117
1. Negligence...........................................................117
2. Trespass.............................................................119
3. Public Nuisance......................................................121
4. Failure to Warn......................................................123
F. Juror Misconduct.........................................................125
G. The City's Cross-Appeals for Further Damages.............................126
1. Compensatory Damages Offset..........................................126
2. Punitive Damages.....................................................127
III. CONCLUSION...................................................................130
As described in greater detail below, this extended litigation arose from the intensive use of MTBE as a gasoline additive by Exxon and other gasoline companies in the New York area from the 1980s through the first half of the 2000s, when a state ban on MTBE brought the era to an end. Treatment with MTBE increased the oxygen content of gasoline and mitigated harm to air quality caused by automobile emissions, thereby furthering the goals of the Clean Air Act, 42 U.S.C. §§ 7401-7671q, as amended from time to time. Because of spillage and leakage from gasoline stored in underground tanks, however, MTBE-treated gasoline was released into the ground, contaminating groundwater supplies. MTBE causes water to assume a foul smell and taste, and has been identified as an animal carcinogen and a possible human carcinogen. In 1990, Congress identified MTBE as one of several additives that gasoline suppliers might use to satisfy new federal oxygenate requirements set forth in amendments to the Clean Air Act, calling for the creation of a "reformulated gasoline" program. In 2005, however, Congress ended that program.
In this suit, the City sought to recover from Exxon for harm caused by the company's introduction of gasoline containing MTBE into a system of water wells in Queens known as the Station Six Wells. Although not currently operative, the City alleged that the Station Six Wells are a significant component of its overall plan to deliver potable water to its residents without interruption over many years to come. Without significant treatment of the water drawn by those wells, the City would be unable to rely on their eventual use, and it alleged that this inability constituted a serious and compensable harm under various State tort law and other legal theories.
Because of the matter's complexity, the trial proceeded in several phases. Phase I of the trial addressed whether the City established that it intends in good faith to
Phase III addressed questions of liability and damages. In Phase III, the jury found Exxon liable to the City under New York law for negligence, trespass, public nuisance, and failure-to-warn; the jury found that Exxon was not liable, however, on the City's design-defect and private nuisance claims. The jury then calculated a gross compensatory award reflecting its assessment of the damage to the wells caused by MTBE contamination generally. It offset this award by amounts it attributed to the damage caused by the introduction of MTBE by companies other than Exxon and by preexisting contamination by other chemicals. The result was the jury's finding — and the court's imposition — of a damages award of $104.69 million, plus pre-judgment and post-judgment interest, for the City.
After ruling that, as a matter of law, Exxon's conduct provided an inadequate basis for assessing punitive damages in the City's favor, the District Court did not permit the City to proceed with a proposed Phase IV, in which the jury would have addressed that question. The District Court then entered judgment on the claims submitted to the jury pursuant to Federal Rule of Civil Procedure 54(b), holding in abeyance any proceedings on the City's additional claims under the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2692 (creating liability for, inter alia, failing to inform the EPA of known risks associated with the use of a chemical), and under New York State Navigation Law § 181(5) (creating liability for oil spillage).
On appeal, Exxon contends that: (1) the City's claims are preempted by the Clean Air Act; (2) the City has suffered no cognizable injury; (3) the City's claims are not ripe (or, in the alternative, are barred by the statute of limitations); (4) the City failed to prove injury or causation; (5) the City's claims fail as a matter of New York law; and (6) the District Court abused its discretion by failing to declare a mistrial as a result of alleged juror misconduct. In its cross-appeal, the City contends that the District Court erred by: (1) declining to allow a punitive damages phase to proceed; and (2) requiring the jury to offset its gross damages finding by an amount attributable to preexisting contamination.
For the reasons that follow, we AFFIRM the judgment of the District Court in its entirety.
We begin by setting forth in some detail the factual background and providing an account of the district court proceedings. We then turn to a discussion of the key legal issues raised by Exxon's appeal: primarily, preemption, legal cognizability of injury, ripeness, and sufficiency of the evidence with regard to injury and causation and as to specific elements of each of the City's New York state law tort claims. We next briefly address Exxon's juror misconduct claim. Finally, we discuss the City's arguments regarding the jury's calculation of its damages and the District Court's denial of its claim for punitive damages.
Unless otherwise noted, the following facts are either undisputed or are viewed in the light most favorable to the City. See
MTBE is an organic chemical compound derived from methanol and isobutylene. Until the mid-2000s, MTBE was widely used in certain regions of the United States, including in New York State, as a fuel oxygenate, i.e., an additive that reduces harmful tailpipe emissions by increasing the octane level in gasoline. By virtue of its chemical properties, however, spilled MTBE spreads easily into groundwater supplies. The Environmental Protection Agency ("EPA") advises:
Methyl Tertiary Butyl Ether (MTBE); Advance Notice of Intent to Initiate Rulemaking Under the Toxic Substances Control Act to Eliminate or Limit the Use of MTBE as a Fuel Additive in Gasoline, 65 Fed.Reg. 16094, 16097 (proposed Mar. 24, 2000) (to be codified at 40 C.F.R. Part 755).
Contamination of groundwater supplies by MTBE is undesirable because MTBE has a "very unpleasant turpentine-like taste and odor that at low levels of contamination can render drinking water unacceptable for consumption." Id. Further, although MTBE has not been classified as a human carcinogen by either the EPA or the National Toxicology Program, see Testimony of Sandra Mohr ("Mohr Testimony"), Trial Transcript ("Tr.") at 3055:7; id. at 3097:5-6, some toxicological studies "show [that MTBE] can cause [DNA] mutations," Testimony of Kenneth Rudo ("Rudo Testimony"), Tr. at 3262:18-19, which "can possibly lead to cancer," id. at 3267:22-23. But see Mohr Testimony, Tr. at 3104:20-21 (testifying that "MTBE is at best a weak mutagen and may not be particularly mutagenic at all").
New York law limits the concentration of contaminants permitted in drinking water. See N.Y. Comp.Codes R. & Regs. tit. 10, § 5-1.1(ap). If the concentration of a particular contaminant exceeds the relevant "maximum contaminant level" ("MCL"), the water may not be served to the public. See id. § 5-1.30. From 1989 through December 23, 2003, the MCL for MTBE was 50 ppb.
Effective January 1, 2004, New York State banned the use of MTBE in gasoline. See N.Y. Agric. & Mkts. Law § 192-g (2000).
The Clean Air Act, 42 U.S.C. §§ 7401-7671g, first passed in 1955 and amended in 1965 to impose nationwide emission standards for automobiles, establishes a comprehensive regulatory scheme to "protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare" and "encourage and assist the development and operation of regional air pollution prevention and control programs." 42 U.S.C. § 7401(b). See generally Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. New York State Dep't of Envtl. Conservation, 17 F.3d 521, 524-28 (2d Cir.1994) (tracing development of Clean Air Act).
In 1990, Congress amended the Clean Air Act to establish the Reformulated Gasoline Program ("RFG Program"). See Pub.L. No. 101-549, § 219, 104 Stat. 2399, 2492-2500 (1990). The RFG Program mandated the use of "reformulated gasoline" — gasoline enhanced with certain additives — in metropolitan areas with significant concentrations of ambient ozone. See 42 U.S.C. § 7545(k) (2000). Its goal was to obtain the "greatest reduction [achievable] in emissions of ozone forming volatile organic compounds (during the high ozone season) and emissions of toxic air pollutants (during the entire year)." Id. § 7545(k)(1).
As relevant here, the RFG Program required that reformulated gasoline consist of at least two percent oxygen by weight. Id. § 7545(k)(2)(B). Refiners and suppliers met this requirement by adding oxygenates such as MTBE to their gasoline. The Clean Air Act did not mandate the use of any particular oxygenate. Rather, the EPA identified several additives, including MTBE, that refiners and suppliers could blend into reformulated gasoline and thereby satisfy the requirements of the RFG Program.
Fifteen years later, in 2005, Congress altered its approach and again amended the Clean Air Act — this time, to eliminate the oxygenate requirement for reformulated gasoline. Energy Policy Act of 2005, § 1504, Pub.L. 109-58, 119 Stat. 594, 1076-77 (amending 42 U.S.C. § 7545).
The City's water-supply system provides drinking water to over eight million customers within City limits, and to one million customers in upstate New York. Phase III Joint Pretrial Order ("JPTO") Statement of Undisputed Facts ¶ 41. The City's system relies largely upon water that is drawn from three upland reservoir systems and then transported into the City through a network of aqueducts and tunnels. Id. ¶¶ 41-43. Major components of the City's system are aging and in need of maintenance and repair. Id. ¶ 44.
In the late 1980s, an intergovernmental task force organized by the City's Mayor (the "Task Force") assessed the City's long-term water supply needs and proposed ways for the City to meet those needs. Id. ¶ 26. Among other things, the Task Force recommended that the City investigate the feasibility of using groundwater from the Brooklyn-Queens Aquifer System — a thick layer of permeable soil and rock beneath Brooklyn and Queens through which groundwater moves — to supplement the City's existing surface-water system. Id. ¶ 27. The investigation
One of those well clusters is in Jamaica, Queens, and is known as Station Six (the "Station Six Wells"). The quality of the water at those wells is the subject of this appeal. Purchased by the City in 1996, the Station Six Wells were formerly managed by the Jamaica Water Supply Company. Most of the Station Six Wells draw from the shallowest aquifer beneath Queens. Id. ¶¶ 11, 15-16, 76, 93.
The City first detected MTBE in the Station Six Wells in April 2000, when readings from untreated water drawn from one well showed MTBE concentrations of 0.73 ppb and readings from another well showed MTBE concentrations of 1.5 ppb. Id. ¶¶ 108, 111. Testing conducted three years later, in January 2003, showed that MTBE levels had reached 350 ppb in one of the wells. Id. ¶ 109.
At no point since acquiring them in 1996 has the City pumped water from any of the Station Six Wells into its drinking water distribution system. Id. ¶ 79. A treatment facility there is in the planning stages, but construction has not begun.
In October 2003, the City sued Exxon and twenty-eight other petroleum companies, complaining of injuries to its water supply from gasoline containing MTBE. Over the following year, the City amended its complaint to include twenty-six additional petroleum company defendants. All defendants except Exxon settled before trial. The City's Fourth Amended Complaint (the "Amended Complaint"), filed March 9, 2007, governed the claims against Exxon tried during the Station Six bellwether trial.
In the Amended Complaint, the City sought to recover "all costs and damages... that it has incurred, is incurring, and will incur from investigating, cleaning, detecting, monitoring, preventing, abating, containing, removing, and remediating" the harm caused by MTBE "to the City's groundwater well system as a result of contamination of the soil and/or the aquifer from which these wells draw water." Am. Compl. ¶ 1. The City alleged that the petroleum company defendants "distributed, sold, manufactured, supplied, marketed, and designed MTBE ... when they knew or reasonably should have known that MTBE ... would cause damage to the groundwater" in and around Jamaica, Queens. Id. ¶ 3. In particular, the City asserted that the petroleum company defendants knew at relevant times that MTBE was highly soluble in groundwater, see id. ¶ 100, that MTBE was highly prone to spreading widely from a spill point, see id. ¶¶ 88-89, and that underground gasoline tanks in which reformulated gasoline was stored leaked regularly, see id. ¶¶ 92-94.
The City asserted the following ten causes of action:
The City sought compensatory damages of $300 million and punitive damages in an amount to be determined at trial.
The City's design-defect, failure-to-warn, negligence, public nuisance, private nuisance, and trespass claims were tried to a jury beginning in August 2009. The trial, which lasted for approximately eleven weeks, culminated in a jury verdict finding Exxon liable on four claims (failure-to-warn, negligence, public nuisance, and trespass), and acquitting Exxon of liability on two (design-defect and private nuisance). Portions of the trial proceedings relevant to this appeal are recounted below.
Phase I addressed a threshold issue: because the City was not using the Station Six Wells as a source of drinking water at the time of trial (nor is it now), the jury was asked to determine whether the City intended to use those wells for that purpose in the future. The District Court's interrogatories to the jury instructed that, to recover on any theory, the City had to "prove[], by a fair preponderance of the credible evidence, that it intends, in good faith, to begin construction of the Station 6 facility within the next fifteen (15) years," and that the City "intends, in good faith, to use the water from the Station 6 wells, within the next fifteen (15) to twenty (20) years, either to supply drinking water to its residents or to serve as a back-up source of drinking water if needed due to shortages in other sources of supply (or both)." Phase I Interrogatory Sheet.
The City's Phase I witnesses included James Roberts, the Deputy Commissioner of the New York City Bureau of Water and Sewer Operations of the New York City Department of Environmental Protection ("DEP"). Roberts testified that although the City was not then using the Station Six Wells, it had not abandoned
The jury also heard testimony from Kathryn Garcia, the Assistant Commissioner for Strategic Projects at DEP. Garcia described Station Six as "absolutely a priority matter" for the City. Testimony of Kathryn Garcia ("Garcia Testimony"), Tr. at 436:14. She testified that "Station 6 has always been a decision that has been made and to my knowledge has never been revisited," and that she had "never heard any conversation about ... maybe we shouldn't do Station 6." Id. at 439:3-7. According to Garcia, the City had yet to construct a treatment facility at Station Six because "[w]e have been struggling with our capital budget in terms of having enough money for all of our needs." Id. at 435:9-10. In 2008 and 2009, however, the Mayor and City Council approved budgets that included funding for the project. Id. at 440:5-24.
William Meakin, the former Chief of Dependability and Risk Assessment at DEP, also testified about the impact of budget issues on Station Six. Meakin reiterated that the City is "committed to designing and building Station 6." Testimony of William Meakin ("Meakin Testimony"), Tr. at 612:6-7. According to Meakin, the City had yet to do so for only one reason: "money, the funding." Id. at 612:10.
The City also presented the testimony of Steven Lawitts, the Acting Commissioner of DEP. Lawitts confirmed that he had approved the design and construction of a treatment facility at Station Six and that the Mayor and the City Council had ratified that decision by providing for a facility in the City's budget. Testimony of Steven Lawitts ("Lawitts Testimony"), Tr. at 680:3-11. Lawitts agreed that "if the City had the money for Station 6, ... that project [would] go forward." Id. at 681:10-12; see also id. at 683:2-5 (answering "yes" to the question, "From your perspective as [C]ommissioner, is money the only reason Station 6 hasn't been built yet?"). When asked for his view about the importance of Station Six, Lawitts explained that:
Id. at 681:18-24. Lawitts explained that an additional 10 million gallons of water per day "would be enough water to supply on average about 80,000 people." Id. at 682:2-3.
At the conclusion of Phase I, the jury found that the City had proven its good faith intent to begin construction of the Station Six facility within the next fifteen years. The jury also found that the City intends to use the Station Six Wells within the next fifteen to twenty years as a back-up
In Phase II, the jury was asked whether the City had proven "that MTBE will be in the groundwater of the capture zone of the Station 6 wells when they begin operat[ing]" as a back-up source of drinking water, with "capture zone" defined as "the groundwater that will be drawn into the Station 6 wells when they begin operation." Phase II Interrogatory Sheet. It was also asked "[a]t what peak level will MTBE be found in the combined outflow of the Station 6 wells, and when that will occur," with "combined outflow" defined as "the combination of all the water from all the wells that goes into the treatment facility." Id.
The City's principal witness during Phase II was David Terry, a hydrogeologist who testified about two groundwater models he created to estimate future levels of MTBE contamination in the Station Six Wells. According to Terry, hydrogeologists use groundwater models "to understand the flow of groundwater and how contaminants move through the groundwater system." Testimony of David Terry ("Terry Testimony"), Tr. at 1890:18-20. Terry explained that, in developing a groundwater model,
Id. at 1891:6-14.
The first of Terry's two models was a "groundwater flow model." Id. at 1893:22-1895:15. Terry used this model, which was developed by the United States Geological Survey and shows "where the groundwater flows" and "how fast it moves," id. at 1893:23-24, to predict the likely size and shape of the Station Six capture zone, id. at 1895:21-1896:9. He did so by populating the model with a "proposed pumping scenario" provided by City planners. Id. at 1896:12-20. The "proposed pumping scenario" included information about the location of various wells at and near Station Six, their anticipated activation dates, and the anticipated rates at which they would pump. Id. at 1901:14-20. Terry explained that in estimating the Station Six capture zone, "[w]e really can't look at Station 6 by itself because there are other wells near Station 6, and when those wells pump they affect the water flow direction at the wells near Station 6." Id. at 1896:16-19. His testimony also made clear that his prediction of the size and shape of the Station Six capture zone was based on the City's proposed pumping scenario, which could change over time. Id. at 1902-12; 2087:17-21; 2210:8-10.
The second of Terry's two models was a "transport model." Terry explained that a transport model
Terry used his flow and transport models to perform two different analyses. His "Analysis 1" was designed to ascertain "future peak concentrations at Station 6." Id. at 2016:9-10. Relying on actual ground water quality information gathered in 2004 for sample locations in the vicinity of Station Six, Analysis 1 predicted that the concentration of MTBE in the combined outflow of the Station Six Wells would peak at 35 ppb in 2024. Id. at 2067:17-19.
Terry's "Analysis 2" was designed to determine how long MTBE contamination at Station Six would last if well usage began in 2016. Id. at 1906:8-18; 2015:9-11. As part of this analysis, Terry identified twenty-two known gasoline release sites in the vicinity of Station Six and assumed different release volumes at each site. Id. at 2073:7-16; 2074:6-8. Analysis 2 predicted that if no more than 50 gallons of gasoline were released at each site, MTBE concentration in the combined outflow of the Station Six Wells would be undetectable. Pl. Ex. 1682. But if 500 gallons of gasoline were released at each site, MTBE concentration would peak at approximately 6 ppb and last through at least 2040. Id. And if 2,000 gallons of gasoline were released at each site, MTBE concentration would peak at approximately 23 ppb and also last through at least 2040. Pl.Ex. 14862. Terry opined that the 2,000-gallon release scenario was "relatively conservative," Terry Testimony, Tr. at 2075:19-20, but "probably the most realistic of [the] scenarios," id. at 2075:6-8.
Exxon had no affirmative burden to establish an alternative measure of MTBE contamination at Station Six, and it did not proffer a competing model. It did, however, present the testimony of an expert who concluded that Terry's models were "fatal[lly] flaw[ed]," Testimony of Thomas Maguire ("Maguire Testimony"), Tr. at 2432:20-22, and that the methods Terry employed were "scientifically [in]valid," id. at 2444:2-5.
At the conclusion of Phase II, the jury found that the City had proven that "MTBE will be in the groundwater of the capture zone of the Station 6 wells when they begin operation." Phase II Interrogatory Sheet. The jury found further that the concentration of MTBE in the combined outflow of the Station Six Wells will peak at 10 ppb in 2033. Id.
Phase III dealt with liability and statute of limitations issues. As to liability, the jury was asked (1) whether the City "is, or will be, injured by the MTBE that will be in the combined outflow of the Station 6 wells"; (2) whether Exxon "was a cause of the City's injury" as either a "direct spiller" of MTBE gasoline or a "manufacturer, refiner, supplier, or seller" of MTBE gasoline; (3) whether Exxon was liable on the City's design-defect, failure-to-warn, trespass, private nuisance, public nuisance, and negligence claims; and (4) what amount of compensatory damages should be awarded to the City. Phase III Interrogatory Sheet. As to the statute of limitations, the jury was asked whether Exxon had proven "that the City did not bring its claims in a timely manner." Id.
The jury was instructed that, in determining whether the City is or will be injured by MTBE contamination at Station Six, the "question is whether the [C]ity has proven by a fair preponderance of the credible evidence that a reasonable water provider in the [C]ity's position would treat the water to reduce the levels or minimize the effects of the MTBE in the combined outflow of the Station 6 wells in order to use that water as a back-up source of drinking water." Tr. at 6604:5-10.
In support of its claim that a reasonable water provider in its position would treat the water in the Station Six Wells, the City presented a number of witnesses, including Dr. Kathleen Burns, who testified about the toxicological characteristics of MTBE. In Dr. Burns's opinion, MTBE "is an animal carcinogen," "a probable human carcinogen," and "a probable human mutagen." Testimony of Kathleen Burns ("Burns Testimony"), Tr. at 2809:10-22. Describing mutagenicity, Dr. Burns advised, "It only takes one molecule ... of MTBE interacting with DNA[] to start to initiate the sequence that will give us an abnormal reproducing cell line and ultimately lead to cancer." Id. at 2829:12-14.
Similarly, Dr. Kenneth Rudo, a toxicologist, testified that MTBE is both "mutagenic" and a "probable human carcinogen." Testimony of Kenneth Rudo ("Rudo Testimony"), Tr. at 3265:23-3266:2. As a mutagen, MTBE can change the way human DNA is expressed. Id. at 3266:3-18. According to Dr. Rudo, at even the lowest levels of exposure in drinking water, MTBE can cause mutations that lead to cancer. Id. at 3267:21-24.
The City also presented expert testimony about the taste and odor characteristics of MTBE. Harry Lawless, a professor in Cornell University's food science department, testified about his review of the scientific literature regarding the proportion of the population that is sensitive to the taste and smell of MTBE in drinking water at various concentration levels. Testimony of Harry Lawless ("Lawless Testimony"), Tr. at 2888:20-25. Based on his review, Lawless opined that 50 percent of the population would detect MTBE in drinking water at 14 to 15 ppb; 25 percent of the population would detect MTBE in drinking water at 3 to 4 ppb; and 10 percent of the population would detect MTBE in drinking water at 1 to 2 ppb. Id. at 2889:18-22. Lawless also testified that "if [he] was in a consumer products company and 10 percent of the population noticed a change in the product, that would be a problem." Id. at 2890:3-5.
In addition, the City called Steven Schindler, Director of Water Quality for the City's Bureau of Water Supply, whose responsibilities include monitoring the City's water supply for quality issues and investigating consumer complaints relating to water quality. Testimony of Steven Schindler ("Schindler Testimony"), Tr. at 2927:19-22; id. at 2938:17-20. Schindler testified that consumers "expect[] their water to be relatively free of taste and odor" and that "there is a very close link between how the water tastes and smells [and] public confidence." Id. at 2942:13-19. According to Schindler, if "10 percent of the population ... detect[ed] taste and odor in their water ... that's going to undermine ultimately the public con[fidence] in our water supply." Id. at 2943:9-13.
For its part, Exxon presented the testimony of Dr. Sandra Mohr, who disputed Drs. Burns's and Rudo's account of MTBE's effects on human health. Dr. Mohr testified that neither the EPA nor the National Toxicology Program has classified MTBE as a human carcinogen.
The City advanced three theories of causation, each of which was tied to its theories of liability. First, it alleged that Exxon caused damage to the City as a "direct spiller" of gasoline containing MTBE. In this vein, the City asserted that Exxon owned or controlled underground storage tank systems at six gasoline stations in Queens, and that MTBE leaked from these tanks into the groundwater. Tr. at 6605:1-8. The jury was instructed that it should find that Exxon was a cause of the City's injury as a "direct spiller" if the City showed by a preponderance of the evidence that (1) "[a]t the time that [Exxon] owned or controlled some or all of these underground storage systems, they leaked gasoline containing MTBE" and (2) "these leaks caused or will cause an injury to the [C]ity's Station 6 wells." Id. at 6605:8-15. The jury was also instructed that "[a]n act or omission is regarded as a cause of an injury if it is a substantial factor in bringing about the injury; that is, if it has such an effect in producing the injury that reasonable people would regard it as a cause of the injury." Id.
Second, the City alleged that Exxon caused damage to the Station Six water supply as a "manufacturer, refiner, supplier, or seller" of gasoline containing MTBE. Under this theory, Exxon could be held liable for manufacturing, refining, supplying, or selling MTBE-treated gasoline that leaked or spilled from service stations not owned or controlled by Exxon. Thus, the jury was instructed that it should find that Exxon was a cause of the City's injury as a "manufacturer, refiner, supplier or seller" of MTBE gasoline if the City showed by a preponderance of the evidence that Exxon's "conduct in manufacturing, refining, supplying or selling gasoline containing MTBE was a substantial factor in causing the [C]ity's injury."
Third, the City alleged that Exxon could be liable as a "contributor" to the City's injury pursuant to an alternative theory — known as the "commingled product theory" or "manufacturer or refiner contribution"
Thus, the District Court instructed that jury that it "will find that [Exxon] contributed to the [C]ity's injury in its capacity as a manufacturer or refiner" if the City showed by a preponderance of the evidence that:
Id. at 6607:15-6608:6.
The jury was instructed that if it found Exxon liable on any of the City's causes of action, "then [it] must award the [C]ity sufficient damages to compensate the [C]ity for losses caused by [Exxon's] conduct." Tr. at 6634:20-22. This damages determination took place in four stages. First, the jury was instructed to determine the "sum of money that compensates [the City] for all actual losses the [C]ity proves, by a fair preponderance of the credible evidence, that it has sustained, or will sustain in the future, as a result of MTBE in the Station 6 wells." Id. at 6635:8-13. Next, in view of Exxon's contention that the water in the Station Six capture zone was also polluted with non-MTBE contaminants such as perchloroethylene,
In an effort to quantify its damages, the City called Marnie Bell, a groundwater treatment expert who testified about the cost of treating the MTBE at Station Six. Bell explained that it is "standard engineering practice to design a treatment system to treat the water to below an MCL" because "[d]esigning a treatment system to treat the water to just below an MCL would place a water utility at risk for violating the MCL and possibly delivering contaminated water to its customers." Testimony of Marnie Bell ("Bell Testimony"), Tr. at 5881:14-18. In addition, Bell explained, New York State "require[s] that treatment systems for the removal of organic contamination [such as MTBE] be designed to remove the contaminant to the lowest practical level." Id. at 5881:19-22.
Bell identified two "proven and reliable technologies" for removing MTBE from groundwater: granular-activated carbon ("GAC") and air-stripping.
In arriving at her estimates, Bell projected the costs of a treatment facility over a forty-year timeframe because "Terry's modeling ... showed MTBE concentration sustaining at significant levels out to 2040. And we projected those trends outwards to try and identify the entire timeframe in which Station 6 would need to provide MTBE treatment." Id. at 5885:16-20. In addition, Bell testified that, although she understood Station Six would be used as a back-up source of drinking water (as the jury concluded during Phase I), the "only reasonable assumption to make [in projecting the cost of a treatment facility] was that the facility would need to operate continuously." Id. at 5886:21-22. As Bell explained, "[t]he [C]ity has a number of planned repairs on its tunnels and aqueducts. There is the potential for a failure of that supply. And when the system needs to operate, it needs to operate continuously for as long as it is needed."
The jury was also asked to consider Exxon's contention that the City had failed to bring its claims within the applicable
In support of its contention that the City's claims were time-barred, Exxon relied principally on the testimony of William Yulinsky, the Director of Environmental Health and Safety in DEP's Bureau of Waste Water Treatment. Yulinsky testified that, as early as September 1999, he received a memorandum from a City consultant who noted that, "considering that numerous potential sources of MTBE exist within [one] mile of Station 6, the need to treat for MTBE should be anticipated, particularly in conjunction with the high concentrations of PCE reported nearby." Testimony of William Yulinsky ("Yulinsky Testimony"), Tr. at 5781:24-5782:8. Yulinsky also testified that by August 2000, the City was "looking at station modifications for Station 6 to treat a variety of things," including MTBE. Id. at 5768:1-9. Yulinsky explained, however, that in 1999 and 2000 "it was way too soon to determine what we were going to need to treat for." Id. at 5772:6-8.
At the close of Phase III, the jury found that the City "is, or will be injured" by the MTBE that will be in the combined outflow of the Station Six Wells. Phase III Interrogatory Sheet. It also found that Exxon was a cause of the City's injury as both a direct spiller of gasoline containing MTBE and as a manufacturer, refiner, or seller of such gasoline. Id. In view of these findings, it did not consider whether Exxon could be held liable as a "contributor" to the City's injury pursuant to a "commingled product theory" of liability. Id. As for the City's substantive claims, the jury found that the City had proven Exxon's liability for failure-to-warn, trespass, public nuisance, and negligence, but not design-defect or private nuisance. Id.
After concluding that Exxon had failed to prove that the City's claims were untimely, the jury turned to the question of damages. Id. First, the jury concluded that the City would be fairly and reasonably compensated by an award of $250.5 million. Id. Next, it determined that the cost associated with reducing levels of non-MTBE contaminants in the Station Six Wells was $70 million. Id. Finally, it attributed 42 percent of the fault for the City's injury to petroleum companies other than Exxon. Id. The jury's final award to the City was therefore $104.69 million.
As previously noted, the City also sought punitive damages based on Exxon's allegedly reckless disregard of the risks and dangers inherent in supplying gasoline containing MTBE. In support of its claim for punitive damages, the City pointed to certain evidence it had adduced during Phase III, as well as other evidence it
The first category of evidence pertained to Exxon's knowledge of the effect of MTBE on the taste and odor of drinking water. The City argued that its evidence raised an inference that Exxon knew, as early as the mid-1980s, that the presence of MTBE might render water undrinkable. For example, Robert Scala, former director of the Research and Environmental Health Division at Exxon, testified that in 1984 he drafted a paper for Exxon and the American Petroleum Institute in which he raised concerns about the taste and odor of MTBE and other gasoline-associated compounds, and that others at Exxon shared his concerns. Testimony of Robert Scala ("Scala Testimony"), Tr. at 3239:11-3239:20. The City also pointed to an internal memorandum prepared by Exxon employee Barbara Mickelson in 1984, in which Mickelson concluded that "low, non-hazardous, analytically non-detectable levels of MTBE continue to be a source of odor and taste complaints in affected drinking water." Pl.Ex. 272. In addition, the City cited a memorandum prepared by Exxon employee Jack Spell in 1984, in which Spell described to his Exxon supervisors a Shell Oil report concluding that "approximately 5 parts per billion (in water) is the lower level of detectability" for MTBE. Pl.Ex. 5506.
The second category of evidence pertained to Exxon's knowledge of the health effects of MTBE. Although the parties disagree about the impact of MTBE on human health, the City presented evidence that, construed in its favor, raised an inference that as early as the 1980s, Exxon knew that MTBE posed potential health risks. For example, the City cited a memorandum Spell forwarded to his Exxon supervisors in early 1987, which advised that "MTBE has been identified as a health concern at the state and federal level when it is a contaminate [sic] in either ground water or air." Pl.Ex. 5506. The City also highlighted a slideshow prepared by Exxon in 1995, in which Exxon stated that its strategy was to "continue to monitor data on MTBE in groundwater" and to participate in ongoing studies of MTBE's toxicity. Pl.Ex. 477. In addition, the City introduced a 1999 Exxon study that observed, "With uncertain human health and environmental potential effects, public concerns about the need for control or elimination of MTBE in gasoline has accelerated." Pl.Ex. 580.
The third category of evidence pertained to Exxon's knowledge of the difficulties of remediating MTBE spills. For example, in the same 1984 memorandum in which she remarked upon MTBE's taste and odor characteristics, Barbara Mickelson also noted that "MTBE, when dissolved in ground water, will migrate farther than BTX [another petrochemical] before soil attenuation processes stop the migration." Pl.Ex. 272. In a memorandum prepared the following year, Mickelson explained that "the inclusion of MTBE in Exxon gasoline is of concern as an incremental environmental risk" in part because "MTBE has a much higher aqueous solubility than other soluble gasoline components," "MTBE has a higher differential transport rate than other soluble gasoline components," and "MTBE ... cannot be removed from solution to below detectable
The fourth category of evidence pertained to Exxon's knowledge that its own underground storage tanks leaked gasoline. For example, in a 1984 memorandum to his supervisors, Jack Spell identified a series of "ethical and environmental concerns that are not too well defined at this point," including the "possible leakage of SS [service station] tanks into underground water systems of a gasoline component that is soluble in water to a much greater extent." Pl.Ex. 247. Similarly, Barbara Mickelson noted in another 1984 memorandum that Exxon had "62 ground water clean up activities underway." Pl. Ex. 271. The following year, in a memorandum in which she "reviewed the environmental risks from retail service station underground storage systems associated with the addition of MTBE," Mickelson noted that MTBE's elevated aqueous solubility "can be a factor in instances where underground storage tanks develop a leak which ultimately may find its way to the underground aquifer." Pl.Ex. 283. For his part, Robert Scala testified that he was aware by the 1980s that Exxon had begun to replace underground storage tanks "[p]resumably because they either leaked or had a potential to leak." Scala Testimony, Tr. at 3229:5-8; see also Pl.Ex. 228 (Underground Tank Failure Report 1982 Year-End Summary); Pl.Ex. 782 (Underground Tank Program). These tank problems extended well into the 1990s. In March 1998, for example, Exxon prepared a slide show in which it noted that "268 UST [underground storage tank] system releases occurred between 1993-1996." Pl.Ex. 1026. The slides reflect both Exxon's belief that future MTBE releases were likely through tank failure, and that the company had plans and training in place to minimize the risk of releases.
The fifth category of evidence pertained to Exxon's knowledge of MTBE contamination in New York. On this score, the City offered a 1998 survey, completed by Exxon employee Mike Meola, of MTBE contamination levels at potable and monitor wells near 98 retail sites in the state. Pl.Ex. 3074. The survey showed average MTBE concentrations of 50,000 to 100,000 ppb, with peak concentrations reaching 1,000,000 ppb in some monitor wells. Id. The survey did not suggest, however, that Exxon understood precisely how MTBE contamination would affect groundwater located some distance away from a leaking tank. Indeed, a 1987 Exxon memorandum introduced by the City suggests that at that time Exxon theorized that MTBE's "apparent faster migration ... is mitigated by the rapid dilution of the material and its faster disappearance from a site." Pl. Ex. 2636. Nor did the City present evidence suggesting that, before 1998, Exxon knew that MTBE contamination in New York State occurred at significant levels.
The final category of evidence pertained to Exxon's candor about its knowledge regarding MTBE. The City presented disputed evidence that, construed in the City's favor, suggested Exxon hid its knowledge of MTBE's deleterious characteristics from regulators, gas station owners and operators, and others. For example, when asked in deposition whether Exxon informed independent station owners that its gasoline contained MTBE, Robert Larkins, the Exxon executive who approved MTBE's use in the mid-1980s, responded that Exxon "didn't uninform them." Deposition of Robert P. Larkins,
At the close of Phase III of the trial, Exxon moved to preclude the jury from considering an award of punitive damages, arguing that the City's evidence was insufficient as a matter of law to establish the requisite degree of malice, recklessness, or wantonness. The District Court granted Exxon's motion, reasoning that the City had not shown that Exxon's conduct "created either significant actual harm or a substantial risk of severe harm to the Station Six wells."
During the jury's Phase III deliberations, the District Court received a telephone call from Juror No. 2, who reported that Juror No. 1 had "cursed," "insulted," and threatened to "cut" her. Tr. at 6994:10-13. Juror No. 2 also reported that "[e]verybody is afraid of" Juror No. 1 and "[n]obody is willing to stand up to her." Id. at 6995:1-2. The next day, Exxon moved to excuse Juror No. 1 from further service, and requested that the District Court ask the remaining jurors whether, in Juror No. 1's absence, they felt "they [could] reach a decision based on their own views, own conscientious views, rather than on threats, coercion or duress." Id. at 6992:11-22.
After observing that Juror No. 1 "has been a worrisome juror for a long time" and suggesting that "she is the juror whose voice we can hear through the doors as being loud and being abusive," the District Court proceeded to ask each juror individually whether he or she felt able to deliberate without fear of duress or threat. Id. at 6993:1-7. After several jurors denied feeling threatened and responded unequivocally that they could reach their own verdicts, the District Court stated that it had "occurred" to the court "that Juror No. 2 is very fragile and that rather than excusing Juror No. 1, it might be Juror No. 2 has an overblown view of what's occurring," recalling a prior occasion when Juror No. 2 had cried in court. Id. at 7007:13-24. The District Court then questioned Juror No. 2, who stated, "I can't make my own decision." Id. at 7011:2.
After completing the interviews, the District Court concluded that it was "absolutely confident that nobody feels threatened other than Juror No. 2, [who] says she no longer feels she can reach her own verdict[,] [s]o it strikes me that she ought to be excused." Id. at 7013:2-5. Counsel for Exxon agreed that "if [Juror No.] cannot go forward, then she needs to be excused," id. at 7013:24-25, but moved for the dismissal of Juror No. 1 "for threatening [Juror No. 2] with physical violence," id. at 7014:3-4. The District Court denied the motion, expressing its view that the "violence"
Id. at 7014:5-10; see also id. at 7015:15-17 ("If there had been a threat of violence,
At defense counsel's request, the District Court then agreed to re-interview Juror No. 2 so that the contents of the previous night's telephone call could be placed on the record. During this second interview, Juror No. 2 recounted that the previous day the other members of the jury "said I was stupid, I can't form my own opinion because it doesn't match the rest of them. And I feel — I feel that I'm not safe." Id. at 7017:9-12. She also stated that she had been "threatened to be cut" earlier in the week, and "threatened with a fork" one to two weeks earlier. Id. at 7017:17-7018:21.
After formally dismissing Juror No. 2, the District Court summoned the other jurors for a "talk about civility" during which it instructed them to "[m]ake every attempt ... to reach a verdict, and to do so without ... shouting, without cursing, without any threatening, if that has happened, and I can't know that, I wasn't there." Id. at 7020:11-7022:9. After the jury resumed its deliberations, counsel for Exxon moved for a mistrial "based on the further developing facts that in fact there wasn't a threat of violence but an actual instrument was used in the jury room, at least in the mind of [Juror No. 2]." Id. at 7022:14-17. The District Court denied the motion. Defense counsel then observed that the court had never asked Juror No. 1 if she had in fact threatened violence, to which the District Court responded, "That's true. [Juror No. 1] is going to deny that. People usually don't admit to crimes." Id. at 7023:2-3.
Following the conclusion of Phase III, Exxon moved for judgment as a matter of law and in the alternative for a new trial or remittitur. The District Court denied the motion.
Exxon contends that, in light of the jury's verdict in its favor with regard to the City's design-defect claim, the City's remaining state law tort claims conflict with and are therefore preempted by the Reformulated Gasoline Program established by the Clean Air Act Amendments of 1990 (the "RFG Program" or the "1990 Amendments"). Its argument proceeds in three main parts. First, Exxon emphasizes that federal law required it to add an oxygenate to its gasoline. Second, Exxon proposes that the jury's rejection of the City's strict liability, design-defect claim amounts to an affirmative finding that no safer, feasible alternative to MTBE existed as a means to comply with the RFG Program. Finally, because adding MTBE to its gasoline was, Exxon argues, the "safest feasible means" of complying with the federal oxygenate requirement, the jury's $104.6 million verdict impermissibly penalized the company for merely following federal law, and runs contrary to the Congressional purpose and objective of the
We are not persuaded. In the Clean Air Act Amendments of 1990, Congress did not require Exxon to use MTBE in its gasoline. The jury's rejection of the City's design-defect claim in this litigation is not equivalent to an affirmative finding that MTBE was the safest feasible oxygenate — much less that MTBE was the only available oxygenate. But even if Exxon had no safer, feasible alternative to MTBE as a means of complying with the RFG Program's oxygenate requirement, the jury did not impose liability solely because of Exxon's use of MTBE in its gasoline. Rather, to hold Exxon liable on every claim other than design-defect, the jury was required to find not only that the company used MTBE, but that it engaged in additional tortious conduct, such as failing to exercise ordinary care in preventing and cleaning up gasoline spills. For these reasons, and as detailed further below, we reject Exxon's argument that the jury's verdict conflicts with and is therefore preempted by the Clean Air Act Amendments of 1990.
We review a district court's preemption analysis de novo. N.Y. SMSA Ltd. P'ship v. Town of Clarkstown, 612 F.3d 97, 103 (2d Cir.2010).
The Supremacy Clause of the United States Constitution provides that federal law "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. From this constitutional principle, it follows that "Congress has the power to preempt state law." Arizona v. United States, ___ U.S. ___, 132 S.Ct. 2492, 2500, 183 L.Ed.2d 351 (2012). In every preemption case, accordingly, we ask whether Congress intended to exercise this important and sensitive power: "the purpose of Congress is the ultimate touchstone." Wyeth v. Levine, 555 U.S. 555, 565, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009) (internal quotation marks omitted).
The Supremacy Clause and our federal system contemplate, of course, a vital underlying system of state law, notwithstanding the periodic superposition of federal statutory law. Thus, as the Supreme Court has repeatedly instructed, "in all pre-emption cases ... we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Id. (internal quotation marks and alterations omitted). In light of this assumption, the party asserting that federal law preempts state law bears the burden of establishing preemption. See id. at 569, 129 S.Ct. 1187; Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 255, 104 S.Ct. 615, 78 L.Ed.2d 443 (1984). Imposing state tort law liability for negligence, trespass, public nuisance, and failure-to-warn — as the jury did here — falls well within the state's historic powers to protect the health, safety, and property rights of its citizens. In this case, therefore, the presumption that Congress did not intend to preempt state law tort verdicts is particularly strong. See, e.g., U.S. Smokeless Tobacco Mfg. Co. v. City of N.Y., 708 F.3d 428, 432-33 (2d Cir.2013).
The Supreme Court has recognized three typical settings in which courts will find that Congress intended to preempt state law. First, when Congress expressly provides that a federal statute overrides state law, courts will find state law preempted if, applying standard tools of statutory construction, the challenged
The parties agree that the Clean Air Act and its 1990 Amendments contain no explicit preemption directive expressing a Congressional intent to override state tort law, and Exxon does not argue that Congress intended to occupy any field relevant here.
The Supreme Court has adopted various formulations of the "impossibility" branch of conflict preemption. In an early expression of the doctrine, the Court endorsed a narrow view: that federal law will preempt state law on this theory only when "compliance with both federal and state regulations is a physical impossibility." Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963). In recent years, the Court has applied a more expansive analysis and found "impossibility" when "state law penalizes what federal law requires," Geier v. American Honda Motor Co., 529 U.S. 861, 873, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000), or when state law claims "directly conflict" with federal law, American Telephone & Telegraph Co. v. Central Office Telephone, Inc., 524 U.S. 214, 227, 118 S.Ct. 1956, 141 L.Ed.2d 222 (1998) ("AT & T"). See generally Wyeth, 555 U.S. at 589-90, 129 S.Ct. 1187 (Thomas, J., concurring) (tracing the Court's use of the impossibility doctrine). Even understood expansively, "[i]mpossibility preemption is a demanding defense," Wyeth, 555 U.S. at 573, 129 S.Ct. 1187, and we will not easily find a conflict that overcomes the presumption against preemption.
Exxon argues that the 1990 Amendments effectively required it to use MTBE, yet the jury's verdict in effect prohibits the use of MTBE and consequently subjects Exxon to requirements with which it is impossible to comply. This argument is unavailing. State law here neither "penalizes what federal law requires" nor "directly conflicts" with federal law.
Conceding, as it must, that federal law did not explicitly mandate its use of MTBE, Exxon contends that, as a practical matter, it had no choice but to use MTBE to comply with the federal oxygenate requirement, because MTBE was in fact the "safest, feasible" oxygenate available to satisfy its federal obligation. Appellants' Br. at 27. In support, it relies on the jury's rejection of the City's design-defect claim.
As noted above, the City's design-defect theory was that Exxon bore strict liability for the City's damages because of the "unreasonably dangerous and foreseeable risk to groundwater" posed by Exxon's treatment of its gasoline with MTBE. Am. Compl. ¶ 131. Thus, the jury was asked the following on a special verdict form: "Has the City proven, by a fair preponderance of the credible evidence, that there was a safer, feasible alternative design at the time [Exxon's] gasoline containing MTBE was marketed?" Phase III Interrogatory Sheet. The jury responded by checking the box labeled, "No." Id. Exxon would have us construe this finding as an affirmative determination that the company could not comply with federal law without using MTBE. This argument is flawed for two reasons.
First, Exxon commits a logical fallacy in assuming that the jury's rejection of the City's design-defect claim amounted to an affirmative finding that MTBE was the safest, feasible oxygenate. To prevail on its design-defect claim, the City bore the burden of proving, by a preponderance of the evidence, the existence of a safer, feasible alternative to MTBE. In rejecting the City's claim, the jury found only that the evidence was not sufficient to meet the City's burden. It did not also find, affirmatively, that MTBE was the safest feasible oxygenate available to satisfy the federal oxygenate requirement.
Second, the standard for establishing the absence of a "safer, feasible
The standard for establishing impossibility preemption is different. See Wyeth, 555 U.S. at 573, 129 S.Ct. 1187. The party urging preemption must do more than show that state law precludes its use of the most cost-effective and practical means of complying with federal law — it must show that federal and state laws "directly conflict." AT & T, 524 U.S. at 227, 118 S.Ct. 1956. If there was any available alternative for complying with both federal and state law — even if that alternative was not the most practical and cost-effective — there is no impossibility preemption. Thus, the District Court correctly held that "[i]mpossibility does not depend on whether events in the physical world would have made it difficult to comply with both standards, but on whether the two standards are expressly incompatible."
Exxon responds that it could have met the heightened impossibility standard had the jury been properly instructed. The company sought the following instruction: "If you find that [Exxon] has shown, by a preponderance of the credible evidence, that ethanol was not a safer or feasible alternative to MTBE at the time that [Exxon] was deciding what oxygenate to use to comply with the federal Clean Air Act Amendments, then you will find that the City's defective design product liability claim is preempted by federal law and that the City cannot recover on that claim against [Exxon]." Supp.App. 82. The District Court declined to give this instruction, citing its concerns about explaining the concept of preemption to the jury. The court also noted that preemption was partially a legal issue, and concluded that the design-defect interrogatory — which asked whether the City had proven the existence of a safer, feasible alternative — would resolve any relevant factual questions.
Exxon was not entitled to its proposed instruction because that instruction misstated the law. See PRL USA Holdings, Inc. v. U.S. Polo Ass'n, Inc., 520 F.3d 109, 117 (2d Cir.2008). The proposed instruction
To meet its burden with respect to the impossibility branch of conflict preemption, Exxon needed to demonstrate that it could not comply with the federal oxygenate requirement by using a compound other than MTBE. At trial, the City argued that Exxon could have used ethanol to comply with federal law. On appeal, Exxon offers three reasons to support its position that it could not have used ethanol in its gasoline: the supply of ethanol was insufficient; suppliers could not ship ethanol through pipelines; and ethanol-containing gasoline could not be mixed with other manufacturers' MTBE-containing gasoline. Even when viewed in the light most favorable to Exxon, however, the evidence adduced at trial was insufficient to support these proffered reasons for finding impossibility preemption.
First, Exxon's expert conceded that the supply of ethanol could adjust to meet increased demand. O'Brien Testimony, Tr. at 4467:4-13, 4484:7-10. Second, he testified that ethanol could be transported using trains, trucks, or barges, and that, at the time of trial, producers were using trains to ship ethanol across the country. Id. at 4458:19-24, 4484:22-25. Another Exxon witness testified that in early 1995, the company began using ethanol to meet its Clean Air Act obligations at gas stations in the Midwest; until that time, the company had been using MTBE in that region.
One can imagine a case in which a state law imposes such enormous costs on a party that compliance with a related federal mandate is effectively impossible. But this is not such a case. At most, the evidence adduced at trial showed that using ethanol instead of MTBE would have increased Exxon's production costs to an extent that was far from prohibitive.
The second branch of conflict preemption — the obstacle analysis — is in play when state law is asserted to "stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Arizona v. United States, ___ U.S. ___, 132 S.Ct. 2492, 2505, 183 L.Ed.2d 351 (2012) (internal quotation marks omitted).
Obstacle analysis — which appears to us only an intermediate step down the road to impossibility preemption — precludes state law that poses an "actual conflict" with the overriding federal purpose and objective. Mary Jo C. v. N.Y. State & Local Ret. Sys., 707 F.3d 144, 162 (2d Cir.2013). Obstacle analysis has been utilized when federal and state laws said to conflict are products of unrelated statutory regimes. What constitutes a "sufficient obstacle" is "a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects." Id. (internal quotation marks omitted). As with the impossibility branch of conflict preemption, "the purpose of Congress is the ultimate touchstone," Wyeth, 555 U.S. at 565, 129 S.Ct. 1187 (internal quotation marks omitted), and "the conflict between state law and federal policy must be a sharp one," Marsh v. Rosenbloom, 499 F.3d 165, 178 (2d Cir.2007) (internal quotation marks omitted). A showing that the federal and state laws serve different purposes cuts against a finding of obstacle preemption. See id. at 180 ("On a fundamental level, [the federal law] and [state law] serve different purposes, reinforcing our conclusion that they do not actually conflict.").
The burden of establishing obstacle preemption, like that of impossibility preemption, is heavy: "[t]he mere fact of `tension' between federal and state law is generally not enough to establish an obstacle
To determine whether a state law (or tort judgment) poses an obstacle to accomplishing a Congressional objective, we must first ascertain those objectives as they relate to the federal law at issue. The Supreme Court's decision in Wyeth is instructive in this regard. In holding that FDA approval of a prescription drug's label did not preempt a failure-to-warn claim asserted under state law, the Court relied in large part on the legislative history of the relevant federal law. The Court noted, for instance, that Congress declined to enact an express preemption provision for prescription drugs, although it had enacted such a provision for medical devices in the same statute. The Court also explained that it was appropriate to give "some weight to an agency's views about the impact of tort law on federal objectives when the subject matter is technical and the relevant history and background are complex and extensive." 555 U.S. at 576, 129 S.Ct. 1187 (internal quotation marks and alteration omitted).
The purpose of the 1990 Amendments was to achieve a "significant reduction in carbon monoxide levels." S.Rep. No. 101-228, at 3503 (1989). Exxon agrees but asserts that "Congress made clear that feasibility mattered," and that the 1990 Amendments sought to reduce air pollution without imposing economic burdens on gasoline manufacturers. Appellants' Br. at 29. Through its verdict, Exxon argues, the jury effectively concluded that Exxon should have used ethanol rather than MTBE.
In support of its argument, Exxon cites two statutory provisions reflective of Congressional concern about the costs of complying with the Amendments. First, Exxon emphasizes that, in the statute, Congress instructed the EPA to take "into consideration the cost of achieving... emissions reductions" when drafting regulations under the Clean Air Act Amendments at issue in this case. 42 U.S.C. § 7545(k)(1) (2000). Immediately following this language, however, Congress also instructed the EPA to consider "any nonair-quality and other air-quality related health and environmental impacts." Id. At the heart of the City's suit is the claim that Exxon's use of MTBE caused adverse "health and environmental impacts" on the City. That Congress instructed the EPA to take into account "nonair-quality" effects on the environment suggests a Congressional intent to permit — not preempt — suits like this one.
Second, Exxon cites a provision of the Amendments that authorized the EPA to waive the oxygenate requirement if the
We also note that in 1999, the EPA concluded that a Nevada proposal effectively banning MTBE did not conflict with the Clean Air Act. See EPA, Approval and Promulgation of Implementation Plans; Nevada State Implementation Plan Revision, Clark County, 64 Fed.Reg. 29573, 29578-79 (June 2, 1999). Additionally, in the Energy Policy Act of 2005, Pub.L. No. 109-58, 119 Stat. 594 (codified at 42 U.S.C. § 13389), Congress considered including a safe harbor provision that would have immunized MTBE producers and distributors from state tort liability, but ultimately chose not to do so. See 149 Cong. Rec. S15212 (daily ed. Nov. 20, 2003) (statement of Sen. Dianne Feinstein); 151 Cong. Rec. H6949 (daily ed. July 28, 2005) (statement of Rep. Bart Stupak) ("I am happy that the `safe harbor' provisions for manufacturers of MTBE that were in the House bill were dropped."). Of course, neither of these actions necessarily reflects the intent of Congress as a whole when it amended the Clean Air Act in 1990. But this evidence provides further circumstantial support for our conclusion that Exxon has not established Congressional objectives sufficiently at odds with state law to require that state law be set aside under the doctrine of conflict preemption. See Wyeth, 555 U.S. at 567, 576-77, 129 S.Ct. 1187 (considering subsequent federal legislative history, as well as the relevant agency's views, in analyzing whether state law was subject to conflict preemption). In sum, although these legislative materials demonstrate that Congress was sensitive to the magnitude of the economic burdens it might be imposing by virtue of the Reformulated Gasoline Program and perhaps sought to limit them, they hardly establish that Congress had a "clear and manifest intent" to preempt state tort judgments that might be premised on the use of one approved oxygenate over a slightly more expensive one. Madeira, 469 F.3d at 249 (internal quotation marks omitted).
Even were we to accept Exxon's argument that the 1990 Amendments preclude imposition of a post hoc state law penalty based on its use of MTBE, the judgment of the District Court would not be preempted because the jury's verdict did not rest solely on the company's use of
As we have observed, the jury considered six claims: direct-spiller negligence, failure-to-warn, trespass, public nuisance, private nuisance, and design-defect. Five of these claims (all but design-defect) required the jury to find that Exxon engaged in additional tortious conduct; as to these claims, the mere use of MTBE would not have caused the company to incur liability. See Tr. at 6629:18-20 (direct-spiller negligence); id. at 6615:18-24 (failure-to-warn); id. at 6618:7-11 (trespass); id. at 6628:5-9 (public nuisance); id. at 6621:5-6 (private nuisance).
Tellingly, Exxon adopted this view earlier in the litigation. Indeed, the company's proposed jury instructions stated that if the jury found that "ethanol was not a safer or feasible alternative to MTBE," then it "will find that the City's defective design product liability claim is preempted by federal law and that the City cannot recover on that claim against [Exxon]." Deferred Joint Supp.App. at 82 (emphasis added). And Exxon initially argued to the District Court that "Congress and EPA preempted only in the narrow area of fuel design, while preserving participation in the federal administrative process and state remedies against those who spill gasoline."
For these reasons, we affirm the District Court's determination that the claims on which the jury returned a verdict for the City are not preempted by federal law.
Exxon contends that, as a matter of law, the presence of MTBE at levels below the MCL cannot constitute cognizable injury. According to Exxon, because the jury found at the conclusion of Phase II that MTBE concentrations in the Station Six outflows will peak at 10 ppb — a level equal to the current MCL — the City has not been injured.
To pursue a claim in federal court, a plaintiff must satisfy the requirements of constitutional standing, a principle established by the "case or controversy" requirement of Article III of our Constitution. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Constitutional standing makes three demands: First, "the plaintiff must have suffered an `injury in fact.'" Id. Second, "there must be a causal connection between the injury and the conduct" of which the plaintiff complains. Id. And third, "it must be likely, as opposed to
The injury-in-fact requirement is satisfied when the plaintiff has suffered "an invasion of a legally protected interest, which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical." Lujan, 504 U.S. at 560, 112 S.Ct. 2130 (internal footnote, citations, and quotation marks omitted). As our prior opinions have explained, however, "[t]he injury-in-fact necessary for standing need not be large[;] an identifiable trifle will suffice." LaFleur v. Whitman, 300 F.3d 256, 270 (2d Cir.2002) (internal quotation marks omitted).
Standing is "the threshold question in every federal case." Disability Advocates, Inc. v. N.Y. Coalition for Quality Assisted Living, Inc., 675 F.3d 149, 156 (2d Cir.2012) (internal quotation marks omitted). Once this threshold is crossed, a plaintiff must still establish the elements of its causes of action to proceed with its case. Cf. Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir.2006) ("[A]n injury-in-fact need not be capable of sustaining a valid cause of action under applicable tort law."). To prevail on most of its claims, the City was required to show that it suffered an injury actionable under New York law. See Akins v. Glens Falls City Sch. Dist., 53 N.Y.2d 325, 333, 441 N.Y.S.2d 644, 424 N.E.2d 531 (1981) (noting that injury is an element of a negligence claim); Copart Indus. v. Consolidated Edison Co. of N.Y., 41 N.Y.2d 564, 568-70, 394 N.Y.S.2d 169, 362 N.E.2d 968 (1977) (same as to public nuisance claim); Howard v. Poseidon Pools, Inc., 72 N.Y.2d 972, 974, 534 N.Y.S.2d 360, 530 N.E.2d 1280 (1988) (same as to failure-to-warn claim); cf. Hill v. Raziano, 63 A.D.3d 682, 880 N.Y.S.2d 173, 175 (2d Dep't 2009) (noting that "nominal damages are presumed from a trespass even where the property owner has suffered no actual injury").
Whether a plaintiff has standing to sue is a question of law, and accordingly we review the District Court's ruling de novo. Disability Advocates, 675 F.3d at 156. Whether contamination at levels below the applicable MCL is actionable under New York law also presents a question of law accorded de novo review. See Ins. Co. of N. America v. Pub. Serv. Mut. Ins. Co., 609 F.3d 122, 127 (2d Cir.2010).
Before trial, the District Court concluded that the City had standing to bring its claims even if the alleged contamination did not exceed the MCL. The court reasoned that, "while the MCL may serve as a convenient guidepost in determining that a particular level of contamination has likely caused an injury, the MCL does not define whether an injury has occurred."
We agree with the District Court that, for standing purposes, the MCL does not define whether injury has occurred. It strikes us as illogical to conclude that a water provider suffers no injury-in-fact — and therefore cannot bring suit — until pollution becomes "so severe that it would be illegal to serve the water to the public." Appellees' Br. at 54. This is especially so in view of a New York water provider's statutory duty and commonsense obligation
That the MCL does not define whether a water provider has suffered injury for standing purposes is confirmed by the City's identification of several specific, deleterious effects of MTBE at below-MCL levels. For example, the City offered testimony from a toxicologist, who opined that "even at the lowest levels of exposure... in drinking water," MTBE is a mutagen "that can cause a mutation which can possibly lead to cancer." Rudo Testimony, Tr. at 3267:21-24. It also offered testimony from a taste and odor expert, who opined that "25 percent of the population would detect [MTBE] at 3 to 4 parts per billion, and that 10 percent of the population would detect it down at 1 or 2 parts per billion." Lawless Testimony, Tr. at 2889:20-22. And it presented testimony from the City's Director of Water Quality, who noted that "the public [is] accustomed to receiving water that is ... free of taste," and that, if it served water at MTBE levels as low as 1 or 2 ppb, the City would be adversely affected by consumer complaints from the "10 percent of the population that can detect taste and odor in their water" at those levels, thereby undermining public confidence in the City's water supply. Schindler Testimony, Tr. at 2943:9-13.
Our conclusion as to the proper lens through which to view the MCL as it relates to the question of standing finds further support in LaFleur v. Whitman, 300 F.3d 256 (2d Cir.2002), where we held that a plaintiff may suffer injury-in-fact from air pollution that falls below federal regulatory pollution thresholds. In LaFleur, a private plaintiff brought suit under the Clean Air Act, seeking review of the EPA's decision not to object to the state's issuance of an operating permit to a facility that converted municipal waste and sewage sludge into ethanol and carbon dioxide. Id. at 259. The facility operator challenged plaintiff's standing on the ground that "the ambient level of the regulated air pollutant to be released by the facility ... would be well below" the applicable regulatory standards. Id. at 269. We rejected the challenge, concluding that the plaintiff, who worked in an adjacent shopping center and was likely to be exposed to the facility's emissions, had sufficiently alleged an injury-in-fact. Id. at 270. This was so, we held, "even if the ambient level of air pollution does not exceed" the relevant regulatory standards. Id. at 271.
The standing cases cited by Exxon neither bind nor persuade us. For example, Exxon cites City of Greenville, Ill. v. Syngenta Crop Protection, Inc., 756 F.Supp.2d 1001 (S.D.Ill.2010), for the proposition that "the city's claimed remediation costs did not establish standing because they were unnecessary to meet the city's statutory obligation to provide clean water." Appellants' Br. at 44. But Exxon's gloss on City of Greenville is inaccurate. In fact, the City of Greenville court held that "a water provider may demonstrate an injury in fact even if its finished water does not exceed an MCL if its use of the water to meet its
Exxon's reliance on Iberville Parish Waterworks District No. 3 v. Novartis Crop Protection, Inc., 45 F.Supp.2d 934 (S.D.Ala.1999), is also unavailing. In Iberville, two public water providers sued a producer of herbicide for contamination allegedly caused by the herbicide's chemical component, atrazine. Id. at 936. In finding that the public water providers lacked constitutional standing, the Iberville court asserted that "[b]ecause both [water providers] are in compliance with [the applicable] drinking water standards, it cannot be said that either has suffered any actual invasion of a legally protected interest." Id. at 941-42. But this conclusion was unsupported by any discussion or analysis, so we find it unpersuasive. Indeed, it is doubly unpersuasive in view of the factual differences between that case and this one. Although the plaintiffs in Iberville sought recovery for costs associated with monitoring and remediating atrazine contamination, the evidence showed that a significant proportion of those costs were unrelated to the alleged contamination. Id. at 939-42. For example, one of the plaintiffs had installed a filtration system, not to remove atrazine, but rather "to improve the taste and clarity of [the] water and, in [so] doing, to maintain [its] competitive edge over bottled water manufacturers." Id. at 941. Here, by contrast, the costs incurred and projected by the City to treat the water at Station Six are directly related to MTBE contamination.
Of course, to recover on most of its state-law claims, the City was required to do more than establish standing — it was required to show, among other things, that it suffered actual injury as a matter of New York tort law. See Akins, 53 N.Y.2d at 333, 441 N.Y.S.2d 644, 424 N.E.2d 531 (negligence); Copart Indus., 41 N.Y.2d at 568-70, 394 N.Y.S.2d 169, 362 N.E.2d 968 (public nuisance); Howard, 72 N.Y.2d at 974, 534 N.Y.S.2d 360, 530 N.E.2d 1280 (failure-to-warn); cf. Hill, 880 N.Y.S.2d at 174 (no injury requirement for trespass claim). To the extent Exxon argues that New York law (as distinguished from the doctrine of constitutional standing) bars recovery where the alleged contamination does not exceed the MCL, that argument, too, fails.
We agree with the District Court that, in determining whether the City had established injury as a matter of New York law, the relevant question for the jury was whether "a reasonable water provider in the [C]ity's position would treat the water to reduce the levels or minimize the effects of the MTBE in the combined outflow of the Station 6 wells in order to use that water as a back-up source of drinking water." Tr. at 6604:5-10. This standard strikes a proper balance. On the one hand, it recognizes that "even clear, good-tasting water contains dozens of contaminants at low levels," and therefore demands more than de minimis contamination
Several New York state-court decisions in the lead-paint context support this conclusion by holding that whether a plaintiff has suffered injury from contamination at levels below an applicable regulatory threshold is a question of fact for the jury. In Cunningham v. Spitz, 218 A.D.2d 639, 630 N.Y.S.2d 341, 341 (2d Dep't 1995), for example, the court found "triable issues of fact as to whether the plaintiff ... was injured as a result of his exposure to lead, notwithstanding the fact that his blood-lead level did not fall within scientifically accepted definitions of lead poisoning." Likewise, in Singer v. Morris Avenue Equities, 27 Misc.3d 311, 895 N.Y.S.2d 629, 631 (N.Y.Sup.Ct. Jan. 5, 2010), the court rejected the contention that the plaintiff had not been injured as a matter of law where her blood-lead level was lower than the level defined by the New York City Health Code as constituting lead poisoning.
The state-law injury cases to which Exxon cites do not alter our conclusion. For example, in City of Moses Lake v. United States, 430 F.Supp.2d 1164 (E.D.Wash. 2006), the court granted summary judgment to defendants on tort claims arising out of their alleged contamination of Moses Lake's drinking wells with the chemical trichloroethylene. Id. at 1167. In holding that, under Washington law, Moses Lake had not been injured, the court observed that the contamination giving rise to suit fell below the applicable MCL. Id. at 1185. But in Moses Lake, the MCL served as simply one factor in the court's analysis. The court also noted that the level of trichloroethylene in the affected aquifers was "imperceptible to human senses" and that Moses Lake "continue[d] to supply drinking water via its [allegedly affected] wells." Id. at 1184. In addition, Moses Lake failed to adduce "any evidence of an actual existing danger" posed by the contamination. Id. Here, by contrast, the
Exxon's reliance on Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88 (4th Cir.2011), is similarly infirm. In Rhodes, private plaintiffs sought recovery for du Pont's alleged contamination of the municipal water supply with perfluorooctanoic acid and "the resulting presence of [the chemical] in their blood." Id. at 93. In affirming the district court's grant of summary judgment to du Pont on plaintiffs' negligence claim, the Fourth Circuit held that "[t]he presence of [the chemical] in the public water supply or in the plaintiffs' blood does not, standing alone, establish harm or injury for purposes of proving a negligence claim under West Virginia law." Id. at 95. "In such situations," according to the Fourth Circuit, "a plaintiff also must produce evidence of a detrimental effect to the plaintiffs' health that actually has occurred or is reasonably certain to occur due to a present harm." Id. Here, by contrast, the City has adduced evidence showing the specific injuries it suffered as a result of MTBE contamination at Station Six: that MTBE is a probable human carcinogen, that it can be detected at 1-2 ppb by ten percent of the population, and that even if only ten percent of the population taste it, the confidence of the public in the water supply would be undermined. And, based on this evidence, a jury could easily determine that a reasonable water provider in the City's position would treat the water in the Station Six Wells to reduce the levels or minimize the effects of MTBE in order to use the water as a back-up source of drinking water.
In sum, we reject Exxon's contention that the New York MCL for MTBE determines whether the City has been injured either for standing purposes or for purposes of establishing injury as a matter of New York tort law. We decline Exxon's invitation to adopt a bright-line rule that would prevent a water provider from either bringing suit or prevailing at trial until its water is so contaminated that it may not be served to the public. The MCL does not convey a license to pollute up to that threshold.
Exxon contends that the City's claims are unripe because "it is deeply uncertain whether the City's usufructuary interest in Station 6 will ever suffer an injury."
"`Ripeness' is a term that has been used to describe two overlapping threshold criteria for the exercise of a federal court's jurisdiction." Simmonds v. INS, 326 F.3d 351, 356-57 (2d Cir.2003). The first such requirement — which we refer to as "constitutional ripeness" — is drawn from Article III limitations on judicial power. Id. at 357; see also Reno v. Catholic Social Servs., Inc., 509 U.S. 43, 57
The doctrine of constitutional ripeness "prevents a federal court from entangling itself in abstract disagreements over matters that are premature for review because the injury is merely speculative and may never occur." Ross v. Bank of America, N.A. (USA), 524 F.3d 217, 226 (2d Cir.2008) (internal quotation marks omitted). This aspect of the ripeness doctrine overlaps with the standing doctrine, "most notably in the shared requirement that the plaintiff's injury be imminent rather than conjectural or hypothetical." Id. (internal quotation marks and alterations omitted). In most cases, that a plaintiff has Article III standing is enough to render its claim constitutionally ripe. See Simmonds, 326 F.3d at 358; Ross, 524 F.3d at 226. Here, our determination above that the City has satisfied the requirements of Article III standing leads us easily to conclude that its claims are constitutionally ripe; we therefore focus only on prudential ripeness. Ross, 524 F.3d at 226.
The doctrine of prudential ripeness "constitutes an important exception to the usual rule that where jurisdiction exists a federal court must exercise it," and allows a court to determine "that the case will be better decided later." Simmonds, 326 F.3d at 357 (emphasis omitted). Prudential ripeness is "a tool that courts may use to enhance the accuracy of their decisions and to avoid becoming embroiled in adjudications that may later turn out to be unnecessary." Id. In determining whether a claim is prudentially ripe, we ask "whether [the claim] is fit for judicial resolution" and "whether and to what extent the parties will endure hardship if decision is withheld." Id. at 359; see also Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 581, 105 S.Ct. 3325, 87 L.Ed.2d 409 (1985). A district court's "ripeness determination is ... a legal determination subject to de novo review." Conn. v. Duncan, 612 F.3d 107, 112 (2d Cir.2010).
According to Exxon, the District Court effectively "asked the jury to peer into a crystal ball and make myriad predictions about what might or might not occur decades from now depending on how the [City] uses a facility that it has not yet started to build and that it might never complete." Appellants' Br. at 35. The speculative nature of the jury's task demonstrates, Exxon says, that the claims are prudentially unripe for adjudication. As we observed above, however, this argument mistakenly conflates the nature of the City's claimed damages with its injury.
The City's theory of its legal injury is that, by contaminating the water in the Station Six Wells with MTBE, Exxon interfered with the City's right to use that water. Exxon's extensive discussion of the current disuse of the Station Six Wells and the future steps required to use them addresses the scope of the damages flowing from the injury, not whether there is an injury at all. The City's claims are prudentially ripe. It brought suit only after testing showed the presence of MTBE in the Station Six Wells. The Amended Complaint therefore alleged a present injury — namely, that Station Six had already been contaminated with MTBE. As we have explained, whether that injury was significant enough for the City to prevail
In addition, although in bringing suit the City sought to recover past, present, and future damages flowing from Exxon's conduct, there is nothing unusual about such a claim. See, e.g., Davis v. Blige, 505 F.3d 90, 103 (2d Cir.2007) ("When [an] injury occurs, the injured party has the right to bring suit for all of the damages, past, present and future, caused by the defendant's acts." (internal quotation marks omitted)). Nor is the City's claim rendered prudentially unripe by the possibility that its damages may prove too speculative to support recovery.
We also note that dismissing the City's claims as unripe would work a "palpable and considerable hardship." Thomas, 473 U.S. at 581, 105 S.Ct. 3325 (internal quotation marks omitted). Under New York law, a plaintiff asserting a toxic-tort claim must bring suit within three years of discovery (or constructive discovery) of its injury. See N.Y. C.P.L.R. 214-c(2). In Jensen v. General Electric Co., 82 N.Y.2d 77, 603 N.Y.S.2d 420, 623 N.E.2d 547 (1993), the New York Court of Appeals held that the common law "continuing-wrong" doctrine — pursuant to which a recurring injury is treated as "a series of invasions, each one giving rise to a new claim or cause of action" — does not reset the statute of limitations in the toxic-tort context. Id. at 85, 603 N.Y.S.2d 420, 623 N.E.2d 547 (internal quotation marks omitted). As the District Court observed, "the City brings a traditional recurring injury claim" in the sense that its injury is continuing: MTBE is in the Station Six Wells and will be for the foreseeable future.
Exxon responds that even if the City's claims are ripe, they are barred by the statute of limitations because the City first discovered that it had been injured more than three years before bringing suit. See N.Y. C.P.L.R. 214-c(2). As we have explained, the City contends that it was injured when the concentration of MTBE at Station Six rose to a level at which a reasonable water provider would have treated the water. At trial, Exxon bore the burden of establishing that the City knew or should have known before October 31, 2000 — i.e., three years before the City filed suit — that it had been injured. See id.; Bano v. Union Carbide Corp., 361 F.3d 696, 709-10 (2d Cir.2004). Ultimately, the jury rejected Exxon's statute-of-limitations argument, concluding at the end of Phase III that Exxon failed to prove "that the City did not bring its claims in a timely manner." Phase III Interrogatory Sheet. On appeal, we understand Exxon to contend that no reasonable
In support of this contention, Exxon draws our attention to two pieces of evidence which, it says, establish that the City's suit was time-barred. The first piece of evidence came from William Yulinsky, Director of Environmental Health and Safety in DEP's Bureau of Waste Water Treatment, who testified that as early as 1999 the City recognized that because "numerous potential sources of MTBE exist[ed] within [one] mile of Station 6, the need to treat for MTBE should be anticipated." Yulinsky Testimony, Tr. at 5781:17-5782:15. But Yulinsky's testimony that the City anticipated a future need to remediate MTBE does not prove that the City knew in 1999 that Station Six had already been contaminated or that the contamination was significant enough to justify an immediate or specific remediation effort.
The second piece of evidence to which Exxon points is the City's April 2000 discovery that one of the Station Six Wells had experienced "some exposure" to MTBE. Specifically, the City conceded that "MTBE was first detected in raw water drawn from Well 6D on April 18, 2000 at a concentration of 1.5[ppb]" and that "MTBE was first detected in raw water drawn from Well 33 on April 18, 2000 at a concentration of 0.73[ppb]." Phase III JPTO, Statement of Undisputed Facts ¶¶ 108, 111. But Exxon has not identified sufficient evidence to establish that, in a case such as this involving a core municipal function and implicating an unusually compelling public interest, a reasonable juror was required to find that a reasonable water provider would have treated groundwater containing MTBE at these concentrations. We therefore conclude that a reasonable juror could have found that Exxon failed to show that the City learned of its injury before October 31, 2000.
We turn now to Exxon's challenge to the sufficiency of the evidence underlying the jury's verdict as to injury and causation. Exxon argues that the jury's peak MTBE finding and its damages calculation are based on speculation, and that the District Court erred in permitting the jury to consider "market share evidence" as circumstantial proof of Exxon's role in causing the City's injury. For these reasons, according to Exxon, the District Court should have granted its motion for judgment as a matter of law. As discussed below, we reject these challenges.
"We review a district court's denial of a motion for judgment as a matter of law de novo." Manganiello v. City of New York, 612 F.3d 149, 161 (2d Cir. 2010). "In so doing, we apply the same standards that are required of the district court." Id. (internal quotation marks and brackets omitted). A court may grant a motion for judgment as a matter of law "only if it can conclude that, with credibility assessments made against the moving party and all inferences drawn against the moving party, a reasonable juror would have been compelled to accept the view of the moving party."
The only expert witness to quantify the amount of MTBE that will be in the Station Six outflow was hydrogeologist David Terry, who employed multiple analyses to do so, as described above. Using one analysis — Analysis 1 — Terry opined that MTBE concentration would peak at 35 ppb in 2024. Using a different analysis — Analysis 2 — Terry opined that, depending on spill volume, the peak concentration could range from de minimis levels to approximately 23 ppb, and could last through at least 2040. For its part, the jury concluded in Phase II that the concentration of MTBE at Station Six will peak at 10 ppb in 2033.
On appeal, Exxon challenges the jury's conclusion on two grounds. First, it notes that, notwithstanding the jury's Phase I finding that the City will use Station Six as a back-up source of drinking water, Terry based his models on the assumption that Station Six will operate on a continuous basis. According to Exxon, this allegedly erroneous assumption renders Terry's models fatally flawed and the jury's verdict without any evidentiary basis. Second, Exxon argues that because Terry's expert opinion and the jury's verdict differ, the latter must have been based on impermissible speculation.
As for Exxon's first argument, it is true that the jury concluded during Phase I that the City would use the water from the Station Six Wells "as a back-up source of drinking water if needed due to shortages in other sources of supply." It is also true that Terry's analyses assumed that Station Six would run on a continuous basis for twenty-four years. Terry Testimony, Tr. at 2155-:11-25; id. at 2212:22-2213:13. But that assumption is not necessarily inconsistent with the jury's backup source finding. Indeed, several City witnesses testified that, given the unpredictability of water emergencies and the need to repair existing infrastructure periodically, water providers customarily plan, as a matter of prudent practice, for continuous use of back-up water facilities. For example, Terry himself testified that it is the "normal[]" practice to assume continuous use when planning for back-up wells "because no one really knows at the outside how they're going to use the well. They might think it's a standby well or something and something happens and they need to use the well, so in that case you want to have enough treatment for that scenario." Id. at 2213:8-13. Steven Schindler, Director of Water Quality for the City's Bureau of Water Supply, testified that "[y]ou never know how long a backup supply is going to be needed," especially given the City's plans to "tak[e] components of [its] system off line for long periods of time, meaning years." Schindler Testimony, Tr. at 2945:7-19. And Marnie Bell, called by the City to describe the costs of designing a treatment facility at Station Six, testified that the "[p]lanned replacement of tunnels, aqueducts, emergencies, [and] failure of these facilities" required the City "to plan for the worst
Exxon's second argument is that the jury's peak-MTBE verdict was "irrational," and must be set aside, because it did not mirror Terry's peak-MTBE prediction. Appellants' Br. at 55. We disagree. The role of an expert is not to displace the jury but rather to "provid[e] the groundwork ... to enable the jury to make its own informed determination." United States v. Duncan, 42 F.3d 97, 101 (2d Cir.1994). Accordingly, the jury is "free to accept or reject expert testimony, and [is] free to draw [its] own conclusion." Berger v. Iron Workers Reinforced Rodmen, Local 201, 170 F.3d 1111, 1121 (D.C.Cir.1999); see also Schroeder v. The Tug Montauk, 358 F.2d 485, 488 (2d Cir. 1966) ("[I]t was within the province of the [trier of fact] to weigh [conflicting expert evidence] and accept or reject the whole or a part of each [expert's] testimony."). And we have consistently held that expert testimony that "usurps ... the role of the jury in applying [the] law to the facts before it" by "undertak[ing] to tell the jury what result to reach" or "attempt[ing] to substitute the expert's judgment for the jury's" is inadmissible. Nimely v. City of New York, 414 F.3d 381, 397 (2d Cir.2005) (internal quotation marks and alteration omitted).
As an initial matter, we note, as did the District Court, that the jury's peak-MTBE finding fell within the range of possible outcomes predicted by Terry's analyses. Terry testified that because he lacked perfect information about the amount of gasoline spilled in the vicinity of Station Six, he based his analyses on a range of variables. For example, in Analysis 1, Terry predicted future MTBE concentrations using groundwater quality information taken in 2004 for sample locations near Station Six. And in Analysis 2, he predicted future MTBE concentrations and the duration of such concentrations by identifying known spill sites and assuming spill volumes of 50 gallons, 500 gallons, and 2,000 gallons. Analysis 1 suggested peak MTBE concentrations of 35 ppb, while Analysis 2 suggested peak MTBE concentrations ranging from de minimis levels (assuming spill volumes of 50 gallons) to approximately 23 ppb (assuming spill volumes of 2,000 gallons).
Further, Terry's models only predicted future MTBE concentrations at Station Six. These predictions were based on a set of assumptions about a number of factors, including spill volume, timing, and the uses to which Station Six would be put. The jury evidently accepted some of Terry's assumptions and rejected others, which it was entitled to do. Exxon's contrary argument would threaten to "denigrate[] the historic and practical abilities of the jury," Medcom Holding Co. v. Baxter Travenol Laboratories, Inc., 106 F.3d 1388, 1398 (7th Cir.1997), by forcing upon it a binary choice: either accept Terry's testimony in whole or reject it in whole. This is not the law. See Berger, 170 F.3d at 1121; Schroeder, 358 F.2d at 488.
For these reasons, we reject Exxon's contention that the jury's peak MTBE finding was based on impermissible speculation.
According to Exxon, the jury's Phase III verdict as to Exxon's liability as a manufacturer, refiner, supplier, or seller of gasoline containing MTBE must also be reversed because it was impermissibly based on a market-share theory of liability.
"Market share liability provides an exception to the general rule that in common-law negligence actions, a plaintiff must prove that the defendant's conduct was a cause-in-fact of the injury." Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222, 240, 727 N.Y.S.2d 7, 750 N.E.2d 1055 (2001). Where the theory of proof called market-share liability is permitted, a defendant may be held liable absent any showing that it caused or contributed to the plaintiff's injury; instead, a defendant may be presumed liable to the extent of its share of the relevant product market. Hymowitz v. Eli Lilly & Co., 73 N.Y.2d 487, 511-12, 541 N.Y.S.2d 941, 539 N.E.2d 1069 (1989).
According to Exxon, the District Court permitted the imposition of market-share liability in contravention of New York law when it instructed the jury that in evaluating whether Exxon's conduct in manufacturing, refining, supplying or selling gasoline containing MTBE was a substantial factor in causing the City's injury, the jury could "consider as circumstantial evidence [Exxon's] percentage share of the retail and/or supply market for gasoline containing MTBE in Queens or [in] any other region that you determine is relevant." Tr. at 6606:17-20. We disagree with Exxon and conclude that the instruction appropriately applied New York law. The District Court did not impose market-share
As an initial matter, we note that the City did not rely on a market-share theory of liability. To the contrary, it identified the "exact defendant whose product injured" it — Exxon. Cf. Hymowitz, 73 N.Y.2d at 504, 541 N.Y.S.2d 941, 539 N.E.2d 1069 (allowing recovery notwithstanding plaintiffs' inability to identify the manufacturer of injurious product). Indeed, as explained below, the City adduced testimony establishing that Exxon gasoline found its way into every underground storage tank in Queens during the relevant period. This is a case in which a defendant faces liability because of evidence linking its own product to the plaintiff's injury.
Under New York law, an act or omission is regarded as a legal cause of an injury "if it was a substantial factor in bringing about the injury." Schneider v. Diallo, 14 A.D.3d 445, 788 N.Y.S.2d 366, 367 (1st Dep't 2005). The word "substantial" means that the act or omission "had such an effect in producing the injury that reasonable people would regard it as a cause of the injury." Rojas v. City of New York, 208 A.D.2d 416, 617 N.Y.S.2d 302, 305 (1st Dep't 1994) (internal quotation marks omitted). In endeavoring to prove that Exxon's conduct as a manufacturer, refiner, supplier, or seller of gasoline was a "substantial factor" in bringing about its injury, the City adduced three principal pieces of evidence. First, the City presented expert testimony that, because gasoline from different manufacturers was commingled before distribution, Exxon gasoline "ended up in each of the retail gas stations in Queens and in their underground storage tanks" between 1985 and 2003. Testimony of Bruce Burke ("Burke Testimony"), Tr. at 4103:7-10. As a result, when "there were leaks from those tanks and MTBE gasoline came through those leaks ... there was some Exxon MTBE gasoline in the tanks [that] presumably went into the leaks." Id. at 4104:14-20. Second, the City presented expert testimony that Exxon supplied approximately twenty-five percent of the gasoline sold in Queens between 1986 and 2003. Testimony of Martin Tallett, Tr. at 4278:9-10; id. at 4281:8-11. And third, the City presented expert testimony that "[l]eaks happen at gas stations ... on a fairly routine basis." Testimony of Marcel Moreau ("Moreau Testimony"), Tr. at 1115:15-16.
Viewed in context, the market share data adduced by the City served merely as some proof that sufficient quantities of Exxon gasoline were delivered to gas stations in the vicinity of Station Six to make it more likely than not that Exxon gasoline played a substantial role in bringing about the City's injury. Like the District Court, we perceive a difference between employing market-share data in this fashion and imposing liability based solely on a defendant's share of the market for a dangerous product, absent any evidence that the defendant's own product directly caused some of the harm alleged. Here, the City did not use market share data as a substitute for showing that Exxon contributed to the contamination of Station Six. Cf. Hymowitz, 73 N.Y.2d at 504, 541 N.Y.S.2d 941, 539 N.E.2d 1069. Instead, it used such data to help quantify the scope of that contribution.
The cases upon which Exxon relies are distinguishable. In Tidler v. Eli Lilly &
Under the circumstances of this case, we find that the District Court's instruction was not improper. We also find that, based on the evidence described above, a reasonable jury could conclude that Exxon's conduct as a manufacturer, refiner, supplier, or seller of gasoline containing MTBE was indeed a substantial factor in bringing about the City's injury.
Exxon contends that even if we reject its arguments as to preemption, legal cognizability, and ripeness, and its challenge to the sufficiency of the evidence of injury and causation, the judgment below must be reversed because the jury's verdicts as to the City's claims of negligence, trespass, nuisance, and failure-to-warn are unsupported by the evidence. We disagree and conclude that, viewed in the light most favorable to the City, the evidence supported the jury's verdict. See Chin v. Port Auth. of N.Y. & N.J., 685 F.3d 135, 150-51 (2d Cir.2012) ("In reviewing the sufficiency of the evidence in support of a jury's verdict, we examine the evidence in the light most favorable to the party in whose favor the jury decided, drawing all reasonable inferences in the winning party's favor." (internal quotation marks omitted)).
To prevail on a negligence claim under New York law, a plaintiff must show "[1] a duty on the part of the defendant; [2] a breach of that duty by conduct involving an unreasonable risk of harm; [3] damages suffered by the plaintiff, and [4] causation, both in fact and proximate, between the breach and the plaintiff's harm." McCarthy v. Olin Corp., 119 F.3d 148, 161 (2d Cir.1997) (internal quotation marks and citations omitted).
At trial, the City argued that Exxon was negligent as a "direct spiller" of gasoline containing MTBE because Exxon failed to ensure that such gasoline was properly stored and dispensed at service stations it owned or controlled. According to the City, gasoline leaked from Exxon's underground storage tanks, causing
Viewed in the light most favorable to the City, the evidence supported the jury's negligence verdict. The record provided ample evidence of gasoline spills and leaks at Exxon-controlled stations, and the jury could have concluded that these releases were negligent. For example, the jury heard testimony about a series of gasoline releases from an Exxon service station located at 113-21 Merrick Boulevard in Queens, within the "capture zone" of the Station Six Wells. In 1996, an inexperienced employee caused a gasoline leak when changing filters on a gasoline dispenser. Three years later, one of the station's tanks failed a "vacuum" test, meaning that the tank was leaking and required repairs. And in 2001, employees encountered gasoline-contaminated soil when working on the station's piping system; upon further exploration, they discovered six 550-gallon storage tanks buried under the station — tanks that were unregistered, and that the station owner did not know existed. An earlier test of the groundwater underneath the station revealed an MTBE concentration of 1,500 ppb — thirty times the then-current MCL.
The jury also heard testimony about steps Exxon could have taken to prevent, or at least mitigate the damage from, these contamination incidents. Marcel Moreau, the City's expert on underground gasoline storage, explained that Exxon could have implemented "vapor monitoring," which would have permitted station operators to detect leaks more quickly. Moreau Testimony, Tr. at 3378:22. He also explained that Exxon could have installed remediation systems at its stations, which would have permitted station operators to begin the clean-up process as soon they detected a gasoline leak. Id. at 3379:3-10. Moreau testified that, to his knowledge, Exxon did not implement either of these measures at its stations. Id. at 3380:15-17. In addition, according to Moreau, after the 1996 leak at the Merrick Boulevard station from an improperly-installed filter, Exxon employees did not perform a "chemical analysis or anything else to determine what was contaminated and what was not. They just went by nose." Id. at 1270:16-19.
The jury was entitled to credit this testimony and conclude that the exercise of reasonable care required Exxon to implement the measures identified by Moreau. Contrary to Exxon's argument, these devices were not simply a "wish list." Moreau testified that vapor detection technology was available in the 1980s, and that, in a 1986 paper recognized by at least one petroleum trade group, he and others warned about the dangers of MTBE and emphasized the importance of effective leak-detection systems. Id. at 3345:2-14. An internal Exxon memorandum from 1984 explained that MTBE migrated farther in groundwater than other contaminants and had lower "odor and taste thresholds." PL Ex. 272. A memorandum dated two years later observed that federal and state authorities had identified MTBE as a health concern. PL Ex. 5506. Evidence of Exxon's timely knowledge of the particular dangers of MTBE, combined with evidence about remedial measures
To prevail on a trespass claim under New York law, a plaintiff must show an "interference with [its] right to possession of real property either by an unlawful act or a lawful act performed in an unlawful manner." New York State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1361 (2d Cir.1989) (citing Ivancic v. Olmstead, 66 N.Y.2d 349, 352, 497 N.Y.S.2d 326, 488 N.E.2d 72 (1985)). "[W]hile the trespasser, to be liable, need not intend or expect the damaging consequence of his intrusion, he must intend the act which amounts to or produces the unlawful invasion, and the intrusion must at least be the immediate or inevitable consequence of what he willfully does, or [what] he does so negligently as to amount to willfulness." Phillips v. Sun Oil Co., 307 N.Y. 328, 331, 121 N.E.2d 249 (1954). In a trespass case involving the "underground movement of noxious fluids," a plaintiff must show that the defendant "had good reason to know or expect that subterranean and other conditions were such that there would be passage [of the pollutant] from defendant's to plaintiff's land." Id.
Exxon asserts that the City failed to establish the first element of trespass — an interference with its water rights. We address this assertion only briefly because it simply repackages two arguments we have already rejected. First, Exxon contends that an interference has not occurred because, according to the jury, the peak MTBE concentration in the Station Six Wells will not exceed 10 ppb. But as already explained, New York courts have held that a plaintiff may suffer injury from contamination at levels below an applicable regulatory threshold. See Cunningham v. Spitz, 218 A.D.2d 639, 630 N.Y.S.2d 341, 341 (2d Dep't 1995); Peri v. City of New York, 8 Misc.3d 369, 798 N.Y.S.2d 332, 339-40 (N.Y.Sup.Ct. Mar. 28, 2005), affd, 44 A.D.3d 526, 843 N.Y.S.2d 618 (1st Dep't 2007), affd, 11 N.Y.3d 756, 864 N.Y.S.2d 802, 894 N.E.2d 1192 (2008). Here, the jury found that a reasonable water provider would have treated the MTBE-contaminated water at Station Six. And the record contains sufficient evidence to support this conclusion.
Second, Exxon contends that it did not interfere with the City's water rights because the City has never actually used Station Six. Again, however, Exxon conflates the City's injury with its damages. The City alleged, and proved to the jury's satisfaction, that the City intends to use the Station Six Wells, that MTBE will be within the capture zone of those wells when they begin operation, and that a reasonable water provider would treat the water to remove the MTBE. An interference has occurred. Whether the City actually uses Station Six goes to the calculation of its damages. Cf. Hill v. Raziano, 63 A.D.3d 682, 880 N.Y.S.2d 173, 175 (2d Dep't 2009) ("[N]ominal damages are presumed from a trespass even where the property owner has suffered no actual injury to his or her possessory interest.").
Exxon also contends that the District Court erred by failing to instruct the jury that a defendant is liable for trespass only if it "`had good reason to know or expect that subterranean and other conditions were such that there would be passage [of the pollutant] from defendant's to plaintiff's land.'" Appellees' Br. at 73 (quoting Phillips, 307 N.Y. at 331, 121 N.E.2d 249) (alteration in original). In fact, the District Court's instruction conveyed this element of trespass. The relevant portion of the that instruction, which
Finally, we reject Exxon's argument that its actions as a "mere refiner and supplier" of gasoline were "too remote from any actual spills or leaks to be deemed an `immediate or inevitable' cause of any trespass." Appellants' Br. at 73-74 (quoting Phillips, 307 N.Y. at 331, 121 N.E.2d 249). In State v. Fermenta ASC Corp., 238 A.D.2d 400, 656 N.Y.S.2d 342 (2d Dep't 1997), plaintiff Suffolk County Water Authority determined that several of its wells had been contaminated by a chemical known as TCPA, a natural byproduct of a widely-used herbicide called Dacthal. The water authority sued the exclusive manufacturer and distributor of Dacthal on several legal theories, including trespass. In affirming the trial court's denial of summary judgment to the manufacturer on the trespass claim, the Second Department explained that "it is enough that the defendants' actions in directing consumers to apply Dacthal to the soil [were] substantially certain to result in the entry of TCPA into [Suffolk County Water Authority] wells." Id. at 346.
Fermenta is squarely on point. Just as the manufacturer in Fermenta knew that consumers would apply its product to the soil, here the jury concluded that Exxon "knew that the gasoline containing MTBE that it manufactured, refined, sold and/or supplied would be spilled." Tr. at 6620:2-3. And just as the actions of the manufacturer in Fermenta were substantially certain to cause contamination, here the jury concluded that it was "substantially certain that [Exxon's] gasoline containing MTBE would leak from the gasoline distribution system and enter groundwater, including the groundwater in the capture zone of the Station 6 wells."
A public nuisance "is an offense against the State and is subject to abatement or prosecution on application of the proper governmental agency." Copart Indus. v. Consolidated Edison Co. of N.Y., 41 N.Y.2d 564, 568, 394 N.Y.S.2d 169, 362 N.E.2d 968 (1977). To prevail on a public nuisance claim under New York law, a plaintiff must show that the defendant's conduct "amounts to a substantial interference with the exercise of a common right of the public," thereby "endangering or injuring the property, health, safety or comfort of a considerable number of persons." 532 Madison Ave. Gourmet Foods v. Finlandia Ctr., 96 N.Y.2d 280, 292, 727 N.Y.S.2d 49, 750 N.E.2d 1097 (2001).
Exxon argues that the jury's rejection of the City's design-defect claim forecloses the City's public-nuisance claim because it establishes that Exxon acted in the safest feasible way, and that Exxon therefore did not "substantially" interfere with a public right.
We also reject Exxon's contention that its conduct as a supplier of gasoline was too "remote from Station 6" to support the jury's public nuisance verdict. Appellants' Br. at 74. Under New York law, "[e]very one who creates a nuisance or participates in the creation or maintenance thereof is liable for it." Penn Cent. Transp. Co. v. Singer Warehouse & Trucking Corp., 86 A.D.2d 826, 447 N.Y.S.2d 265, 267 (1st Dep't 1982) (internal quotation marks omitted); see also Restatement (Second) of Torts § 834 ("One is subject to liability for a nuisance caused by an activity, not only when he carries on the activity but also when he participates to a substantial extent in carrying it on."). As we have explained, the City adduced evidence showing that Exxon manufactured gasoline containing MTBE and supplied that gasoline to service stations in Queens. In addition, the City offered testimony that Exxon knew station owners would store this gasoline in underground tanks that leaked, and introduced evidence that Exxon knew specifically that tanks in the New York City area leaked. The record also shows that Exxon was aware of MTBE's tendency to spread quickly once released into groundwater. In sum, the evidence supports a finding that Exxon knew that MTBE gasoline it manufactured would make its way into Queens, where it was likely to be spilled, and once spilled, would likely infiltrate the property of others.
Despite this evidence, Exxon argues that the City failed to show that Exxon's operations occurred "near the relative geographic areas of the plaintiffs' wells." Appellants' Br. at 74 (internal quotation marks omitted). In support of this position, Exxon relies on In re Nassau County Consolidated MTBE (Methyl Tertiary Butyl Ether) Products Liability Litigation, 29 Misc.3d 1219(A), 918 N.Y.S.2d 399, 2010
Nassau County has not been subjected to the scrutiny of any higher state court, and we question whether, on further review, New York law will be found to support liability for public nuisance only if the defendant engaged in the nuisance-causing conduct from land that directly adjoins the plaintiff's land.
We note, as an initial matter, that the City sought to hold Exxon liable as both a direct spiller of MTBE gasoline and as a manufacturer, refiner, supplier, and seller of MTBE gasoline, and that the jury's verdict on public nuisance did not distinguish between these theories of causation. Nassau County's discussion of geographic proximity is relevant only to the extent that the jury held Exxon liable for public nuisance as a manufacturer of MTBE gasoline; Nassau County permitted claims to go forward against direct-spiller defendants, i.e., defendants who "had gasoline discharges near the plaintiff[']s wells." Id. at *10.
Under New York law, a plaintiff may recover in strict products liability "when a manufacturer fails to provide adequate warnings regarding the use of its product." Rastelli v. Goodyear Tire & Rubber Co., 79 N.Y.2d 289, 297, 582 N.Y.S.2d 373, 591 N.E.2d 222 (1992). This is because a manufacturer "has a duty to warn against latent dangers resulting from foreseeable uses of its products of which it knew or should have known." Id. The duty to warn extends "to third persons exposed to a foreseeable and unreasonable risk of harm by the failure to warn." McLaughlin v. Mine Safety Appliances Co., 11 N.Y.2d 62, 68-69, 226 N.Y.S.2d 407, 181 N.E.2d 430 (1962).
Exxon argues that the District Court erred when it "instructed the jury that [Exxon] had a duty to warn, inter alia, `the city water providers and the public' of dangers arising from the addition of MTBE into gasoline."
In any event, the focus of the City's evidence on its failure-to-warn claim pertained not to warnings Exxon gave the City or the general public but rather to warnings it gave to gas station operators. Although Exxon disputes whether a warning to station operators would have reduced MTBE contamination, a contention we address below, nowhere does Exxon argue that it lacked a duty to warn station operators of the special dangers of its product. And the evidence showed that although operators were warned generally about the risks of spilling gasoline, they were not warned about the special risks
We are also unpersuaded by Exxon's argument that it had no duty to warn anyone because the dangers of spilling gasoline are common knowledge. The City's claim is not that it was injured by spilled gasoline but rather that it was injured by spilled gasoline containing MTBE. The evidence at trial showed that MTBE has an unusual propensity to spread widely in groundwater if spilled, and that it is especially difficult to clean up. The harmful effects of spilling gasoline containing MTBE are therefore different (and more severe) than the effects of spilling untreated gasoline. Given the unique properties of MTBE, we reject the suggestion that a gasoline supplier complies with its duty to warn of the dangers of gasoline containing MTBE by complying with its duty to warn of the dangers of gasoline that does not contain MTBE. See Liriano v. Hobart Corp., 92 N.Y.2d 232, 242, 677 N.Y.S.2d 764, 700 N.E.2d 303 (1998) ("[T]he open and obvious defense generally should not apply when there are aspects of the hazard which are concealed or not reasonably apparent to the user.").
Finally, Exxon argues that the jury's failure-to-warn verdict must be rejected because the City did not establish that gas station operators and other foreseeable users would have changed their behavior had they been warned of the dangers of MTBE. To the contrary, the record contains ample evidence from which the jury could have concluded that warnings about MTBE would have reduced contamination in the Station Six Wells. For example, the jury heard testimony that gas stations chose not to replace leaky underground storage systems in the 1980s and 1990s because they believed that doing so would be more costly than paying for the consequences of continued leakage. We think the jury could have inferred that station owners would have acted differently had they been warned specifically about the dangers of MTBE. As one City expert testified: "Without MTBE, a-gallon-a-day leak most of the time isn't going to get you in very big trouble. But a-gallon-a-day leak with MTBE is a whole different animal; it changes the game. You are now in a whole different ballpark. You need to pay attention to those kinds of releases, and no one was really paying attention on that scale in the 1980s and through most of the 1990s."
Finally, Exxon argues that it is entitled to a new trial because the District Court failed to dismiss Juror No. 1. According to Exxon, after the District Court dismissed the threatened juror (Juror No. 2), it was "incumbent" upon it "to dismiss the threatener" or, at a minimum, to ask Juror No. 1 whether she had actually threatened Juror No. 2. Appellants' Br. at 75-76. The District Court's failure to dismiss Juror No. 1 was prejudicial, Exxon contends, because Juror No. 2 was, it alleges, "a holdout juror and it is inconceivable that another juror would dare disagree with Juror [No.] 1 after seeing the fate of Juror [No.] 2." Id. at 75.
We "review a trial judge's handling of alleged jury misconduct for abuse of discretion." United States v. Gaskin, 364 F.3d 438, 463 (2d Cir.2004). In so doing, we bear in mind that "[c]ourts face a delicate and complex task whenever they undertake to investigate reports of juror misconduct ... during the course of a trial." United States v. Thomas, 116 F.3d 606, 618 (2d Cir.1997). A trial judge enjoys especially "broad flexibility" when the allegations of misconduct "relate to statements made by the jurors themselves, rather than to outside influences." United States v. Sabhnani, 599 F.3d 215, 250 (2d Cir.2010) (internal quotation marks omitted). Even if a party moving for a mistrial shows that the court abused its discretion, however, it must also demonstrate that "actual prejudice" resulted. United States v. Abrams, 137 F.3d 704, 709 (2d Cir.1998) (per curiam).
We see no abuse of discretion in the District Court's decision to dismiss Juror No. 2 and not Juror No. 1, and certainly no prejudice. After diligently and exhaustively inquiring of each juror individually whether he or she felt under any threat, pressure, or coercion to render a verdict in either party's favor, the District Court, relying on its observations of the jurors' demeanors as well as their responses to its careful questioning, concluded with "absolute[] confiden[ce] that nobody feels threatened other than Juror No. 2." Tr. at 7013:2-3. The record amply supports that conclusion, and there is no cause for us to second-guess it. Moreover, given the District Court's dismissal — with the agreement of both sides — of Juror No. 2, its decision not to ask Juror No. 1 whether she actually threatened Juror No. 2 was reasonable. After all, the court had not only ensured that each remaining juror felt capable of rendering an independent decision, but also had instructed each to vote his or her own conscience. In any event, the District Court's conclusion that none of the remaining jurors felt he or she was deliberating under threat, pressure, or coercion is fatal to Exxon's argument that "it is inconceivable that another juror would dare disagree with Juror [No.] 1 after seeing the fate of [holdout] Juror [No.] 2" — and, with it, Exxon's theory of prejudice. Appellants' Br. at 75. With this established, we easily conclude that the relief Exxon sought — removal of Juror No. 1 — would have done nothing to change the outcome of the case; it would simply have left an eight-rather than nine-person verdict. For these reasons, we affirm the
We turn now to the City's arguments on cross-appeal. The City first argues that the jury should not have been instructed to reduce its compensatory damages award to account for the cost to the City of treating pre-existing contamination at Station Six. It further contends that the court erred in ruling that, as a matter of law, the City was not entitled to recover punitive damages from Exxon.
At trial, Exxon argued that any compensatory damages awarded to the City should be reduced by the necessary cost of remediating the other contaminants, such as PCE, present in the Station Six capture zone. The District Court agreed, and instructed the jury:
Tr. at 6637:11-15. The jury found that the cost of removing pre-existing contamination — namely, PCE — was $70 million, and reduced its $250.5 million compensatory damages award accordingly.
The City argues that the District Court's instruction to the jury to reduce any compensatory damages award to account for the pre-existing PCE contamination was a legal error that "unfairly rewarded Exxon and penalized the City for a mere fortuity."
We disagree. The City's argument misapprehends the nature of compensatory damages, which are designed not to punish the wrongdoer, but to compensate the victim for injuries actually suffered or expected to be suffered. See McDougald v. Garber, 73 N.Y.2d 246, 253-54, 538 N.Y.S.2d 937, 536 N.E.2d 372 (1989) ("The goal is to restore the injured party, to the extent possible, to the position that would have been occupied had the wrong not occurred."). Here, it is undisputed that the PCE that is present at Station Six precludes the City from serving the water, even absent any MTBE contamination. Indeed, the City purchased the Station Six Wells from the Jamaica Water Supply Company in response to complaints about the quality of Company-supplied water, intending to use the wells as a back-up water supply. The preexisting contamination of that source required the City to build a treatment plant before it could effectuate its purpose in purchasing the wells — i.e., serving potable water in the future. Thus, the City
We review de novo a district court's determination that the evidence is insufficient to permit a reasonable jury to consider awarding punitive damages. Farias v. Instructional Sys., Inc., 259 F.3d 91, 101 (2d Cir.2001). We will uphold that determination if, drawing all inferences in the plaintiff's favor, there is no genuine issue of material fact and the defendant is entitled to judgment foreclosing a punitive damages award as a matter of law. See Schonfeld v. Hilliard, 218 F.3d 164, 172 (2d Cir.2000).
"Punitive damages, in contrast to compensatory damages, are awarded to punish a defendant for wanton and reckless or malicious acts and to protect society against similar acts." Rivera v. City of New York, 40 A.D.3d 334, 836 N.Y.S.2d 108, 117 (1st Dep't 2007). In New York, the standard for conduct warranting an award of punitive damages "has been variously described but, essentially, it is conduct having a high degree of moral culpability which manifests a conscious disregard of the rights of others or conduct so reckless as to amount to such disregard." Home Ins. Co. v. American Home Prods. Corp., 75 N.Y.2d 196, 203, 551 N.Y.S.2d 481, 550 N.E.2d 930 (1990) (internal quotation marks and citations omitted). Such conduct "need not be intentionally harmful but may consist of actions which constitute wilful or wanton negligence or recklessness." Id. at 204, 551 N.Y.S.2d 481, 550 N.E.2d 930. Punitive damages are appropriate where the defendant "acted with actual malice involving an intentional wrongdoing" or where such conduct amounted to a "wanton, willful or reckless disregard of plaintiffs' rights." Ligo v. Gerould, 244 A.D.2d 852, 665 N.Y.S.2d 223, 224 (4th Dep't 1997).
Our Court has observed that "the recklessness that will give rise to punitive damages [under New York law] must be close to criminality." Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 843 (2d Cir. 1967) (Friendly, J.); accord Home Ins. Co., 75 N.Y.2d at 203, 551 N.Y.S.2d 481, 550 N.E.2d 930 (referring to punitive damages as "a sort of hybrid between a display of ethical indignation and the imposition of a criminal fine" (internal quotation marks omitted)). Such recklessness may be found where the defendant "is aware of
A punitive damages award cannot be sustained under New York law unless "the very high threshold of moral culpability is satisfied," Giblin v. Murphy, 73 N.Y.2d 769, 772, 536 N.Y.S.2d 54, 532 N.E.2d 1282 (1988), because punitive damages are "a social exemplary remedy, not a private compensatory remedy," Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 358, 386 N.Y.S.2d 831, 353 N.E.2d 793 (1976) (internal quotation marks omitted). See also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) (observing that punitive damages "are aimed at deterrence and retribution"). Accordingly, to warrant imposing punitive damages, the reckless conduct at issue must be "sufficiently blameworthy" that punishing it "advance[s] a strong public policy of the State." Randi A.J. v. Long Island Surgi-Ctr., 46 A.D.3d 74, 842 N.Y.S.2d 558, 564 (2d Dep't 2007) (internal quotation marks omitted). To analyze "the egregiousness of a tortfeasor's conduct, and the corresponding need for deterrence," courts must "take into account the importance of the underlying right or public policy jeopardized by the tortfeasor's conduct." Id. at 565. "[T]he more important the right at issue, the greater the need to deter its violation." Id.
At the close of Phase III of the trial, Exxon moved to preclude the jury from considering an award of punitive damages, arguing that the City's evidence was insufficient as a matter of law to establish the requisite degree of malice, recklessness, or wantonness. The District Court granted the motion, concluding that the City had not shown that Exxon's conduct created either severe actual harm or a severe risk of potential harm to the Station Six Wells. Throughout its analysis, the court discounted the City's evidence of Exxon's "general awareness of the dangers of MTBE" because "the narrow question presented by this motion is whether the City has produced or proffered sufficient evidence to allow a reasonable jury to conclude that [Exxon's] conduct with respect to Station Six" warranted the imposition of punitive damages.
In response, Exxon argues that punitive damages must be precluded because, at all relevant times, its use of MTBE in gasoline was authorized by law; the jury found that there was no "safer, feasible alternative" to MTBE (an assertion we have already rejected); and, in any event, the City offered no evidence that any member of the public has ever been harmed by MTBE in the Station Six Wells. Exxon observes that there is no "genuine dispute" that the presence of MTBE in Station Six's capture zone was well below the 50 ppb MCL in place until December 2003, and that "New York's public policy, as expressed in its regulations, permits the presence of MTBE in drinking water at the level found by the jury." Appellants' Reply Br. at 54. Exxon further argues that there is no need to deter further conduct specifically relating to the use of MTBE in New York because New York banned MTBE in 2004 and Congress repealed the oxygenate requirement in 2005. Finally, in response to the City's evidence of Exxon's "general awareness that exposure to high concentrations of MTBE over long periods of time could cause injury," Exxon argues that such general awareness "cannot prove that [Exxon] knew years earlier, when it was making the decision to use MTBE, that its MTBE gasoline would cause some still-future injury to Station 6." Appellants' Reply Br. at 56.
We believe that Exxon has the better of this argument and that the District Court properly held that no reasonable jury could conclude, by at least a preponderance of the evidence, that Exxon was "aware of and consciously disregard[ed] a substantial and unjustifiable risk" that a reasonable water provider would, as a result of Exxon's manufacture and supply of MTBE-containing gasoline in New York, be forced to treat its water supply for MTBE contamination. Roginsky, 378 F.2d at 843 (internal quotation marks omitted) (emphasis added). Exxon was required by law to use an oxygenate in the gasoline it manufactured and supplied. The vast majority of the evidence marshaled by the City related to Exxon's knowledge of the potential effects of MTBE on the odor and taste of water and on the health of those consuming it, as well as MTBE's tendency to spread quickly upon leakage through underground storage tanks or spills. But there is no evidence demonstrating that Exxon understood precisely how MTBE contamination at spill sites — including the contamination it discovered in New York in 1998 — would affect groundwater located some distance away from those sites. In fact, the City's evidence suggests that Exxon originally believed MTBE would dissipate to extremely low contaminant levels in groundwater.
What is especially telling on this issue is the jury's projection that the concentration of MTBE at Station Six would peak at 10 ppb in 2033. This projection speaks not only to the "ultimate outcome of Exxon's conduct," Appellees' Br. at 89, but also to the substantiality of the risk, inherent in supplying and distributing MTBE-containing gasoline, that a reasonable water provider would one day be required to decontaminate its water of MTBE. In light of this projection, we do not believe that a reasonable jury could also find that Exxon's conduct created a substantial and unjustifiable risk that the persistent levels of MTBE in Station Six would exceed a reasonable water provider's tolerable MCL, thereby risking substantial injury to the interest of New York residents in potable drinking water. This is particularly so in the context of Congress's mandate to use an oxygenate and the City's tolerance of a 50-ppb concentration of MTBE in its drinking water during the time when most of Exxon's allegedly reckless conduct occurred.
To summarize: We conclude that the state law tort verdict against Exxon is not preempted by the federal Clean Air Act. We conclude that the jury's finding that the MTBE levels in Station Six Wells will peak at 10 ppb in 2033 — the MCL for MTBE since 2004 — is not inconsistent with a conclusion that the City has been injured. We conclude that the City's suit was ripe because the City demonstrated a present injury, and that the City's suit was not barred by the statute of limitations. We conclude that the jury's verdict finding Exxon liable under state tort law theories is not precluded by the jury's concurrent conclusion that the City had not carried its burden, in the design-defect context, of demonstrating a feasible, cost-reasonable alternative to MTBE available to satisfy the standards of the now-repealed Reformulated Gasoline Program. We conclude that Exxon's demand for a retrial because of an incident of juror misconduct is unavailing. And we conclude that the jury properly offset the gross damages award by amounts it reasonably attributed to cleanup of contaminants other than MTBE, and that the City was not entitled to a jury determination of Exxon's liability for punitive damages.
For the foregoing reasons, we
42 U.S.C. § 7545(k)(2)(A) (2000) (emphases added).
Tr. at 6620:1-15.
