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In recent years oil companies have agreed to pay nearly half a billion dollars to cities with water tainted by a gasoline additive called MTBE. They can blame Victor Sher for that. Sher, along with Dallas attorney Scott Summy, pioneered the idea of going after oil companies for groundwater contamination. Sher’s former firm Miller Sher & Sawyer won the first massive settlement in 2002: a $69 million deal between gasoline makers and a South Lake Tahoe water district. A year later, Sher, his former partner Duane Miller, and Summy topped themselves with a deal for the city of Santa Monica estimated at more than $300 million. It was the ground floor of a new kind of groundwater litigation. Now there are scores of MTBE suits nationwide, and Sher is cocounsel in some of the biggest. Although he relishes the opportunity to practice high-stakes environmental law, he insists that the best part of fat settlements is their impact on manufacturers. “For someone like me, whose goal is to affect policy and change corporate behavior, this is a sweet spot,” he says. Until 1997, Sher was a highly successful environmental activist. As director of the Sierra Club Legal Defense Fund, he masterminded spotted owl litigation that stymied logging in the Pacific Northwest. But suing the government, the group’s traditional tactic, was generating diminishing returns. Improved government defenses and judges’ sagging receptiveness to Endangered Species Act challenges meant more work for less meaningful victories. Sher says he wanted to pursue other types of environmental litigation but was held back by the organization’s tight budget. So he became a name partner at Sacramento’s Miller Sher & Sawyer, where he began using product defect claims, which typically involve research costs over $1 million per case, to go after MTBE makers. After the Tahoe settlement, he launched San Francisco’s Sher Leff. “I ultimately thought the private sector was the way to go,” he says. “If you look at what changes corporate behavior, it’s regulation … and economic incentives.” Historically, chemical manufacturers had been unafraid of groundwater litigation because large plaintiff judgments were rare. But the MTBE suits used defective product arguments to go after the chemical makers, rather than the gas stations directly responsible for leaks into groundwater. It was the difference between suing mom-and-pop operations and going after the deep pockets of Shell Chemicals and Arco, which have been unable to convince courts that they are not responsible for the pollution. The defective product argument was first applied to MTBE in the late 1990s by Sher, Miller, and Summy. The latter is now a partner with the Dallas asbestos firm Baron & Budd. Summy says he hit upon the idea independently, and met Sher and Miller when their cases were consolidated. Their argument has changed the toxic tort landscape for often litigation-shy public agencies. Water providers have been dealing with low-level pollution for years, more concerned with insulating themselves from liability than holding others liable for pollution. Public water providers were highly averse to the financial risk of suing polluters. But with recent MTBE settlements handled on contingency, the actions are nearly risk-free for water providers, says Sher. However, John Lyons, a partner in Latham & Watkins’s Los Angeles office who defends oil companies in MTBE suits, says Sher’s clients risk a credibility gap. “On the one hand, they have for years been on the side of assuring their customers that water’s safe — and they shouldn’t be sued,” he says. “On the other hand, they are raising the claims now that they’re suffering from low levels of contamination.” Sher puts it differently: “We’re seeing the emergence of a new type of environmental enforcer: the public entities who are responsible for delivering resources to the public.” Krista Clark, a legislative specialist with the Association of California Water Agencies, says better methods of detecting groundwater pollution could benefit plaintiffs lawyers. “You’re probably going to see more litigation as you find more and more of this stuff,” she says. Sher and other plaintiffs lawyers are diversifying their practices, applying defective product arguments to other chemical compounds. A version of this story originally appeared in The Recorder, a sibling publication of Corporate Counsel.

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