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Oil companies came up winners in New Jersey’s first ruling in litigation over water contamination by the gasoline additive MTBE, and it’s a ruling that may have reverberations nationally. U.S. District Judge Anne Thompson granted summary judgment in Holten v. Chevron, 00-4703, ruling that strict liability is pre-empted by an amendment to the federal Clean Air Act, which required the sale of gasoline containing oxygenates like MTBE (methyl tertiary butyl ether) that promote cleaner burning. What’s more, Thompson ruled that MTBE can’t be considered a defective product — thus knocking out the underpinnings from a non-pre-empted state tort claim. Federal pre-emption has emerged as a central issue in the growing number of suits over MTBE, and Thompson’s July 10 decision may affect other federal class action suits over MTBE contamination. Last Tuesday, plaintiffs’ attorney Shari Blecher filed a motion for reconsideration of Holten and says she’ll appeal if it isn’t granted. Blecher, of Princeton, N.J.’s Lieberman & Blecher, represents 97 current and former residents of the town of Bayville, N.J., whose wells were contaminated by MTBE. The state Department of Environmental Protection identified leaking underground tanks at a gasoline station at Route 9 and Morris Avenue as the sole source of the pollution. Named defendants were Chevron USA Inc. and Gulf Oil Corp., which supplied gasoline to the station, and Cumberland Farms, the owner of the station since 1972. The plaintiffs seek funds for a medical monitoring program and for cleanup of the contamination. They also seek punitive damages and compensatory damages for the costs of obtaining an alternative water supply. The suit was brought in Superior Court in Ocean County, N.J., last year, and the defendants had it removed to U.S. District Court in Trenton, N.J. In her ruling, Thompson granted summary judgment for Chevron and Gulf, leaving only Cumberland Farms as a defendant. She did not agree with the companies that they were specifically required to use MTBE in gasoline, but still said Congress clearly contemplated that MTBE would be used widely. “As noted in moving defendants’ papers, the legislative history of the Clean Air Act amendments, 42 U.S.C. 7401, et seq., is replete with references to MTBE and its usefulness,” she wrote in granting summary judgment to Chevron and Gulf. “Thus, because Congress required that gasoline include an oxygenate and specifically designated that MTBE would be one of the most common and effective oxygenates, this court concludes that gasoline containing MTBE cannot be deemed a defective product,” Thompson added. Citing the New Jersey Supreme Court’s holding in Bahrle v. Exxon, 145 N.J. 144 (1996), Thompson concluded that an oil company should not be held vicariously liable when it supplies gasoline to a service station found to be leaking and contaminating the ground water. Blecher, in her motion for reconsideration, argues that the Clean Air Act did not specifically require use of MTBE but permitted oil companies to choose from about six additives. “The judge decided that because the Clean Air Act allows MTBE, it cannot be deemed a defective product,” says Blecher. “We believe this is a clear product-liability lawsuit. There is no federal pre-emption, as it has been applied, to MTBE lawsuits.” The attorneys for Chevron and Gulf, Richard Wallace of Wallace King Marraro & Branson in Washington, D.C., and Matthew Slowinski of Slowinski Atkins & Czyz in Newark, N.J., declined to discuss the ruling in view of the pending motion for reconsideration. LONG COATTAILS Thompson’s ruling letting out the oil companies is not only a big setback to the Bayville plaintiffs but may have wider implications. Because there is very little case law on MTBE, the ruling also will be used by oil companies in similar litigation across the country, says Lewis Goldshore, an environmental lawyer and partner at Szaferman, Lakind, Blumstein, Watter, Blader, Lehmann & Goldshore in Lawrenceville, N.J. “Certainly if there was more bulk to the opinion here, there would be a better basis to determine its applicability. But standing in stark language is the fact that MTBE can’t be determined a defective product,” he says. Two days after Thompson’s ruling, U.S. District Judge Shira Scheindlin in Manhattan noted that it conflicted with a decision from a state court judge in California. In South Lake Tahoe Public Utility District v. Atlantic Richfield, No. 99-9128, (Ca. Super. Ct., Feb. 9, 2001), the judge ruled that a product-liability suit could proceed despite the claimed pre-emptive effect of the Clean Air Act. “I will say that the South Tahoe case reached the exact opposite conclusion, so I have one-to-one at moment,” Scheindlin said during a hearing on July 13. “ Holten is on one side and South Tahoe is on another on whether the strict liability, risk/utility analysis is pre-empted.” The New York case, Berisha v. Amerada Hess Corp., 00 Civ. Div. 1898 (S.D.N.Y.), is a class action suit by owners of private wells in 18 states where oxygenated fuel is sold, including New Jersey. It names 12 oil companies as defendants. Scheindlin will not rely on Thompson’s ruling in the New Jersey case or on the ruling in South Lake Tahoe, but will conduct her own analysis on pre-emption, says Jon Hinck, a plaintiff’s attorney in the New York case. Hinck is an associate with Lewis Saul & Associates in Portland, Maine. The Holten defendant oil companies, however, in their request for summary judgment, say the ruling from the bench in South Lake Tahoe is not reflected in any written opinion and is not binding in federal court. Debra Rosen, the attorney for the remaining Holten defendant, Cumberland Farms, contests the DEP’s determination that her client is responsible for the water contamination in Bayville. Rosen, a partner at Archer & Greiner in Haddonfield, N.J., says Cumberland Farms’ consultants do not believe the gas station is responsible because the wells containing MTBE are about 1,000 feet away, and some other wells closer to the station were not contaminated. TREND TOWARD THE DEFENSE Thompson’s ruling reinforces an early trend toward defense verdicts in MTBE cases, says Alan Hoffman, head of the litigation department at Philadelphia’s Blank Rome Comisky & McCauley. Hoffman represented defendant Lyondell Chemical, an MTBE producer, in a state court case in Maine, Millett v. Atlantic Richfield, CV98-555. In March 2000, a judge denied the case class-action status, and in January of this year, the case was settled when Atlantic Richfield agreed to pay the five plaintiffs a total of $35,000. Hinck, the Maine lawyer who represented the Millett plaintiffs, says the $35,000 figure, while seemingly small, was adequate to pay for well testing sought by the plaintiffs. Hoffman says he does not foresee any growth in MTBE litigation in the future because of the great hurdles plaintiffs must mount. “There are no health risks attributed to MTBE where there’s going to be damages. Not one case in this country that’s been filed that’s claimed MTBE has caused a personal injury — all economic,” Hoffman says. “Thus far nobody’s won an MTBE case. The only record on MTBE cases to date is Maine and New Jersey, both of which I’ll call losses. I don’t see it as being a plaintiff’s first choice of litigation.” Assisting Blecher’s firm in the case is Joseph Gonzalez of Masry & Vititoe in Westlake Village, Calif. That firm employs Erin Brockovich, the file clerk whose environmental activism was chronicled by Hollywood.

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