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A federal judge has refused to dismiss the bulk of cases filed against major oil companies for groundwater contamination caused by the gasoline additive known as MTBE. Southern District of New York Judge Shira A. Scheindlin denied motions to dismiss in the consolidated multi-district litigation on MTBE (methyl tertiary butyl ether), a chemical compound that gasoline manufacturers began adding to their products in 1979 to increase octane levels, and, supposedly burn fuel more efficiently. In In re: Methyl Tertiary Butyl Ether Products Liability Litigation, MDL 1358, Scheindlin also presented what she called the “commingled product theory,” a modification of the theory of market share liability, for claims originating in three of the 15 states where cases were filed. Plaintiffs, who include cities, municipal corporations and water suppliers, charged that Amerada Hess Corp. and other companies conspired to mislead them, the Environmental Protection Agency, and the public about the dangers of adding MTBE to gasoline by downplaying the dangers to groundwater. The plaintiffs, claiming that MTBE is now the second most frequently detected chemical in groundwater, sued the defendants in dozens of actions around the country, seeking to hold them jointly and severally liable under state theories of collective liability. After the cases were removed to federal court, the Panel on Multidistrict Litigation consolidated them before Scheindlin. Taking the plaintiffs’ accusations as true for purposes of deciding the motions to dismiss in the 15 states, including New York, New Jersey and Connecticut, Scheindlin explored different theories of collective liability for a product that moves swiftly through underground water supplies and allegedly bears no chemical signature, making it difficult for the identity of actual polluters to be established. She said the MTBE contamination cases present a compelling “circumstance for the application of market share liability,” in which the plaintiff sues manufacturers who represent a “substantial share” of the market for a particular product. “The burden of identification shifts to the defendants if the plaintiff establishes a prima facie case of every element of the claim except for identification of the actual tortfeasor or tortfeasors,” she said. Scheindlin said that courts, over time, have “fashioned new approaches in order to permit plaintiffs to pursue a recovery when the facts and circumstances of their actions raised unforeseen barriers to relief.” “Those courts made a policy decision that in balancing the rights of all parties, it would be inappropriate to foreclose plaintiffs entirely from seeking relief merely because their actions did not fit the parameters of existing liability theory,” she said. “These MTBE cases suggest the need for one more theory, which can be viewed as a modification of market share liability, incorporating elements of concurrent wrongdoing.” The theory: “When a plaintiff can prove that certain gaseous or liquid products … of many suppliers were present in a completely commingled or blended state at the time and place that the risk of harm occurred, and the commingled product caused a single indivisible injury, then each of the products should be deemed to have caused the harm.” BURDEN OF PROOF And under this theory, she said, “each refiner actually caused the injury.” “Thus, if a defendant’s indistinct product was present in the area of contamination and was commingled with the products of other suppliers, all of the suppliers can be held liable for any harm arising from an incident of contamination,” she said. Defendants would be severally liable, she said, with damages apportioned by proof of “defendant’s share of the market at the time a risk of harm was created to the potential class of victims.” A defendant “must be able to exculpate itself” by proving the product was not present at the time or place. And for this theory to apply, she said, plaintiffs must “conduct some investigation so that they can make a good faith identification of the defendants whom they believe caused their injury.” The judge predicted that this modification of market share theory, based on existing case law, would be recognized in Connecticut, Indiana and Kansas. Scheindlin then allowed cases to go forward in New York and 11 other states based on different theories of collective liability. Robert Gordon, Stanley N. Alpert and C. Sanders McNew of Weitz & Luxenberg are liaison counsel for plaintiffs. Peter John Sacripanti, James A. Pardo and Stephen J. Riccardulli of McDermott, Will & Emery are liaison counsel for defendants.

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