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December 18, 2020

Environmental, Natural Resources, & Energy Law Blog

Product Liability Law – Another Weapon In The Arsenal Against Contamination - Paul Napoli

Relying on environmental laws often becomes an interminable process of administrative or judicial proceedings hinging on the partisan interpretation of various statutes. Environmental lawyers regularly find themselves arguing statutory construction or fighting ever-changing regulations under Comprehensive Environmental Response, Compensation, and Liability Act, known also as Superfund (“CERCLA”), The Resource Conservation and Recovery Act (“RCRA”) or a State’s equivalent statute. These statutes, as well as some common law nuisance claims, provide strong legal mandates for cleaning up hazardous chemical contamination. Nonetheless, these laws rarely apply responsibility to the manufacturers or distributors of chemicals because those responsible for making the hazardous chemicals seldom have any direct connection or ownership to the property. While Congress had the choice to include these parties in the definition of responsible parties under CERCLA, it chose not to.

Further, there are contaminants that are “emerging” such as PFAS, 1,4 Dioxane and potentially 80,000 other unregulated chemicals that neither CERCLA nor RCRA can provide a remedy for. This is because unregulated contaminants, including PFAS and 1,4 Dioxane, have yet to become listed as a hazardous substances under CERCLA, which could create a cause of action to recover for past remediation and response costs under 107(a)(4)(B) of CERCLA. Thus, there are many situations where States, neighbors, and individuals who live adjacent to these sites are left with economic costs associated with these sites because of polluters who outright abandoned the site.

Now, these victims of contamination can assert another cause of action—one that does not necessarily require proof of foreseeability, and that allows a recovery from this broader definition of responsible parties, the manufacturers and distributors of the chemicals. That cause of action is strict products liability. A manufacturer should be held liable for injuries from his product only when he ought reasonably to have foreseen such injury in an appreciable number of persons. Cudmore v. Richardson-Merrell, Inc., 398 S.W.2d 640 385 U.S. 1003 (1967); The determination of whether an allegedly defective product presents an unreasonable risk of harm involves the balancing of the foreseeability and gravity of the harm with the burden of preventing it. Anibal Del Cid v. Beloit Corp., 901 F. Supp. 539, 542, 1995 U.S. Dist. LEXIS 14707, *1; In New York, “[i]t is well settled that a manufacturer of defective products … may be held strictly liable for injuries caused by its products, regardless of privity, foreseeability or due care.” Finerty v. Abex Corp., 27 N.Y.3d 236, 241, 32 N.Y.S.3d 44, 51 N.E.3d 555 (2016).

There is no dispute in the scientific community that chemicals produced for industrial and other uses have contaminated many areas including much of the country’s water supply and groundwater. See, “Toxic chemicals may contaminate drinking water of 200 million US people” https://www.medicalnewstoday.com/articles/toxic-chemicals-may-contaminate-drinking-water-of-200-million-us-people. Many experts in the field believe that harmful chemicals have caused and will continue to produce a variety of serious health issues in those who drink contaminated water and are otherwise exposed to contamination through inhalation, dermal exposure, ingestion, or other routes. Lawsuits can be filed to stem contamination or force a cleanup under the aforementioned federal and state environmental laws. However, products liability theories are another important means for some cases to proceed. Indeed, property damage and personal injury lawsuits arising out of contamination filed under the products liability theory are mushrooming all over the United States.

Products liability theories are figuring prominently in current contamination litigation centering on unregulated chemicals. Since there is no federal product liability law, product liability claims are typically based on state laws and brought under the theories of negligence, strict liability, failure to warn or breach of warranty. The legal bases for product liability suits are expansive, comprising liability for manufacturing defect, design defect, and failure to warn.

A failure to provide an adequate warning is considered a product defect in strict liability cases. A defendant cannot escape liability for a failure to warn simply because it was unaware of the risk. A defendant is under a duty to stay knowledgeable about its product. To sustain a claim for strict liability based on a defective warning, a plaintiff must prove that (1) the manufacturer knew, or should have known of the risk inherent in the product; (2) there were no warnings or instructions, or those provided were inadequate, (3) the absence of warnings made the product inherently dangerous; and (4) the absence of adequate warnings or instructions was the proximate cause of plaintiff’s injury. Thus, for plaintiffs to trigger the application of strict liability, a plaintiff must first show that the defendant owed a duty to warn of a known or foreseeable risk, which is based on a reasonableness standard. That is, whether a warning is feasible and reasonably necessary (See, Restatement (Third) § 2 cmt. i.), which is fact specific. (Olivo v. Owens-Illinois, Inc., 895 A.2d 1143 (N.J. 2006) (premises owner owed duty to spouses handling workers’ unprotected work clothing based on foreseeable risk of exposure from asbestos borne home on contaminated clothing).) Usually, there is no duty to warn of a risk that is obvious or “generally known and recognized.” (See Humble Sand & Gravel, Inc. v. Gomez, 146 S.W.3d 170 (Tex. 2004); see also Restatement (Third) § 2 cmt. j.) If a duty to warn exists, the plaintiff must show that the defendant failed to exercise due care in warning users of the potential dangers associated with the intended and reasonably foreseeable uses of its product. (See, Huffman v. Caterpillar Tractor Co., 908 F.2d 1470 (10th Cir. 1990); Santoro v. Donnelly, 340 F. Supp. 2d 464 (S.D.N.Y. 2004)). The plaintiff must also show that the risk was known or reasonably knowable to the defendant at the time the product was manufactured or sold. (See, Bailey v. Janssen Pharmaceutica, Inc., No. 06-80702-CIV, 2006 WL 3665417, at *4 (S.D. Fla. Nov. 14, 2006) (pharmaceutical company must warn of prescription drug’s risk known or knowable in light of generally recognized and prevailing best scientific and medical knowledge available at time of manufacture)). Lastly, a plaintiff must show that the defendant’s failure to warn or provision of an inadequate warning proximately caused his injuries.

An example of this can be seen in the overwhelming evidence that 3M knew PFAS chemicals were unsafe but chose to hide it from the public as well as governmental agencies anyway. In fact, in April 2006, 3M agreed to pay a penalty of more than $1.5 million to EPA for its failure to disclose studies dating back decades that confirmed the potential hazards of these chemicals to public health and the environment, among other things. For years, starting in the 1950s, DuPont allowed large amounts of PFOA from its plant to contaminate the drinking water in Ohio and West Virginia. By 2003, DuPont allowed nearly 2.5 million pounds of PFOA from its plant into the Ohio River Valley harming residents across six water districts. The company also failed to report that some of its exposed female employees had passed PFOA to the bloodstream of their unborn children. Other residents of Ohio and West Virginia suffered from life threatening illnesses, including certain cancers, and even death after consuming the PFOA contaminated water. “Providing an inadequate warning is no better than providing no warning at all.” See, American Law of Products Liability 3d, §33:1. If it was possible to discover the risk, such as the risk of causing serious illnesses from certain chemicals through reasonable research, testing and investigation, the defendant will be held liable for failing to warn about a risk it should have known about.

The public presumptively believes that the EPA or OSHA tests all chemicals on the market and assess their risk. However, this is not the case. Many chemicals are exempt from disclosure under exceptions since they may contain ‘confidential business information” (“CBI”) or are pre-1977 not requiring disclosure. Under the EPA, Chemical identities listed on the public portion of the Toxic Substances Control Act (“TSCA”) Inventory are ineligible for CBI status, (40 CFR 711.30(a)(2)(i)). Yet, many emerging contaminants such as PFAS are not yet regulated under the TSCA. The result is often EPA, OSHA, and other governmental agencies need to rely on the manufacturers of the chemicals for human health and environmental information. Under the TSCA, chemical manufacturers are not mandated to generate toxicological data for use by the EPA in evaluating chemicals. Chemicals that existed on the market as of 1977 under TSCA do not face regulatory scrutiny unless the EPA can demonstrate that they meet threshold triggers for intervention. Therefore, there is widespread agreement among attorneys, government, and advocacy groups that TSCA is deeply flawed, leading to many weaknesses in the governance of chemicals and few incentives for industry to adopt a better method for safer chemicals. That is why plaintiff attorneys are paving the way in pursuing litigation in light of the federal government’s shortcomings. Attorneys have adapted product liability theories in the absence of federal regulation to compensate those affected. As mentioned above, the U.S. regulates very few existing substances under the TSCA despite the scientific evidence that many chemicals might pose risks to human health and the environment. Further, harmful chemicals like PFAS have yet to be declared a hazardous substance under CERCLA. In this context, toxic tort litigation has emerged as a means of controlling chemical risks. Where legislatures and governments are unable or unwilling to reform the regulatory system, plaintiffs may seek to bring tort actions directly against companies producing or using chemicals on the grounds that they are suffering from toxic chemical impacts, or are being exposed to the chemicals through contaminated drinking water. Tort actions may compel industry to take voluntary steps to redesign chemical molecules or products to be less toxic. These actions may generate new accountability among the industry for their production and use of hazardous or toxic chemicals.

Generally, one who supplies a product directly or through a third party is subject to liability to those whom the manufacturer should expect to use the product or to be endangered by its probable use. Restatement (Second) of Torts §388 (1965). The duty extends to others aside from the purchaser or user. See, Hittle v. Scripto-Tokai Corp., 166 F. Supp. 2d 142, 158, 2001 U.S. Dist. LEXIS 15200, *38, CCH Prod. Liab. Rep. P16,175. A manufacturer must take reasonable steps to warn those that may be affected by exposure to the chemicals. Thus, under the failure to warn doctrine, a manufacturer can be held liable if it failed to provide a reasonable warning about the riskiness of the product. Manufacturers of chemicals have a duty to warn the community of the known hazards associated with its chemicals’ components, and the failure to warn can result in liability, among others, to clean up a site or community. Even if a manufacturer does not know or expect their chemicals for escaping their control, if it does, liability follows. Strict liability means that the manufacturer owes a duty of care to the public before releasing their products to the consumer market. By not ensuring their product was safe, they are liable. Strict liability is the imposition of liability on a party without a finding of fault. A claimant need only prove the occurrence of specified criteria. The reason underlying this liability determination is that the manufacturer is in the best position to discover and guard against defects in its products and to warn of their harmful effects.

Courts have repeatedly been confronted with situations in which manufacturers created products that posed unique, substantial harms to others or natural resources. The failure to warn theory resulting in contamination was analyzed by many courts. See Borel v. Fibreboard Paper Prods. Corp., 493 F.2d 1076, 1088-89, 1091 (5th Cir. 1973) (defining scope of strict liability action based upon failure to warn), cert. denied, 419 U.S. 869 (1974); Canifax v. Hercules Powder Co., 46 Cal. Rptr. 552, 557-58 (Cal. Ct. App. 1965); See Smith v. U.S. Gypsum Co., 612 P.2d 251, 254 (Okla. 1980) (holding that in strict liability failure to warn, manufacturer must warn of dangers inherent in “all foreseeable uses.”). However, there is tension between the states on the extent of liability under this theory. In James v. Bessemer Processing Co. 714 A.2d 898 (N.J. 1998) the court held that, in a failure to warn of toxicity of chemicals, New Jersey would rely on the “’frequency, regularity and proximity’ of exposure test” regarding failure to warn, stating that the industry should not be saddled with such open-ended exposure based upon “‘a casual or minimum contact.’” Under a frequency, regularity and proximity test, in order to prove that exposure to a specific defendant’s product was a substantial factor in causing or exacerbating the plaintiff’s disease, the plaintiff is required to prove an exposure of sufficient frequency, with a regularity of contact, and with the product in close proximity to the plaintiff. Further, the Washington Supreme Court held in two cases that a product manufacturer has no duty to warn of dangers presented by products, manufactured by a third party, that may be used in conjunction with the manufacturer’s product. Simonetta v. Viad Corp. 197 P.3d 127 (Wash. 2008); Braaten v. Saber Hagen Holdings, 38 37. 38. 198 P.3d 493 (Wash. 2008). The Fifth Circuit describes self-determination as one of the principles underlying strict liability for failure to warn. In Texas however, there is no cause of action “for a failure to warn about hazards discovered after a product has been manufactured and sold”. Syrie v. Knoll Int’l, 748 F.2d 304, 311 (5th Cir. 1984)

In the In Re Methyl Tertiary Butyl Ether (“MTBE”) Multidistrict Litigation (“MDL”), Judge Shira A. Scheindlin delivered the opinion and applied the failure to warn theory. In Re (“Mtbe”) Products Liability Litigation, 644 F. Supp. 2d 310 (S.D.N.Y. 2009). This MDL involved dozens of product liability cases, filed in nearly twenty states. The numerous plaintiffs, including states, cities, municipalities, and private entities, alleged that more than one hundred manufacturers and distributors of MTBE had contaminated groundwater through the sale of gasoline that contained MTBE. Judge Scheindlin concluded that defendants knew and expected that MTBE would cause widespread water contamination and failed to provide any warnings to the public. For example, adequate warning includes the duty of the manufacturer to make product warnings visible and understandable to their intended users. Warning labels should be placed in highly visible areas on the product’s packaging or even on the product itself. Users of gasoline and operators of drinking water wells at issue were never warned about the dangers of MTBE. This failure to warn resulted in a holding that the manufacturers were strictly liable for the product given their failure to warn against these harmful chemicals.

Recently in 2019, Vermont Attorney General T.J. Donovan announced a settlement of $3.8 million in their case against more than two dozen of the nation’s largest refiners of gasoline. The State’s case, filed in June of 2014, alleged that these refiners caused widespread pollution of Vermont’s groundwater with MTBE. Although at first glance that may seem to be an exorbitant amount of money, these companies make billions of dollars every year. $3.8 million is just a drop in the bucket for these refiners of gasoline. There have been much larger awards including an $816 Million Jury Verdict for New Hampshire Over MTBE Contamination of State’s Drinking Water. See, https://www.businesswire.com/news/home/20130409006722/en/816-Million-Jury-Verdict-for-New-Hampshire-Over-MTBE-Contamination-of-State%E2%80%99s-Drinking-Water. The use of these causes of action to obtain these awards will continue and expand. See, The growth of environmental product liability litigation worldwide to continue in 2019, https://www.lexology.com/library/detail.aspx?g=b0b1b9bb-1295-4aed-bc07-eb9b6b02787e.

The shift from fault-based standards to strict liability has meant that manufacturers can be held liable even if a plaintiff does not prove negligence. When a defective product causes injury, the manufacturer of the product may be liable to the plaintiff. Certain defenses will be available to the defendant under certain legal theories while they will not be available under others. Failure to warn products liability law triggers liability holding the defendant liable for a product’s defects regardless of whether the company or business acted negligently or had any connection to property that is contaminated from the use or release of products that contain contaminants made by the manufacturers. Thus, contaminants can be found defective even when they meet regulatory standards or conform to the state of knowledge at the time the contaminant was produced. The cumulative effect of this case is that it has become easier, in some cases, to bring product liability lawsuits against manufacturers.

Everyone in the chain of distribution is responsible. Judge Scheindlin acknowledged that courts favor liability for entities higher in the chain of distribution, given the fact that that manufacturers are in a better position to know when products are properly made, as well as to diffuse the cost of safety in design and production. In re MTBE, 591 F.Supp.2d 259, 276 [SDNY 2008). However, liability for a product could rest with any party in the product’s chain of distribution. Brady v. Calsol, Inc. (2015), 241 Cal.App.4th 1212, 1218-1219 [194 Cal.Rptr.3d 243; Heller v. U.S. Suzuki Motor Corp., 64 N.Y.2d 407, 411, 477 N.E.2d 434, 488 N.Y.S.2d 132 (1985). For strict liability to apply, the sale of a product must be made in the regular course of the supplier’s business. Gonzalez v. Rutherford Corp., 881 F. Supp. 829, 1995 U.S. Dist. LEXIS 4423. It would be fundamentally wrong to permit a manufacturer to profit from the sale of a product it knows to be dangerous and fail to warn consumers of its dangers. Manufacturers and distributors are thus provided encouragement to “achieve optimal levels of safety in designing and marketing products.” See, Third Restatement §2, comment a.

In strict products liability, a manufacturer, wholesaler, distributor, or retailer who sells a product in a defective condition is liable for injury which results from the use of the product regardless of privity, foreseeability, or the exercise of due care. Even if manufacturers give some type of warning, it may be inadequate. Manufacturers have used harmful PFAS in a variety of products, including in Aqueous Film Forming Foam (“AFFF”). For example, chemicals may work quite well as a fire retardant, such as AFFF. AFFF is used for fire suppression, particularly at municipal airports and Air Force bases for training purposes and to combat jet fuel spills. Yet, because AFFF contained PFAS, where manufacturers knew of the dangers and chose to hide it from the public, AFFF is now a major avenue for exposure to these harmful chemicals. Human exposure to these toxic substances, through use or contaminated drinking water, can lead to an increased risk of various health related cancers and illnesses. Although AFFF manufacturers agreed to phase-out PFAS-containing AFFF several years ago, legacy contamination continues to be found in drinking water systems in many states.

Virtually all the victims of environmental risk are strangers to the enterprise that creates the risk and can do little if anything to protect themselves without adequate warning from the producers. The manufacturer has the greatest ability to control the risk created by his product since it may initiate or adopt inspection and quality control measures thereby preventing defective products from reaching a community in the first place.

The strict products claim is needed to fill in the gaps for when environmental statutes and public nuisance fall short. This typically is the case when there is an unregulated chemical or the laws have not yet been updated to list a chemical as a hazardous substance. The liability of chemical manufacturers should be no different than that of a toy manufacturer who puts a lead toy in a baby’s mouth. Product liability law is increasingly viewed as a weapon against the source of contamination in the first place. Products liability law can impose consequences to those companies who manufacture chemicals or products that are put into the stream of commerce. In invoking these laws, the community can extend responsibility for cleanup beyond the owner of the property or potentially responsible parties to those who manufactured, produced, distributed and sold the chemicals harming human health.