Maryland’s Highest Court Clarifies Toxic Tort Standards and Reverses a Punitive Damage Award in Excess of $1 Billion

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The Maryland Court of Appeals clarified certain standards for toxic tort claims, reversed a judgment in excess of $1 billion in punitive damages, vacated approximately $640,000,000 in compensatory damages, and remanded several claims for a new trial in Ford and Albright v. Exxon Mobil Corporation, 2013 WL 673710 & 673738, Nos. 15-16 Sept. Term 2012 (Md., Feb. 26, 2013).

 

In 2006, the defendant reported a leak of more than 25,000 gallons of gasoline from an underground storage tank system at a fueling station in Jacksonville, Md.  Several hundred local residents alleged the release contaminated the underground aquifer and drinking water wells and brought suit through an array of theories, including claims seeking compensatory damages for emotional distress for fear of contracting cancer and medical monitoring, and punitive damages based on fraud.

 

In reversing the trial court’s judgments in the plaintiffs’ favor, Maryland’s highest court ruled that a plaintiff may recover damages for emotional distress for fear of contracting a latent disease where (1) the plaintiff was exposed to a toxic substance due to the defendant’s tortious conduct, (2) the exposure led to an objective and reasonable fear of contracting a disease, and (3) the plaintiff manifested a physical injury capable of objective determination as a result of the fear.  The court determined that exposure to constituents of gasoline in well water by residents of the community in concentrations below relevant EPA and Maryland standards could not support an objective, reasonable fear of developing cancer, and confirmed that an alleged subcellular change produced by exposure to toxic chemicals, without manifested symptoms of a disease or actual impairment, is not a compensable physical injury.

 

The court also recognized medical monitoring costs as a compensable element of damage under traditional tort theories, even in the absence of a physical injury, provided that a plaintiff can establish (1) significant exposure to a proven hazardous substance through the defendant’s tortious conduct, (2) a significantly increased risk of contracting a latent disease proximately resulting from the exposure, (3) the increased risk makes periodic diagnostic medical examinations reasonably necessary, and (4) monitoring and testing procedures exist that make early detection and treatment of the disease possible and beneficial.

 

The plaintiffs attempted to support their fraud claim through evidence that the defendant made intentionally or recklessly false statements to public officials, including a county-level municipal office, which allowed the station to be constructed in 1983, and various communications with the Maryland Department of the Environment before and after the release, and that the officials relied on the information to the ultimate detriment of the plaintiffs, i.e., “fraud on the people’s government constitutes fraud on the people.”  While the jury in Ford ruled in the defendant’s favor on a fraud count, the Albright jury ruled in the plaintiffs’ favor and awarded $1,045,550,000 in punitive damages.  The Court of Appeals rejected the plaintiffs’ theory of third-party reliance, and determined that the plaintiffs’ additional evidence only could demonstrate dissatisfaction within the community with the defendant’s remediation efforts, rather than proving fraud. 

Topics:  Contaminated Properties, Damages, Fraud, Groundwater, Punitive Damages

Published In: Civil Procedure Updates, Civil Remedies Updates, Environmental Updates, Toxic Torts Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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