Seventh Circuit Highlights Challenges To Class Certification In Environmental Litigation

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Property owners in the town of Roxana, Illinois, a small village on the Mississippi River across from St. Louis, filed suit against Shell Oil Company and ConocoPhillips.  The property owners alleged that a refinery owned by Shell and later ConocoPhillips leaked benzene and other petroleum-based contaminants into the groundwater under their homes.  The property owners sought the lost value in their homes as a result of the groundwater contamination.

The Illinois District Court Judge certified the property owners as a class under Rule 23, Federal Rules of Civil Procedure.  On appeal, the Seventh Circuit reversed.  Parko v. Shell Oil Co., 2014 WL 187184 (7th Cir., January 17, 2014).  The Circuit Court concluded that the plaintiff/property owners failed to demonstrate the “predominance of issues common to the entire class over issues that vary among the members of the class” – a critical element in class certification.

Once Shell and ConocoPhillips challenged the plaintiffs’ injury and damage model, the Circuit Court concluded that the trial judge should have investigated the predominance of issues and taken evidence on the matter.  Predominance of issues is not merely a pleading requirement.  The questions the Circuit Court wanted answered were as follows:

[I]f the defendants are right, there is no common issue, only individual issues that will vary from homeowner to homeowner:  is there benzene in the groundwater beneath his home at a level of concentration that if the groundwater were drunk would endanger health (and is there any possibility it would enter the water supply); what is the source of the benzene in the groundwater beneath a given home (that is, who is the polluter who caused the groundwater to become polluted); could the presence of the benzene in that concentration cause any other form of harm; has the presence of the benzene reduced the value of his property; if so, how great has the reduction been.

The court concluded that “[i]t is difficult to see how these issues can be managed in the class action format.”

Before a trial court certifies a class, particularly in the environmental context, it must be prepared to engage in a rigorous analysis of plaintiffs’ proposed methodology for proving injury and damages.