Gordon & Rees Successfully Extracts Client from Trial of Major Perchloroethylene Contamination Case

In City of Modesto, et. al. v. The Dow Chemical Co., et. al. (Case Nos. 999345 & 999643, San Francisco Superior Court), Plaintiffs brought suit in late 1998 alleging soil, groundwater and well contamination in Modesto, California due to the disposal of the chlorinated cleaning solvent percholoroethylene ("perc"). Plaintiffs sued perc manufacturers, perc distributors, manufacturers of dry cleaning equipment which used perc and various dry cleaning facilities.

Approximately 40 dry cleaning sites in Modesto, California are at issue in this litigation, where Plaintiffs allege soil, groundwater and/or well contamination stemming from site operations. The total damages originally alleged by Plaintiffs was in the vicinity of $160 million. However, based on a defense motion in limine attacking Plaintiffs' claimed damages based on CERCLA and California Superfund preemption and speculativeness, Plaintiffs' potential recovery in the phase one trial was decimated from almost $70 million to investigation costs and well filtration costs of approximately $5-6 million, along with a $15 million "lost tax revenue" claim.

The first phase of trial, of five "bellwether" sites alleged to have caused contamination in the four City wells at issue, commenced on February 6, 2006. During the course of the four month jury trial, the court further eliminated Plaintiffs' tax loss claim based on speculativeness. Additionally, prior to the case going to the jury, the court granted a motion for nonsuit regarding City Well 8 based on causation, which was drafted and argued by Gordon & Rees attorneys Kristin Reyna and Gery Zacher. The motion resulted in the dismissal of one of Gordon & Rees' clients, Cooper Industries, from the phase one trial and the dismissal of one of the dry cleaners at issue, Halford's Cleaners, from the phase one jury trial, thereby eliminating 1/5 of plaintiffs' remaining phase one trial claims.

The jury's deliberations lasted eight days before they returned a verdict finding liability against the majority of the defendants. The total compensatory damages awarded were approximately $3.2 million, but this was far less than plaintiffs sought even after the granting of the defense motion in limine on damages. And, while punitive damages were also awarded against some of the defendants, these were just recently reduced by the court by approximately 95%. Also, the trial has not completely concluded, as the court also has yet to complete its bench trial on Polanco Act and California Superfund claims alleged against some of the defendants, which commenced after the end of the jury trial.

As this was only the first phase of this complex environmental contamination case, the City of Modesto case is far from over. It is expected that the court and parties will fashion a remedy to circumvent the "one judgment" rule in California so that anticipated numerous matters pertaining to the phase one trial, on both sides, can be appealed now, and resolved prior to any future trial phases of the case proceeding. Many of these matters, in particular the exclusion, via the defense's motion in limine, of the majority of plaintiffs' damage claims based on preemption and speculation, could result in precedential case law in California. It is also quite possible that despite the expected pending appeals, there may soon be a flurry of perc case filings on the coattails of the phase one trial plaintiff's verdict, which could impact not only perc manufacturers but present and former perc distributors, dry cleaning equipment manufacturers, dry cleaners and property owners where dry cleaning establishments operated or operate.