National Clothesline

A long-running legal battle took a surprise turn last month when a jury awarded the City of Modesto, CA, compensatory and punitive damages for perc contamination of its water wells and other property owned by the city.

A June 13 verdict that set punitive damages at $175 million followed a verdict on June 9 that granted $3.17 million in compensatory damages in a lawsuit the city filed in 1998 that sought more than $162 million from chemical manufacturers and drycleaning companies.

The brunt of the punitive damages were assessed against two chemical manufacturers —$100 million against Vulcan Materials Co. and $75 million against Dow Chemical Co. Another $75,000 was assessed against R. R. Street & Co. Inc.

The defendants are appealing the verdicts. A hearing is scheduled for July 26 before San Francisco Superior Court Judge John Munter.

Dow, Vulcan and Street representatives all declared that their companies will continue defending themselves in the case.

“Although the jury’s verdict is disappointing and without basis, Dow believes that this absurd result will be remedied by the courts,” said Charles J. Kalil, corporate vice president, general counsel and corporate secretary for Dow.

Kalil said Dow will vigorously defend its historical conduct and practices in the manufacture and sale of perchloroethylene and is confident that the company will prevail.

A statement on the Vulcan Materials web site said the company “believes the verdicts are contrary to the evidence presented at trial and the punitive damages are totally without merit, excessive, and in clear contravention of constitutional limits regarding such damages.”

Noting that U.S. Supreme Court and California courts limit punitive damages to a maximum of nine times compensatory damages, Vulcan said it will pursue “all appropriate avenues for post-trial and appellate relief.”

Ross Beard, president and CEO of Street, called the verdict “extremely surprising” and said his company will also appeal.

“While the punitive damages awarded against Street pale in significance compared to those against Dow and Vulcan, Street continues to believe the findings of liability against the company are completely unjustifiable,” Beard said. “The company will pursue all avenues of appeal available to it and vigorously defend the remaining claims in the lawsuit, which the company believes is not only of vital importance to Street, but also to the drycleaning industry as a whole.”

The city filed the lawsuit in 1998 against 17 defendants, which included Occidental Chemical Corp., PPG Industries Inc. and several local drycleaners in addition to the defendants named above. The suit sought over $100 million to clean up soil and groundwater contamination at more than 30 locations around the city.

During the trial, which began in February, attorneys for the city argued that the companies told drycleaners that they could safely dispose their perc waste in the city sewer system. The city’s lawsuit also contended that the cleaning chemicals are “defective products” even when used correctly and that some manufacturers withheld information about hazards of the chemicals.

Since discovering he contamination, the city has installed charcoal filtration systems to remove the chemicals from drinking water.

As part of their defense, the chemical companies argued that the city’s leaky sewer systems were also part of the problem.

Leaking sewer systems were a key to successful litigation by the International Fabricare Institute in a contamination lawsuit at IFI’s former property involving the Washington Suburban Sanitary Sewer Commission. IFI CEO Bill Fisher said that precedent should have applied in the California case as well.

“The city has as much or more culpability as cleaners and manufacturers,” Fisher said. “In most places it was and still is perfectly legal to dispose of wastewater in the sewer system. It is only these sanitary commissions that knew sewer systems leaked. The jury should not have awarded punitive damages as there were no deliberate or willful actions taken by any of these companies.”

On the other hand, the Modesto Bee quoted attorney Duane Miller, whose Sacramento-based law firm, Miller Axline & Sawyer, represents Modesto, as saying the verdicts could have statewide as well as national ramifications.

“We believe this is the first verdict of its kind anywhere to impose punitive damages on a manufacturer of PCE,” Miller told the Bee. “I don't know if this is going to lead to similar claims. Certainly, many cities are similarly affected.”

In the same article, George Britton, Modesto’s city manager, said the city would use the money to clean up contamination in the ground and in the city’s sewer and drinking water systems, but the pending appeals could keep the city from getting any money for years, he noted.