California Joins Jurisdictions Authorizing Punitive Damage Claims Against Polluters That Refuse To Timely Remediate Groundwater Contamination
By Bryan Barnhart*
LL.M., University of the Pacific, McGeorge School of Law
J.D., Hastings College of Law
California’s courts routinely impose punitive damages awards against polluters that knowingly release hazardous substances which contaminate groundwater. But California has been slow to follow the nationwide trend favoring punitive damages awards against polluters that knowingly fail to remediate their past hazardous releases before those releases spread and cause greater harm.
While California’s punitive-damages jurisprudence has helped to deter potential polluters from releasing hazardous substances in the first place, therefore, it has not deterred the culpable misconduct which actually causes the most harm to groundwater-contamination plaintiffs – i.e., it has not punished polluters that sit idly by as their discrete hazardous-substance releases balloon into groundwater contaminant plumes which migrate offsite and pollute neighboring properties and drinking water wells.
On May 28, 2021, however, California’s courts took a big step towards creating a punitive-damages jurisprudence that can deter contamination of the state’s groundwater by punishing polluters that unjustifiably delay their cleanups. In TCP Cases Coordination Proceeding, the San Bernardino County Superior Court (“TCP Cases Court”) issued an order authorizing a punitive damages claim against a polluter that failed to take “steps to investigate or remediate” hazardous-substance releases before those releases reached groundwater and migrated offsite to contaminate a nearby municipal well used for drinking water.
The TCP Cases Court issued its May 28th Order in City of Fresno v. Shell Oil Company, et al.[1], one of dozens of lawsuits which have been coordinated for pre-trial proceedings in San Bernardino County’s Superior Court. The TCP Cases plaintiffs are public agencies seeking remedies for contamination of groundwater and drinking water wells caused by 1,2,3-trichloropropame (“TCP”), a hazardous impurity in certain pesticides. Plaintiff City of Fresno asserts punitive damages claims against the nation’s largest manufacturers and distributors of TCP-containing pesticides, including Occidental Chemical Corporation and Occidental Petroleum Corporation (collectively, “Occidental”).
Fresno’s claim for punitive damages against Occidental is based on harm to the City’s drinking water supplies caused by Occidental’s failure to investigate and clean up groundwater contamination caused by Occidental’s releases of a TCP-containing pesticide, Telone II, at Occidental’s retail outlet in Fresno, OxyChem Fresno. From 1975 through 1982, Occidental regularly spilled Telone II onto soil at its OxyChem Fresno facility. By 1987, Occidental had learned that its Telone II spills had percolated down to OxyChem Fresno’s groundwater and migrated offsite, forming a contamination plume which already had contaminated one neighbor’s well.
Yet Occidental did nothing to clean up its Telone II contamination at OxyChem Fresno. Nor did Occidental attempt to contain or remediate the ever-growing contamination plume that continued to migrate beyond OxyChem Fresno’s boundaries and extend toward downgradient wells. Eventually, TCP from OxyChem Fresno’s Telone II-contamination plume reached one of Fresno’s municipal wells, rendering the well’s water unsafe for human consumption, and forcing the City to shut down the well to protect the public.
In its May 28th Order, the TCP Cases Court joined the nationwide trend favoring the use of punitive damages awards to deter polluters from delaying clean-ups, and held that a reasonable jury could find that Occidental’s knowing failure to timely “investigate and remediate” its groundwater-contamination plume warrants an award of punitive damages.
Punitive Damages’ Deterrent Purpose
The purpose of punitive damages is to deter culpable misconduct which causes harm.[2] Courts have explained, “[w]hile punitive damages are generally found to apply only in cases of intentional harm,” they also may be imposed “for unintentional conduct evidencing a “‘conscious disregard of the rights and safety of others.’”[3] For example, “a man wildly fires a gun into a crowd. By sheer chance, no one is injured and the only damage is to a $10 pair of glasses. A jury reasonably could find only $10 in compensatory damages, but thousands of dollars in punitive damages to teach a duty of care. We would allow a jury to impose substantial punitive damages in order to discourage future bad acts.”[4]
In environmental contamination cases, “punitive damages may be imposed for business activities, harmful to others, carried out in disregard of the corporation’s societal obligations. In brief, the issue is whether the defendant has damaged the [person or] property of plaintiff by conduct evidencing “an ‘I don’t give a damn’ attitude.”[5]
Punitive Damages In Groundwater-Contamination Cases
It is well and widely established that punitive damages may be awarded to deter culpable misconduct which causes hazardous substances to contaminate groundwater.[6]
The question is: which contamination-causing misconduct should courts use punitive damages to deter? Should courts only award punitive damages to deter potential polluters from releasing hazardous substances in the first place? Or should polluters also be punished for failing to take responsibility for investigating and cleaning up known pollution caused by past releases before those releases spread and cause additional harm?
This question is important because, in many groundwater contamination cases, it is not the tortfeasor’s first hazardous substance release that causes harm to the plaintiff. Rather, the plaintiff’s injury results from the tortfeasor’s failure to clean up its hazardous substance release before it spreads onto the plaintiff’s property.
MTBE gasoline, for example, usually did not cause harm the moment that it leaked out of underground storage tanks. Rather, MTBE gasoline caused harm because the responsible parties did not clean up the leaks before the MTBE migrated down through the soil to groundwater, and then spread into drinking water wells.
Punitive damages awards cannot fully perform their deterrent function in groundwater contamination cases, therefore, unless courts use them to punish both culpable misconduct which causes hazardous substance releases in the first place, and to punish culpable failures to timely remediate existing contamination before it spreads and causes additional harm.
Unlike the hypothetical man who “wildly fires a gun into a crowd,” a groundwater-contamination tortfeasor commits most of his potentially culpable misconduct after he first releases the hazardous substance which causes the plaintiff’s harm.
A gunman’s ability to prevent injury ends when he pulls the trigger. A bullet moves too fast to take back – once it has left the barrel, the gunman loses control.
A polluter, in contrast, can take back a hazardous substance that it has released to soil or groundwater. Contamination is a slow moving “bullet.” It can take years for a hazardous substance to make its way down through soil to groundwater, and years more for the contaminated groundwater to migrate onto neighboring properties or into nearby wells. The polluter has myriad post-release opportunities to determine which direction the contamination is moving, to identify all potential victims which the contamination is likely to hit, and to interrupt the contamination’s trajectory before it causes injury.
Recognizing this reality, courts increasingly authorize punitive damages awards based on polluters’ failure to timely remediate groundwater contamination.[7]
In Exxon Corp. v. Yarema, for example, Maryland’s Court of Special Appeals affirmed a punitive-damages award based on Exxon’s failure to timely remediate gasoline that had leaked out of underground storage tanks. Exxon learned about the leak in 1979. “Based on its own expertise, Exxon admitted that a prompt response to a gasoline leak is essential and that, if it had begun recovery efforts within a month after the losses were discovered, the contamination might possibly have been contained to [Exxon’s] own property.”[8] Yet Exxon did nothing to contain or remediate the contamination for two years, during which time it spread on the plaintiffs’ property. The Yarema Court held that Exxon’s knowing failure to timely remediate its gasoline releases evidenced a “disregard [for] the health and safety of the community” justifying a punitive damages award.[9]
California’s Punitive Damages Jurisprudence In Groundwater Contamination Cases
California long has authorized awards of punitive damages against polluters that cause a release of hazardous substances which contaminate groundwater. In 2002, for example, the jury in South Tahoe Public Utility District v. Atlantic Richfield Co. found that punitive damages should be imposed on two petroleum industry manufacturers that caused MTBE-gasoline releases which contaminated municipal drinking water wells. In 2006, the jury in City of Modesto v. Dow Chemical Company awarded punitive damages against a PCE-dry-cleaning solvent manufacturer that caused PCE releases which contaminated the City’s groundwater. And in 2019, the jury in City of Atwater v. Shell Oil Company imposed a punitive damages award on a pesticide manufacturer that caused releases to groundwater of the hazardous-waste chemical 1,2,3-trichloropropane.
California’s state courts have been slow to join, however, the growing contingent of jurisdictions authorizing punitive damages awards based on polluters’ failure to timely remediate their contamination before it spreads. California seemed poised to take this next step back in 2011, when the Northern California District Court applied California law to deny partial summary judgment on a punitive damages claim based on a failure to remediate in Barrous v. BP P.L.C., 2011 WL 4595205 (N.D. Cal. 2011).
The Barrous plaintiffs owned property next to a BP service station. In 1992 and 1994, BP received notice that leaking underground storage tanks had contaminated the station’s soil and groundwater with gasoline. Yet BP did not act to remediate the contamination until 2002, by which time the contamination had spread to the plaintiffs’ property. The Northern District Court held that these facts could support a punitive damages award under California law:
“California Courts have found punitive damages awards appropriate for unintentional conduct showing complete lack of concern regarding the harmful potential . . . or a conscious disregard of the rights and safety of others. Here, a reasonable jury could find that BP’s inaction for nearly ten years exhibited clear and convincing evidence of a complete lack of concern regarding the harmful potential of the contamination at the Station.”[10]
Although Barrous relied on California’s punitive damages law, a decade passed before California’s state courts followed its lead. In the meantime, California’s courts’ calendars have become increasingly clogged with recalcitrant polluters that seem determined to prove that the threat of punitive damages is necessary to prod them into taking responsibility for and cleaning up contamination which they know that they caused.
The TCP Cases Coordination Proceeding Court’s May 28th Decision
Finally, on May 28, 2021, the Superior Court Judge who presides over California’s TCP Cases Coordination Proceeding followed Barrous v. BP P.L.C.’s interpretation of California’s punitive damages law, and allowed a punitive damages claim to proceed based on a polluter’s willful failure to timely remediate groundwater contamination.
As noted above, the TCP Cases Coordination Proceeding includes dozens of cases by public agencies seeking remedies for contamination of groundwater and public drinking water wells caused by TCP, a toxic impurity found in certain pesticides, including Telone II. One of the coordinated TCP Cases is City of Fresno v. Shell Oil Company. Plaintiff City of Fresno’s Complaint asserts punitive damages claims against several defendants, including former Telone II distributor Occidental.
From 1975 through 1982, Occidental sold bulk Telone II out of a 5,000-gallon above-ground storage tank at its OxyChem Fresno site. Each time that Occidental loaded or unloaded its bulk tank, between 5 and 15 gallons of Telone II spilled onto the OxyChem Fresno site’s sandy, porous soil.
Occidental claims that it did not know that Telone II contained TCP at the time of the spills; i.e., from 1975 and 1982. By 1987 at latest, however, Occidental did know that its spills had percolated down through OxyChem Fresno’s soil and contaminated groundwater with Telone II. While conducting a State-ordered investigation of soil and groundwater contamination which it had caused at a different location at the same Fresno facility, Occidental found high levels of one of Telone II’s main ingredients, 1,2-Dichloropropane, in a well owned by OxyChem Fresno’s next-door neighbors. The neighbors’ well was approximately 500 feet hydraulically downgradient of the spot where Occidental had spilled bulk Telone II. OxyChem Fresno’s bulk tank was the only apparent source for the unusually high 1,2-Dichloropropane concentrations in the neighbors’ well.
Yet Occidental did not investigate or clean up the 1,2-Dichloropropane contamination. Occidental did not warn its neighbors that it had found 1,2-Dichloropropane in their well. Occidental did not test beneath the soil where it had spilled bulk Telone II. Nor did Occidental take any steps to prevent the plume of Telone II contamination which already had hit its neighbors’ well from continuing to extend toward municipal drinking water supply wells located farther downgradient.
Even if Occidental did not know that Telone II contained TCP when Occidental first spilled it on OxyChem Fresno’s soil, furthermore, Occidental certainly learned that fact shortly thereafter – by the early 2000s, Occidental was a frequent and prominent defendant in the TCP Cases Coordination Proceeding. Yet Occidental continued to do nothing to investigate or to clean up the growing groundwater-contamination plume caused by the Telone II releases which Occidental knows that it caused at its own retail site in Fresno.
Then, sometime between 2014 and 2019, high concentrations of TCP from Occidental’s Telone II-contamination plume reached Fresno’s public drinking water supply Well 341, located 2.7 miles downgradient of OxyChem Fresno’s Telone II bulk tank. Fresno notified Occidental about the contamination and its likely source in early 2020. Yet Occidental still has taken no steps to investigate or clean up its Telone II spills at its Fresno facility, or to clean up or contain the resulting groundwater-contamination plume.
Instead, in early 2021, Occidental moved for summary adjudication of Fresno’s punitive damages claim, arguing that Occidental could not have displayed a “conscious disregard for the rights and safety of others” because Occidental did not know that Telone II contained TCP when it spilled Telone II at OxyChem Fresno between 1975 and 1982. Occidental’s motion did not mention its post-1982 discovery that its Telone II releases had contaminated groundwater, nor did it discuss Occidental’s failure to investigate or to clean up its contamination before it reached Fresno’s drinking water well.
Following the Northern California District Court’s Barrous decision, the TCP Cases Coordination Proceeding Court denied Occidental’s motion:
“Plaintiff argues in opposition that in Barrous v. BP P.L.C. (N.D. Cal. Oct. 3, 2011) 2011 U.S. Dist. LEXIS 113597, *51, the federal district court discussed that in California, courts have awarded punitive damages for unintentional conduct “‘showing complete lack of concern regarding the harmful potential—the probability and likelihood of injury,’ [citation], or a ‘conscious disregard of the rights and safety of others.’ [Citation.]” (Footnotes omitted.) The court found a reasonable jury could find BP’s inaction for nearly ten years regarding contamination at a gas station “exhibited clear and convincing evidence of a ‘complete lack of concern regarding the harmful potential’ of contamination” at the station, constituting malice. (Ibid.) The City argues that here, Occidental continues to demonstrate a disregard for its discharge of Telone waste that has migrated offsite and contaminated groundwater. . . .
“When such is considered, Occidental has not met its initial burden on the motion because it . . . has not cited sufficient evidence that the City’s discovery responses are devoid of any evidence that could support a finding against Occidental of malice when it fails to address discovery responses that contend activity at the OxyChem Fresno site is the source of contamination and despite such knowledge, Occidental has not taken any steps to investigate or remediate TCP contamination in the Fresno area.”
The TCP Cases Court’s City of Fresno Order does not bind other courts. But it does send a strong signal that California is willing to follow the national trend toward authorizing punitive-damages awards against polluters who fail to timely investigate and clean up known hazardous substance releases before those releases spread and cause greater harm. Because City of Fresno is part of the TCP Cases Coordination Proceeding – which currently includes nearly 50 TCP-contamination cases – the Court’s May 28th Order should have a widespread and long-term impact. In the years to come, the same Court that issued the City of Fresno Order will decide similar motions based on similar facts in other groundwater contamination cases which are pending before it in the same Coordination Proceeding.
Conclusion
It is to be hoped that the TCP Cases Court’s May 28th Order will galvanize California’s polluters to promptly clean up contamination they cause before it spreads to neighboring properties and causes greater harm. If so, then California will have moved one step closer to creating a punitive-damages jurisprudence that fulfills its deterrent purpose: to effectively discourage the “I don’t give a damn attitude” among polluters that too often causes discrete hazardous substance releases to grow into widespread contamination of groundwater and drinking water supplies.
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NOTES
* Bryan Barnhart represents public agencies in actions to recover clean-up costs from companies that pollute groundwater with toxic chemicals. He is an associate at Miller & Axline, counsel of record for the City of Fresno and for the City of Atwater in the TCP Cases Coordination Proceeding, for the South Lake Tahoe Public Utility District in the South Tahoe Public Utility District v. Atlantic Richfield Co. MTBE-contamination litigation, and for the City of Modesto in the City of Modesto v. Dow Chemical Company PCE-contamination litigation.
[1] TCP Cases Coordination Proceeding — City of Fresno v. Shell Oil Co. et al (coordinated in the San Bernardino Superior Court’s TCP Cases Coordinated Proceeding).
[2] See Dyna-Med, Inc. v FEHC, 43 Cal.3d 1379, 1387 (1987) (punitive damages “serve but one purpose–to punish and through punishment, to deter”).
[3] Barrous v. BP P.L.C., 2011 WL 4595205, *16 (N.D. Cal. 2011).
[4] TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 459-460 (1993) (quoting Garnes v. Fleming Landfill, Inc., 186 W.Va. 656, 668 (1991)).
[5] Orchard View Farms, Inc. v. Martin Marietta Aluminum, Inc., 500 F.Supp. 984, 988 (D. Or. 1980).
[6] See Exxon Corp. v. Yarema, 69 Md.App. 124 (Ct. App. Md. 1986) (affirming punitive-damages award against service-station owner that caused gasoline to contaminate neighbors’ groundwater); see also Miller v. Cudahy Co., 858 F.2d 1449 (1988) (affirming punitive-damages award against salt-mine owner that caused salt brine to contaminate neighbors’ groundwater and wells); see also Rusch v. Phillips Petroleum Co., 163 Kan. 11 (1947) (affirming punitive-damages award against polluter that caused hazardous substances to contaminate groundwater and surface water on neighbor’s land); see also Dow Chemical Co. v. Ogletree, Deakins, Nash, Smoak & Stewart, 237 Ga.App. 27 (Ct. App. Ga. 1999) (approving punitive-damages award against chemical manufacturer that caused hazardous substances to contaminate neighbor’s groundwater); see also Barrous v. BP P.L.C., 2011 WL 4595205 (N.D. Cal. 2011) (authorizing punitive-damages award against service-station owner that caused gasoline to contaminate neighbor’s groundwater); see also National Telephone Co-op Ass’n v. Exxon Corp., 38 F.Supp.2d 1 (D.D.C. 1998) (same); see also City of Sanger v. Sup. Ct., 8 Cal.App.4th 444 (1992) (city can recover punitive damages against pesticide manufacturer that contaminated municipal wells); see also The Southland Company v. Aaron, 224 Miss 780 (S.Ct. Miss. 1955) (approving punitive-damages award against polluter that willfully contaminated plaintiff’s water supply); see also Corwine v. Maracaibo Oil Exploration Corp., 184 Kan. 151 (S.Ct. Kan. 1959) (same); see also Knabe v. National Supply Division of Armco Steel Corp., 592 F.2d 841(5th Cir. 1979) (same); see also Bower v. Hog Builders, Inc., 461 S.W.3d 784 (S.Ct. Mo. 1970) (same); see also Newman v. Nelson, 350 F.2d 602 (10th Cir. 1965) (same); see also Diamond X. Ranch LLC v. Atlantic Richfield Co., 2017 WL 4349223 (authorizing punitive-damages award for willful contamination of neighbors’ creek); see also Orchard view Farms, Inc. v. Martin Marietta Aluminum, Inc., 500 F.Supp.984 (D. Or. 1980) (awarding punitive damages based on defendant’s willful contamination of neighboring properties).
[7] See Exxon Corp. v. Yarema, 69 Md.App. 124 (Ct. App. Md. 1986); see also Rusch v. Phillips Petroleum Co., 163 Kan. 11 (S.Ct. Kan. 1947); see also Dow Chemical Co. v. Ogletree, Deakins, Nash, Smoak & Stewart, 237 Ga.App. 27 (Ct. App. Ga. 1999); see also Newman v. Nelson, 350 F.2d 602 (10th Cir. 1965) (same); see also Barrous v. BP P.L.C., 2011 WL 4595205 (N.D. Cal. 2011); see also National Telephone Co-op Ass’n v. Exxon Corp., 38 F.Supp.2d 1 (D.D.C. 1998); see also Miller v. Cudahy Co., 858 F.2d 1449 (1988); but see Newman v. Nelson, 350 F.2d 602 (10th Cir. 1965) (reversing punitive damages award because defendant timely remediated contamination); see also Atkinson v. Herington Cattle Co., 200 Kan. 298 (S.Ct. Kan. 1968) (same).
[8] Exxon Corp. v. Yarema, 69 Md.App. 124, 161 (Ct. App. Md. 1986).
[9] Exxon Corp. v. Yarema, 69 Md.App. 124, 162 (Ct. App. Md. 1986).
[10] Barrous v. BP P.L.C., 2011 WL 4595205, *16 (N.D. Cal. 2011).
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