Lead In Drinking Water Issues In The 21St Century

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LEAD IN DRINKING WATER ISSUES IN THE 21^ST CENTURY

Post Presentation Evaluation
Joseph F. Speelman
General Counsel
Petro-Logistics S.A.
Geneva, Switzerland

On February 21, 2017, during the IADC Mid-Year Meeting in Scottsdale, Arizona, the above program was presented on behalf of the Environmental and Energy and Toxic and Hazardous Substances Litigation Committees. As part of that program, I spoke regarding in-house counsel perspectives on the topic.

The presentation highlighted significant steps that in-house counsel need to take in anticipation of large scale litigation involving lead contamination of drinking water, as well as other, related environmental issues across the US.  In a prior article on this presentation subject, I outlined three significant class action law suits filed across the country, including Flint, Michigan, Chicago, Illinois, and Philadelphia, Pennsylvania. In each case the defendants were either state or local governments and agencies. (“What Rough Beast”, January, 2017). These cases are moving at glacial speed through the various procedural processes and “traps” in the court systems they are pending in at this time. I raised then an issue for private (non-governmental) commercial companies to be mindful of as this litigation unfolds. Governments, state and local, have many types of laws which protect them from being sued, successfully, (partially or completely) for causing damages or injuries to individuals and private entities. Most of these laws are loosely based upon the concept of sovereign immunity. Meaning, literally, the government is immune from being sued in its own courts. The potential outcome of litigation against state or local governments would be that the state Supreme Courts would find such claims either severely limited or banned because of the sovereign immunity theory.

On March 27, 2017 the Supreme Court of New Jersey decided the case of NL Industries, Inc. vs The State of New Jersey seeking contribution from the New Jersey clean-up fund for lead contamination of a site in New Jersey that the state had both owned and controlled prior to the introduction of lead contaminated material and such introduction being fully approved by the state of New Jersey Department of Environmental Quality. The state supreme court , in overturning a lower court ruling in favor of NL Industries, as well as overturning a prior NJ appellate opinion exactly contrary to the supreme court ruling, ruled that the adoption of the NJ state clean up statute, which authorized the filing of contribution claims against the state, did not remove the protection given the state of New Jersey by the sovereign immunity doctrine. (NL Industries, Inc. vs The State of New Jersey, case number 076550, decided March 27, 2017, publication pending) It would seem that concerns about sovereign immunity laws and statutes will likely become significant and high risk issues in any lead contamination in drinking water litigation with a state or state agency named as a defendant. In plain language….it would appear that the states and their agencies could well receive protection from paying for their own acts of negligence or even gross negligence in lead in drinking water litigation. Thus leaving the entire burden to any and all private parties named, or later named in these cases as defendants under one theory of liability or another. “The minnows would be netted while the sharks swim free!” Lead contamination of water litigation will become, as I suggested in my prior article, the “hunt for solvent bystanders”.

In-house counsel plays, or should play, a vital role in the Risk Management process of any manufacturing or production company, public or privately owned. The key points to be aware of include evaluation of your company’s current and past experience regarding water contamination or pollution issues near company facilities or potentially related to such facilities. Particular attention must be given to prior acquisitions or divestitures of companies, divisions, or individual facilities by your client.

Prior lead related litigation in the US demonstrated that plaintiff counsel make and some courts are willing to allow allegations in complaints against defendant companies that reach far into the defendant’s past acquisition and transaction histories in an attempt to attach liability for present day litigation against such companies. In some cases, actions by former affiliates of existing companies that occurred over 60 years in the past were allowed to go to a jury, even though the divestiture of such affiliates had occurred over 55-60 years in the past. 

• In-house counsel must review the complete merger and acquisition activity of their company, especially if the company’s history involved manufacturing or production activities.
• As well, counsel must review the General Business Liability Insurance coverage layers, all of them, keeping such far past circumstances in mind. In particular, evaluate self-insured retention (SIR) levels for such old situations. The concern is that such coverage may be small, heavily leveraged against the company through SIR provisions, or even non-existent. Company leadership must be aware of all insurance arrangements and coverage levels as to all circumstances.

The Internet

• A critical and vexatious new type of risk exists for virtually all business in the US presently. It is the existence and operation of internet based “influence strategies” that, increasingly, are being used by interest groups and plaintiff counsel to target companies, industries and even entire sectors of the US economy. The purpose behind these efforts is to create social support for litigation regarding existing or planned legal actions such as lead in drinking water and various types of alleged contamination or pollution, including climate change responsibility. Major companies in the energy production sector of the US economy have already been subjected to negative reputational attacks from such internet and social media based platforms.
• Counsel must conduct strategic internet/social media research to uncover any such efforts directed at their clients. These strategic initiatives are well hidden and in many cases are launched from platforms in places with privacy laws so strict as to virtually preclude the discovery of the ultimate source of such activities. However, the existence of such actions can be determined through a diligent review of the internet. Certain of these efforts make demonstrably false or libelous statements about their targets and can lead to well placed and planned legal actions to protect the reputation of a targeted company.
• Many years ago, various tort reform groups in the US exposed a number of examples of organizations and associations that claimed to be grass roots citizen protest groups but were set-up, funded, and directed by various plaintiff counsel groups and which were related to pending litigation these counsel had against various companies and individuals. The social media/internet influence groups mentioned in the above section are the direct outgrowth of those discredited, plaintiff counsel created groups.
• It is not enough for businesses to adopt elaborate and effective Compliance Policies. Companies in today’s world must not only defend themselves in the internet/social media….they must adopt social media strategies to protect their reputation, business brands, and day to day operations. In some cases, they must defend their existence and right to do business. 

It is a new and rather vicious business environment today. If a business fails to protect itself in the internet/social media realms, that might prove to be an “outcome determinative” mistake for those companies….and their counsel. Counsel must lead their client’s strategy on these issues.  Outside counsel, many of whom are quite astute in this area, can provide essential and timely assistance on such matters.  For many companies, especially those in the energy production segment of the US economy, it is essential to be capable and functioning in this new area of predatory behavior being projected at them.

I close this post presentation analysis in the same manner that I closed the presentation in Arizona...

BE CAREFUL OUT THERE.