Rhode Island Lawsuit Targets Deep Pockets, Not Justice

A bedrock principle of tort law in this country is that the party who causes the damage is the one who should be liable for fixing the damage. Even under a standard of “strict liability” where a defendant is liable without a finding of fault, courts require a showing that the damage in question was actually caused by the defendant at the table.

A lawsuit recently filed in Rhode Island, led by the state’s Attorney General and staffed by hired-gun private plaintiff’s lawyers who stand to make a mint if the lawsuit is successful, seeks to break from this foundational principle. That should be of concern to any manufacturer that could become the target of creative plaintiffs’ lawyer lawsuits—which is to say, to every manufacturer.

The lawsuit involves the gasoline oxygenate MTBE, which was for a time blended with motor fuel in order to meet federal emissions standards. The problem with MTBE is that it is highly water soluble, and if underground storage tanks containing gasoline leak, the MTBE stored in them can contaminate groundwater. Of course, the owners of these tanks, if they can be identified, have always been, and continue to be, responsible for cleaning up such leaks. On top of that, Congress created a special trust fund to pay for cleanups when the owner or cause is unknown, or where the owner may not have the wherewithal to pay. The fund, which has been around since the mid-1980s, is paid for by a tax levied on the petroleum industry on every gallon of fuel sold.

Unfortunately, many of the states where MTBE was most heavily used are also states that have suffered poor economic growth and have faced major budget challenges in recent years. This has led many of these states, including Rhode Island, to raid their cleanup funds for other state budget priorities, thus creating the need to find alternative sources of funds to handle these cleanups. Cue the trial bar, who have shopped MTBE lawsuits to several state Attorneys General and have found fertile hunting ground in the cash-strapped northeastern states.

The Rhode Island legal filing includes a smorgasbord of legal theories intended to bypass the inconvenient need to show that the defendants in the case actually caused the damage the lawsuit seeks to remedy. The case seeks to pin liability on any company that sold reformulated fuel in the state—regardless of whose actions or whose storage tanks actually caused contamination. It is remarkably a sanction based on simply doing business in the state of Rhode Island, which the state seeks to allocate according to the market share held by industry participants during the relevant time period. Beyond the tort law implications of this case, it is remarkable that a state so badly in need of economic investment would target an industry simply for doing business there.

No matter how much money defendants have paid into the state fund to cover such cleanups and regardless of the extensive efforts they may have already gone through to prevent leaks and to remediate those that occurred under their watch, the companies are targeted in this lawsuit because they are perceived as most able to pay. This is a case about targeting deep pockets, not about remedying past wrongs, and certainly not about justice.

Linda Kelly

Linda Kelly

Senior Vice President and General Counsel at National Association of Manufacturers
Linda Kelly is the senior vice president and general counsel at the NAM. In addition to handling NAM’s organizational legal compliance, Ms. Kelly also oversees the work of the NAM’s Manufacturers’ Center for Legal Action, directing the NAM’s litigation strategy in support of its policy objectives. Ms. Kelly is a seasoned Washington policy lawyer with more than 20 years of experience working on a diverse array of legal and public policy issues at the state, federal and international levels.
Linda Kelly

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