From The New York Times, “States Can Sue Utilities Over Emission“:

A panel of the United States Court of Appeals for the Second Circuit, in New York, ruled that eight states — California, Connecticut, Iowa, New Jersey, New York, Rhode Island, Vermont and Wisconsin — as well as New York City and three land trusts could proceed with a suit against American Electric Power, Southern Corporation, the Tennessee Valley Authority, Xcel Energy and Cinergy Corporation, all large coal-burning utilities.

The case, brought in 2004, said the defendants were creating a “public nuisance” and sought reductions in emissions that scientists say are changing the climate.

The opinion from the Second Circuit in the case, Connecticut v. American Electric Power Co.,is available here. The National Association of Manufacturers had joined other business associations in filing an amicus brief in support of the utilities, which is available here.

This is a horrible decision, encouraging litigation to define activities essential to U.S. economic growth, jobs and government revenues as public nuisances. The ruling again places the judiciary in the constitutionally improper and anti-democratic role of policymaker.

As the brief argues:

Plaintiffs allege that emissions of CO2 contribute to global warming. CO2 is emitted principally from the combustion of fossil fuel to produce energy. Thus, if global warming nuisance suits were allowed, any human activity that involves combustion of fossil fuel would become a potential target of nuisance suits. Moreover, under plaintiffs’ theory, it would not matter where the emissions occur, because CO2 emissions from any location allegedly mix in the upper atmosphere with other CO2 emissions and allegedly contribute to warming worldwide. The result of plaintiffs’ theory would be that any person or organization alleging damage from global warming would be able bring a nuisance suit against any person, company, municipality or other entity, wherever located, that plaintiffs believe is using energy in an inefficient or excessive manner, or that plaintiffs believe to be capable of using a less carbon-intensive fuel or of reducing CO2 emissions in some other manner. The range of possible litigation targets is virtually endless, because combustion of fossil fuels, for both personal and business purposes, pervades American life.

Basically, what plaintiffs seek is nothing less than to have the judiciary decide how fossil fuel energy should be used in this country—a venture that would draw the judiciary deeply into difficult and contentious issues of national and international energy policy. The District Court correctly held that these issues of energy policy are political questions beyond the jurisdiction of the judiciary—questions that should be decided only after the kind of full debate and public participation that the political, legislative and administrative processes can provide. Congress and the President have recognized that global warming and energy policy are inextricably intertwined and should be addressed on a national and international basis. To address these issues in case-by-case litigation of nuisance suits can only lead to an unworkable patchwork of inconsistent and uncertain results, where no user of fossil fuel could be assured that its operation, even though compliant with existing law, could continue given the ever-present threat of a lawsuit—or perhaps multiple suits—seeking to control emissions.

The United States is only right now at the start of an economic recovery — perhaps. That recovery will require expanded energy production and business investment. But if you’re the head of a company that wants to invest for the future — in the process creating jobs and wealth — and you find that self-aggrandizing attorneys general and anti-growth environmentalists can simply litigate you into paralysis, well, the hell with it.

Yet that’s the situation as now exists in the states that comprise the Second Circuit.

• Reuters, “U.S. court reinstates emissions suit vs. utilities“
• Point of Law, Michael Krauss, “2nd Circuit Revives ‘Federal Common Law of Nuisance’ Suit”. Krauss, a professor of law at George Mason, had the same reaction as we did (or vice versa, as he wrote first): “If this Circuit ruling stands, why should investors have confidence in industrial projects that have received all necessary legal permits to be built? A ‘federal nuisance suit’ filed by a ‘land trust’ or a state other than the permitting state could destroy profitability. Presumably investors would need all 50 states’ approval plus that of the ‘land trusts.’ Talk about a chill to job creation.”

More coverage of a federal judge’s dismissal of the City of Cleveland’s lawsuit against large banks, claiming they had created a public nuisance by securitizing mortgages that went into default. Cleveland Plain Dealer, “Federal judge dismisses lawsuit blaming banks for foreclosure mess in Cleveland”

HousingWire.com, “In Cleveland, Facing Giants and Failing”

Judge Sarah Lioi’s ruling is available here as a .pdf file.

From the AM Law Litigation Daily, “Judge Dismisses Cleveland’s Suit Against Subprime Lenders“:Perhaps Cleveland mayor Frank Jackson scored points with his base when he announced back in January 2008 that the city was suing 21 financial institutions. Likening the banks’ activity to that of organized crime, the city claimed the banks had created a public nuisance by fueling subprime mortgages that left certain neighborhoods devastated by foreclosures. But the city’s legal reasoning has not impressed Cleveland federal district court judge Sara Lioi, who dismissed the case with prejudice on Friday.

The city sought to recover damages related to the costs of “monitoring, maintaining, and demolishing foreclosed properties” and “the diminution in the city’s property tax revenues caused by the depreciating effect foreclosures have had on the affected homes and surrounding properties,” according to Judge Lioi’s opinion. But Judge Lioi found, among other things, that Ohio state law preempts the city’s public nuisance claim and that the allegations did not sufficiently show that the defendants were the proximate cause of the alleged damages.

The city’s suit, like so many others, was always political grandstanding more than cogent law. A block of Cleveland is blighted because Credit Suisse First Boston securitized mortgages? You might as well sue the Mayor of Cleveland for promoting policies that undermine the city’s tax base that pay for police and city services. You might as well sue the people who trashed the buildings and actually, you know, created the blight.

Twisting public nuisance law to serve political purposes or to tap a new source of revenue has proved a dismal failure, as Rhode Island and Ohio’s lead paint lawsuits demonstrate. Time for candidates and voters to hold the elected officials who brought the suits accountable.

(Hat tip, Walter Olson, Point of Law, with much background at this post.)

To avoid making a public nuisance of ourselves, here’s a list of today’s posts on the Rhode Island Supreme Court’s opinion on the state’s lead paint lawsuit.

• Twisting Public Nuisance Laws
• Finally, for More on the R.I. Ruling, Go Here
• More on Lead Paint, Almost 800 Years Worth
• Our Thoughts Turn to Cleveland, Leadenly
• The NAM’s Statement on the R.I. Lead Paint Ruling
• Statement from the Defendants in R.I. Lead Case
• The NAM’s Involvement in Rhode Island Decision
• R.I. Court Reins In Abuse of Public Nuisance Laws

And again…

• Case summary from the Rhode Island Supreme Court
• Opinion (.pdf)
• Dow-Jones Newswires: “RI High Court Reverses Ruling Against Paint Cos“
• Reuters: “Rhode Island top court overturns lead paint ruling“
• Providence Journal: “Update: Landmark lead-paint judgment overturned

This AP story notes state courts in New Jersey and Missouri rejected public nuisance lawsuits against paint manufacturers last year, while a jury in Milwaukee ruled in favor of NL Industries, one of the defendants in the Rhode Island lead paint lawsuit.

Ohio is the only other state that has sued. Jim Gravelle, a spokesman for that state’s attorney general’s office, said lawyers in the office were interested in what the Supreme Court said because the arguments in both cases are very similar. But he said it does not affect Ohio’s lawsuit because that suit is based on Ohio law.

“This in no way restricts Ohio’s right to hold lead paint companies liable for the extreme harm they have caused Ohio citizens under public nuisance or other causes of action,” he said.

In no way? Really? Ohio has a new attorney general these days, not the same one (Marc Dann) who filed the original lawsuit in 2007. Dann’s judgment proved less than stellar, generally. Perhaps the new AG , Nancy Rogers, can re-evaluate the state’s case in light of the Rhode Island ruling and save the Ohio a lot of money in fruitless litigation.

As AG Rogers considers that option, we commend this article in the Washburn Law Journal, vol. 45, no. 3 (Spring 2006), “The Law of Public Nuisance: Maintaining Rational Boundaries on a Rational Tort,” by Victor Schwartz and Phil Goldberg of Shook, Hardy & Bacon:

In the movie “Zelig,” Woody Allen’s character was chameleonlike. His personality changed to fit his surroundings or needs at the moment. Throughout history, there have been various attempts to turn the tort of public nuisance into a Zelig-like legal theory as amorphous as the word “nuisance” itself.1 Recently, some state attorneys general and personal injury lawyers have been trying to convert the tort of public nuisance into a cutting edge legal theory and are using it in the most important mass litigations of our time. They are attempting to move public nuisance theory far outside its traditional boundaries by using it to sue product manufacturers in an effort to circumvent the well-defined structure of products liability law. If history and sound public policies guide courts, these lawsuits will fail.  Unlike the character Zelig, public nuisance theory has a rich history and distinct personality.  

We note that Phil was the lead drafter of the amicus brief the NAM joined in the Rhode Island case. So congratulations, and good arguing!

UPDATE (6 p.m.): LegalNewsline has a good review of the paltry few remaining public nuisance suits against paint manufacturers, including the state of Ohio’s: “A state judge has already dismissed the City of Toledo’s. Moellenberg said the public nuisance theory can’t survive an examination in Ohio. ‘(T)he plaintiffs (in Toledo) are represented by many of the same attorneys that brought the Columbus lawsuit, and they didn’t even appeal,’ Moellenberg said.” Charles Moellenberg is the Pittsburgh attorney with Jones Day who represented Sherwin-Williams.