Jury Awards Significant Damages Verdict for MTBE Contamination

November 8, 2009
by LYNN ROSNER RAUCH
Client Alert Newsletter December 2009

In October 2009, a federal court jury found ExxonMobil Corp. ("Exxon") liable for $104.7 million in compensatory damages to plaintiff New York City for polluting city drinking water wells with the gasoline additive methyl tertiary butyl ether ("MTBE"). Exxon's decision not to settle with the city left it the lone company (of among more than 20) to go to trial. The jury concluded that Exxon was liable for spilling gasoline from six service stations in Queens Borough and as a supplier for failing to adequately warn of the dangers posed by the product. Exxon defended the claims arguing that its service stations were not the source of MTBE contamination of drinking water and that the concentration of MTBE was too low to constitute a "legally cognizable injury." These defenses were rejected by the Court and the jury.

The jury award did not include punitive damages but was based on Exxon's portion of the $250 million projected cost to construct and operate a water treatment system for the City. The jury also factored in preexisting conditions and responsibility of other entities in determining its award. Despite not being assigned 100 percent of the costs, this award may influence defendants in other similar pending and anticipated cases in federal courts to settle their claims, rather than risk such significant awards.