N.J. Court Finds Exxon Mobil Strictly Liable for Public Nuisance, But Concludes that Only Abatement, Not "Loss of Use" Damages, Is Available to the State

November 15, 2008
by KATE CAMPBELL
MGKF News Flash

On August 29, 2008, the Superior Court of New Jersey, Union County, issued another ruling in the seminal natural resource damage ("NRD") case in the state, New Jersey Department of Environmental Protection v. Exxon Mobil Corporation, Docket No. UNN-L-3026-04. While there have been a couple of key decisions addressing the scope of recovery for the New Jersey Department of Environmental Protection's ("NJDEP's") statutory NRD claims under the New Jersey Spill Compensation and Control Act ("Spill Act") in the past two years, this recent ruling addresses, for the first time, the contours of the state's common law NRD claims.

On NJDEP's motion for partial summary judgment, the court entered judgment as to Exxon Mobil's liability for public nuisance, but denied judgment on its trespass claim, finding that the former, not the latter, is the proper vehicle for NJDEP to seek redress of its injuries. The court also denied NJDEP's claim for unjust enrichment, since its common law and Spill Act claims (revived by the Appellate Court last year; see our June 13, 2007, Special Alert here), provide an adequate remedy at law.

While the state has claimed victory at this level, it remains to be seen whether Exxon Mobil will seek to appeal the court's ruling on liability for public nuisance, and, perhaps more importantly, whether the current state of the law on NJDEP's ability to recover "loss of use" damages under the Spill Act remains unchanged. Of particular significance to the court's August 29 decision is that while Exxon Mobil was adjudged liable for public nuisance as a matter of law, the court found that the agency cannot recover "loss of use" damages under this theory; rather, the only relief available to the state is abatement of the nuisance. Thus, if the Supreme Court ultimately weighs in on whether the reach of the Spill Act does in fact extend to "loss of use" damages, and if it concludes that the statute does not so provide, then this decision, if upheld on appeal, would effectively eliminate the primary damages theory advanced by NJDEP in the multitude of NRD cases it has brought throughout the state, absent, of course, legislative action to amend the statute itself.