What happens when money from a so-called environmental clean-up lawsuit goes toward everything other than helping the environment? That is the central question in a curious, decade-old case involving California plaintiffs’ lawyers, a global energy firm, and, of late, the New Hampshire Legislature.
Last year, a jury ordered ExxonMobil to pay $236 million to the state for monitoring and cleanup of groundwater related to the gasoline manufacturers’ use of MTBE — a smog-reducing additive commonly put in gasoline for decades, ironically, to comply with federal environmental air quality standards.
The legal path this case took involved a well-heeled plaintiffs’ law firm out of San Francisco hired by the New Hampshire state attorney general under a lucrative contingency fee arrangement that would award the firm what is surely tens of millions of dollars for its work.
The deal seemed simple: California law firm got its payout, New Hampshire got its clean-up. But a $236 million judgment is proving too tempting for the state’s politicians, who want the cash handed over without restrictions for every other use except cleaning up the environment.
The judge in the case, Peter Fauver, originally ordered a trust created for the cleanup. But Attorney General Joseph Foster challenged the ruling. Judge Fauver didn’t budge, but the state, being denied access to this lawsuit piggy bank, is appealing to the state supreme court.
Keep in mind that the state argued in court — before a jury that ultimately agreed — that it needed the money for environmental testing and remediation. But $236 million is too enticing for politicians. One legislator went so far as to suggest the money could be used to “help balance the budget.”
Unfortunately, it looks like environmental rhetoric was used to get a reaction from the jury, and take advantage of the people’s good will to accomplish a political, rather than an environmental goal.
And the case itself isn’t even concluded. ExxonMobil intends to appeal the judgment on its merits. This leads to the question of whether the politicians are counting their windfall before it is in the state’s coffers.
Regardless of what you think about the potential environmental issues involved in this case, surely we can all agree that the state shouldn’t claim before a jury that the money is necessary for testing and clean up, then argue to the judge against that very position.
Which leads us back to the California plaintiffs’ firm. The MTBE litigation was driven largely by out-of-state trial lawyers working on a contingency fee basis, inserting a profit-motive into the state’s enforcement responsibility.
These kinds of punitive mega-lawsuits against so-called deep-pocketed businesses may work in California, with a huge consumer market that is the eighth largest economy in the world. But when this same tactic is applied in New Hampshire, with its relatively small market, it is much easier for companies to avoid the state altogether. Who then suffers? The companies, or Granite Staters? Yet if lawsuits like this become the norm, it is New Hampshire jobs that will be in jeopardy.
Fortunately, this case still has opportunities to be made right in the courts. First, as to whether the award should be upheld at all. And second, whether the New Hampshire Supreme Court will do the right thing and decide jury awards should go toward what they are supposed to and not into another cookie jar for the politicians.
Lisa A. Rickard is president of the U.S. Chamber Institute for Legal Reform.