New York City fights to make one of its water sources safe to drink again

City of New York v. Exxon Mobil Corp., et al.

U.S. District Court, Southern District of New York, Case No. 04-CV-3417

Going to trial against ExxonMobil and 39 other oil companies is a tall task. When the City of New York found itself in that situation in an important case implicating the safety of the City’s drinking water supply, the City entrusted SL Environmental Law Group (then known as Sher Leff) to serve as the City’s trial counsel. This partnership led to the City’s recovery of $120 million from defendants in what remains the only major MTBE groundwater contamination case in the U.S. that prevailed in trial and appeal.

The case began in February 2004 when the City of New York filed a complaint against more than 40 oil companies. The case arose from contamination of five groundwater wells with methyl tertiary butyl ether (MTBE). The City asserted product liability claims against the defendants, alleging that gasoline containing MTBE was a defectively designed product, and that the defendants failed to warn station owners of the dangerous nature of the product, namely that MTBE has characteristics that make it a high risk to contaminate groundwater if released into the ground via storage tank leak or spills. The City also asserted claims for trespass, nuisance and negligence. The City demanded that defendants pay for the cost of removing MTBE from the contaminated wells.

The City filed its case in state court. Defendants removed the case to federal court, where it coordinated with a large number of other MTBE contamination cases. The City’s case was one of five MTBE cases to be designated as the first to go to trial. Shortly thereafter, two of those cases settled and two others were remanded to state court (and are ongoing). By 2008, the City found itself with no settlements secured and standing alone with the first and only MTBE case heading toward trial.

Even though the City has a world-class legal department, it realized it could not match the resources of the oil companies. In 2008, the City retained SL as its trial counsel. SL led settlement talks that resolved claims against all defendants except the dominant defendant ExxonMobil. These strategic settlements allowed SL and the City to present a more streamlined case against ExxonMobil at trial.

In August of 2009, a jury trial began with ExxonMobil as the lone defendant. The trial was separated into three phases. The City had the legal burden to prevail at each phase in order to advance to the next. Over the course of 11 weeks, the City prevailed in each of the three phases. ExxonMobil was found liable for the presence of MTBE in the City’s five wells. On October 19, 2009, the jury found ExxonMobil responsible for remaining $104.7 million in damages. Commenting about the victory in the City’s press release, Mayor Michael Bloomberg was quoted saying: “Our water supply is one of our most vital resources – and we will work to protect it and go after those who damage it.” Michael Cardozo, Corporation Counsel for New York City, also applauded the victory and trial team: ““This is a tremendous victory for New Yorkers and a clear message to polluters. I am grateful for the tireless efforts of our attorneys – particularly our outside counsel[.]”

The Second Circuit Court of Appeals affirmed the verdict in July 2013, and the United States Supreme Court denied ExxonMobil’s Petition for Writ of Certiorari in April 2014.