Tenth Circuit sides with plaintiffs in epic litigation over nuclear facility.
Scott Flaherty, The National Law Journal June 29, 2015
After 25 years of litigation over contamination from the Rocky Flats nuclear weapons plant in Colorado, a federal appeals court has ruled that Dow Chemical Co. and Rockwell International Corp. should be on the hook for nuisance claims by neighboring property owners that combined could total hundreds of millions of dollars.
In an unusual move, the U.S. Court of Appeals for the Tenth Circuit on June 23 ordered the lower court to reverse its ruling and enter judgment for the plaintiffs, instead of sending the case back for reconsideration. The court cited in part the extraordinary delay in resolving the case, noting the “titanic” amount of time and expense it has taken up, including a 2006 trial.
“We can imagine only injustice flowing from any effort to gin up the machinery of trial for a second pass over terrain it took 15 years for the first trial to mow through,” Judge Neil Gorsuch wrote for the majority.
Merrill Davidoff (near left) of Berger & Montague argued the appeal for the plaintiffs, roughly 12,000 Colorado property owners. Kirkland & Ellis’ Christopher Landau (far left) argued for the two defendant companies.Davidoff welcomed the Tenth Circuit’s ruling, saying the defense had employed “scorched earth” tactics throughout the entire litigation and noting that his clients have stuck it out for decades. “I feel especially good for them,” he said of the clients. “The class representatives really deserve applause.”
FURTHER APPEALS POSSIBLE
A Dow spokeswoman said in a written statement that the company was disappointed and considering further appeal options. She also said Dow is entitled to be indemnified by the U.S. Department of Energy because it operated Rocky Flats under a government contract.
Dow operated the Rocky Flats plant from 1952 to 1975, when Rockwell took over. In 1989, the Federal Bureau of Investigation found evidence that plant workers had for years mishandled radioactive waste, allowing it to leach into soil and bodies of water. The plant was shut down and Rockwell later pleaded guilty to environmental crimes.
The value of nearby property plummeted and, in January 1990, local landowners lodged a putative class action against Dow and Rockwell under state nuisance law and the federal Price-Anderson Act, which applies to lawsuits that allege liability for nuclear incidents. Price-Anderson limits companies’ liability in certain cases, with the government paying a portion of any damages.
After years of pretrial wrangling, a jury in early 2006 sided with the plaintiffs and awarded $377 million in damages. On appeal, the companies argued that the district court’s jury instructions included an overly broad definition of what constitutes a nuclear incident under Price-Anderson. In 2010 the Tenth Circuit agreed that the jury instructions were too permissive.
When the case went back to the district court, Berger & Montague engaged in “a little judicial jiu-jitsu,” as Gorsuch put it in his ruling. Conceding that the plaintiffs couldn’t prove that a nuclear incident had taken place, they abandoned the Price-Anderson claim, but continued pursuing the nuisance claim. They maintained that the 2006 jury verdict should allow the district court to enter judgment in the plaintiffs’ favor on that state law claim, without the need for a new trial.
PRE-EMPTION ARGUMENT REJECTED
The district court sided with Dow and Rockwell, which had argued that the plaintiffs’ earlier pursuit of federal Price-Anderson claims pre-empted their state nuisance claims. The Tenth Circuit panel rejected that argument. (None of the three judges involved in the ruling was part of the first appellate panel.)
“Dow and Rockwell appear to have persuaded even the plaintiffs that this case does not involve a nuclear incident within the meaning of the Price-Anderson Act,” Gorsuch wrote. “But that does not mean the defendants are insulated from any liability — or that the jury’s verdict is a pointless piece of paper.”
In a concurring opinion, Judge Nancy Moritz agreed that the case deserved a remand, but wrote that she would have sent it back for a new trial on the nuisance claim.