Maryland High Court Slashes Billion-Dollar Jury Award and Clarifies Toxic Tort Standards
Reversing nearly all of the $1.6 billion in jury verdicts that had been entered by lower courts, the Maryland Court of Appeals on February 26, 2013 issued a pair of opinions that may make recovery of damages more difficult for Maryland plaintiffs in toxic exposure cases.
In the two related opinions, Maryland’s highest court clarified the showing required for plaintiffs to prevail on medical monitoring, injury to real property, fraud, and emotional distress in the context of chemical exposure claims.
The cases arose from an accidental release, in February 2006, of 26,000 gallons of gasoline from an underground storage tank system at a service station in Jacksonville, Maryland. More than 500 Jacksonville residents and business owners filed suit in the two actions, asserting various tort-based claims and seeking compensatory damages (including medical monitoring, property damages and emotional distress) and punitive damages. In March of 2009, a group of about 91 families secured a jury award of roughly $147 million. In 2011, a group of more than 450 plaintiffs won a compensatory award of nearly $500 million and a punitive damages award of just over $1 billion.
The Court’s February 26 opinions dramatically reduced these awards – in many cases rejecting them entirely – in every damages category.
A brief summary of the Court’s holdings on certain key issues is set forth below.
Property damages: (i) In the absence of detectable contamination, no property damages may be recovered unless plaintiffs can show “more than a possibility of future contamination or mere annoyance;” (ii) property damages may not exceed the pre-contamination fair market value of the property; (iii) plaintiffs may not recover for both diminution of property value and past loss of use and enjoyment where such recovery is duplicative; and (iv) property damages must be established using market data unless a real estate expert can offer a reasonable justification for ignoring such data.
Emotional distress: (i) No recovery is permitted based on fear of loss of property value in the absence of a showing of fraud; and (ii) a plaintiff may recover for fear of contracting a latent disease (such as cancer) only where he can show he was actually exposed to a toxic substance due to the defendant’s tortious conduct, which led him to fear objectively and reasonably that he would contract a disease, and where he manifested a physical injury as a result of that fear.
Medical monitoring: This remedy is only available where the plaintiff (i) has been significantly exposed (i.e., above regulatory action levels) to a proven hazardous substance; (ii) suffers a significantly increased risk of latent disease as a result of that exposure; and (iii) reasonably requires periodic diagnostic medical examinations that are capable of detecting symptoms of the latent disease.
Punitive Damages: (i) To recover punitive damages based on a misrepresentation, plaintiffs must establish that they detrimentally relied on the misrepresentation; and (ii) members of the public may not recover damages for fraud based only on false statements made to the government.
The two decisions, Exxon Mobil Corp. v. Albright and Exxon Mobil Corp. v Ford, were decided unanimously and are certain to be cited widely by defendants in future toxic tort actions in Maryland. In particular, defendants will likely rely on the Court’s explanation that plaintiffs must establish actual exposure to or detections of chemicals (as opposed to potential future exposures or detections) – in some cases above regulatory standards – as a threshold requirement to recover on certain toxic tort claims.