Environmental
Jun. 25, 2002
Tosco Settles as Plaintiffs Protest MTBE Trial Gag
SAN FRANCISCO - Nine months into a landmark trial, Tosco Corp. has agreed to pay $3 million to settle claims that its gasoline is defective because it contains MTBE.
The settlement, approved last week, extricates Tosco from the marathon proceeding. Experts believe the case may signal increased liability for petroleum companies that use the controversial additive in their gas.
Meanwhile in the same trial, some remaining defendants have accused the plaintiff, the South Tahoe Public Utility District, of violating a judge's gag order. District employees tried to influence jurors by talking to television and print reporters, the defendants claim, and violated the order by testifying before a congressional committee.
The lawsuit originated in Lake Tahoe, where MTBE leaked out of underground gas tanks and into public water wells. The utility district filed a lawsuit in San Francisco to recover cleanup costs from small gas stations, giant oil companies and one manufacturer of the chemical. South Tahoe Public Utility District v. Atlantic Richfield Co., 999128.
In April, a jury became the first to declare gasoline with MTBE a defective product. Jurors held the oil company defendants - Tosco, Shell Oil Co., Texaco Inc. and Equilon Enterprises - liable for making and selling gas with MTBE. They also found defective the pure MTBE made by defendant Lyondell Chemical Co.
The risk of using MTBE outweighs any benefit, the jury said, and the companies didn't adequately warn their customers of the danger.
Tosco now joins more than 30 defendants that have settled the suit. The settling companies have paid a total of about $38 million.
Despite the verdict, Tosco denies liability in court papers, saying that the district never proved that Tosco gasoline contaminated a Tahoe well. The company says it settled the case because it was cheaper than continuing the litigation.
Lawyers involved in the settlement either declined to comment or did not return phone calls Friday. Judge Carlos T. Bea issued a gag order on the day of the verdict, prohibiting lawyers and parties from releasing "any extra-judicial statement relating to this case" except quotes from public records and scheduling information. The gag order is necessary, Bea said, because such statements might interfere with a fair trial.
Some defendants now claim that plaintiffs violated that order, and they have asked Bea to hold them in contempt.
They point to the congressional testimony of James Jones, president of the Tahoe utility district's board of directors. Jones told the U.S. House of Representatives Subcommittee on Environment and Hazardous Materials details about the case, including his opinion that "responsible parties refused to lend a hand," according to the defense motion.
Bea told the lawyers in May that he was "a little bit worried" about a story written by an American Lawyer Media reporter in which plaintiffs attorney Duane C. Miller estimates how long the trial might last.
Finally, the defendants object to statements made to various news agencies by Dennis Cocking, the district's information officer.
The plaintiffs argue that such statements merely relate information from the public record and are permissible under Bea's order.
The plaintiffs also challenge the validity of the gag order. California courts have held that such orders are presumed invalid because they constitute a prior restraint on free speech, according to the district's papers. To gag attorneys, a judge must find that the restrained speech poses a clear and present danger to a competing interest, and he must tailor his order narrowly.
California case law holds that it isn't enough for a court to decide that a fair trial "may be" affected by the exercise of free speech. The district claims the judge's gag order was based on nothing more than speculation that publicity might contaminate the jury. Thus, it concludes, the order is not constitutional.
The parties are scheduled to argue about the gag order July 25.
MTBE, or methyl tertiary-butyl ether, is a chemical added to gasoline to help it burn more cleanly. The chemical achieved widespread use after Congress passed the 1990 Clean Air Act, which required companies to use specially formulated gas in certain areas. Two chemicals were proposed to help meet the standards: MTBE and ethanol. Most California refineries chose MTBE.
But the chemical caused problems. It was extremely soluble in water, and small amounts of it dispersed through groundwater and reached public drinking wells. The chemical changes the taste and smell of water, and plaintiffs claim the chemical makes water undrinkable. Some claim MTBE is a carcinogen, but at least two medical research groups have declined to list it as such.
Jurors are hearing evidence in the second phase, to determine whether gas stations in the area are liable for trespass and nuisance claims. They will determine damages during a third phase.
Shell announced earlier this month that by the end of the year it would stop using MTBE in gasoline it sells in California. That means Shell will discontinue the additive one year ahead of the deadline set by Gov. Gray Davis.
Tyler Cunningham
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