E-Alert Case Updates

Court of Appeals Slashes Jury Verdicts in Exxon Gas Leak Cases

Exxon Mobil Corp. v. Albright
No. 15 (Court of Appeals of Maryland, February 26, 2013)

Exxon Mobil Corp. v. Ford
No. 16 (Court of Appeals of Maryland, February 26, 2013)

by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In these companion cases, the Maryland Court of Appeals reversed more than $1 billion in punitive damages awarded by a Baltimore County jury to Jacksonville, Maryland residents and businesses. The damages were in connection with a 26,000 gallon gas leak at an Exxon Mobil-owned gas station in 2006. The Court also reversed a large number of the compensatory damages, which originally totaled around $500 million.

In Albright, the Court of Appeals reversed the fraud verdict. Plaintiffs’ fraud theory was based on allegedly fraudulent statements that Exxon made to government officials. Plaintiffs contended that the public officials relied on Exxon’s false statements to the detriment of them—i.e., the public. The Court held that Maryland does not allow a third party to recover damages for fraud purely on the basis of a fraudulent statement made to the government. Overall, the Court held that none of the Plaintiffs were able to prove any of their fraud theories by clear and convincing evidence. Because the fraud verdicts were reversed, all the punitive damages stemming therefrom were reversed as well. In addition, because of the absence of fraud, there was no permissible recovery for emotional distress attendant to property damage. The Court therefore reversed jury awards on that basis as well.

In both Albright and Ford, the Court also considered whether emotional distress damages could be awarded due to the Plaintiffs’ fear of contracting cancer arising from the leak. The Court held that a Plaintiff can recover emotional distress damages for fear of contracting a latent disease if Plaintiff demonstrates: 1) he was actually exposed to a toxic substance due to the defendant’s tortious conduct; 2) which lead him to, objectively and reasonably, fear that he would contract a disease; and 3) as a result of the objective and reasonable fear, he manifested a physical injury capable of objective determination. The Court reversed jury awards to many of the Plaintiffs due to their failure to prove the elements of this cause of action.

The Plaintiffs were also awarded damages for medical monitoring in connection with the gas leak, although Maryland courts have never explicitly recognized a cause of action for medical monitoring. The Court held that in Maryland, a Plaintiff may recover damages for medical monitoring costs, usually through the administration of an equitable fund, upon a showing that: 1) the plaintiff was significantly exposed to a proven hazardous substance through the defendant’s tortious conduct; 2) that as a proximate result of the significant exposure, the plaintiff suffers a significantly increased risk of contracting a latent disease; 3) that the increased risk makes periodic diagnostic medical examinations reasonably necessary; and 4) that the monitoring and testing procedures exist which make early detection and treatment of the disease possible and beneficial. Again, the Court reversed jury awards to many of the Plaintiffs in the case for their failure to prove the elements of this cause of action.

The Court also held that the Plaintiffs should not have been allowed to recover damages for both diminution in property value AND past loss of use and enjoyment of real property as the recoveries were duplicative. The Court held that Plaintiffs could only recover damages for diminution in property value and reversed the verdicts for past loss of use and enjoyment.

Overall, many of the damages awarded to the Plaintiffs in these cases ended up being overturned.