By Robert B. Barnett Jr., J.D.
The economic loss doctrine did not bar Baltimore’s strict liability claims because the city had a property interest in its storm water system and because the public safety exception applied.
The city of Baltimore, Maryland’s lawsuit against Monsanto Company alleging strict product liability claims relating to poly chlorinated biphenyl (PCB) contamination of Baltimore’s streets, drainage systems, storm water, and water bodies has survived a motion to dismiss by the chemical maker. The Maryland federal district court ruled that the economic loss doctrine did not bar Baltimore’s strict liability claims against Monsanto because Baltimore asserted property damages and the city plainly had a property interest in its storm water system. Further, even if Baltimore’s alleged harm was purely economic, the city sufficiently pleaded that the public safety exception would apply to preclude the application of the economic loss doctrine. The lawsuit is just one of many similar suits filed by municipalities across the nation against Monsanto for PCB contamination (Mayor and City Council of Baltimore v. Monsanto Co., March 31, 2020, Bennett, R.).
Background. Monsanto was the U.S.’s only manufacturer of PCBs, which are used in industrial and commercial applications, from 1935 to 1977. In 1977, Monsanto split into Monsanto (agricultural products), Solutia Inc. (chemical products), and Pharmacia Corporation (pharmaceutical products). The dangers of PCBs to humans—including cancer—have been well documented for many years. Critics have alleged that Monsanto knew of the dangers long ago but continued nevertheless to deny or downplay them. Baltimore sued Monsanto, Solutia, and Pharmacia in Maryland federal court for damages to its municipal storm water system from the PCB runoff. Baltimore’s suit asserts claims for, among others, strict liability for defective design and manufacture and strict liability failure to warn (Maryland does not recognize product liability claims based in negligence). Monsanto and the others filed motions to dismiss.
Standing. Monsanto argued that Baltimore lacked Article III standing because Baltimore’s damages were too speculative to confer standing. It further argued that no injury in fact could exist until Baltimore completed a PCB/storm water study. The court, however, rejected those arguments, concluding that Baltimore’s damages were more than speculative. Damage to its water system has already occurred. In fact, the contamination had rendered some fish and shellfish unfit for human consumption. In addition, the city already had incurred costs in trying to reduce the volume of PCBs in the its storm water. These allegations, therefore, sufficiently pleaded an injury in fact. Even though the exact extent of the damages was unknown, the allegations were sufficient because they alleged actual, present, and concrete injuries to the storm water system as a result of PCB contamination.
Economic loss doctrine. Monsanto also contended that the complaint should be dismissed because the economic loss doctrine barred Baltimore’s strict liability claims, which typically require personal injury or property damage. The court, however, again rejected Monsanto’s argument. Baltimore has a property interest in the storm water system that it owns and operates. Allegations that excessive PCBs in the water systems, which have required the city to take measures to reduce the volume, have been found to be sufficient in similar suits against Monsanto. The city’s property interests in its storm system is a different type of claim than the claimfora state’s "interest in groundwater," which has been found not to constitute a property interest.
Moreover, the court said that even if the city’s harm was purely economic, Maryland’s public safety exception to the economic loss doctrine applied. The public safety exception is measured by whether the nature and probability of damage occurring show a clear, serious, and unreasonable risk of death or personal injury. The mere possibility of injuries is not enough. At this early stage, the court said, Baltimore has demonstrated a real probability that harm will occur, in part because the contamination has already occurred, endangering not just humans but also animals. Therefore, the court concluded that the economic loss doctrine did not preclude Baltimore from bringing its strict liability claims; and even if it did, the public safety exception to the economic loss doctrine would rescue the claims.
Damages. Monsanto contended that Baltimore’s damages claim failed because the relief it sought—obtaining a system upgrade—was too speculative because it sought recovery for future costs. While a plaintiff must assert damages with reasonable certainty, the court found that Baltimore clearly was seeking more than an upgrade to its storm water system. The court then concluded that it was satisfied that the city had properly pleaded damages at this point in the proceedings. It was too early in the case to rule on the question of damages prior to any discovery having taken place. As a result, the court declined to dismiss the damages claim.
Strict product liability. Monsanto argued that the strict liability claims for defective design and defective manufacture should be dismissed because they were barred by Maryland’s risk-utility test. The court disagreed, concluding that these claims should be analyzed under the consumer expectation test rather than the risk-utility test. Under the consumer expectation test, it was foreseeable to Monsanto that PCBs would cause widespread contamination to the environment. Furthermore, Maryland has never limited recovery in strict liability for design defect to ultimate users. Bystanders also can recover against sellers. Baltimore’s allegations, therefore, satisfied the pleading obligations for strict liability claims for defective design and defective manufacture.
As for the city’s failure to warn claim, Monsanto argued that it owed no duty to warn Baltimore of the dangers of PCBs. Where a duty to warn exists, however, the duty extends to anyone reasonably expected to come into contact with the product. While no duty to "warn the world" exists, the duty extends to third persons expected to be endangered. In this case, as the sole PCB manufacturer, Monsanto knew and expected that the PCBs would cause widespread water contamination, including to a city such as Baltimore. As a result, Baltimore was in the category of those who should have been warned, and its allegations for strict liability for failure to warn were sufficient to survive the company’s motion to dismiss.
The court, therefore, denied Monsanto’s motion to dismiss.
The case is No. RDB-19-0483.
Attorneys: Carla Burke Pickrel (Baron and Budd P.C.) for Mayor and City Council of Baltimore. Thomas Joseph Cullen, Jr. (Goodell Devries Leech and Dann LLP) for Monsanto Co. and Solutia Inc.
Companies: Monsanto Co.; Solutia Inc.; Mayor and City Council of Baltimore
MainStory: TopStory DamagesNews DesignManufacturingNews WarningsNews ChemicalNews MarylandNews
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