Fracking Litigation and Daubert Challenges Defending Against and Asserting Challenges to Expert Witness Evidence Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. TUESDAY, MAY 21, 2013 Presenting a live 60-minute webinar with interactive Q&A R. Trent Taylor, Partner, McGuireWoods, Richmond, Va. Steve A. Luxton, Partner, Morgan Lewis & Bockius, Washington, D.C.
Transcript
Fracking Litigation and Daubert Challenges Defending Against and Asserting Challenges to Expert Witness Evidence
• Milward v. Acuity Specialty Prods. Grp., Inc., 639 F.3d 11 (1st Cir. 2011)(recently denied cert. by U.S. Supreme Court)
• Plaintiffs Brian and Linda Milward sued U.S. Steel Corp. and other chemical companies for negligence, claiming Brian Milward's routine workplace exposure to benzene caused his acute promyelocytic leukemia.
• A district judge dismissed the case, after rejecting toxicologist Martyn Smith's expert opinion that the research about APL supports "the inference" that benzene exposure can cause the extremely rare form of leukemia.
• The First Circuit reversed in March, affirming Smith's method, in which he considered evidence from peer-reviewed scientific literature to eliminate unlikely conclusions and come to the most likely one.
• “Dr. Smith estimated that ... to obtain statistically significant results, one would need hundreds of thousands of highly exposed workers, the same number of controls and millions of dollars of funding,” the opinion said. “The court erred in treating the lack of statistical significance as a crucial flaw.”
• The First Circuit's decision could undermine the Supreme Court's 1993 Daubert v. Merrell Dow Pharmaceuticals ruling, which held that courts should bar “scientifically unreliable evidence,” and could also spur other courts to allow testimony based on "unsound science."
McGuireWoods LLP | 22 CONFIDENTIAL
Nonnon v. City of New York
• In September 2011, the New York appellate division partially affirmed a denial of defendant’s summary judgment motion in a case involving toxic landfill seepage and alleged cancer clusters.
• The Nonnon court stated that it is “not always necessary for a plaintiff to quantify exposure levels precisely” and said that “so long as plaintiff’s experts have provided a scientific expression of plaintiff’s exposure levels, they will have laid an adequate foundation for opinions on specific causation.”
• While there was no indication that plaintiffs’ experts actually knew, let alone “scientifically expressed” the individual exposure levels, the court found that plaintiff’s proximity analysis study permitted an inference that plaintiffs’ diseases were more likely than not caused by substances from the landfill.
• The Nonnon court ultimately held that “criticisms of [an expert’s] analysis go to the weight of the evidence and should therefore be the subject of cross-examination at trial” rather than serve as grounds for pretrial exclusion of the expert.
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Betz v. Pneumo Abex LLC
• A pathology expert's controversial “any-exposure” theory, which states that a health risk attaches even to a single asbestos fiber, is based on unproven science and is inadmissible in a test case on behalf of automobile brake workers with mesothelioma, the Pennsylvania Supreme Court ruled May 23 (Betz v. Pneumo Abex LLC, Pa., No. 38 WAP 2010, 5/23/12).
• The expert's theory “is in irreconcilable conflict with itself. Simply put, one cannot simultaneously maintain that a single fiber among millions is substantially causative, while also conceding that a disease is dose responsive,” the Supreme Court said.
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Texas
• Causation in Texas toxic tort cases require both general and
• Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706,
728 (Tex. 1997)
• A fracking plaintiff must first prove that the specific
injury/illness is capable of being caused by the specific chemical
in question to satisfy general causation
• -Then specific causation including that there was sufficient
exposure via an accepted dose/response relationship to satisfy the
specific causation requirement
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New York and Pennsylvania
• Frye v. United States, 293 F. 1013 (D.C. Cir. 1923)
• “Just when a scientific principle or discovery crosses the line
between the experimental and demonstrable stages is difficult to
define. Somewhere in this twilight zone the evidential force of
the principle must be recognized, and while the courts will go a
long way in admitting experimental testimony deduced from a
well-recognized scientific principle or discovery, the thing from
which the deduction is made must be sufficiently established to
have gained general acceptance in the particular field in which it
belongs.”
Expert Witnesses: Alleged Causes of Groundwater Contamination
• The Experts and Their Techniques – Hydrogeologists
• study the movement, distribution, and quality of water on earth
• study the distribution and movement of groundwater in soil and rock
• identify fate and transport of contaminants in groundwater
– Environmental engineers and scientists • identify extent of contamination in soil
• can perform dating and speciation of contamination
– Analytical experts qualify laboratory data
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Expert Witnesses: Alleged Causes of Groundwater Contamination
• Modeling – MODFLOW is a computer program developed in late 1983
by the United States Geological Survey • simulates the flow of groundwater through aquifers
• can predict the rate at which hazardous substances migrate and the volume of leakage into a water well
• can also estimate the size of a contamination plume in a reservoir
• sanctioned by the EPA, has been peer-reviewed, and is considered a standard modeling tool used by hydrogeologists
– MODFLOW has been found to be a reliable methodology on which expert opinion may be based – when applied correctly
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Expert Witnesses: Alleged Causes of Groundwater Contamination
• Many other modeling and predictive techniques – MODFLOW is not always useful or acceptable (i.e.,
fractured bedrock)
– Other predictive techniques can be used by hydrogeologists • They must be based on reliable principles and methods
• The expert must have reliably applied principles and methods to the facts
• Modeling Predictions in Conflict with Actual Testing – One key pitfall for groundwater contamination experts is
when the results of actual testing conflict with the results predicted by the expert’s model
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Expert Witnesses: Alleged Causes of Groundwater Contamination
• Considering All the Data – An expert’s opinion may be demonstrably unreliable if
the expert fails to consider data that conflicts with his or her opinion
– It is not always necessary for an expert to perform actual testing, however, and an expert’s opinion may be admissible even if no testing was performed
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Expert Witnesses: Alleged Medical Causation and Groundwater Contamination
• Another type of expert commonly called to testify in groundwater contamination cases are medical professionals
– toxicologists, epidemiologists, and oncologists
– testify regarding the groundwater chemicals to which plaintiffs were allegedly exposed and whether such chemicals had a carcinogenic or otherwise negative impact on human health
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Expert Witnesses: Alleged Medical Causation and Groundwater Contamination
• Medical causation experts
• (1) examine the plaintiffs to determine
– Medical condition
– Level of contaminant exposure
• (2) assemble relevant scientific literature pertaining to the contaminant
• (3) analyze data in existing studies
• (4) conclude whether there was a causal link between the contaminant and the plaintiff’s injuries
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Expert Witnesses: Alleged Medical Causation and Groundwater Contamination
• Successful Daubert challenges to medical causation experts generally undermine the reliability of the proffered expert’s testimony
– One method of attacking the reliability of these experts’ methodologies is to examine their analyses for baseless assumptions or conjecture
– Testimony can be excluded if the witness is shown to be seeking data to fit a preconceived conclusion rather than interpreting data objectively
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McGuireWoods LLP | 33 CONFIDENTIAL
Daubert Issues in Fracking Litigation
• Bombardiere v. Schlumberger Tech. Corp.
Civil Action No. 1:11-CV-50 (N.D. W. Va. 2/13/13)
• “[T]his Court finds that Dr. Lipsey lacks the qualifications to
render the opinions for which he has been retained, has deviated
from the appropriate methodology to render such opinions
without providing any justification or support therefor, and has
based his opinions on assumptions that are simply not supported
by the record. Accordingly, this Court will exclude the
testimony and report of Dr. Lipsey.”
McGuireWoods LLP | 34 CONFIDENTIAL
Trend #1 - The Battlefield? Science!
McGuireWoods LLP | 35 CONFIDENTIAL
Science
• Recent Barnett Shale study by City of Fort Worth Natural Gas
Air Quality Study tested over 375 sites and found no significant
health threats (chronic or acute) related to natural gas
production activities, including fracking, in close proximity to
residential and commercial areas
• Ohio Dep’t of Natural Resources Report in 2012 concluded that
brine injections at a disposal well called Northstar 1 had likely
triggered 12 low-magnitude earthquakes in the Youngstown, OH,
area over the previous year; these earthquakes prompted Ohio
Gov. Kasich to impose a moratorium on injection wells within a
five-mile radius
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U.S. Geological Survey study in 2012
• Found that the average number of earthquakes of magnitude 3 or greater
in the U.S. midcontinent – an area that includes Arkansas, Colorado,
Oklahoma, New Mexico, and Texas – increased to 6 times the 20th
century average last year
• Scientists determined the increase in seismic activity was “almost
certainly manmade”
• Stated that “[a] naturally occurring rate change of this magnitude is
unprecedented outside volcanic settings or in the absence of a main
shock, of which there are neither in this region”
• Noted that another study found “strong evidence” linking seismic
activity in central Arkansas to deep wastewater injection wells
McGuireWoods LLP | 37 CONFIDENTIAL
CSPH Study
• Increased Focus on Air Emissions Produced by Hydraulic Fracturing
• Air emissions produced by hydraulic fracturing at natural gas drilling sites may contribute to acute and chronic health problems for nearby residents, according to a study released recently.
• Researchers at the Colorado School of Public Health found that the wells released several petroleum hydrocarbons including benzene, ethylbenzene, toluene and xylene when hydraulic fracturing processes were used.
• “Our data show that it is important to include air pollution in the national dialogue on natural gas development that has focused largely on water exposures to hydraulic fracturing,” Lisa McKenzie, lead author of the study, said in a statement.
• According to the study, the emissions can cause eye irritation, headaches, sore throat and difficulty breathing, but they're also associated with more serious health threats, like an increased cancer risk for residents near the wells.
• Concluded that residents within one-half mile of a fracturing well has an increased risk of cancer and noncancer illnesses because of petroleum hydrocarbons released into the air by drilling operations
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But Cf.
Wyoming Dep’t of Environmental Quality Study
• Monitored air quality near fracturing sites in the state for 11
months in 2011
• Found that none of the air samples exceeded federal or state
action levels
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# 2 - Lone Pine
• Strudley v. Antero Resources Corp., Colo Dist. Ct., No. 11-CV-
2218 (5/9/12)
– “Cognizant of the significant discovery and cost burdens presented
by a case of this nature, the Court endeavored to invoke a more
efficient procedure than that set out in the standard case
management order. Accordingly, the Court required Plaintiffs,
before full discovery and other procedures were allowed, to make a
prima facie showing of exposure and causation . . . .”
McGuireWoods LLP | 40 CONFIDENTIAL
Strudley
• Plaintiffs’ expert “suggests, at best, a very weak circumstantial
causal connection between the wells and Plaintiffs’ injuries.”
• “[U]pon review of the Plaintiffs’ collective medical records,
[pltfs’ expert] only temporally associates Plaintiff’s symptoms
with the wells being brought into production . . . [a] temporal
relationship, by itself, provides no evidence of causation.”
• “Air sample, taken the day after the Plaintiffs moved out of
their Silt home, shows detectable levels of certain gasses
and compounds. However, this raw data is not
accompanied by any explanation of what levels are
necessary to cause any of the symptoms complained of by
Plaintiffs.”
McGuireWoods LLP | 41 CONFIDENTIAL
Strudley
• “The Court, in reaching its decision, further relied on the fact that the
Colorado Oil and Gas Conservation Commission (“COGCC”) had
conducted an investigation of the Plaintiffs’ well water and had
concluded that the water supply was not affected by oil and gas
operations in the vicinity.”
• “The COGCC concluded that ‘there is no data that would indicate the
water quality in your domestic well has been impacted by nearby oil
and natural gas drilling and operations.’”
• Court also noted that companies gave sworn testimony that they
conducted their activities in compliance with applicable laws and
regulations to protect human health and the environment.
• “Defendants have provided evidence to support their contention that the
air emissions-control equipment at the wells and prevailing wind
patterns make it unlikely that plaintiffs or their property were exposed
to harmful levels of chemicals from defendants’ activities.”
McGuireWoods LLP | 42 CONFIDENTIAL
Strudley
• “[Pltfs’ expert] further stated that levels of sodium and chloride were ‘higher than EPA recommends for drinking water, and are not typical of well water used as drinking water . . . [s]uch levels are in the range expected from a number of deep well sources, such as may be produced from gas wells.’”
• “Again, there was no statement regarding what constitutes dangerous levels of any substance in drinking water or whether any causal link exists between the study’s results and Plaintiffs’ alleged injuries.”
• “Though the evidence shows existence of certain gases and compounds in both the air and water of Plaintiffs’ Silt home, there is neither sufficient data nor expert analysis stating with any level of probability that a causal connection does in fact exist between Plaintiffs’ injuries and Plaintiffs’ exposure to Defendants’ drilling activities.”
McGuireWoods LLP | 43 CONFIDENTIAL
But Cf.
• Hagy v. Equitable Prod., Case No. 2:10-cv-01372 (S.D. W. V.
2010)
• In suit by family seeking injunction to prevent drilling, medical
monitoring fund, and compensatory and punitive damages
against companies involving in nearby shale gas drilling, court
denied proposed Lone Pine order
McGuireWoods LLP | 44 CONFIDENTIAL
# 3 - Legislation
• Pennsylvania
– Unconventional Gas Well Impact Fee Act of 2012 (Act 13)
– Makes operators presumptively liable for pollution of water supplies within 2500 feet of a well nore when the pollution occurs within 12 months of the later of completion, drilling, stimulation, or alteration of the well
• Maryland
– H.B. 1123 in Maryland
– Signed into law on 5/22/12
– Establishes presumption that contamination of a water supply in the area around a gas well is caused by the gas exploration or production activity, unless the driller rebuts the presumption by a “preponderance of the evidence”
– This “presumptive impact area” covers “a radius of 2500 feet from the vertical wellbore” and “applies for 365 days after the last event of well drilling, completion, or hydraulic fracturing”
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# 4 – More subjective and less tangible alleged harm
• Gates v. Rohm and Haas Co. (E.D. Pa.) – ruled that the presence of vinyl chloride in the air, even if below background levels, constitutes a physical injury to property under nuisance law.
• Meyer v. Fluor Corp. (Mo.) – in nuisance class suit against lead smelter to recover prospective medical monitoring due to harmful emissions, MO S. Ct. certified the class and held that recovery for medical monitoring is not contingent upon the existence of a present physical injury
• Cook et al. v. Rockwell and Dow – jury verdict of almost $1 billion based solely on decline in property values for 13,000 plaintiffs
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In re: Tennessee Valley Authority Ash Spill
Litigation, Case No. 3:09-cv-00009 (E.D. Tenn.)
• “Although plaintiffs argue that exposure to the toxic constituents
in the ash exists by virtue of the presence of ash in the
environment, the mere existence of a toxin in the environment
is insufficient to establish causation without proof that the
individual was actually exposed to the toxin and at a level
sufficient to cause injury or stress.”
McGuireWoods LLP | 47 CONFIDENTIAL
Other Law
• Plaintiffs are generally required to allege that they have suffered an “appreciable, substantial tangible injury.”
• Courts have explained that this substantial harm must be one of “importance, involving more than slight inconvenience or petty annoyance.” Darney v. Dragon Prods. Co., LLC, 640 F. Supp. 2d 117 (D. Me. 2009) (quoting Restatement (Second) of Torts § 821F, cmt. c)).
• Furthermore, numerous courts have held that the harm must be more than “de minimis” and that if the alleged invasion relates to contamination, it must “rise to the level of toxicological concern.” Lamb v. Martin Marietta Energy Sys., 835 F. Supp. 959 (W.D. Ky. 1993); Benesh v. Amphenol Corp. (In re Wildewood Litig.), 52 F.3d 499 (4th Cir. 1995); Brooks v. E. I. du Pont de Nemours & Co., 944 F. Supp. 448 (E.D. N.C. 1996); In re TVA Ash Spill Litig., 805 F. Supp. 2d 468, 491 (E.D. Tenn 2011) (plaintiff must show constituents reached property in sufficient concentrations to cause actual damage). An invasion of small amounts of contaminants on plaintiffs’ land is not enough to state a claim for private nuisance. Bradley v. American Smelting & Refining Co., 635 F. Supp. 1154, 1157-58 (W.D. Wash. 1986).
McGuireWoods LLP | 48 CONFIDENTIAL
Berish v. Southwestern
• “Plaintiffs' claims for Damages for Emotional Distress except as to Plaintiff C.S. will be dismissed. Plaintiffs' will be allowed to amend their Complaint to seek damages for inconvenience and discomfort.”
• “Under Pennsylvania law, claims for emotional distress require that the plaintiff suffer an attendant physical injury. Houston v. Texaco, Inc., 538 A.2d 502, 505 (Pa. Super. Ct. 1988). Plaintiffs have only pled physical ailments as to Plaintiff C.S. Therefore, the emotional distress claims will be dismissed except as to Plaintiff C.S.”
• “Plaintiffs have asked the Court for leave to amend their Complaint to add a claim for damages for inconvenience and discomfort. Pennsylvania law recognizes "a cause of action for inconvenience and discomfort caused by interference with another's peaceful possession of his or her real estate." Houston, 538 A.2d at 506. Plaintiffs have complied with Fed. R. Civ. P. 15(a) and Local Rule 15.1, and the Court will grant them leave to amend in order to add claims for damages for inconvenience and discomfort. This determination essentially comports with the agreement reached at oral argument.”
McGuireWoods LLP | 49 CONFIDENTIAL
Practical Strategies/Tips
Other Considerations: Discovery Issues in Fracking Litigation
Examples of Documents Requested
• Gas well meter inspection reports and monitoring data
• Monthly production volumes
• Environmental assessments and impact analyses
• Studies, papers, and treatises regarding fracking fluids or drilling mud
• Diagrams, blueprints, and schematics for wells at issue
• Purchase orders and MSDS sheets
• Sampling data
• Documents identifying the components of the fracking fluid
• Documentation submitted to environmental agencies
• Warnings or notices of violation from environmental agencies
• Agreements, inventory reports, and training information regarding transport and disposal of hazardous chemicals
• Other complaints regarding water contamination
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Other Considerations: Discovery Issues in Fracking Litigation
Examples of Subpoenaed Information
• EPA has subpoenaed information re: fracking
– Fracturing fluid formulation, including MSDS for constituent products in formulation
– Information regarding modifications to fracking fluid
– Source water quality data
– Environmental impact studies and data
– Reports of water contamination
– Standard Operating Procedures for hydraulic fracturing
– Pressure and temperature data
– Calculations regarding volume of flowback
• SEC has subpoenaed information re: shale gas reserves
– Costs per unit, drilling costs
– Reserve estimates from third party engineering firm
– Forecasting information
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Unique Data Sources
• Data about a challenged substance may exist in many different records formats, often unique to industrial business processes
– Warehouse inventory records, shipping and lading bills, MSDS and industrial safety/accident records databases, disposal permit logs, sales databases, RFP logs or bid estimates, source permitting and disposal records, sales records
• Capturing unique data for processing, review, and production in the form it is ordinarily maintained or a “reasonable usable form”
Industry-specific business processes and data-rich scientific and engineering determinations, present unique discovery challenges in these cases
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Inaccessible Data Sources
• Data about performance on specific projects and site condition measurements were historically recorded in inaccessible forms or on specialized instruments – if they were recorded at all
– Bore pressure records on strip charts, manual notebook entries on mixing ratios or hygrometer results, archived physical samples of formation fluids, proprietary memory cartridges from drill string tools.
• Party need not produce information from sources that the party identifies as not reasonably accessible
• May have to prove undue burden or costs
Industry-specific business processes, data-rich scientific and engineering determinations, long claims timeframes, and multi-location operations present
unique discovery challenges in these cases
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Issues with Possession, Custody, or Control
• The prevalence of subcontracting and frequency of multi-provider projects means considerable contracting, coordination, billing, tracking and completions records may be generated.
– These types of records are often the focus for causation, liability apportionment, and damages issues.
– Records you don’t have may exist with other parties. Your records may not agree with other contemporaneous records.
• Intercompany sharing agreements for data may exist.
• Joint Venture agreements or contracts may provide a company with “control” even if documents are not within its possession or custody.
• Trent Taylor focuses on defending complex toxic tort and products liability cases. His experience includes representing clients in class actions, MDL coordinated proceedings, nationwide mass tort litigation, and appellate cases in the substantive areas of toxic torts. He defends cases involving complex scientific and medical issues, and has concentrated in the defense of novel claims brought by plaintiffs, including public nuisance, civil conspiracy, unjust enrichment, and deceptive trade practices. He is a frequent commentator on legal issues, has been quoted by the New York Times, Wall Street Journal, American Lawyer, the National Law Journal, and numerous influential legal blogs, among others, and was interviewed on NPR's "All Things Considered" on June 8, 2010, to discuss appellate issues. He is currently authoring a treatise on nuisance and trespass litigation that will be published in 2013. http://www.cap-press.com/books/isbn/9781594607714/Nuisance+and+Trespass+Law
• Steven A. Luxton is a partner in Morgan Lewis's Litigation Practice, resident in Washington, D.C. and Houston. Mr. Luxton focuses his practice on the areas of product liability, complex mass tort and toxic tort litigation, and commercial litigation. He has represented a wide array of clients ranging from large corporations to small businesses in state and federal courts throughout the country and has tried cases in Maryland and the District of Columbia. His litigation experience includes all phases of discovery and trial. Mr. Luxton has taken and defended hundreds of fact and expert witness depositions; briefed and argued complex motions and state and administrative appeals; and tried both bench and jury trials involving a broad range of issues including product liability, personal injury, and commercial disputes. In his mass tort and toxic tort practice, he has successfully defended a wide variety of corporate clients in claims involving exposure to solvents, asbestos, silica, and numerous other substances. In his commercial litigation practice, Mr. Luxton has represented companies and individuals in a diverse array of business disputes involving tortious interference with business relationships, contractual disputes, and fraud.
