No. 15-933 IN THE Supreme Court of the United States EXXON MOBIL CORPORATION and EXXONMOBIL OIL CORPORATION, Petitioners, v. STATE OF NEW HAMPSHIRE, Respondents. On Petition for a Writ of Certiorari to the New Hampshire Supreme Court BRIEF OF WASHINGTON LEGAL FOUNDATION AS AMICUS CURIAE IN SUPPORT OF PETITIONERS Richard A. Samp (Counsel of Record) Mark S. Chenoweth Washington Legal Foundation 2009 Massachusetts Ave., NW Washington, DC 20036 202-588-0302 [email protected]Date: February 22, 2016
Transcript
No. 15-933
IN THE
Supreme Court of the United States
EXXON MOBIL CORPORATION andEXXONMOBIL OIL CORPORATION,
Petitioners,v.
STATE OF NEW HAMPSHIRE,
Respondents.
On Petition for a Writ of Certiorarito the New Hampshire Supreme Court
BRIEF OF WASHINGTON LEGAL FOUNDATIONAS AMICUS CURIAE IN SUPPORT OF PETITIONERS
Richard A. Samp (Counsel of Record)Mark S. ChenowethWashington Legal Foundation2009 Massachusetts Ave., NWWashington, DC [email protected]
Date: February 22, 2016
QUESTIONS PRESENTED
1. Whether the Due Process Clause permits aState to use parens patriae standing and statisticalproof of recovery to recover hundreds of millions ofdollars in a “Trial by Formula” that eliminatedindividualized defenses that have uniformly preventedcourts from certifying comparable cases as class actionsand allowed the State to recover for contamination ofwells that do not yet exist.
2. Whether a state-law tort duty is preemptedwhen it retroactively outlaws the only feasible optionfor complying with a federal mandate.
A. Impossibility Preemption AppliesWhen a Party Cannot FeasiblyComply with Both Federal andState Law, Even When FederalLaw Does Not Expressly ForbidCompliance with State Law . . . . . . . 12
B. The Courts Below RejectedPreemption as a Matter of Law,Thereby Preventing Petitionersfrom Demonstrating FactualImpossibility . . . . . . . . . . . . . . . . . . . . 16
iv
Page
C. The Decision Below Conflicts withOther Post-Bartlett DecisionsRegard ing the Scope o fImpossibility Preemption . . . . . . . . . 21
II. REVIEW IS ALSO WARRANTED TOCONSIDER PETITIONERS’ “TRIAL BYFORMULA” CLAIM . . . . . . . . . . . . . . . . . . . 23
Washington Legal Foundation (WLF) is a non-profit public interest law firm and policy center withsupporters in all 50 states.1 WLF devotes a substantialportion of its resources to defending free enterprise,individual rights, a limited and accountablegovernment, and the rule of law.
To that end, WLF has frequently appeared asamicus curiae in this Court in cases raising preemptionissues, to point out the economic inefficiencies oftencreated when multiple layers of government seeksimultaneously to regulate the same business activity. See, e.g., Mutual Pharm. Co. v. Bartlett, 133 S. Ct. 2466(2013); Riegel v. Medtronic, Inc., 552 U.S. 312 (2008);Bates v. Dow AgroSciences LLC, 544 U.S. 431 (2005);United States v. Locke, 529 U.S. 89 (2000).
WLF is particularly concerned that individualfreedom and the American economy both suffer whenstate law, including state tort law, imposes uponindustry an unnecessary layer of regulation. Excessiveor conflicting rules frustrate the operation of specificfederal regulatory regimes and make it impossible forregulated businesses to operate in compliance withboth federal and state laws.
1 Pursuant to Supreme Court Rule 37.6, WLF states thatno counsel for a party authored this brief in whole or in part; andthat no person or entity, other than WLF and its counsel, made amonetary contribution intended to fund the preparation orsubmission of this brief. More than 10 days prior to the due date,counsel for WLF provided counsel for Respondent with notice of itsintent to file. All parties have consented to the filing; letters ofconsent have been lodged with the Court.
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At issue here is whether federal law preemptsRespondent’s causes of action. WLF agrees withPetitioners that the common-law duty that NewHampshire seeks to impose on them—a duty not tomarket gasoline containing methyl tertiary butyl ether(MTBE)—conflicts with a duty imposed on Petitionersby the federal government’s reformulated gas (RFG)program. Petitioners presented overwhelming evidencethat the only means by which it feasibly could havecomplied with the RFG program in New Hampshirewas to add MTBE to its gasoline. Yet, the courts belowdid not even permit Petitioners to seek a jurydetermination regarding the conflict between federaland state law, instead ruling as a matter of law that noconflict existed and thus that the New Hampshire tortclaim was not preempted. That ruling was based on afundamental misunderstanding of preemption law;WLF is concerned that if the ruling (which conflictswith decisions of this Court and the federal appealscourts) is allowed to stand, other state courts hearingsimilar MTBE claims will follow suit.
This brief focuses primarily on the preemptionissue. WLF nonetheless fully supports Petitioner’srequest for review of the first QuestionPresented—whether due process constrains theauthority of a state court to conduct a “trial by formula”that deprives the defendant of the right to raiseindividualized defenses to each asserted claim. WLF isparticularly concerned by the adoption of overlystreamlined trial procedures when, as here, theplaintiff is a state government that voluntarily optedinto the RFG program and now is using its own courtsto extract hundreds of millions of dollars in penaltiesfrom out-of-state defendants.
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STATEMENT OF THE CASE
The facts of the case are set out in detail in thePetition. WLF wishes to highlight several facts ofparticular relevance to the preemption issues on whichthis brief focuses.
In 1990, Congress established the RFG program,which required that gasoline sold in areas withsubstandard air quality have a minimum 2% oxygencontent. 42 U.S.C. § 7545(k)(2)(B) (2000). Theincreased oxygen content was designed to lead toincreased fuel combustion and thereby to reduceharmful emissions from motor vehicles. To meet thatrequirement, refiners had to add an “oxygenate” totheir gasoline. New Hampshire opted into the RFGprogram in 1991.
The Environmental Protection Agency (EPA)authorized refiners to choose one of several differentoxygenates. However, every refiner determined, for avariety of reasons, that it had no choice in the NewHampshire market: MTBE was the only feasibleoxygenate for use in meeting the federal government’sRFG mandate. EPA approved use of MTBE as anoxygenate despite its awareness that MTBE posed arisk to groundwater.
For 11 years (from 1995 to 2006), gasolinedelivered by refiners to the New Hampshire marketcontained MTBE. During that period, state officialsbecame increasingly concerned that accidental gasolinespills could result in MTBE contamination ofgroundwater. In 2004, the New Hampshire legislatureenacted legislation banning the sale of MTBE gasoline,
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effective in 2007. Before that ban took effect, EPAgranted New Hampshire’s request to opt out of theRFG program, and Congress repealed the oxygenaterequirement in 2006.
In 2003, New Hampshire filed suit againstseveral gasoline suppliers, refiners, and chemicalmanufacturers seeking damages for groundwatercontamination allegedly caused by MTBE. Before thecase came to trial in 2013, all the defendants hadsettled except for Petitioners Exxon Mobil Corp. andExxonMobil Oil Corp. (collectively, “Exxon”).
New Hampshire did not allege that Exxon wasresponsible for any specific gasoline spills that led togroundwater contamination. Rather, it sought to holdExxon liable based solely on Exxon’s having refinedand sold MTBE gasoline for use in the New Hampshiremarket. The State adopted this litigation tactic as ameans of attempting to hold Exxon liable for a share ofall estimated groundwater contamination in the State,without having to prove direct causation with respectto the contamination of any individual well. In otherwords, the sole basis for Exxon’s alleged liability was itsdecision to meet the RFG Program’s oxygenaterequirement by adding MTBE to the gasoline it refinedfor use in New Hampshire.
Exxon repeatedly urged the trial court to holdthat New Hampshire’s claims were preempted byfederal law. It argued that the conduct that (accordingto New Hampshire) was a violation of a state common-law duty—the refining and sale of MTBE gasoline forthe New Hampshire market—was required by federallaw. There was no feasible means by which Exxon
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could meet the requirements of the federalgovernment’s RFG program other than by usingMTBE.
The trial court rejected all such entreaties,finding as a matter of law that federal law did notimpliedly preempt New Hampshire’s claims. OnAugust 22, 2012, it denied Exxon’s preemption-basedmotion for summary judgment. Pet. App-90 to App-97. At the close of the State’s case-in-chief, it deniedExxon’s motion for a directed verdict. Pet. App-136 to148. The order denying that motion summarilydismissed Exxon’s preemption claims, stating that they“are legal claims this Court has already decided andwill not revisit.” Pet. App-147. After the jury verdict,Exxon moved to set aside the verdict and for a newtrial, arguing in part that the trial court “failed toinstruct the jury on ExxonMobil’s affirmative defenseof preemption or include it in the jury form,” and thatthere were sufficient facts from which the jury couldhave concluded that “MTBE was the only feasibleoxygenate for use in New Hampshire.” Pet. App-17 toApp-18.
In denying post-trial motions, the district courtacknowledged that Exxon had adequately raised itspreemption defense pre-trial and in its directed verdictmotion, but it again rejected the defense as a matter oflaw:
To the extent Exxon argues the jury should havebeen instructed on preemption in order to findfacts from which the Court could furtherevaluate preemption, the Court considered andrejected this argument in its [order denying
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Exxon’s motion for a directed verdict]. . . . Exxonalleges the State’s claims are preempted by thefederal Clean Air Act and its RFG program. TheCourt rejected this legal argument. There are nofacts that a jury could find that would alter thelegal analysis this Court already undertook.
Pet. App-18 (emphasis added).
The jury awarded total damages of $817 million. After determining that Exxon’s market share forgasoline in New Hampshire during the applicable timeperiod was 28.94%, it entered a judgment againstExxon for $236 million plus prejudgment interest.
The New Hampshire Supreme Court affirmedthe judgment against Exxon. Pet. App-1 to App-87. Itstated, “We hold as a matter of law that the State’sclaims are not preempted by federal law.” Pet. App-27(emphasis added). It expressed agreement with afederal district court decision “rejecting Exxon’sarguments that because there was no safer, feasiblealternative to MTBE, it was impossible for Exxon tocomply with federal requirements without usingMTBE.” Pet. App-26.
SUMMARY OF ARGUMENT
This case presents issues of exceptionalimportance. Major refiners and distributors of gasolineare facing scores of similar MTBE lawsuits across thecountry. The potential liability amounts to hundredsof billions of dollars. And all of these state-law tortsuits are premised on a claim that the defendants didwhat was required of them by the federal Clean Air
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Act: they complied with the RFG program in the onlyfeasible manner (and in the manner they wereencouraged to by federal and New Hampshire officials)by adding MTBE to their gasoline. In this and manyother MTBE suits, the defendants are not accused ofnegligently handling gasoline or otherwise directlycausing spills. The sole basis for the claims (variouslystyled as claims for negligence, defective design, andfailure to warn of MTBE’s dangerousness) is that thedefendants never should have introduced MTBEgasoline into the stream of commerce. Review isurgently needed to determine whether claims based onthis theory are impliedly preempted because theyconflict with federal law.
It has long been settled that state laws thatconflict with federal law are “without effect” and thuspreempted. Maryland v. Louisiana, 451 U.S. 725, 746(1981). Even when a State purports to be acting withinits acknowledged sphere of power, its laws arepreempted whenever it is “impossible for a privateparty to comply with both state and federalrequirements,” or where “state law stands as anobstacle to the accomplishment and execution of thefull purposes and objectives of Congress.” English v.General Electric Co., 496 U.S. 72, 79 (1990). Exxon hasmade a compelling case that New Hampshire’s claimsare conflict-preempted—whether analyzed under the“impossibility” prong or the “obstacle” prong of conflictpreemption.
The lower courts ruled otherwise based on afundamental misunderstanding of preemption law. Focusing on EPA regulations that permitted refiners tosatisfy RFG program requirements by using any one of
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several different oxygenates, they reasoned that federallaw did not require Exxon to use MTBE in NewHampshire—and thus that it was not impossible forExxon to comply both with federal law and with NewHampshire’s mandate that it not use MTBE. See, e.g.,Pet. App-22. But conflict preemption analysis is notconfined to an analysis of whether a federal statute onits face requires an act that is prohibited under statelaw. Rather, the Court analyzes whether compliancewith both federal and state requirements is“impossible—in fact or by law.” Bartlett, 133 S. Ct. at2480 (emphasis added). Impossibility preemption isjust as applicable when federal law on its face permitsa company to comply with a state mandate but theevidence demonstrates that, as a practical matter,compliance with the state mandate is not feasible.
Exxon’s evidence did not merely demonstratethat using another oxygenate (such as ethanol) wouldhave been inconvenient and led to increased costs. Rather, it demonstrated that during the years thatNew Hampshire participated in the RFG program,using ethanol in the State would have been impossiblewithout substantial interruptions in supply. See, e.g.,Pet. at 30 (citing, inter alia, evidence of inadequateethanol supply, impossibility of shipping ethanol-blended gasoline by pipeline, and incompatibility ofethanol with existing distribution and storagesystems).
Of course, Exxon had one simple means by whichit could have complied with both federal and NewHampshire requirements: it could have stoppedsupplying gasoline to New Hampshire during the yearsnecessary to reconfigure its operations so as to make
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them compatible with ethanol use. But the Court hasemphasized that simply because an actor can “avoidliability” by “ceas[ing] to act altogether” is not reasonto reject a conflict preemption claim. Bartlett, 750 F.3dat 2477 (explaining that “if the option of ceasing to actdefeated a claim of impossibility, impossibilitypreemption would be all but meaningless”).
Indeed, New Hampshire implicitly recognizedthat Exxon and other suppliers lacked the ability tosupply ethanol-blended gasoline in the near term,when its legislature adopted an MTBE ban in 2004. The legislation included a three-year phase-out period,a recognition that Exxon and others would have beenforced to stop supplying gasoline in the near term if theban had been effective immediately.
Both the trial court and the New HampshireSupreme Court rejected Exxon’s conflict preemptionclaims “as a matter of law,” Pet. App-27 and App-18,thereby precluding Exxon from even seeking the jury’sfactual determination that the use of ethanol as anoxygenate during the relevant years was infeasible. That rejection conflicts directly with Bartlett’s holdingthat a state law is preempted when it is “in fact”infeasible for an actor to comply with both the state lawand federal law except by ceasing its operations.
The decision below also appears to conflict withpost-Bartlett decisions from the federal appeals courts. The New Hampshire Supreme Court’s no-preemptionconclusion could plausibly be explained as follows: even if federal law gave Exxon no feasible option but touse MTBE, our tort judgment does not conflict withthat federal mandate. Federal law does not give oil
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refiners the right to market their products in NewHampshire; and if Exxon chooses to do business in theState, it can comply with both federal and state lawsimply by using MTBE and then agreeing to pay NewHampshire a penalty for any damages caused by itsintroduction of MTBE into the State. See, e.g., Pet.App-26.
That rationale is in considerable tension withother post-Bartlett appellate decisions addressingimpossibility preemption. In particular, a recent FifthCircuit decision, Lashley v. Pfizer, Inc., 750 F.3d 470(5th Cir. 2014), rejected efforts by plaintiffs to evadeBartlett’s holding that conflict preemption barredfailure-to-warn lawsuits against generic drugmanufacturers. The Fifth Circuit held that Bartlett’srationale also required preemption of non-failure-to-warn claims, such as the plaintiffs’ “conten[tion] thatgeneric manufacturers should be liable for anydamages caused by the production and/or distributionof an unsafe product.” 750 F.3d at 475. That holdingcannot be squared with the New Hampshire SupremeCourt’s conclusion that Exxon can be held liable fordistributing of an unsafe product in New Hampshire,without regard to whether Exxon had a feasiblealternative for complying with federal law. Review iswarranted to clear up the apparent confusion regardingBartlett’s holding.
Review is also warranted of the first questionpresented by the petition: whether New Hampshire’suse of a “trial by formula”—a trial plan that preventedExxon from raising individualized defenses toallegations that its actions caused the contamination of
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groundwater throughout the State—violated Exxon’sdue process rights. The Court held in Wal-Mart Stores,Inc. v. Dukes, 131 S. Ct. 2541, 2561 (2011), that theRules Enabling Act prohibits certifying a plaintiff classin federal court proceedings on the premise that thecourt will conduct a “Trial by Formula” of the sortconducted in the New Hampshire trial court. Reviewis warranted to determine whether the Due ProcessClause requires that similar procedural fairness beafforded defendants in state-court proceedings.
REASONS FOR GRANTING THE PETITION
I. THE DECISION BELOW REWRITESCONFLICT PREEMPTION CASE LAW BYPREVENTING DEFENDANTS FROMD E M O N S T R A T I N G F A C T U A LIMPOSSIBILITY
The courts below rejected Exxon’s conflictpreemption claim “as a matter of law.” Pet. App-27 andApp-18. Indeed, the trial court refused to allow Exxonto submit preemption-related factual issues to the jurybecause, in its view, “[t]here are no facts that a jurycould find that would alter the legal analysis this Courtalready undertook” regarding preemption. Pet. App-18(emphasis added). In other words, according to thecourts below, Exxon’s conflict preemption claim wasunavailing even if Exxon’s evidence demonstrated thatuse of any oxygenate other than MTBE was infeasible. The courts concluded that because EPA regulationsexpressly authorized refiners to comply with the RFGprogram by using oxygenates other than MTBE, Exxonfailed to demonstrate that it was impossible to comply
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with both federal law and state law.
The lower courts’ approach to impossibilitypreemption conflicts sharply with this Court’s case law,which requires examination of whether compliancewith both state and federal law is either legally orfactually impossible. Review is warranted to resolvethat conflict.
A. Impossibility Preemption AppliesWhen a Party Cannot FeasiblyComply with Both Federal and StateLaw, Even When Federal Law DoesNot Expressly Forbid Compliancewith State Law
The Supremacy Clause establishes that federallaw “shall be the supreme Law of the Land; and theJudges in every State shall be bound thereby, anyThing in the Constitution or Laws of any State to theContrary notwithstanding.” U.S. Const., Art. VI, cl. 2. In applying the Supremacy Clause, the Court long agodetermined that state laws that conflict with federallaw are “without effect” and thus preempted. Maryland v. Louisiana, 451 U.S. at 746. Even when aState purports to be acting within its acknowledgedsphere of power, its laws are preempted whenever it is“impossible for a private party to comply with bothstate and federal requirements,” or where “state lawstands as an obstacle to the accomplishment andexecution of the full purposes and objectives ofCongress.” English v. General Electric Co., 496 U.S. 72,79 (1990). State law that conflicts with federal law ispreempted regardless whether any federal statute
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expressly states that conflicting state laws arepreempted: “The Supremacy Clause, on its face, makesfederal law ‘the supreme Law of the Land’ even absentan express statement by Congress.” PLIVA, Inc. v.Mensing, 131 S. Ct. 2567, 2579 (2011).
The conflict preemption question in this caserequires a determination regarding whether it wasimpossible for Exxon to comply both with the NewHampshire common-law requirement appliedretroactively in this case (a prohibition on the sale ofMTBE gasoline in New Hampshire) and the federalrequirement imposed by the RFG program (gasolinerefined for sale in covered areas must have a minimum2% oxygen content, to be achieved by adding one ofseveral oxygenates specified by EPA, including MTBE). If compliance with both requirements was impossible,then New Hampshire’s no-MTBE mandate is conflict-preempted, and the judgment below cannot stand.
Of course, a company seeking to navigate stateand federal regulatory requirements will almost alwayshave one straightforward means of complying withboth sets of requirements: suspend its businessoperations. Most government regulations do notimpose affirmative obligations on passive individuals;rather, they impose obligations only on those who areconducting a business that is subject to governmentoversight. Thus, in most instances a company couldbring itself into compliance with both state and federalregulations by ceasing operations altogether. TheCourt, however, has emphatically rejected theavailability of a “stop-selling” option as a basis forrejecting impossibility preemption. Bartlett, 133 S. Ct.
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at 2478 (stating that “[w]e reject this ‘stop-selling’rationale as incompatible with our pre-emptionrationale.”).
Bartlett also involved a tort claim arising underNew Hampshire law. A drug manufacturer facedconflicting requirements imposed by federal and statelaw. Federal law required that the manufacturer’sdrug be labeled in the precise manner prescribed by theFood and Drug Administration (FDA), while NewHampshire common law required that additionalhealth warnings be included on the label. The FirstCircuit denied the manufacturer’s impossibilitypreemption defense, concluding that the manufacturercould have complied both with federal law and withstate law by ceasing sales of its drug. This Courtrejected the First Circuit’s stop-selling rationale,stating:
Our preemption cases presume that an actorseeking to satisfy his federal- and state-lawobligations is not required to cease actingaltogether in order to avoid liability. Indeed, ifthe option of ceasing to act defeated a claim ofimpossibility, impossibility pre-emption wouldbe all but meaningless. . . . . The incoherence ofthe stop-selling theory becomes plain whenviewed through the lens of our previous cases. In every instance in which the Court has foundimpossibility preemption, the “direct conflict”between federal- and state-law duties couldeasily have been avoided if the regulated actorhad simply ceased acting.
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Ibid.
Bartlett’s rejection of the “stop-selling rationale” does not distinguish between conflicts that require acompany to cease operations for the indefinite future(i.e., for so long as the conflicting state and federalrequirements remain in place) and conflicts thatrequire a company to cease operations for an extendedperiod of time until it can develop a feasible means ofcomplying with both the state and federalrequirements. Bartlett’s rationale is equally applicablein both instances.
“The question for ‘impossibility’ is whether theprivate party could independently do under federal lawwhat state law requires it to do.” Mensing, 131 S. Ct.at 2579 (emphasis added). In some instances (as inBartlett), the impossibility of complying simultaneouslywith federal and state requirements is apparent fromthe face of the federal requirements. The federalrequirements at issue in Bartlett specified the preciselanguage to be included on the manufacturer’s druglabel, language that differed from the labeling languagemandated by New Hampshire. The Court hasrecognized, however, that in other instances theimpossibility of complying with both federal and staterequirements will not be so readily apparent andinstead will require a detailed examination of theunderlying facts to determine whether “impossibility”exists. See, e.g., Mensing, 131 S. Ct. at 2580 (“To besure, whether a private party can act sufficientlyindependently under federal law to do what state lawrequires may sometimes be difficult to determine.”).
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But Mensing and Bartlett both make clear thatthe absence of language in the federalstatute/requirement that facially conflicts with thestate requirement is not grounds for precluding afinding of impossibility preemption. See, e.g., Bartlett,133 S. Ct. at 2480 (when addressing conflictpreemption claims, the Court analyzes whethercompliance with both federal and state requirements is“impossible—in fact or by law.”) (emphasis added).
B. The Courts Below RejectedPreemption as a Matter of Law,Thereby Preventing Petitioners fromDemonstrating Factual Impossibility
Exxon has made a compelling case that NewHampshire’s tort claims are conflict-preempted becausemarket conditions during the relevant time periodrendered it infeasible for Exxon to satisfy RFG programrequirements by using any oxygenate other thanMTBE. WLF does not suggest that it would have beenimpossible for all time for Exxon to supply NewHampshire with gasoline using ethanol as theoxygenate; it most likely could have done so after aseveral-year delay. But compliance with both NewHampshire and federal law would have required it tocease New Hampshire operations for several yearswhile it reconfigured its operations so as to make themcompatible with ethanol use. Bartlett dictates that theavailability of that stop-selling option does nothing toundermine Exxon’s preemption claim.
The Petition has explained at length why it wasinfeasible for Exxon to comply with the RFG program
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by including ethanol in its New Hampshire-boundgasoline. WLF will not repeat that entire explanationhere. In brief, Exxon’s evidence demonstrated, interalia, the inadequacy of ethanol supply in this country,the impossibility of shipping ethanol-blended gasolineby pipeline, and the incompatibility of ethanol withexisting distribution and storage systems. The factthat every refiner in the Northeast used MTBE tosatisfy RFG program requirements is additionalevidence that use of ethanol was not feasible.
Indeed, New Hampshire’s own conductdemonstrates that it recognized that use of ethanol wasnot a feasible near-term option. For example, in 1999and 2001, senior New Hampshire environmentalofficials opposed pending legislation that would havebanned MTBE because doing so would “effectivelycreate an ethanol mandate” and ethanol was “notcommercially available.” Pet. 30. When the NewHampshire legislature adopted an MTBE ban in 2004, the legislation included a three-year phase-out period,a recognition that Exxon and others would have beenforced to stop supplying gasoline in the near term if theban had been effective immediately.
The lower courts rejected Exxon’s conflict-preemption claim based on a fundamentalmisunderstanding of preemption law. Focusing onEPA regulations that permitted refiners to satisfy RFGprogram requirements by using any one of severaldifferent oxygenates, they reasoned that federal lawdid not require Exxon to use MTBE in NewHampshire—and thus that it was not impossible forExxon to comply both with federal law and with New
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Hampshire’s mandate that it not use MTBE . See, e.g.,Pet. App-22.
But as the preceding discussion of Mensing andBartlett indicates, conflict-preemption analysis is notconfined to an analysis of whether a federal statute onits face requires an act that is prohibited under statelaw. Rather, the Court analyzes whether compliancewith both federal and state requirements is“impossible—in fact or by law.” Bartlett, 133 S. Ct. at2480 (emphasis added). Impossibility preemption isjust as applicable when federal law on its face permitsa company to comply with a state mandate but theevidence demonstrates that, as a practical matter, thecompany cannot feasibly comply with federal law if itabides by the state mandate. By determining thatimpossibility preemption should be rejected “as amatter of law” because federal regulations explicitlyauthorized use of ethanol, Pet. App-27, and that thereexist “no facts that a jury could find that would alter”the trial court’s rejection of a conflict preemptiondefense, Pet. App-18, the decisions below directlyconflict with Mensing and Bartlett. Even if, as NewHampshire contends, some evidence suggests that itwas feasible for Exxon to use ethanol as an oxygenate,Mensing and Bartlett dictate that Exxon should havebeen permitted to attempt to prove the contrary.
Both the trial court and the New HampshireSupreme Court focused their conflict preemptionanalysis on this Court’s decision in Geier v. American
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Honda Motor Co., 529 U.S. 861 (2000).2 That focus isentirely misplaced, given that Exxon’s preemptionargument in the New Hampshire Supreme Court didnot rely on Geier. The court’s inexplicable focus onGeier apparently caused it to overlook the centralpremise of Exxon’s preemption argument: that NewHampshire’s no-MTBE mandate conflicted with federallaw because compliance both with that mandate andwith federal law was infeasible. The New HampshireSupreme Court is correct that Geier does not supportExxon’s conflict-preemption argument, but Exxon doesnot contend otherwise.
The New Hampshire Supreme Court’s relianceon In re MTBE Prods. Liability Litig., 725 F.3d 65 (2dCir. 2013), is similarly misplaced. The court cited theSecond Circuit’s decision as one whose conflict-
2 Geier held that federal vehicle-safety requirementsimpliedly preempted a state tort-law requirement that cars beequipped with air bags, because (the Court concluded) the federalstandard was adopted for the purpose of ensuring that some, butnot all, cars would be equipped with air bags—thereby making itmore likely that consumers would ultimately accept the newtechnology. 529 U.S. at 875. The New Hampshire Supreme Courtrejected Exxon’s preemption claim in substantial part because,unlike the federal vehicle-safety requirements at issue in Geier(which granted automakers an option to either install or not installairbags), the RFG program was not designed for the purpose ofgranting refiners the right to use whichever oxygenate theydeemed most appropriate. Pet. App-24 (stating that “Exxon doesnot point to any part of the Clean Air Act or its legislative historythat supports a conclusion that the choice among oxygenateoptions was a significant objective of the federal law”). ButExxon’s conflict-preemption argument focuses on the infeasibilityof ethanol, not on claims the RFG program granted refiners anunrestricted right to choose either ethanol or MTBE.
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preemption analysis it agreed with. Pet. App-26. Butthe Second Circuit rejected preemption claims assertedby a refiner/distributer of MTBE gasoline because thejury found that the defendant “fail[ed] to exercisereasonable care when storing gasoline that containedMTBE,” 725 F.3d at 104, not simply because (as allegedhere) the defendant used MTBE to satisfy RFGprogram requirements. The Second Circuit decisionstands for the unremarkable proposition that even iffederal law made it infeasible for refiners to useethanol to satisfy RFG program requirements, it wasnot impossible for the defendant to comply with thoserequirements while simultaneously complying withstate-law requirements that MTBE be handled in anon-negligent manner.
Finally, Exxon’s evidence demonstrated thatNew Hampshire’s claims were also impliedlypreempted under the “stands as an obstacle” branch ofconflict preemption. All agree that a principal purposeof the federal Clean Air Act is the improvement of airquality. Had Exxon and other refiners chosen tocomply with the conflicting demands of federal andNew Hampshire law by ceasing operations in the State,motorists would have been required to drive toneighboring States to refill their gas tanks. Thatscenario would entail increased driving and thusincreased discharge of noxious exhaust chemicals intothe atmosphere—a result that would clearly stand asan obstacle to accomplishment of the Clean Air Act’sgoals. See Bartlett, 133 S. Ct. at 2481 (Breyer, J.,dissenting) (arguing that although it is not “impossible”for a company to comply with both federal and statelaw if it can do so by ceasing business operations,
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requiring a withdrawal from the market as a means ofavoiding conflicting laws is subject to conflictpreemption if the state law “stands as an obstacle tothe accomplishment of the federal law’s objectives.”)
C. The Decision Below Conflicts withOther Post-Bartlett DecisionsRegarding the Scope of ImpossibilityPreemption
If the decision below is viewed as an effort by theNew Hampshire Supreme Court to interpret and applyMensing and Bartlett, the decision appears to conflictwith post-Bartlett decisions from the federal appealscourts. Review is warranted to resolve the apparentconfusion regarding Bartlett’s meaning.
The New Hampshire Supreme Court’s no-preemption conclusion could plausibly be explained asfollows: even if federal law gave Exxon no feasibleoption but to use MTBE, our tort judgment does notconflict with that federal mandate. Federal law doesnot give oil refiners the right to market their productsin New Hampshire; and if Exxon chooses to do businessin the State, it can comply with both federal and statelaw simply by using MTBE and then agreeing to payNew Hampshire a penalty for any damages caused byits introduction of MTBE into the State. See, e.g., Pet.App-26.
That rationale is in considerable tension withother post-Bartlett appellate decisions addressingimpossibility preemption. In particular, a recent FifthCircuit decision, Lashley v. Pfizer, Inc., 750 F.3d 470
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(5th Cir. 2014), rejected efforts by plaintiffs to evadethe holdings of Mensing and Bartlett that conflictpreemption barred failure-to-warn lawsuits againstgeneric drug manufacturers.3
Like Bartlett, Lashley also involved a productliability claim against a generic drug manufacturer. The plaintiffs argued that: (1) the manufacturer wasdistributing an unsafe product; (2) FDA approval of thedrug did not bestow a federal right to market it, andthus imposing monetary sanctions under state-law non-failure-to-warn claims did not conflict with anyfederal right; and (3) Bartlett did not mandatepreemption of tort claims that were not explicitlypremised on a failure to provide additional healthwarnings. The Fifth Circuit rejected that argumentand held that Bartlett required preemption of theplaintiffs’ non-failure-to-warn claims: “State law claimsfor damages are not available as an end-run aroundpreemption.” Lashley, 750 F.3d at 476.
In sharp contrast to the Fifth Circuit’s approach,the New Hampshire Supreme Court rejected Exxon’sconflict preemption claim despite Exxon’s evidence thatusing MTBE was the only feasible means by which itcould comply with federal requirements. Review iswarranted to resolve the clear tension between Lashley
3 As noted above, Bartlett held that New Hampshire’sefforts to require generic manufacturers to add new healthwarnings to their drug labels was subject to impossibilitypreemption because FDA had prescribed the precise label wordingfrom which the manufacturer was not permitted to deviate. Bartlett, 133 S. Ct. at 2477.
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and the decision below.
II. REVIEW IS ALSO WARRANTED TOCONSIDER PETITIONERS’ “TRIAL BYFORMULA” CLAIM
Review is also warranted of the first questionpresented by the petition: whether New Hampshire’suse of a “trial by formula”—a trial plan that preventedExxon from raising individualized defenses toallegations that its actions caused the contamination ofgroundwater throughout the State—violated Exxon’sdue process rights. The Court held in Wal-Mart Stores,Inc. v. Dukes, 131 S. Ct. 2541, 2561 (2011), that theRules Enabling Act prohibits certifying a plaintiff classin federal court proceedings on the premise that thecourt will conduct a “Trial by Formula” of the sortconducted in New Hampshire trial court. The Courtconcluded that such proceedings improperly abridgethe rights of defendants to raise defenses to individualclaims. Ibid. Review is warranted to determinewhether the Due Process Clause requires that similarprocedural fairness be afforded defendants in state-court proceedings.
Indeed, the procedural unfairness here is farworse than anything proposed in Wal-Mart. NewHampshire’s “Trial by Formula” included adoption ofmarket-share liability. That is, the trial courtpermitted the State to extrapolate Exxon’s liabilitybased not simply (as in Wal-Mart) on a sampling of asmall subset of the defendant’s activities but rather ona sampling of a small subset of wells—without regardto whether Exxon’s activities could have had any
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impact on the tested wells. The net effect of the trialcourt’s unique evidentiary rulings was to relieve theState of any obligation to demonstrate that Exxon’sactivities bore any relationship to the wells for whosealleged contamination Exxon is being held responsible.
The New Hampshire courts’ adoption of trialprocedures that deprived Exxon of important rights isparticularly disturbing because it arises in a case inwhich New Hampshire itself is the plaintiff. ThisCourt holds that “[a] fair trial in a fair tribunal is abasic requirement of due process.” In re Murchison,349 U.S. 133, 136 (1955). The fairness of theproceedings below is subject to serious question whenthe State itself is the chief beneficiary of the NewHampshire Supreme Court’s decision to affirm thelargest tort award in state history and to approvetroublesome trial-court procedural shortcuts thatredounded to the plaintiff’s benefit. The State hasawarded itself a large jackpot, yet there is scantevidence that it plans to use the proceeds forenvironmental clean-up, the ostensible purpose for theaward of damages.
Finally, it is also troublesome that thepreemption issue that is the major focus of this briefarises only because New Hampshire has been soinsistent on conducting the sort of “trial by formula”condemned in Wal-Mart. Had New Hampshire beencontent to seek groundwater contamination damagesfrom those directly responsible for the spills that led tocontamination (as some previous MTBE plaintiffs havedone), preemption would not have been an issue. Eventhough federal law left suppliers with no feasible
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options other than the distribution of MTBE gasoline,no one was required by the federal government tohandle the gasoline in a negligent manner leading tospills and leakage. Accordingly, conflict preemptionwould play little if any role in traditional tort suits ofthat sort. But by seeking to hit the litigation jackpotby imposing massive liability on deep-pocketed entitiesthat were attempting in good faith to comply withfederal environmental requirements, New Hampshireand its contingency-fee attorneys seemingly have goneout of their way to create the federal preemption issuethat sooner or later the Court will be forced to confront.
CONCLUSION
The Court should grant the Petition.
Respectfully submitted,
Richard A. Samp (Counsel of Record)Mark S. ChenowethWashington Legal Found.2009 Massachusetts Ave, NWWashington, DC [email protected]
