In a ruling with implications for cities across the United States, appellate justices this week rejected Modesto’s request to reinstate a $75 million judgment against a producer of toxic dry cleaning chemicals. However, the ruling also paves the way for a new trial under conditions favorable to Modesto.
City Attorney Adam Lindgren called the decision “a major victory for the city of Modesto in its long-running efforts and battle” against Dow Chemical Co. Dow claimed partial victory as well, and will consider appealing portions favoring Modesto, a company spokesman said Friday.
The ruling, dated Monday, is the latest in a legal war stretching two decades over who should be responsible for a chemical that polluted soil and groundwater under several dry cleaners sprinkled throughout Modesto.
“This case has followed a complex and tortuous path,” acknowledged First Appellate District justices Maria Rivera, Ignazio Ruvolo and Jon Streeter, in the ruling.
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Modesto drinking water is safe, officials have said throughout the years, but capturing the toxic chemical in soil vapor and keeping it from reaching the aquifer is expensive.
California became the first state to ban perchloroethylene, also called perc and PCE, in 2007, although dry cleaners have until 2023 to completely phase out PCE equipment. Perhaps half across California already have gone to other hydrocarbon- or water-based methods, said Peter Sinsheimer, executive director of UCLA’s Sustainable Technology & Policy Program.
Modesto had become a poster child of sorts when the city in 1998 sued Dow and other PCE manufacturers and distributors. Although the firms had known for 20 years that PCE was dangerous, they had instructed dry cleaners to dispose of PCE waste in drains or simply on the ground, court documents say.
The U.S. Environmental Protection Agency calls PCE a “likely carcinogen” that destroys organs like livers and kidneys and attacks immune, reproductive and central nervous systems. One cup could contaminate 24 million gallons of groundwater, according to state health standards.
“In every case I’m aware of, the dry cleaners did not understand their activities would cause this risk,” Sinsheimer said. “Primarily, the owners are first-generation immigrants trying to make a living as best they can, working really, really hard, and weren’t aware this was an issue.”
Modesto sued more than a dozen shops, and also opted to go after chemical manufacturers. Most settled before trial, bringing the city more than $37 million in settlements. That money has allowed City Hall over the years to collect 3,000 pounds of PCE at four properties formerly occupied by dry cleaners, Lindgren said.
But Dow and others “continued to insist they should not be held liable for contamination caused by PCE,” Lindgren said.
A San Francisco jury stunned observers in 2006 by ordering Vulcan Materials Co. to pay Modesto $100 million, and Dow Chemical, based in Michigan, another $75 million, all in punitive damages. Shortly after, the judge reduced the penalties to $7.25 million and $5.44 million, respectively; Vulcan settled out of court in 2007, but Dow continued fighting and the legal battle eventually produced the equivalent of five trials and three appeals.
Among other issues, the city most recently sought to have the higher punitive damages award reinstated, while Dow hoped to have it erased.
Monday’s latest ruling “establishes standards favorable to the city in further proceedings,” Lindgren said. Such would take place in San Francisco, where other phases of the case have been held.
“We are pleased,” Modesto Mayor Ted Brandvold said. “This will help protect Modesto residents, and places the costs of cleaning up PCE contamination where it belongs, which is on those responsible for the contamination.”
Dow also “is pleased that the (First California) Court of Appeals correctly reversed the punitive damages verdict,” spokesman Jarrod Erpelding said in an email. “Nevertheless, we are disappointed at the potential for more litigation in this very old case. Dow is considering all further appeal options.”
The three justices, in Monday’s ruling, said they were “loathe to overturn a jury’s finding under any circumstances, and particularly a finding that punitive damages should be imposed due to the reprehensible conduct of a corporate actor.” But they felt bound by “controlling legal principles” in erasing the damages, they said.
The justices noted the “protracted litigation and the lengthy delays that have beset this matter,” adding “our own concerns about our already overburdened courts. We accordingly strongly encourage the parties to consider any and all creative approaches that might put an end to the litigation.”
Dow sold most of its PCE production business two years ago.
Water-based laundering, also called wet cleaning, is environmentally friendly and just as effective at removing stains, including those on delicate apparel, Sinsheimer said.
The Bee’s Kevin Valine contributed to this report.
Garth Stapley: 209-578-2390