Parko Provides Guidance on Contamination Class Actions

Parko: Posner Demands That the District Court Engage the Facts

Parko is the quintessential environmental putative class action. In Parko, landowners from a small village in southwestern Illinois alleged that over 90 years of operations from a nearby oil refinery had contaminated groundwater under their homes and had diminished their property value.

Seizing on language from Judge Posner’s recent grant of class certification in Butler v. Sears, Roebuck & Co., 727 F.3d 795 (7th Cir. 2013), the district court certified the class on the question of whether benzene originating at the refinery resulted in contamination to the landowners’ property. Parko, 2013 WL 4721382, at *8. In doing so, the court rejected the defendants’ argument that class treatment was inappropriate because the plaintiffs could not prove individualized harm through class-wide evidence. According to the court, this argument was “merits-focused,” and plaintiffs only had to show “common proof of evidence and methodology” for damages at the certification stage.

Judge Posner, writing for a unanimous Seventh Circuit panel, reversed. Posner chastised the district court for “put[ting] the cart before the horse.” Parko, 727 F.3d at 1085. Framing his opinion with Comcast, he opined that a court must receive evidence on the “realism of plaintiffs’ injury and damage model in light of defendants’ counterarguments” before deciding whether to certify a class. Without such inquiry, according to Posner, predominance could not be satisfied as individualized issues could vary from homeowner to homeowner. Of these issues, Posner highlighted that the contaminated groundwater was not being used as a drinking-water supply. Likening the contamination to such underground interlopers as earthworms, slugs, and radon, Posner reflected, “as long as there is no danger . . . [benzene’s] underground presence should not affect property values.” Therefore, without any specified loss, he suggested that the class should not be certified.

The Class Action Remains Ill-Suited to Resolve Contamination Claims

Often in 23(b)(3) mass-tort cases, individualized issues of injury and damages abound. This is particularly true in environmental-contamination actions where class members seek damages for exposure to allegedly toxic substances drawn out over a long time. See, e.g.,Gates v. Rohm & Haas Co., 655 F.3d 255 (3d Cir. 2011); Fisher v. Ciba Specialty Chems. Corp., 238 F.R.D. 273 (S.D. Ala. 2006); LaBauve v. Olin Corp., 231 F.R.D. 632 (S.D. Ala. 2005).

Of course, there are exceptions to this general rule of preclusion. But these exceptions have discrete facts—a single accident, one or few defendants, and readily identifiable contamination within a specific geographical location. See, e.g., Mejdrech v. Met-Coil Systems Corp., 319 F.3d 910 (7th Cir. 2003) (Posner, J.) (contamination of local drinking water from a single storage container); Sterling v. Velsicol Chem. Corp., 855 F.2d 1188, 1196–97 (6th Cir. 1988) (release of toxic chemicals from one landfill). With a long exposure period and individualized losses, Parko falls squarely within the general rule’s purview. 

What Is Parko’s Effect?

Parko offers three takeaways for environmental-contamination class actions: (1) Lower courts should heed directives from recent Supreme Court class-action jurisprudence; (2) authority should be carefully cited; and (3) certification hinges on key questions.

Parko Endorses the Supreme Court’s “Rigorous Analysis” 

Two recent Supreme Court cases—Dukes and Comcast—ratchet up the scrutiny that the district court must apply before granting certification. Dukes advocates a “rigorous analysis” that “probe[s] behind” the pleadings. 131 S. Ct. at 2552 (quoting Gen. Tel. Co. of Sw. v. Falcon, 102 S. Ct. 2364, 2364 (1982)). Comcast reinforces Dukes’s approach, clarifying that a court must bring this same scrutiny not only to liability but also to damages. 133 S. Ct. at 1433. Read together, Dukes and Comcast require courts to inquire behind the intentions of class counsel to show common evidence and a single methodology for both injury and damages.

Despite these directives from the Supreme Court, the Parko district court ducked this analysis: It did not receive evidence; it did not resolve disputes; and it did not even citeComcast once.

Judge Posner’s opinion castigates the district court’s approach and clarifies what must be done in a “rigorous analysis.” According to Posner, the district judge must engage the issues: dig behind the plaintiffs’ intentions, take evidence of central issues, and consider the plaintiffs’ alleged injury and damages in light of the defendants’ counterarguments. See Parko, 739 F.3d at 1086. Some of these considerations will overlap with the case’s merits, but as Justice Ginsburg recently wrote, “Merits questions may be considered to the extent . . . that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.” Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1194–95 (2013) (quoting Dukes, 131 S. Ct. at 2551).

Not All Putative Class Actions Are Alike

The Parko district court likely was surprised with Posner’s reversal because it had extensively cited Judge Posner as authority. Parko, 2013 WL 4721382, at *7 (“Butlereffectively shuts down Defendants’ arguments against predominance.”) How could the district court have read the judge so incorrectly?

One possibility is that the district court cherry-picked language from Posner’s Butler opinion without considering the differences between the cases’ factual underpinnings. Indeed, Butlerconcerned a putative consumer class action alleging defects in front-loading washing machines, far different from the landowners’ class in Parko. The quotations from consumer-related class actions—in Bulter’s case, “[T]he fact that damages are not identical across all class members should not preclude certification” (727 F.3d at 801)—may not transfer to the environmental-contamination context.

Judge Posner does not state this principle outright in Parko, but he certainly intimates it. When discussing the differences in injury and damages among Parko’s class members, Posner wrote, “[T]his doesn’t appear to be one of those small-claims suits that as a practical matter can proceed only as a class action (e.g. overcharges of $5.50 for rental cars).” Parko, 739 F.3d at 1086. Here, he implicitly contrasts the complex facts of environmental-contamination cases with the relatively straightforward facts of consumer-centric cases where potential members are readily identifiable and suffered identical injuries. By drawing this comparison, Posner suggests that environmental class actions are a different animal, and therefore, when choosing precedent to cite, both counsel and judges must regard the facts of a case before citing it as authority.

Parko Narrows the Issues for Class Certification

Parko also highlights the crucial issues for Rule 23(b)(3) environmental-contamination class actions. Posner lists the questions a court must consider for predominance:

Parko, 739 F.3d at 1087.

In the aggregate, these questions imply that courts should certify environmental-contamination class actions only when similarly situated class members suffer cognizable harm and quantifiable losses from a discrete source (or sources). Posner stops short of issuing this bright-line rule, but his concluding remarks hint that, to warrant class certification, the answers to these questions must clearly tilt in the plaintiff’s favor. See id. at 1088 (citingMejdrech v. Met-Coil Sys. Corp., 319 F.3d 910 (7th Cir. 2003)).

Conclusion 

The Parko opinions shape the contours of class-action jurisprudence in the environmental-contamination context. These opinions, regardless of their outcome, benefit plaintiff and defense counsel alike. They pinpoint the facts that are likely to be determinative in a certification petition and teach parties where to focus their arguments and what authority to cite. Both environmental-contamination plaintiffs and defendants should heed Parko’s teachings when litigating future class actions.

Keywords: environmental litigation, class action, contamination, Posner, class certification, mass tort

_{Meaghan Boyd is a senior associate with Alston & Bird, LLP, in Atlanta, Georgia, and is cochair of the ABA Section of Litigation Environmental Litigation Committee. Geoff Rathgeber is an associate in the firm's Atlanta office.}

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