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Chemical Companies Cleared in California Groundwater Pollution Case

After five months of trial in San Francisco Superior Court, a jury cleared a handful of chemical companies on Monday of nearly all the claims brought against them by the city of Modesto, Calif., in the latest phase of a decade-old groundwater pollution case.

The jury did award Modesto about $18.3 million in damages to cover cleanup costs, but that amount could be nullified by settlements the city has already reached with other defendants.

The jury also decided that the remaining defendants, including the Dow Chemical Co., did not act with malice when they manufactured and distributed chemicals, such as perchloroethylene, to dry cleaners in Modesto. That rules out punitive damages, which could have been much larger.

Dow spokesman Jarod Davis wrote in an e-mail that the company was "pleased" by the verdict and that Modesto had failed to prove most of its claims.

Duane Miller, a partner at Sacramento, Calif.'s Miller, Axline & Sawyer who represents Modesto, disagreed, saying, "There's no question, overall, that the plaintiffs have been successful in this case."

Modesto sued a host of companies involved in the manufacture, distribution, sale and use of perchloroethylene, also known as PERC or PCE, in 1998. The city alleged, among other things, that the defendants made a defective product and negligently allowed the toxic chemical to threaten Modesto's drinking water by failing to recall the PCE or to warn dry cleaners about the dangers of letting PCE wash into sewers.

Since then, the case has passed from one San Francisco judge to another, and a team of defense attorneys brought in from around the country has succeeded in whittling down many of the claims against the companies.

Going to trial was a risk for both sides. Modesto knew that a jury considering the direct contamination of drinking water wells had, in 2006, awarded the city roughly $3.2 million in damages for clean-up costs and then slapped Dow and co-defendant R.R. Street & Co. Inc., an Illinois-based manufacturer, with $75 million and $75,000, respectively, in punitive damages. (Judge John Munter later reduced the punitives against Dow to $5.4 million.)

But the jury in the second trial would only be considering four dry cleaner sites where groundwater pollution could have threatened drinking water, a step removed from direct contamination, and the defendants knew that other companies had settled with Modesto for a combined $37 million, an amount they could potentially use to offset any damages awarded at trial.

Monday's verdict brought satisfaction to the defense attorneys, who invited the jury to a nearby Mexican restaurant afterward. It concluded a trial that began with opening statements on Nov. 17 and ended after a month of jury deliberations.

"My office is a mess right now ... as are a couple of the other offices around mine," said Brian Buddell, a partner at San Francisco's Brydon, Hugo & Parker who represents PCE distributor Goss-Jewett Co. of Northern California.

Goss-Jewett and R.R. Street both escaped any liability on Monday. Dow and Pittsburgh-based PPG Industries, another manufacturer, weren't so lucky. The jury found that Dow had failed to warn at least one dry cleaner about the dangers of PCE. The jury also held both Dow and PPG accountable for the PCE used by another dry cleaner, finding that the chemical's risk outweighed its benefits.

That means both Dow and PPG could be on the hook for the $18.3 million.

John Thomas, a partner at Houston's Hicks Thomas who represents R.R. Street, said that the defendants will seek to apply the money Modesto has reaped from settlements to essentially cancel out the compensatory damages the city has won at trial.

Miller, Modesto's lawyer, said the offset issue isn't as simple as comparing the verdict to the settlements; it should be site-specific. He says the defendants are trying to get a second crack at a decision a judge has already made -- that the settlement money should be earmarked for specific contamination sites.

Miller also said his "biggest single concern," which he plans to appeal, was a pretrial ruling from Judge Ernest Goldsmith that blocked the city from pursuing damages for the contamination of property such as sewers, streets and soil that wouldn't endanger the drinking water wells.

The jury also hung on some questions of liability, and was one vote away from barring the majority of Modesto's claims based on the statute of limitations. Davis, the Dow spokesman, said the company will ask for a retrial on that point, and plans to appeal the jury's finding of liability. He said that Dow continues to manufacture PCE and believes it is safe when dry cleaners and distributors follow "safe use and handling guidelines."

PPG spokesman Jeremy Neuhart and the company's lawyers declined to comment, though Neuhart wrote in an e-mail that PPG "believes that it has always acted as a responsible chemical manufacturer."

"We believe this litigation is far from over," added Neuhart.

(read online version)

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