Capital Briefs

Live Free or Die? New Hampshire added to “Hellholes” list

The American Tort Reform Foundation’s Judicial Hellholes program documents “developments in places where judges in civil cases systematically apply laws and court procedures in an unfair and unbalanced manner, generally against defendants.”

“Judicial Hellholes reports compile the most significant court rulings and legislative actions over the course of the year as documented in real-time online. The report also reflects feedback gathered from ATRA members and other firsthand sources.”

New Hampshire’s civil litigation system is in danger of falling into the Hellholes abyss with the same speed that the Granite State’s famous “Old Man of the Mountain” rock formation suddenly crumbled in 2003. The combination of contingency-fee lawyers, plaintiff-friendly judges, and ambitious politicians seeking reelection has created a liability lawsuit environment that threatens to undermine the legitimacy of New Hampshire’s legal system while endangering the state’s economic competitiveness.

In April 2013, Exxon Mobil Corporation was found liable in a case alleging that the gasoline additive MTBE (methyl tertiary-butyl ether) had contaminated groundwater. The trial in a New Hampshire Superior Court lasted more than three months, but the jury deliberated less than 90 minutes before awarding the state an astronomical $236 million. The verdict was by far the largest in Granite State history and one of the largest in all the United States during 2013.

Though it has since been phased out, MTBE is one of the “oxygenates” approved by the Environmental Protection Agency for use as an additive, required by the Clean Air Act, to make gasoline burn cleaner and reduce vehicle emissions. But product mishandling and sometimes leaky underground storage tanks resulted in instances of contaminated groundwater. Nevertheless, New Hampshire’s lawsuit is questionable for several reasons.

First, there is very little groundwater contamination reported in the state, and no reports exceeded the level that state environmental experts say requires environmental clean-up. In fact, the state’s water suppliers consistently tell the public that the drinking water is safe.

Second, rather than sue individual gas station owners, whose underground tanks may have leaked, New Hampshire went after the deep pockets of big refiners. And instead of using lawyers from the state attorney general’s office, New Hampshire hired private-sector personal injury lawyers on a contingency-fee basis to prosecute the case. Such arrangements, as documented over the years in this report and elsewhere, raise troubling questions about conflicts of interest, political cronyism, and even corruption.

Third, though New Hampshire’s contingency-fee lawyers promised the judge and jury during the trial that any verdict would be used to monitor and clean up MTBE contamination, they are now fighting against an Exxon motion to have the judgment paid into a trust expressly designated for MTBE clean-up. And spendthrift New Hampshire politicians also want to spend the money on things unrelated to groundwater contamination.

Governments in other states, including Massachusetts, Maryland, Illinois and Indiana have similarly treated MTBE settlements as no-strings-attached “windfalls,” suggesting that their lawsuits were little more than efforts to fatten government budgets without raising taxes, thereby increasing incumbent politicians’ reelection chances.

Finally, presiding Superior Court Judge Peter Fauver made several decisions that are inconsistent with long-settled New Hampshire law, all of which favored the plaintiff. For example, defense attorneys argue their client was deprived of a fair trial by rulings, before and during the trial, against the admissibility of certain evidence.

One such ruling precluded expert testimony from a former EPA official who would have testified about actions taken by New Hampshire under the reformulated gasoline (RFG) program that effectively mandated the use of MTBE. Judge Fauver also allowed plaintiff ’s counsel to advance the justifiably controversial theory of “commingled market share liability,” which the New Hampshire Supreme Court has not adopted.

If New Hampshire’s attorney general and other state officials think they can fleece out-of-state corporations as a means to easier reelection, the state will quickly come to find itself cited among Judicial Hellholes in future reports. And, sadder still, the state’s residents will eventually come to learn that such extortion-by-lawsuit drives employers and investors to other states, taking jobs and economic growth with them.

Read the full report here.

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