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7th Circ. Nixes Class Cert. In ConocoPhillips Pollution Suit

A Seventh Circuit panel on Friday reversed a district judge’s certification of a class of Illinois residents who claimed a ConocoPhillips Co. refinery leaked toxic chemicals into their water supply, ruling the judge had not adequately studied the claims’ commonality.

U.S. District Judge G. Patrick Murphy had in September certified a class of Roxana, Ill., residents alleging the Wood River Refinery had let hazardous benzene contaminate their property, finding the plaintiffs had explained how the leak could have injured their health and lowered property values. But the panel found that Judge Murphy had taken the plaintiffs’ promise of future evidence at face value and should have researched the soundness of their methodology.

“Nothing is simpler than to make an unsubstantiated allegation,” U.S. Circuit Judge Richard A. Posner wrote for a unanimous panel. “The judge should have investigated the realism of the plaintiffs’ injury and damage model in light of the defendants’ counterarguments and to that end should have taken evidence.”

In their 2011 complaint, Roxana residents alleged spills at the refinery had released the chemicals benzene, hexane, toluene and xylene into Roxana's air and water. Some of the chemicals, like benzene, are carcinogenic.

The facility's current majority stakeholder is ConocoPhillips. Shell Oil Co. operated the refinery until 2000, according to the ruling.

The plaintiffs alleged in their complaint that due to leaky underground pipes and unsafe operating procedures, half a million gallons of benzene had been discharged into the air and water around Roxana over two decades. In some places, benzene levels were measured to be as high as 26,000 times the legal limit, the complaint alleged.

But the panel found that the plaintiffs planned to back up their claims by measuring benzene levels in the groundwater beneath their homes, even though their water supply comes from an uncontaminated aquifer.

“Benzene in the water supply is one thing; benzene in groundwater that does not feed into the water supply is quite another,” the opinion said.

If their expert’s evidence is rejected, they would have no basis to claim that the benzene levels were the common cause for their unspecified loss in property values, according to the opinion. Given the loss of real estate values overall in recent years, it would be even more difficult to tie any loss in value to benzene levels, the court held.

“It can’t be assumed that a decline in the value of residential property in Roxana (if in fact there’s been a decline) is the result of proximity to a refinery that for all one knows has been leaking contaminants for the last 95 years without causing detectable harm,” the opinion said.

The panel also held that it could not be assumed that all residents had suffered the same level of contamination, and that similar degrees of benzene did not guarantee the same amount of damages. The potential existed, the court ruled, for a host of individual issues varying from homeowner to homeowner.

“But in any event they must be engaged by the district judge before he can make a responsible determination of whether to certify a class,” the opinion said.

An attorney for the plaintiffs said they were confident the district court would recertify the class after it had made the evidentiary findings required by Friday’s decision.

"Shell's own environmental contractor has measured, and on a regular basis continues to measure, extensive contamination in the area,” Derek Y. Brandt of Simmons Browder Gianaris Angelides & Barnerd LLC told Law360.

Representatives for the defendants did not immediately respond late Friday to requests for comment.

U.S. Circuit Judges Richard A. Posner, Diane P. Wood and Diane S. Sykes sat on the panel for the Seventh Circuit.

The plaintiffs are represented by Andrea Bierstein and Jayne H. Conroy of Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP, Derek Y. Brandt, Emily J. Kirk, Anna M. Kohut, John Robert Phillips, Jo Anna Pollock and G. Michael Stewart of Simmons Browder Gianaris Angelides & Barnerd LLC and Melissa Sims of Melissa K. Sims Law Office.

Shell is represented by Richard B. Korn, Bart C. Sullivan and Ryan E. Mohr of Fox Galvin LLC. ConocoPhillips is represented by Beth A. Bauer, Larry E. Hepler and David M. Bays of HeplerBroom LLC and Michael D. Jones, Chris Posteraro and Joseph Cascio of Kirkland & Ellis LLP.

The cases are ConocoPhillips Co. et al. v. Jeana Parko et al., case number 13-8023, and Shell Oil Co. et al. v. Jeana Parko et al., case number 13-8024, both in the U.S. Court of Appeals for the Seventh Circuit.