Will Bedbug Litigation Become The Latest Litigation Scourge?

Guest Blogger ANDREA J. LAWRENCE is a Senior Counsel at Epstein Becker & Green in New York.  She provides legal advice and counsel to clients in the real estate industry. Andrea has extensive commercial litigation experience, and has provided legal representation to real estate companies, landlords, developers, property management companies, and commercial tenants  She recently published an article about bed bug litigation in the New York Real Estate Journal.  Despite some recent highly publicized bedbug personal injury litigation involving prominent New York hotels, Andrea concludes on the basis of a recent New York appellate case, that bedbug cases may not fare well in a commercial setting. 

Many people don’t necessarily associate bedbugs with other environmentally hazardous conditions such as toxic mold or oil contamination. However, the reemergence of bedbugs in this country has created unsafe and hazardous living conditions, and has spawned a recent spate of lawsuits throughout the United States. Just recently in New York, the Appellate Division, First Department, shed some light on the issue of liability in the sale of an apartment building with an alleged bedbug infestation. In 85-87 Pitt St., LLC v 85-87 Pitt St. Realty Corp., 83 A.D.2d 446, 921 N.Y.S.2d 40 (1st Dep’t 2011), the appellate court upheld a lower court dismissal of a lawsuit, where a buyer sought damages from a seller after its purchase of a residential apartment building with a prior bedbug infestation. The Appellate Division affirmed the lower court’s dismissal of the case, predicated upon the contract clause setting forth that the buyer had accepted the building "as is" after having had an opportunity for inspection, as well as the merger clause contained therein that extinguished any claims arising from the seller’s alleged misrepresentations concerning bedbugs. Thus, at least in this jurisdiction, there is not much legal recourse for purchasers of buildings, or even apartment units, with a bedbug history, where such relief is precluded by contract.

 The lesson to be learned from this case is simple – in the course of a buyer’s due diligence in today’s market, it should search building records for reports of a bed bug (or any insect/vermin) infestation, and may want to conduct its own physical inspection with an exterminator to uncover any such infestation, past or present. Moreover, should a buyer wish to have some safeguard against this issue, it should insist on a clause within the contract of sale whereby the seller proffers a representation about the presence or absence of bedbugs so as to be enforceable. 

No Causal Link On Cell Phone Cancer Risk

Consumer Reports, among others, reported this week that the International Agency for Research on Cancer ("IARC"), which is part of the World Health Organization ("WHO"), has classified low-level radiation from cell phones as "possibly carcinogenic to humans" based on limited evidence linking cell phone use to glioma, a type of brain cancer.  Although Consumer Reports concluded in its article that IARC’s action was based on "limited evidence" and doesn’t "convincingly" link typical cell phone use with cancer, an American public that often skims only headlines of articles, may be susceptible to appeals of sympathy by plaintiff lawyers representing long-time cell phone users with brain cancers.  Throughout the 1980’s the utility industry battled spurious claims, premised upon junk science, that electromagnetic field radiation was responsible for "cancer clusters" of child leukemias and other dreaded diseases.  Although virtually every major EMF toxic tort claim was successfully defended by industry over a period of years, tens of millions of dollars was spent defending these lawsuits, which were brought in courts all  across the country.  As in the case of low dose radiation from cell phone use, there were  millions of millions of potential plaintiffs in the EMF cases and all of the prospective utility industry defendants had deep pockets. Following issuance of the IARC release, a spokeswoman for the Federal Communications Commission ("FCC") stated that FCC currently requires that all cell phones meet safety standards based upon the advice of federal health and safety agencies.  Moreover, according to the National Cancer Institute’s Surveillance Epidemiology and End Results Program ("SEER"), the incidence of brain cancer in the United States has actually declined over recent years as cell phone use has skyrocketed.  Despite these reassuring pronouncements, well-heeled plaintiff lawyers may bring some cases as trial balloons to test industry resolve based upon other equally ambiguous pronouncements, such as the contention that cell phone use can affect "brain function".  As in the cases brought against chemical manufacturers in the 1980’s,  which alleged that chemicals cause generic  "immune system dysfunction", enterprising plaintiffs may attribute any number of injuries to purported "brain function" impacts.  Hopefully, courts will continue to exercise their gatekeeper roles to maintain some semblance of scientific rigor in the courtroom to exclude inconclusive science  if these cases are brought. 

Court Rejects Toxic Telephone Pole Lawsuit

On November 6, 2009, we reported here concernining a case of first impression brought by the Ecological Rights Foundation (“ERF”) in federal court in California.  In her decision, dated March 31, 2011, the Hon. Saundra Brown Armstrong, sitting in the United States District Court for the Northern District of California (Oakland Division), dismissed ERF’s  environmental claims brought  against Pacific Gas & Electric (“PG&E”) and Pacific Bell Telephone (“Pacific Bell”).  The Ecological Rights Foundation alleged that the Defendants’ wooden utility and telephone poles were pressure treated with an oil-based pentachlorophenol preservative which was “oozing” to the surface and being washed off of the Poles, thereby contaminating San Francisco Bay and adjacent waterways.  As a result of the migration of this material over time from the Poles into the soils, ERF alleged that “dioxin-like” compounds were released into the environment placing surrounding homeowners, commercial fisherman and the general public at significant risk.  As a practical matter, if ERF had prevailed, PG&E and Pacific Bell may have had to replace tens of thousands of Poles throughout California.

In dismissing the case, which was brought pursuant to the Clean Water Act (“CWA”) and the Resource Conservation and Recovery Act (“RCRA”), the Court examined the required showings under each statute.  The CWA distinguishes between point and nonpoint sources.  A point source is defined in the statute as “any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.”  All other sources of pollution are characterized as “nonpoint sources.”  To succeed, ERF had to demonstrate that the Defendants’ discharges were point source discharges., looking for an attorney ? here is a speeding ticket defense that you can count on at any time.

In dismissing the CWA claim, the Court held that “point and nonpoint sources are not distinguished by the kind of pollution they create or by activity causing the pollution, but rather by whether the pollution reaches the water through a confined, discrete conveyance.”

The key issue in the analysis of ERF’s RCRA claim was whether the chemical preservatives used on the Poles qualified as a “solid waste” within the meaning of RCRA.  The term “solid waste” is statutorily defined as “discarded material.”  Although not defined by statute, EPA regulations specify that “discarded material” includes any material that is “abandoned.”  ERF alleged that solid waste was disposed of into the environment when the chemical preservative leaked, spilled or dripped from the Poles due to rain, and when dust impregnated with the chemical is blown into the air during dry seasons.  In dismissing the RCRA claim, the Court held that the “flaw in plaintiff’s theory of disposal is that in this case, there is no allegation that Defendants engaged in any conduct that resulted in the discharge of the chemical preservative. To the contrary, Plaintiff merely alleges that the purported contamination is the result of natural forces – mainly, rain and wind… Such allegations, on their face, are insufficient to establish that Defendants engaged in the ‘disposal’ of hazardous waste under § 6972(a)(1)(B).”  The Court rejected Plaintiff’s theory that the “passive” spilling or leaking of materials from a place of containment into the environment constitutes “disposal” of solid waste.  In so holding, the Court distinguished prior cases that found that leakage fromgasoline USTs may be actionable under RCRA.  The UST holdings are only applicable to situations where the discharge of hazardous waste leaked or spilled from a container intended to hold the waste.  In contrast, the Court found that “the Poles are not containers; but rather, they were used to suspend wires for the transmission of electricity for PG&E and data for Pacific Bell.”  Thus, liability under RCRA ¶ 7002 did not attach based on the “discharge” of chemical preservatives from the Poles attributable to natural forces, such as rain and wind.

Spoliation Defeats Innocent Landowner’s CERCLA Claim

Innis Arden Country Club is a well-run country club located on beautiful acreage in Old Greenwich, CT. that has operated for over 100 years. Close friends of mine are members–the food is good, the golfers congenial, and laughing children run barefoot across the pool deck in good weather.  Club members had been stunned to learn in 2004 that PCB contamination had been discovered on the golf course property, not far from where an industrial company, Pitney Bowes, had once conducted operations on an adjacent parcel in Stamford.  The country club’s environmental consultants determined that Pitney Bowes was the source of the contamination, which Pitney Bowes denied, and that PCBs from the Pitney Bowes property had migrated by way of storm water and surface water runoff to Innis Arden.  What no one could dispute was that the country club had not placed the PCBs on the golf course–it was what CERCLA characterizes as an "innocent landowner". On June 26, 2009, the federal district court in Connecticut dismissed Innis Arden’s complaint prior to trial and affirmed a prior sanctions award against the country club. Innis Arden Golf Club v. Pitney Bowes, Inc. et al. Case No. 3:06 cv 1352 (JBA), 2009 U.S. Dist. LEXIS 54135.  Something had gone terribly wrong!  But what?

Pitney Bowes retained Hunton and Williams, a law firm with a strong reputation in environmental litigation to defend the case.  In a July 2009 Client Alert, the law firm attributed Innis Arden’s dismissal to its consultant having destroyed the key evidence that allegedly linked the PCB’s at the country club to their client.  Without being able to perform tests on the actual soil samples the consultant had taken, Pitney Bowes would be unable to refute the consultant’s claim that the PCB’s on the golf course were identical to PCB’s identified on the Pitney Bowes’ site, it alleged.  As the Alert points out, the Court’s spoliation ruling is a strong reminder of the obligations of parties and their experts to impose a litigation hold and to ensure that tangible evidence, such as as a soil sample taken to the lab for testing, is preserved.  Central to the court’s ruling was that the soil sampling in question had been undertaken in preparation for litigation.  As the Magistrate Judge had earlier ruled "……counsel was actively involved in the investigation and analysis of the samples in preparation for legal action……"  Sanctions were awarded even though the Court concluded that Innis Arden had not intended to destroy evidence or to disadvantage Pitney Bowes.  In the Bow Tie Law Blog, the author opines that Innis Arden’s "toxic mess" was created in part by deposition testimony that made it clear to the Court that plaintiff had taken no steps to prevent the destruction of electronic and tangible evidence as early as 2005, by which time it was clear that plaintiff recognized the importance of that evidence in its future litigation. 

By the time  the spoliation sanctions issue came before Judge Atherton on a motion for reconsideration, Innis Arden was in even deeper trouble.  The Magistrate Judge had also awarded sanctions against Innis Arden for discovery abuses–the most egregious that the Magistrate Judge had seen during over twenty years on the federal bench.  Worse, Judge Atherton concluded after hearing Daubert motions that Innis Arden’s trial experts were not sufficiently reliable to be permitted to testify at trial.  On the basis of that ruling, she granted summary judgment to the defendants and dismissed the plaintiff’s complaint.  At the end of the day, the Court did not have to reconsider the Magistrate Judge’s spoliation ruling because the issue was now moot!  Still the "innocent landowner", Innis Arden’s complaint has been dismissed and may yet have to pay the defendants’ sanctions for discovery abuses.