In the class action lawsuit stemming from the 2014 spill of Crude MCHM into the Elk River near Charleston, WV, the U.S. District Court for the Southern District of West Virginia recently issued three rulings in favor of plaintiffs and against Defendant Eastman Chemical Co. Those three developments are summarized below. Previous coverage of the Elk River spill litigation is available here.

Court Rejects Defendants’ Bid to Exclude Corrosion Expert

In a decision illustrating the limits of a Daubert challenge to expert testimony, the Court denied the Crude MCHM manufacturer’s motion to limit testimony from Plaintiffs’ expert as to the corrosive properties of Crude MCHM and denied a related motion for summary judgment. See Good v. Am. Water Works Co., No. 14-cv-01374 (S.D. W.Va. Sept. 26, 2016) (Good I).

Eastman challenged Plaintiffs’ expert testimony that Crude MCHM corroded the inside of the leaking tank, which caused the tank to fail. Eastman argued the expert’s testimony was neither scientifically sound nor consistent with the expert’s laboratory results and therefore inadmissible under Daubert. The Court, however, found no basis to conclude others in the field would not rely on the data gathered during the expert’s testing; the methodology therefore was reliable. Eastman’s challenge to the expert’s findings based on those data was, the Court wrote, “in essence a challenge to the correctness of [the expert’s] conclusion, and as such is not a proper basis for a Daubert challenge.” Good I, slip op. at 22. Because Plaintiffs’ expert raised a genuine issue of material fact as to whether corrosion was the cause of the tank leak, the Court denied Eastman’s motion for summary judgment.

Court Rejects MSDS Preemption, Sophisticated User Defense

In a separate opinion on the same day, the court also rejected Eastman’s arguments based on its Material Safety Data Sheet (MSDS) and the sophisticated user doctrine. The Court held that Eastman’s compliance with federal law in connection with its MSDS for Crude MCHM did not preempt Plaintiffs’ state tort law claims. Good v. Am. Water Works Co., No. 14-cv-01374 (S.D. W.Va. Sept. 26, 2016) (Good II). The Court found that a jury must decide whether Eastman’s MSDS should have more clearly described Crude MCHM’s corrosiveness.

The Court also rejected Eastman’s argument that the sophisticated user doctrine—whereby manufacturers of goods can reasonably rely on sophisticated buyers of those goods to pass any necessary warnings to the end-user—should apply here. Eastman argued it sold its Crude MCHM to a sophisticated customer, Freedom Industries. While recognizing that West Virginia has not expressly adopted the sophisticated user rule, the Court noted application here would require the Court to adopt Eastman’s “novel characterization and treatment of members of the public involuntarily exposed to [Crude MCHM], as if they were ‘end-users’ of the product.” Good II, slip op. at 15. Even if the Court were to so apply the rule, it noted genuine issues of material fact as to the sufficiency of any warnings Eastman gave to its customer and the customers’ understanding of Crude MCHM’s hazards.

Court Finds Lost Wage Claims Not Barred By Economic Loss Doctrine

The Court allowed Plaintiffs’ lost wage claims to proceed against Eastman, but barred those claims against the water utilities that supplied Plaintiffs with tainted water. Good v. American Water Works Co., Inc., 2016 WL 5864432, No. 14-1374 (S.D.W.V. Oct. 6, 2016). Some Plaintiffs allege that the “do not use” order issued for the days following the spill caused them to lose wages when employers, such as restaurants, closed their business establishments.

Under the economic loss doctrine, West Virginia law generally bars recovery for pure economic losses where there is no contractual relationship between the parties, or where plaintiffs have not suffered personal injury or property damage. Pure economic loss may be recovered under West Virginia law where, however, where a special relationship exists between the parties.

The Court found that it could not apply the economic loss doctrine in light of evidence that Eastman’s chemical had damaged Plaintiffs’ pipes, water filters, and bathtubs. The Court allowed Plaintiffs’ claims to proceed on the grounds that if sufficient evidence of physical damage was not found in the damages phase of the litigation, Plaintiffs’ lost wage claims would be barred.

However the Court applied the economic loss doctrine with respect to Plaintiffs’ lost wage claims against the water utility Defendants, finding an absence of a special relationship despite the utility’s contract to supply the restaurant-employer plaintiffs with water, the contamination of which resulted in Plaintiffs’ temporary unemployment and loss of income.