In 2014, the Town of Westport, Massachusetts (Westport) brought suit against Monsanto Company (Monsanto) seeking to recover costs it had and would incur in remediating PCB-containing caulk used in the construction of the Westport Middle School in 1969. Through a series of pretrial motions, the district court eventually dismissed all claims against Monsanto and its related entities, and in the recent decision of Town of Westport v. Monsanto, No. 17-1461, 2017 U.S. App. LEXIS 24827 (1st Cir. Dec. 8, 2017), the First Circuit affirmed the district court’s actions, dealing a blow to purchasers of PCB-containing building materials seeking similar recoveries.
In 1935, Monsanto manufactured PCB mixtures trademarked as Aroclors, an additive frequently used in building materials, and sold them to formulators of building materials. Monsanto’s direct customers manufactured products like paint and caulk containing the PCB mixtures. When Westport Middle School was constructed in 1969, the builders used caulk containing two PCB mixtures produced by Monsanto. At the time, however, the Toxic Substance Control Act (TSCA) and Environmental Protection Agency (EPA) did not exist, and PCB-containing Aroclors were on the market. It was not until 1970, that Monsanto removed PCB-containing Aroclors from the market over concerns of their environmental impacts. Six years later Congress enacted TSCA, which largely prohibited the manufacture and distribution of PCBs in commerce and authorized the EPA to implement regulations regarding PCB use and disposal. The Town of Westport (Westport) did not discover the PCB contamination at Westport Middle School until 2010. Westport engaged in remediation to remove the PCBs, and subsequently sued Monsanto, Solutia, Inc., and Pharmacia Corporation (collectively “Pharmacia”) under Massachusetts law to recover remediation costs.
Westport filed an action before the United States District Court for the District of Massachusetts on May 4, 2014, alleging seven counts of tort liability. Westport sought compensatory damages for the investigation and remediation of PCB contamination at Westport Middle School. The district court granted Pharmacia’s partial motion to dismiss on four counts, allowing Westport’s claims for breach of the implied warranty of merchantability for defective design, breach of the implied warranty of merchantability for failure to warn, and negligence to proceed to discovery. Westport claimed that it spent between $3.1 and $3.7 million in PCB remediation and monitoring costs, and its expert alleged an additional $23.5 million was needed to finish the remediation. Pharmacia moved in limine to exclude the testimony of Westport’s experts and moved for summary judgment on all counts, or alternatively, for partial summary judgment on Westport’s damages claims. The district court entered judgment against Westport on all its claims.
Westport appealed to the First Circuit, challenging the district court’s entry of summary judgment on its claims for breach of implied warranty of merchantability for failure to warn and negligence. It did not challenge the district court’s decision with respect to its claim for breach of implied warranty of merchantability for defective design. The First Circuit affirmed the district court’s entry of judgment against Westport’s breach of warranty and negligence claims. First, the court addressed the standard of foreseeability used by the district court. The First Circuit agreed with the district court’s finding that to sustain its property damage claim, Westport needed to establish that the PCB contamination at Westport Middle School rose to a level requiring remediation. Under Massachusetts law, to sustain a property damage claim Westport must establish that the PCB contamination decreased the school’s fair market value or required remediation. To require remediation, however, the PCB levels must be harmful to human health, a fact that Westport itself conceded was not the case. It was also not enough that Westport was legally required to remediate. The First Circuit held that the district court applied the correct standard of foreseeability: “whether Monsanto should have reasonably known, in 1969, that there was a risk PCBs would volatilize out of caulk at levels harmful to human health.” Id. at *12-13.
Next, the court addressed and rejected Westport’s contention that there was a genuine dispute regarding whether it was reasonably foreseeable that the PCBs in caulk would pose a health risk. The First Circuit emphasized that Westport “failed to proffer any scientific studies evidencing a risk that PCBs volatilize from caulk at harmful concentrations when inhaled, much less that such a risk was known to Pharmacia before 1969.” Id. at *13. Westport’s own experts conceded that there is no existing scientific literature establishing this relationship. Westport also tried to argue that because it was known at the time that PCBs volatilize from paints and resins at elevated levels, that it was reasonably foreseeable that there was a risk the same would occur with caulk. The First Circuit, however, found that it was not reasonably foreseeable in 1969 that PCB-containing caulk would cause adverse health effects because such risk continues to be unverified by current scientific studies. In contrast to Westport’s contention, the court found that “the record is replete with evidence establishing that it was reasonable for Monsanto to conclude that the paint studies were not applicable to caulk.” Id. at *15. Accordingly, the First Circuit found that the district court correctly entered judgment against Westport’s breach of warranty claim for failure to warn.
The First Circuit also affirmed the district court’s entry of judgment against Westport’s claim that Pharmacia violated its post-sale duty to warn because Westport failed to establish that Westport Middle School was an identifiable end user. The First Circuit agreed with the district court’s reasoning that just because Monsanto had a list of direct customers did not mean that it could identify all end users. The court noted that “Westport’s assertion that [Westport Middle School] was an identifiable end user is mere speculation,” and held that the district court correctly entered judgment against Westport’s post-sale failure to warn claim. Id. at *17.
Lastly, the First Circuit addressed and again rejected Westport’s negligent marketing claim. The court emphasized that under Massachusetts law, no court has held that a negligent marketing claim could succeed without a design defect claim. The only way that the claim could survive is if Westport established that Pharmacia intentionally targeted children. Accordingly, because Westport failed to challenge the district court’s entry of judgment against its design defect claim and Pharmacia did not market to children, the First Circuit held that Westport did not have a cause of action for negligent marketing.
The First Circuit’s decision clarifies the burdens that parties seeking to recover damages for remediation of hazardous building materials will face. Lack of proof of scientific literature and data will clearly undermine a plaintiff's efforts, and it remains unclear whether Westport’s claim for negligent marketing would have survived had it challenged the district court’s ruling on its design defect claim, leaving a potential avenue for future claimants.