Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. N.Y.: Oil companies dodge groundwater contamination claims from gas additive use, (Jul 7, 2015)

By Linda O’Brien, J.D., LL.M.

In an action by the Commonwealth of Pennsylvania against several oil companies in relation to the contamination of groundwater from the use of a gasoline additive, the Commonwealth’s claim for unfair and deceptive practices lacked specificity as to the conduct of each defendant oil company, the federal district court in New York City has decided. Thus, the defendants’ motion to dismiss was granted (In re Methyl Tertiary Butyl Ether Products Liability Litigation, July 2, 2015, Scheindlin, S.).

In June 2014, the Commonwealth of Pennsylvania filed suit against numerous oil companies, including Exxon Mobile Corp., relating to the contamination of groundwater from the use of the gasoline additive methyl tertiary butyl ether (MTBE). Pennsylvania alleged, in part, that the oil companies engaged in unfair and deceptive actions in their sale and marketing of MTBE as a safe gasoline additive when its environmental risks and hazards outweighed any benefits, in violation of the Pennsylvania Unfair Trade Practice and Consumer Protection Law (UTPCPL). The defendants moved to dismiss the complaint.

The court determined that the allegations in the complaint forming the basis of the State’s UTPCPL claim lacked specificity and failed to differentiate among the defendants. Under Federal Rule of Civil Procedure Rule 8(a)(2), the complaint must provide a plausible factual basis to distinguish the conduct of each of the defendants and set forth allegations that plausibly give rise to an entitlement for relief, the court explained. The complaint in this case failed to satisfy either of the two requirements.

According to the court, the complaint alleged that one specific defendant, Atlantic Richfield Co., violated the UTPCPL by publishing statements in a bulletin about the proper handling of MTBE during storage and shipping. The plaintiff was also required to allege how the bulletin created a likelihood of confusion for consumers, residents, or the Commonwealth. The other defendant-specific allegations in the complaint relating to comments made in lobbying and regulatory proceedings did not give rise to a UTPCPL claim, since those comments were not directed to consumers.

Finally, two of the four provisions under the UTPCPL require allegations of false advertising. The complaint referred to only one advertisement, which the Commonwealth conceded did not contain any false information. The remaining allegations, accusing the defendants as a group of engaging in deceptive conduct, were too vague as to each defendant to state a claim under the UTPCPL, the court concluded.

The case is No. 1:00-1898.

Attorneys: Daniel Berger (Berger & Montague, P.C.), Michael Axline (Miller, Axline & Sawyer), Stewart L. Cohen (Cohen, Placitella & Roth, P.C.), and James A. Donahue, III, Pennsylvania Office of Attorney General for the Commonwealth of Pennsylvania. Howard A. Rosenthal (Archer & Greiner, PC) for Exxon Mobil Corp. and ExxonMobil Oil Corp. Mark Steven Lillie (Kirkland & Ellis LLP) for BP America Inc. Nathan Philip Eimer (Eimer Stahl Klevorn & Solberg LLP) for CITGO Petroleum Corp. and CITGO Refining and Chemicals Company, LP. Dorothy Mello Laguzza (LeClairRyan) for Coastal Eagle Point Oil Co. Alan E. Kraus (Latham & Watkins LLP) for ConocoPhillips Co.

Companies: Exxon Mobil Corp.; ExxonMobil Oil Corp.; BP America Inc.; CITGO Petroleum Corp.; CITGO Refining and Chemicals Company, LP; Coastal Eagle Point Oil Co.; ConocoPhillips Co.

Cases: StateUnfairTradePractices NewYorkNews