PCB Lawsuit Threatens Pennsylvania Business Climate

Published August 1, 2003

What critics have called a “bizarre” jury verdict, holding a chemical manufacturer responsible for the costs of rebuilding a state-owned building after a fire, is being appealed to the Pennsylvania supreme court.

The Pennsylvania Chamber of Business and Industry, joined by several other in-state and national business organizations, has filed a friend-of-the-court brief urging it to overrule the verdict.

Fire Exposed Trace PCBs

In 1994, a dilapidated building out of compliance with the local fire safety code caught fire. The building was owned by the Pennsylvania Department of Transportation. After the fire, trace levels of PCBs, allegedly manufactured by Monsanto, were recorded in the building.

The PCB levels were well within health standards issued by the U.S. Environmental Protection Agency and U.S. Occupational Health and Safety Administration. The Secretary of the Pennsylvania Department of Transportation declared the building safe for occupancy after the fire and allowed it to be used for years before later calling it unsafe.

After declaring the building unsafe, the Department of Transportation spent $225 million demolishing the old building, constructing and furnishing a new building, and paying employee relocation costs. Although experts testified the trace PCBs in the old building could have been cleaned up for less than $500,000, a jury ordered Solutia, a specialty chemical manufacturer spun off by Monsanto in 1997, to foot $90 million of the Department of Transportation’s overall bill. A judge later reduced Solutia’s liability to $45 million.

Fire a Foreseeable Use for PCBs?

“The decision to hold Solutia liable, and Commonwealth Court’s denial of Solutia’s appeal, represents an unprecedented extension of current ‘strict’ liability laws into an ‘absolute’ liability regime,” said the Pennsylvania Chamber of Business and Industry in a press release. “In short, the court ruled that fire was an intended use of the PCBs, which means manufacturers must be ready to insure the safety of their products in any conceivable situation.”

In its brief, the Chamber argued that the verdict places manufacturers in the dubious position of facing liability for the capacity of their products to create risk, which the Chamber asserts is counter to past court rulings. Prior rulings have stated that while manufacturers are guarantors of their product’s safety from defects, they are not insurers of all injuries caused by the products.

Economic Consequences

“Absolute liability,” the brief pointed out, “would produce severe economic consequences for a wide range of business entities and their customers, from increased insurance costs to stifled innovation to actual disincentives for improved safety efforts.”

The National Association of Manufacturers (NAM) joined the Chamber in its brief. “Product liability law is supposed to reasonably compensate injured parties and provide an incentive for responsible parties to change their behavior,” said NAM General Counsel Jan Amundson. “If excessive claims like this one become the norm, defendant companies will be left without resources to improve their behavior and product lines, and they’ll be unable to develop new, desired goods and services. In short, their economic output will be drastically reduced.

“Pennsylvania is already among the most costly states to do business in,” added Amundson. “If the lower court is upheld, new businesses will be much less inclined to locate there.”

“Pennsylvania already is at a competitive disadvantage in regard to its economic policies affecting business growth and development, a disadvantage that extends to the legal system as well,” agreed the Pennsylvania Chamber, in explaining why it is opposing its own state government in the suit. “Commonwealth Court’s decision will only add to this burden, which is why the Chamber supports Solutia Inc. in its appeal and urges the state Supreme Court to reverse the lower court’s decision.”

PCB Levels Were Safe After Fire

“The trial court didn’t seem at all bothered by the fact that PCB levels at the T&S site were well below levels that health authorities would consider potentially harmful,” Amundson observed. “And it completely ignored undisputed testimony that even an old shoe can give off potentially harmful fumes if it’s incinerated, thus eschewing altogether the concept of risk-benefit analysis. Also ignored by the lower court was considerable case law that would have required the defendant to pay only for repair, not total replacement of the building.

“If permitted to stand, the trial ruling would make any manufacturer or product distributor in Pennsylvania absolutely liable simply because–under extreme conditions–its product could expose people to potential safety risks. If anyone in Pennsylvania thinks that such an approach to product liability law will help grow their economy and create jobs, they clearly have no understanding of business and economics,” concluded Amundson.

James M. Taylor is managing editor of Environment & Climate News. His email address is [email protected].