No. 2013-0591

NEW HAMPSHIRE SUPREME COURT

________________

STATE OF NEW HAMPSHIRE,

Plaintiff-Appellee-Cross-Appellant,

v.

HESS CORPORATION, ET AL.,

Defendants-Appellants-Cross-Appellees.

________________

On Appeal from the Merrimack County Superior Court (consolidated with No. 2013-0668)

________________

REPLY BRIEF FOR APPELLANTS EXXON MOBIL CORPORATION AND EXXONMOBIL OIL CORPORATION

________________

PAUL D. CLEMENT Arguing Counsel (admitted pro hac vice) BANCROFT PLLC 1919 M Street NW, Suite 470 Washington, DC 20036 (202) 234-0090 THEODORE E. TSEKERIDES (admitted pro hac vice) WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000

BRUCE W. FELMLY (NH BAR 787) PATRICK H. TAYLOR (NH BAR 17171) MCLANE, GRAF, RAULERSON & MIDDLETON, PROFESSIONAL ASSOCIATION City Hall Plaza 900 Elm Street Manchester, NH 03101 (603) 625-6464 bruce.felmly@mclane.com

March 17, 2015

TABLE OF CONTENTS

TABLE OF AUTHORITIES ........................................................................................................... ii

INTRODUCTION .......................................................................................................................... 1

ARGUMENT .................................................................................................................................. 2

I. Exxon Did Not Breach Any Valid State-Law Duty ............................................................ 2

A. Imposing Retroactive Tort Liability for Conduct Endorsed by the Political Branches Violates the Separation of Powers, Due Process, and the Waiver Doctrine ................................................................................................ 2

B. The State’s Claims Are Preempted by Federal Law ............................................... 6

C. There Is No Tort Claim for Failure to Warn the Sovereign Qua Sovereign ................................................................................................................ 8

II. The Superior Court Erred By Adopting Market Share Liability ....................................... 12

A. Market Share Liability Conflicts with New Hampshire Law ............................... 12

B. This Is an Especially Poor Case for Market Share Liability ................................. 14

C. Any Market Share Liability Must Be Based on the Refiner Market .................... 18

III. The Superior Court Erred By Trying The Case On An Aggregate Statewide Basis And Effectively Eliminating Site-Specific Defenses .............................................. 18

A. The Superior Court Erred by Allowing the State to Assert Aggregate Claims ................................................................................................................... 18

B. The Superior Court Compounded Its Error by Misapplying DeBenedetto. ......................................................................................................... 20

IV. The Superior Court Disregarded Hess And Prejudiced Exxon By Taking Away From The Jury The Factual Issues Underlying The Parens Patriae Determination ................................................................................................................... 22

V. The State’s Claims Based On Future Expenses Are Unripe And Cannot Support Prejudgment Interest ......................................................................................................... 23

A. The State’s Claims for Future Sampling and Treatment Are Unripe .................... 23

B. The Superior Court Erred by Awarding Prejudgment Interest .............................. 25

CONCLUSION ............................................................................................................................. 25

CERTIFICATE OF SERVICE

ii

TABLE OF AUTHORITIES

Cases

Abel v. Eli Lilly & Co., 343 N.W.2d 164 (Mich. 1984) ................................................................................................ 13

Alliance for Envtl. Renewal v. Pyramid Crossgates Co., 436 F.3d 82 (2d Cir. 2006) ...................................................................................................... 22

Appeal of State Emps.’ Ass’n, 142 N.H. 874 (1998) ............................................................................................................... 23

Bagley v. Controlled Env’t Corp., 127 N.H. 556 (1986) ......................................................................................................... 10, 21

Bouthiette v. Wiggin, 122 N.H. 774 (1982) ............................................................................................................... 23

Brugza v. PMR Architects, 141 N.H. 756 (1997) ............................................................................................................... 10

Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341 (2001) ................................................................................................................ 11

Buttrick v. Arthur Lessard & Sons, 110 N.H. 36 (1969) ................................................................................................................. 12

Carpenter v. W.H. McElwain Co., 97 A. 560 (N.H. 1916) ............................................................................................................ 13

Collins v. Eli Lilly Co., 342 N.W.2d 37 (Wis. 1984) .................................................................................................... 13

Columbia Venture v. Dewberry & Davis, 604 F.3d 824 (4th Cir. 2010) ..................................................................................................... 7

Conley v. Boyle Drug Co., 570 So. 2d 275 (Fla. 1990)................................................................................................ 13, 15

DeBenedetto v. CLD Consulting Eng’rs, 153 N.H. 793 (2006) ......................................................................................................... 20, 21

E. Enters. v. Apfel, 524 U.S. 498 (1998) .................................................................................................................. 5

Estate of Gordon-Couture v. Brown, 152 N.H. 265 (2005) ................................................................................................................. 3

iii

Exxon Mobil Corp. v. EPA, 217 F.3d 1246 (9th Cir. 2000) ................................................................................................... 7

Ford v. N.H. Dep’t of Transp., 163 N.H. 284 (2012) ................................................................................................................. 3

Galloway v. Chicago-Soft, Ltd., 142 N.H. 752 (1998) ............................................................................................................... 25

Geier v. Am. Honda Motor Co., 529 U.S. 861 (2000) .................................................................................................................. 7

Goldman v. Johns-Manville Sales Corp., 514 N.E.2d 691 (Ohio 1987) .................................................................................................. 18

Hymowitz v. Eli Lilly & Co., 539 N.E.2d 1069 (N.Y. 1989) ................................................................................................. 13

In re Brugza, 142 N.H. 743 (1998) ................................................................................................................. 8

In re MTBE Prods. Liab. Litig., 725 F.3d 65 (2d Cir. 2013) ................................................................................................ 7, 8, 9

In re Plaisted, 149 N.H. 522 (2003) ............................................................................................................... 14

JTR Colebrook, Inc. v. Town of Colebrook, 149 N.H. 767 (2003) ................................................................................................................. 4

Kelton v. Hollis Ranch, 155 N.H. 666 (2007) ............................................................................................................... 10

Lamarche v. McCarthy, 158 N.H. 197 (2008) ............................................................................................................... 12

Martin v. Abbott Labs., 689 P.2d 368 (Wash. 1984) ............................................................................................... 13, 15

Metro. Prop. & Liab. Ins. Co. v. Ralph, 138 N.H. 378 (1994) ............................................................................................................... 25

Mississippi ex rel. Hood v. AU Optronics, 134 S. Ct. 736 (2014) .............................................................................................................. 20

Morrison v. Amway Corp., 323 F.3d 920 (11th Cir. 2003) ................................................................................................. 22

iv

Mulcahy v. Eli Lilly & Co., 386 N.W.2d 67 (Iowa 1986) .................................................................................................... 14

Mutual Pharm. Co. v. Bartlett, 133 S. Ct. 2466 (2013) .............................................................................................................. 7

N. Country Envtl. Servs. v. Town of Bethlehem, 146 N.H. 348 (2001) ................................................................................................................. 6

Opinion of the Justices, 121 N.H. 542 (1981) ............................................................................................................... 11

Oxygenated Fuels Ass’n v. Davis, 331 F.3d 665 (9th Cir. 2003) ..................................................................................................... 7

Progressive N. Ins. Co. v. Concord Gen. Mut. Ins. Co., 151 N.H. 649 (2005) ............................................................................................................... 23

Renne v. Geary, 501 U.S. 312 (1991) ................................................................................................................ 24

Riley v. Nat’l Fed’n of the Blind, 487 U.S. 781 (1988) ................................................................................................................ 11

Royer v. Catholic Med. Ctr., 144 N.H. 330 (1999) ............................................................................................................... 10

Rumsfeld v. Forum for Academic & Institutional Rights, 547 U.S. 47 (2006) .................................................................................................................. 11

S. Willow Props. v. Burlington Coat Factory, 159 N.H. 494 (2009) ................................................................................................................. 6

Simoneau v. S. Bend Lathe, 130 N.H. 466 (1988) ............................................................................................................... 12

Simplex Techs., Inc. v. Town of Newington, 145 N.H. 727 (2001) ............................................................................................................... 12

Sindell v. Abbott Labs., 607 P.2d 924 (Cal. 1980)......................................................................................................... 13

Smith v. Eli Lilly & Co., 560 N.E.2d 324 (Ill. 1990) ...................................................................................................... 13

State v. Burke, 153 N.H. 361 (2006) ............................................................................................................... 11

v

State v. City of Dover, 153 N.H. 181 (2006) ........................................................................................................ 10, 22

State v. Hess Corp., 161 N.H. 426 (2011) ................................................................................................... 10, 19, 22

State v. Kidder, 150 N.H. 600 (2004) ............................................................................................................... 14

State v. Noucas, 165 N.H. 146 (2013) ............................................................................................................... 21

State v. Schachter, 133 N.H. 439 (1990) ........................................................................................................... 2, 11

Stop the Beach Renourishment, Inc. v. Fla. Dep’t of Envtl. Prot., 560 U.S. 702 (2010) .................................................................................................................. 5

Thibault v. Sears, Roebuck & Co., 118 N.H. 802 (1978) ..................................................................................................... 6, 12, 14

Trull v. Volkswagen of Am., 145 N.H. 259 (2000) ......................................................................................................... 12, 13

Vautour v. Body Masters Sports Indus., 147 N.H. 150 (2001) ................................................................................................................. 3

Vill. of Hoffman Estates v. Flipside, Hoffman Estates, 455 U.S. 489 (1982) ................................................................................................................ 11

Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011) ............................................................................................................ 20

Weaver’s Cover Energy v. R.I. Coastal Res. Mgmt. Council, 589 F.3d 458 (1st Cir. 2009) ..................................................................................................... 7

Statutes and Rule

RSA 146-A:3-a.............................................................................................................................. 16

RSA 507:7-e .................................................................................................................................. 20

RSA 524:1-b.................................................................................................................................. 25

N.H. Sup. Ct. R. 16-A ................................................................................................................... 11

Other Authorities

Black’s Law Dictionary (10th ed. 2014) ....................................................................................... 25

vi

Restatement (Second) of Torts §402A .......................................................................................... 10

Restatement (Third) of Torts: Products Liability §15 ................................................................... 13

INTRODUCTION

The State’s brief confirms the revolution in tort law that it seeks. The State recovered

hundreds of millions of dollars in a lawsuit that looked nothing like a traditional tort suit. Rather

than demonstrate that Exxon or anyone else was responsible for particular spills at particular sites

that contaminated particular water resources, the State proceeded to litigate on a statewide basis

relying on aggregate proof. Since the State’s avowed purpose was to undertake a massive

statewide aggregate proceeding, it dispensed with traditional causation and convinced the Superior

Court to be the first New Hampshire court to embrace market share liability. Because the aggregate

nature of the State’s suit cannot be squared with the defendant’s right to apportion liability to

responsible third-parties, Exxon’s rights under DeBenedetto were vitiated. And because the State

seeks to hold Exxon responsible not for individual spills, but for the bare fact of introducing MTBE

gasoline into the state, the State’s theory runs afoul of numerous constitutional principles, from the

separation of powers to the Supremacy Clause to Due Process. And the list goes on.

While the State’s brief quibbles here and there about waiver, it ultimately confirms that the

massive judgment below can only be sustained if this Court sanctions a revolution in tort law. At

a minimum, this Court will need to embrace market share liability, an entirely novel tort of failure

to warn the sovereign, the elimination of the statutory right to apportion liability to responsible

third parties, and a novel “trial by formula.” It will also have to convert parens patriae from a

standing doctrine into a uniquely favorable cause of action where the State is freed from the

constraints on all other litigants, and to explain how its novel set of rulings can be squared with

the separation of powers, due process, the First Amendment, and the federal Clean Air Act. In the

alternative, this Court can reconfirm bedrock principles of tort law that not only ensure procedural

fairness, but also maintain the fundamental distinction between common law adjudication and the

kind of lawmaking that is properly reserved for the legislature.

2

ARGUMENT

I. Exxon Did Not Breach Any Valid State-Law Duty.

A. Imposing Retroactive Tort Liability for Conduct Endorsed by the Political Branches Violates the Separation of Powers, Due Process, and the Waiver Doctrine.

1. Seeking to avoid any inquiry into the plain constitutional violations occasioned by its

bait-and-switch, the State contends (at 21) that Exxon has “forfeited its constitutional arguments

concerning the separation of powers and due process.” But Exxon repeatedly raised these

arguments below. It argued that (1) the State’s attempt to evade the consequences of its own policy

judgments by imposing liability “raise[s] separation of powers concerns because it would

effectively second-guess a legislative determination” to continue using MTBE, App. 1432; (2) the

State’s suit is “predicated on the premise that a coordinate branch of government made a policy

mistake” in permitting and encouraging MTBE use, App. 1435; (3) the suit seeks to “nullify

numerous individual legislative judgments,” State App. 627; (4) the suit constitutes an attempt at

“statewide legislation and policy … nullify[ing] legislative determinations … regarding MTBE,”

App. 634; and (5) the suit represents a “usurpation of policymaking power,” State App. 628; see

also App. 1108 (“This lawsuit … violates … axiomatic separation of powers principles.”). Exxon

also expressly argued that the suit “violated [its] due process rights,” App. 1427, as would the

creation of a new retroactive liability regime and the use of market share liability, see App. 1086,

1430. More broadly, Exxon argued throughout this case that the State’s lawsuit was fundamentally

incompatible with the decisions made by the political branches in New Hampshire. The separation

of powers and due process arguments were thus fully preserved. See State v. Schachter, 133 N.H.

439, 440 (1990) (party must “raise[] in the superior court its general theory” to preserve appeal).

2. The State fares no better on the merits. It claims (at 21-22) that its suit cannot be barred

by the separation of powers because any bar on recovery “must be clearly expressed by the

3

legislature.” That is patently wrong. The principle that the State cites is one of statutory

interpretation: that “[s]tatutes in derogation of the common law,” including “immunity provisions

barring the common law right to recover,” must be strictly construed. Estate of Gordon-Couture

v. Brown, 152 N.H. 265, 266-67 (2005). But there is no similar rule that a constitutional separation-

of-powers bar on a tort suit must be “clearly expressed.” See Ford v. N.H. Dep’t of Transp., 163

N.H. 284, 294-95 (2012) (tort suit challenging a discretionary government function would violate

the separation of powers). This is not a situation where the political branches merely allowed a

product to be marketed in the state, cf. State Br. 23 (citing Vautour v. Body Masters Sports Indus.,

147 N.H. 150 (2001)), but one where the State’s own actions promoted the product.

The State blinks reality in claiming (at 22) that imposing massive tort liability on Exxon

for MTBE use does not conflict with the political branches’ decisions to adopt and retain the RFG

program because “the State did not know … which oxygenate Exxon and other manufacturers

would choose.” Although the RFG program formally allowed manufacturers to choose among the

available oxygenates, the State was well aware that MTBE would be the primary if not exclusive

oxygenate used in New Hampshire. Tr. 1481:4-12 (NHDES commissioner testifying that “MTBE

was going to be the oxygenate used in New Hampshire”), 7749:6-12, 7755:2-17 (NHDES

employee testifying MTBE “would be the primary oxygenate used” under the RFG program). The

State cannot plausibly pretend that it did not know the RFG program meant more MTBE. Nor can

it pretend it was unaware that MTBE posed risks to groundwater at the same time it helped improve

air quality. The evidence at trial included reports from 1986—years before the RFG program—

informing the State that MTBE was “highly soluble” in water, “would spread both farther and

faster than … gasoline,” and was “considerably less amenable to treatment.” App. 306-08, 321;

see also App. 281-90. The EPA likewise reported as early as 1988 that MTBE was “extremely

4

soluble in water” and could make remediation “considerably more expensive.” App. 552, 641.

NHDES employees confirmed these observations. See Br. 11-13. The State cannot dispute that it

voluntarily adopted the RFG program despite the known possibility of MTBE contamination.

The State’s assertion (at 22-23) that this Court should ignore the legislature’s decision in

1999 not to ban MTBE fails three times over. First, the State cites inapposite cases about the role

of legislative inaction when interpreting statutes; the situation here, however, demonstrates not

only that the legislature knew that MTBE was in fact the oxygenate being used, but also that the

legislature’s refusal to ban MTBE reflected its unease with alternatives and preference to continue

the status quo despite potential downsides. The State does not get a do-over two decades later

because a jury strikes a different balance than the legislature. Second, the State does not dispute

that, by 1999, its own environmental agency, NHDES, actively opposed a ban of MTBE because

it was “not yet clear that a less toxic, readily available, legal alternative [to MTBE] currently

exists.” App. 776. That report again makes clear that the State weighed the benefits and burdens

of MTBE, and made a conscious choice to allow it. Third, the most the State can say about Exxon’s

conduct by that point is that it testified against the ban. But the State does not contend that Exxon

withheld or misrepresented any information in exercising that core First Amendment right. In all

events, Exxon only advocated the same outcome as the State’s own environmental agency.

Finally, the State has no real response (at 25) to the fact that imposing retroactive liability

for simply supplying MTBE fundamentally conflicts with the detailed legislative scheme

embodied in the ODD and GREE funds. Br. 22-23; cf. JTR Colebrook, Inc. v. Town of Colebrook,

149 N.H. 767, 770 (2003). Aside from another inapposite citation regarding statutory

interpretation, the State merely parrots the Superior Court’s belief that the ODD and GREE funds

are not up to the task of satisfying the State’s ambitious recovery here. But as Exxon already

5

explained, that is the tail wagging the dog. When it created a detailed remedial framework to

address MTBE contamination caused by gasoline spills, the legislature carefully balanced

competing policy choices to decide who would undertake cleanups, who would fund them, how

much each fund would contribute, and so forth. The State is not entitled to ignore that careful

balance and proceed with its massive suit to remediate the same problem just because it now deems

that legislative scheme inadequate. Insofar as the State cannot satisfy the traditional demands of

tort law, its remedy lies in the specific alternative remedial schemes designed by the legislature,

not in creating a revolution in New Hampshire tort law.1

3. Likewise, the State has no answer to the due process implications of the decision below.

It tacitly concedes (at 25-26 & n.12) that legislation imposing massive retroactive liability for

previously authorized conduct would violate “our settled tradition against retroactive laws of great

severity,” E. Enters. v. Apfel, 524 U.S. 498, 549 (1998) (Kennedy, J., concurring), but asserts that

the Superior Court could promulgate a new statewide rule with the same effect. But “[i]t would

be absurd to allow a State to do by judicial decree what [due process] forbids it to do by legislative

fiat.” Stop the Beach Renourishment, Inc. v. Fla. Dep’t of Envtl. Prot., 560 U.S. 702, 714 (2010)

(plurality opinion). And the fact that this extraordinary retroactive bait-and-switch would inure to

the State’s benefit only exacerbates the constitutional difficulties. Id. When the judiciary applies

traditional tort principles, it avoids impermissible retroactive rulemaking. But accepting the

State’s invitation to transform New Hampshire tort law in ways that would revolutionize bedrock

principles of causation and fault, and simultaneously contravene the political branches’ previous

1 The State wrongly claims (at 25 n.11) that Exxon was able to elicit all the relevant testimony about the ODD

and GREE funds. It fails to mention, however, that Exxon was specifically barred from showing on cross-examination that “because the Funds had a positive balance, the State has not been harmed or should not have brought this suit.” Add. 290; see also Tr. 4116:7-4123:5. Meanwhile, the State was repeatedly allowed to elicit testimony that it could not study or clean up MTBE contamination because it lacked sufficient funds. See, e.g., Tr. 2731:2-5, 3901:14-3902:3, 4212:19-4213:12.

6

judgments, would fully implicate due process prohibitions on retroactive lawmaking.

4. The State does not contest that waiver may be implied by “conduct … justifying an

inference” that a plaintiff intentionally relinquished its right to recover. S. Willow Props. v.

Burlington Coat Factory, 159 N.H. 494, 499 (2009). The evidence here was sufficient to justify—

or even compel—that inference. As Exxon has thoroughly explained, there was an extensive

record at trial showing that the State knew the risks of MTBE and nevertheless supported its use.

See Br. 11-13, 25-26. The State never disputes this; indeed, it concedes (at 26) that the extent of

its knowledge was a “heavily contested” factual issue. The Superior Court thus should have

allowed the jury to determine the extent of the State’s knowledge and whether the State’s conduct

constituted an implied waiver. See N. Country Envtl. Servs. v. Town of Bethlehem, 146 N.H. 348,

354 (2001) (whether “implied waiver occurred is a question of fact”).

The State insists (at 27) that a waiver instruction was unnecessary because the instruction

on the plaintiff’s misconduct defense “encompassed” the waiver defense. Add. 371. But waiver

and plaintiff’s misconduct are two completely separate doctrines: waiver constitutes the

intentional relinquishment of a known right, see S. Willow Props., 159 N.H. at 499, while plaintiff’s

misconduct covers theories of comparative and contributory negligence, product misuse, and

assumption of the risk, see Thibault v. Sears, Roebuck & Co., 118 N.H. 802, 812-13 (1978). An

instruction on misconduct does not “encompass” waiver any more than an instruction on

negligence would “encompass” strict liability. Especially given that the Superior Court correctly

set forth the two doctrines in its preliminary instructions, see Br. 26 n.11, it had no valid basis for

excluding the waiver defense from its final instructions.

B. The State’s Claims Are Preempted by Federal Law.

It is well established that a state-law tort duty is preempted if it “stands as an obstacle to

the accomplishment and execution of the full purposes and objectives of Congress.” Geier v. Am.

7

Honda Motor Co., 529 U.S. 861, 899 (2000). That principle resolves this case. By imposing tort

liability on Exxon for merely distributing MTBE, the State would retroactively punish Exxon for

employing the only safe and feasible means it had of complying with the federal oxygenate

mandate of the Clean Air Act. Br. 26-29. The Superior Court should have dismissed the State’s

claims as preempted—or at the very least, it should have sent the preemption issue to the jury.2

The State responds (at 28-29) with cases where courts have rejected preemption arguments,

but those cases fall into two easily distinguishable camps. First, In re MTBE Prods. Liab. Litig.,

725 F.3d 65 (2d Cir. 2013), involved traditional tort theories where the plaintiff demonstrated the

defendant’s liability for particular spills. This case, however, involves retroactive tort liability for

supplying MTBE gasoline in the state. The difference is critical for preemption. When tort liability

turns on the way MTBE was handled, there is no direct conflict between state law and the Clean

Air Act. But when tort liability turns on the mere introduction of MTBE gasoline into the state,

the conflict is unavoidable. Second, the State’s two other cases involved prospective legislative

bans on MTBE with transition periods, in recognition of the conflict between an immediate MTBE

ban and the federal mandate. See Oxygenated Fuels Ass’n v. Davis, 331 F.3d 665 (9th Cir. 2003);

Exxon Mobil Corp. v. EPA, 217 F.3d 1246 (9th Cir. 2000); Br. 28 & n.17. New Hampshire

acknowledged this conflict in providing for a transition period following its own MTBE ban. Br.

13. Retroactive tort liability for supplying MTBE gasoline admits of no such transition period and

2 The State does not even attempt to defend the Superior Court’s erroneous view that preemption cannot apply

where “defendants would rather pay tort damages than change their behavior,” Add. 145. See, e.g., Mutual Pharm. Co. v. Bartlett, 133 S. Ct. 2466, 2477 (2013). It argues only (at 29 n.17) that the court did not rely on that error in rejecting Exxon’s preemption defense. But the State gives no reason for believing that error did not affect the Superior Court’s analysis, and the opinion itself indicates the opposite. See Add. 148 (finding “[b]ased on the above analysis” that “the State’s common law tort claims are not preempted”). Moreover, the State is wrong to assert (at 30-31) that Exxon’s proposed jury instruction on preemption misstated the law; obstacle preemption does bar state law from imposing significant delays and increased costs on federal programs. See Weaver’s Cover Energy v. R.I. Coastal Res. Mgmt. Council, 589 F.3d 458, 473-74 (1st Cir. 2009) (preemption of state law that “delays” federally licensed project); Columbia Venture v. Dewberry & Davis, 604 F.3d 824, 832 (4th Cir. 2010) (preemption of state tort claim that would increase costs for a federal agency).

8

completely disregards the widely recognized infeasibility of an immediate MTBE prohibition.3

In all events, the record here is clear: there was no feasible alternative for Exxon to comply

with the federal oxygenate mandate. See Br. 27-29 & nn.12-15. The State asserts (at 31) that

“safer, feasible alternatives to MTBE existed.” But the evidence it cites shows only that ethanol

was feasible in other parts of the country, and was used on a part-year basis for a few years by one

small refiner in New England. State Br. 29-30 & n.18; see Br. 31-32. That does not remotely

answer the question relevant here: whether ethanol could have safely and effectively replaced

MTBE in all the gasoline sold in New Hampshire year-round. The answer to that question is

clearly no. See, e.g., App. 804 (immediate ban on MTBE would likely cause “substantial increases

in gasoline prices, supply shortages, and a substantial increase in air toxic emissions”); Tr. 6724:7-

6735:4 (explaining problems with ethanol). Moreover, the State does not (and cannot) dispute that

it was impossible for Exxon to switch to ethanol while the other distributors in New Hampshire

were still using MTBE. Tr. 5516:19-5518:1, 5868:8-13, 7425:20-7426:4. Those facts clearly

demonstrate preemption or, at a minimum, a basis for submitting the question to the jury.4

C. There Is No Tort Claim for Failure to Warn the Sovereign Qua Sovereign.

The State does not dispute that the decision below is the first in history to impose tort

liability on a defendant for failing to warn a government body that it should regulate more

stringently. The State does not cite a single case, from New Hampshire or elsewhere, adopting

3 Because In re MTBE involved a different tort theory and, indeed, a different market, the State is wrong to claim

(at 30) that Exxon is “collaterally estopped” by that case from proving that ethanol was not a viable alternative in New Hampshire. See In re Brugza, 142 N.H. 743, 745 (1998) (for collateral estoppel to apply, “the issue subject to estoppel must be identical in each action”). Moreover, the In re MTBE jury considered evidence on ethanol, and nevertheless found the plaintiffs had failed to prove any “safer, feasible alternative” to MTBE gasoline. See 725 F.3d at 98-99.

4 They also clearly demonstrate that Exxon did not breach any duty of care, because no safer feasible alternative was available. They consequently bar the State’s negligence claim. Br. 31-32.

9

that theory, and the few courts to consider such a theory have held against it. See Br. 33.5

The State tries to change the subject by claiming (at 32) that Exxon “provided no warning

about MTBE to anyone.” But Exxon was not held liable for failing to warn the actual users or

consumers of its gasoline—the individual gas station owners, storage tank owners, motorists, etc.

It was instead held liable on the entirely unprecedented and deeply flawed theory that it failed to

warn the sovereign. The difference was critical. If the State had pursued a traditional failure-to-

warn-end-users claim, it would have needed to address numerous individualized causation

questions, such as whether any warning from Exxon to end users would actually have caused fewer

spills. Cf. In re MTBE, 725 F.3d at 123-24. The State therefore explicitly disclaimed that

traditional theory, arguing instead that “the question at issue in this case is whether Exxon provided

warnings to the State and … whether those warnings would have altered the State’s actions.” App.

1360 (emphasis original). In other words, the State asserted that with more warning it would have

regulated MTBE differently—by not adopting the RFG program, or by not continuing it. Tr.

11978:4-11985:15 (closing argument); see App. 1363-64. The State even relied on the unusual

nature of its failure-to-warn theory to preclude Exxon from introducing evidence that any warning

to gasoline distributors would not have affected their behavior. See App. 1359-66. Those strategic

decisions leave the State no room to claim (at 32) that the jury might have imposed liability because

Exxon failed to warn “the State as an end user” or “the citizenry.”

5 The State’s passing contention (at 32) that, even if correct, Exxon’s argument does not warrant overturning the

jury’s verdict is incorrect. The State’s entire case—not just its failure-to-warn claim—is predicated on the notion that Exxon should have given more warnings to the State in its sovereign capacity, as that purportedly would have prevented the State from participating or staying in the RFG program (thus preventing the dramatic escalation of MTBE for which the State now seeks damages). If Exxon was not required to warn the State qua State, then the State bears the burden for electing to participate and remain in the RFG program despite its knowledge of MTBE’s risks, and Exxon cannot be held liable for any contamination that may have followed from those decisions.

10

The State next argues (at 33) that Dover and Hess sanction the theory it actually presented

at trial, establishing a new common-law duty to warn the sovereign against imprudent regulation.

But those cases dealt only with the State’s standing to bring its claims; they said nothing about the

merits of those claims. State v. Hess Corp., 161 N.H. 426, 430-31 (2011); State v. City of Dover,

153 N.H. 181, 184-85 (2006). Dover and Hess establish that the State may assert standing as

parens patriae to seek damages for harm to its waters—for instance, by claiming (as the State did

not) that Exxon failed to warn gas station owners of the dangers of MTBE and so caused those

owners to spill gasoline. By contrast, Dover and Hess do not even hint that parens patriae standing

creates a brand-new tort cause of action for failing to give the government information that, in

retrospect, might have influenced its policy decisions. See Hess, 161 N.H. at 432 (observing that

“[p]arens patriae does not provide a cause of action”).

There are two very good reasons for this silence. First, despite the State’s bare assertion to

the contrary (at 34), it is well established that strict liability under New Hampshire law runs only

to “the user or consumer of an unreasonably dangerous and defective product.” Bagley v.

Controlled Env’t Corp., 127 N.H. 556, 559 (1986) (emphasis added). This Court has consistently

refused to expand liability beyond those bounds,6 which is why the State cannot cite any New

Hampshire case imposing the immensely broad duty to warn all who “a reasonable seller should

know will be in a position to reduce or avoid the risk of harm.” The State claims “user” is broadly

defined—but even that broad definition does not include the State as regulator. See Restatement

(Second) of Torts §402A cmt. l (“‘User’ includes those who are passively enjoying the benefit of

the product … as well as those who are utilizing it for the purpose of doing work upon it[.]”).

6 See, e.g., Kelton v. Hollis Ranch, 155 N.H. 666, 668 (2007); Royer v. Catholic Med. Ctr.,144 N.H. 330, 332-35

(1999); Brugza v. PMR Architects, 141 N.H. 756, 761-62 (1997).

11

Second, imposing liability for failure to warn the sovereign would violate the constitutional

principles of freedom of speech and freedom of petition. The State cannot force individuals or

organizations, by the threat of massive tort liability, to disclose any and all information that the

State might find useful for any one of its regulatory decisions. See Riley v. Nat’l Fed’n of the

Blind, 487 U.S. 781, 795-97 (1988) (content-based laws “[m]andating speech that a speaker would

not otherwise make” face exacting First Amendment scrutiny); Rumsfeld v. Forum for Academic

& Institutional Rights, 547 U.S. 47, 62 (2006).7 Those constitutional concerns are only heightened

by the vague nature of the duty the State seeks to impose, under which individuals and companies

are left to blindly guess at what information the State might someday wish it had known. The

State makes no attempt to clarify the boundaries of this Kafkaesque duty, nor to explain how others

can comply with that duty in the future.8 It likewise fails to explain how it will prevent everyone

from flooding regulators with unnecessary information to avoid massive tort liability for leaving

something out. Cf. Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 351 (2001). This Court

should avoid both the serious constitutional issues raised, and the equally serious practical

problems, by construing New Hampshire tort law to impose no such duty to warn the sovereign.9

7 That principle does not “invalidate all liability for failure to warn.” State Br. 36. It applies only to bar tort

damages based on speech directed toward the State in its political capacity as regulator, not to bar tort damages based on speech directed at plaintiffs in their commercial capacity as users or consumers. Cf. Opinion of the Justices, 121 N.H. 542, 546 (1981) (protection for commercial speech “is not as broad as that afforded other forms of expression”).

8 The State’s only response (at 36) is that Exxon cannot complain of this vagueness because it “did not warn anyone about the risks of MTBE gasoline” and so “would be liable under any regime.” Not so. The State has never even attempted to prove that Exxon would be liable for failing to warn anyone other than the State in its role as sovereign. App. 1360. Moreover, the new tort duty that the State seeks to impose is facially invalid; it is “impermissibly vague in all of its applications,” Vill. of Hoffman Estates v. Flipside, Hoffman Estates, 455 U.S. 489, 497 (1982), because it is impossible for anyone to know in advance what information he might have to report.

9 The State claims (at 35) that this Court should ignore these constitutional problems because Exxon did not raise them below. But Exxon squarely and repeatedly presented its argument that New Hampshire law does not recognize any duty to warn the State as sovereign. See, e.g., App. 1349, 1409, 1432. Having raised that theory below, it is not barred from citing additional law to support it here. Schachter, 133 N.H. at 440; cf. State v. Burke, 153 N.H. 361, 363 (2006). Additionally, this Court has discretion to consider plain constitutional flaws at any time. See N.H. Sup. Ct. R. 16-A. Most important, though, this Court is required to avoid the constitutional concerns that would result from

12

II. The Superior Court Erred By Adopting Market Share Liability.

A. Market Share Liability Conflicts with New Hampshire Law.

For centuries, New Hampshire law has considered proof of causation “a necessary

element” in any tort action. Trull v. Volkswagen of Am., 145 N.H. 259, 264 (2000). The Superior

Court broke sharply from that tradition, adopting an aggressive theory of market share liability

that allowed the State to recover damages from Exxon without even trying to prove that Exxon

actually contributed to MTBE contamination at particular spill sites. New Hampshire should not

join the short list of states (the State identifies a whopping six) that have judicially adopted market

share liability, nor the almost nonexistent list that have done so outside the singular DES context.

The State contends (at 39) that market share liability “follows from traditional, well-

accepted principles of New Hampshire tort law.” It could not be more wrong. As this Court has

repeatedly emphasized, New Hampshire tort law relies on the “common-law principle that fault

and responsibility are elements of our legal system,” and those elements “will not be undermined

or abolished by ‘spreading’ of risk and cost in this State.” Simoneau v. S. Bend Lathe, 130 N.H.

466, 469 (1988) (quoting Thibault, 118 N.H. at 806). Market share liability accomplishes exactly

that impermissible “risk-spreading,” by making each manufacturer liable for its share of the market

rather than only for damages it actually caused. The State’s reliance on Trull, Buttrick, and

Carpenter (at 39-40) is grossly misplaced, and ultimately demonstrates what a revolution the State

seeks. None of those cases repudiated the basic principle that a defendant can only be held liable

if the plaintiff meets “the threshold obligation of proving causation.” Trull, 145 N.H. at 266; see

Buttrick v. Arthur Lessard & Sons, 110 N.H. 36, 39 (1969) (plaintiff must prove the alleged defect

“caused the accident”); Carpenter v. W.H. McElwain Co., 97 A. 560, 561-62 (N.H. 1916)

failing to reject the notion of a duty to warn the sovereign qua sovereign. See Lamarche v. McCarthy, 158 N.H. 197, 206 (2008); Simplex Techs., Inc. v. Town of Newington, 145 N.H. 727, 732 (2001).

13

(defendants jointly liable where “the negligence of each was a proximate cause”). Indeed, Trull

held that where a defendant contributes to causing an indivisible injury to plaintiffs, that defendant

bears the burden of apportioning damages—but only “once the plaintiffs prove causation,” by

showing that defendant’s conduct “was a substantial factor in producing damages.” 145 N.H. at

260, 265. The market share liability theory adopted below expressly conflicts with Trull; it allows

the State to seek damages without any proof that the specific gasoline supplied by Exxon was a

substantial factor in producing MTBE contamination.10

The State concedes (at 42-43) that at least nine state supreme courts, and a number of

federal courts, have rejected market share liability in various cases as “too great a deviation from

[the] tort principle [of] causation in fact.” Smith v. Eli Lilly & Co., 560 N.E.2d 324, 345 (Ill. 1990);

see Br. 39-40 & n.20 (citing cases). Against that authority, it cites only six cases adopting some

“variant of market-share liability in some class of cases.” All but one of those cases, however, did

so in the unique context of DES liability, and implicitly or explicitly limit their holdings to that

context.11 And even in that limited context, they hardly provide full-throated support for the

approach. See, e.g., Collins v. Eli Lilly Co., 342 N.W.2d 37, 45 (Wis. 1984) (choosing to “fashion[]

a method of recovery for the DES case which will deviate from traditional notions of tort law”).12

10 The State is simply wrong to claim (at 41) that because “Exxon supplied a significant amount of MTBE gasoline

to New Hampshire,” it is therefore “certain that Exxon gasoline contributed to” groundwater contamination. What is missing in that assertion is what New Hampshire law has always demanded—namely, a causal link. It will always be likely that a manufacturer with a substantial market share supplied a product, but 44 States, including New Hampshire, have always demanded more.

11 Sindell v. Abbott Labs., 607 P.2d 924, 936-38 (Cal. 1980); Martin v. Abbott Labs., 689 P.2d 368, 382-83 (Wash. 1984); Hymowitz v. Eli Lilly & Co., 539 N.E.2d 1069, 1075-78 (N.Y. 1989) (“[T]he DES situation is a singular case[.]”); Collins v. Eli Lilly Co., 342 N.W.2d 37, 49-52 (Wis. 1984); Conley v. Boyle Drug Co., 570 So. 2d 275 (Fla. 1990); see Abel v. Eli Lilly & Co., 343 N.W.2d 164, 173 (Mich. 1984) (“DES-unique version of alternative liability”).

12 The State disingenuously suggests (at 42) that the Third Restatement “recognizes” market share liability. In fact, the Restatement simply acknowledges that some courts have adopted the doctrine, while others “have refused to effect such a basic change in traditional rules of causation.” Restatement (Third) of Torts: Products Liability §15 cmt. c.; see also id. reporters’ note cmt. c (“A substantial number of courts have rejected the market-share approach.”).

14

Moreover, none of those cases adopted the market share theory for the first time in a case brought

by the State, which substantially exacerbates the constitutional concerns.

Market share liability not only conflicts with New Hampshire law and outside precedents,

but also distorts incentives for plaintiffs and defendants. It encourages plaintiffs to bring generic

actions against large groups of manufacturers—as the State did here—rather than identify parties

actually responsible for specific harms. And it discourages manufacturers from taking adequate

safety precautions, since the cost of any ensuing harm will be borne by the market as a whole. See

Br. 40-41; Chamber Br. 3-7. The State misses the point by arguing (at 44) that manufacturers will

still have some incentives to take safety precautions; the problem is that market share liability

makes those incentives significantly weaker than they should be. This Court has rejected such

“‘spreading’ of risk and cost” before, Thibault, 118 N.H. at 806, and should reject it again here.

Given the serious policy consequences, this Court, like other courts, should leave it for the

legislature to decide whether New Hampshire law should be radically revised to incorporate

market share liability. See Mulcahy v. Eli Lilly & Co., 386 N.W.2d 67, 76 (Iowa 1986) (market

share liability “involves social engineering more appropriately within the legislative domain”); see

also In re Plaisted, 149 N.H. 522, 526 (2003) (“[M]atters of public policy are reserved for the

legislature.”). The legislature, if it adopted this novel regime at all, could tailor it to particular

contexts and could make (indeed, would have to make) this transformative shift on a prospective

basis. For this Court to adopt market share liability would not be “interpreting and applying

[existing] New Hampshire tort law,” as the State imagines (at 44); it would be creating entirely new

legislation, which “is not the function of the courts.” State v. Kidder, 150 N.H. 600, 604 (2004).

B. This Is an Especially Poor Case for Market Share Liability.

The Superior Court was not only wrong to adopt market share liability as a general matter,

but particularly wrong to adopt that theory in this case. Even those states that allow market share

15

liability limit it to contexts in which it is impossible for the plaintiff to prove who exactly caused

its injury. See, e.g., Martin, 689 P.2d at 381 (citing “the impossibility of identifying the individual

manufacturer” of DES pills); Conley, 570 So. 2d at 286 (limiting market share liability to cases

where a plaintiff makes “a genuine attempt to locate and to identify the manufacturer responsible”).

In this case, by contrast, the State steadfastly insisted that proof of traditional causation was

possible. It proceeded on a traditional causation theory throughout almost the entire litigation,

dropping that theory only after the close of all the evidence. Tr. 11008:1-10. Given that

background, the State cannot persuasively assert (at 45-47) that the nature of its claims made proof

of traditional causation impossible. Market share liability is dangerous enough when proof of

traditional causation is truly impossible; allowing it when proof is simply inconvenient or hard to

square with the plaintiff’s interest in litigating a statewide case based on aggregate data would

revolutionize tort law and simply tilt the playing field in the State’s favor.

The State claims (at 45) that the jury found that MTBE contamination could not be traced

back to any particular company. But its argument conflates the evidence that MTBE could not be

traced specifically to a particular refiner (the company that manufactured the gasoline) with

evidence that MTBE could not be traced to a particular supplier (the company that brought it into

New Hampshire). The State thus repeatedly cites testimony (at 46-47) from its own expert that it

cannot tell “who actually manufactured” a given molecule of MTBE, because gasoline from

different refiners was commingled in the supply chain; and it claims that following a particular

shipment through the supply chain would not allow it to trace particular gasoline back to a

particular refiner. But that testimony does nothing to address the issue presented here: whether it

was possible to trace a particular spill to gasoline from a particular supplier, and so impose liability

on that supplier under a traditional causation theory. Br. 42-44. The evidence in fact showed such

16

tracing would be possible, see Tr. 5904:16-5913:12, 7528:11-7529:3, meaning that market share

liability should not have been available to impose damages on Exxon as a supplier.

Numerous cases from other jurisdictions likewise demonstrate that it is perfectly possible

for a plaintiff to hold a defendant liable for MTBE contamination under traditional causation

principles. See Br. 43-44 (citing cases). The State responds in a footnote (at 47 n.43), saying they

do not “demonstrat[e] that traditional causation could have been proved here.” That is true only

in the sense that those cases were traditional efforts to demonstrate liability for particular spills

rather than an attempt to impose liability statewide for merely bringing MTBE into the state. But

that gets matters backwards. When traditional tort remedies are available, then market share

liability is not. A plaintiff cannot forswear traditional remedies, pursue an unprecedented statewide

lawsuit, and then insist that market share liability must be adopted because it would be impossible

for the plaintiff to carry its traditional burden on a statewide basis. The unfairness introduced by

accepting the State’s circular argument was manifest in the proceedings below. Under traditional

causation principles, the State would need to identify where, when, and how MTBE contamination

actually occurred at various sites—which in turn would have made it possible for Exxon to defend

itself by showing that third parties were responsible for those spills, and allocating some portion

of the underlying damages to those third parties. See Br. 44-45. Instead, the Superior Court

effectively shifted the burden to Exxon to locate individual spill sites and prove its gasoline was

not spilled at those sites, replacing the presumption of innocence with a presumption of guilt.13

The Superior Court’s version of market share liability was equally radical in its temporal

and geographic scope. The State does not dispute that applying market share liability over long

13 The State is likewise wrong to imply that without market share liability, it could never recover the cost of

cleaning up a spill. The legislature has already addressed that problem by making site owners strictly liable for contamination at their sites. See RSA 146-A:3-a.

17

periods of time and broad geographic areas makes no sense, because it destroys the approximate

correlation between market share and fault on which the theory is based. See Br. 45-46. It argues

only (at 49-50) that a market covering a seventeen-year period and the entire State of New

Hampshire is permissible given “the breadth of Exxon’s tortious conduct,” State Br. 48, which puts

the cart before the horse. The undisputed evidence showed significant variation in the amount of

gasoline supplied by Exxon over that time and over that area, and equally substantial (but

unrelated) variation in where and when MTBE contamination occurred. See Br. 46 & nn.22-25.

That variation makes it impossible to say that the market share percentage calculated by the jury

accurately reflects the percentage of MTBE contamination attributable to Exxon.14

And as even the State acknowledges (at 50 n.51), the levels of MTBE in Exxon gasoline

over this seventeen-year time period varied significantly, depending on the gasoline’s grade and

whether it was RFG or non-RFG. See Br. 46 n.25, 48. The State dismisses that fact (at 50-51) as

“beside the point,” because (it claims) “all gasoline” in New Hampshire contained some amount

of MTBE. Even if true,15 the particular amount of MTBE in gasoline makes all the (significant)

difference; as the State argued to the jury, “when you double the amount of the MTBE in the gas,

then you substantially increase the risks.” Tr. 11916:17-19. The sole evidence the State presented

regarding Exxon’s market share showed only the average share of all gasoline—whatever the

MTBE level—that Exxon supplied to the State from 1988 to 2005. See Tr. 5897:10-16; State App.

14 The State claims (at 48-49) that its expert, Dr. Hastings, adequately accounted for variation in the supply of

Exxon gasoline because she “added up the actual gallons of gasoline Exxon supplied each month and then divided by the total gallons of gasoline supplied in the State during that period.” But that shows only that Dr. Hastings correctly calculated the total average market share—not that the total average market share was correlated with MTBE contamination. To take an extreme example: if Exxon supplied half of all the gasoline in New Hampshire between 1988 and 2005, its total average market share over that time period would be 50%. But if it supplied all of that gasoline between 1988 and 2001, and all the MTBE leaks occurred between 2001 and 2005, then Exxon’s total average market share from 1988 to 2005 would have zero correlation with its responsibility for MTBE contamination over that period.

15 But see Tr. 5635:20-5636:7, 5695:4-5699:3 (State expert conceding that he did not know for sure whether any refiner was adding MTBE to unleaded regular gasoline before 1992).

18

1250-58. That yawning disconnect is yet another reason why market share liability cannot be used

to measure Exxon’s responsibility for MTBE contamination. See Goldman v. Johns-Manville

Sales Corp., 514 N.E.2d 691, 700 (Ohio 1987) (market share liability inappropriate where “it cannot

be shown that all the products to which the injured party was exposed are completely fungible”).

C. Any Market Share Liability Must Be Based on the Refiner Market.

Even if market share liability were good law in New Hampshire, and even if it were

applicable to this case, the judgment below would still have to be vacated because the Superior

Court applied the wrong market share. The State simply contradicts itself by arguing otherwise.

It claims (at 51) that the Superior Court could properly hold Exxon liable not only for its share of

the New Hampshire refining market (between 6% and 7%), but also for its much larger share of

the supply market (calculated by the jury at 28.94%)—a difference of some $200 million in

damages. See Br. 49; Tr. 5963:1-4, 5982:17-5983:3; App.1397. But as explained above, the State’s

evidence showed at best that it was impossible to trace spilled gasoline back to a particular

refiner—not that it was impossible to trace back to a particular supplier. See pp. 15-16, supra.

The State cannot have it both ways: it cannot claim that market share liability is necessary based

on the refiner market, but then seek dramatically higher damages based on the supplier market.

III. The Superior Court Erred By Trying The Case On An Aggregate Statewide Basis And Effectively Eliminating Site-Specific Defenses.

A. The Superior Court Erred by Allowing the State to Assert Aggregate Claims.

The State does not cite a single case, from any jurisdiction, in which any other court has

allowed a plaintiff (or plaintiffs) to prove statewide harm from MTBE contamination on an

aggregate basis. Nor does it contest that numerous MTBE cases have rejected this type of

aggregate proof—because each individual site presents unique factual and legal issues over when,

where, and how the contamination entered the groundwater, and what remediation is necessary.

19

See Br. 50-51 (citing cases). The State responds instead with the incredible claim (at 52) that it

actually provided the necessary individualized evidence, by identifying some 1,500 sites where

MTBE had leaked into the water supply. The State fails to mention, however, that it only generally

provided evidence about those sites; it made no attempt to prove for each individual site where,

when, and how the MTBE was spilled, let alone whether that MTBE came from Exxon in any way.

See Tr. 630:6-23 (explaining only that “these are sites … where MTBE has leaked in the past”);

see also Tr. 912:5-913:3 (State expert only reviewed 299 of the identified sites in depth).16 And it

made even less of an effort with respect to the additional five to six thousand wells that it claimed

were or would be contaminated with MTBE above the state-authorized threshold. It provided no

individual proof of where each of those wells was, or how each one had become or would become

contaminated; indeed, it relied entirely on statistics to show those contaminated wells even existed.

See Tr. 715:12-716:1, 720:9-18, 780:13-20. That hardly qualifies as “individualized evidence.”17

Changing tack, the State argues (at 54-55) that individualized evidence was unnecessary,

and that it was perfectly appropriate to proceed here on a statewide basis because this was a parens

patriae action rather than a class action case. But as Exxon has explained, parens patriae is only

a standing doctrine, and it does not change the underlying substantive law. Br. 53; see Hess Corp.,

161 N.H. at 432. Tellingly, the State has no response. The fact that a parens patriae action

undeniably differs from a class action, see Mississippi ex rel. Hood v. AU Optronics, 134 S. Ct.

16 Still worse, the State explicitly seeks (at 52) to shift its burden to Exxon, arguing that Exxon “knew about each

site and had every opportunity to challenge [its involvement].” Once again, this Court should reject the State’s guilty-until-proven-innocent theory, especially where Exxon was precluded from presenting individualized evidence for specific sites. Tr. 4403:22-4422:4; 4458:2-4464:14.

17 The State pretends (at 14) that its expert Dr. Fogg specifically “determined” that exactly 2,975 wells in the RFG counties and 2,568 wells in the non-RFG counties were contaminated with MTBE above the statewide maximum threshold. In fact, Dr. Fogg never actually visited or tested any private wells, Tr. 776:8-22, 967:8-11; his “determination” was purely statistical, and his confidence intervals ranged from 0 to 7,140 wells in the RFG counties and from 635 to 8,531 wells in the non-RFG counties. Tr. 976:12-16, 1019:11-21.

20

736 (2014), does not magically make aggregate proof appropriate in parens patriae cases.

The State suggests (at 53, 55) that Exxon is challenging only the methods used by the

State’s experts. But the problem is not with the manifold flaws in those experts’ methodologies;

it is that statewide averages were deemed legally sufficient proof. In other words, Exxon’s

complaint is not simply about the formulas used by the State’s experts, but that a “Trial by

Formula,” Wal-Mart Stores v. Dukes, 131 S. Ct. 2541, 2561 (2011), was allowed to substitute for

the State’s traditional burden of showing that Exxon caused specific spills at specific sites.18

B. The Superior Court Compounded Its Error by Misapplying DeBenedetto.

The Superior Court adopted a novel and completely atextual limit on Exxon’s statutory

right to limit its liability by apportioning damages to other parties who helped to cause the State’s

alleged injury. RSA 507:7-e. It required Exxon to show both that each third party was liable on

the same claim as Exxon—by alleging “sufficient facts to satisfy all the elements of at least one of

the State’s claims,” Add. 310 (brackets omitted); see Add. 313—and that each third party was

liable in the same manner as Exxon—by proving that those third parties “had [or should have had]

some knowledge of MTBE or its characteristics.” Add. 222; see Add. 211-13.

The State does not even attempt to defend this unprecedented “same claim and manner”

limitation. That alone should be enough to require a new trial, so that Exxon can properly seek to

apportion liability to “all parties contributing to the occurrence giving rise to an action.”

DeBenedetto v. CLD Consulting Eng’rs, 153 N.H. 793, 804 (2006) (emphases added). Instead, the

State argues (at 57-58) that apportionment requires proof of “fault.” It concludes that Exxon

cannot allocate damages to third parties who allowed oil to spill on their property in violation of

18 The State wisely does not defend the Superior Court’s conclusion that aggregate proof was appropriate here

just because it was more “cost effective.” See Br. 54 (quoting Add. 19).

21

RSA 146-A:3-a because that statute provides for strict liability. That is both irrelevant and

incorrect. Irrelevant, because the Superior Court required more than proof of fault—it required

the exact same fault, which erroneously prevented Exxon from apportioning damages to the

thousands of third parties who were “causally negligent by either causing or contributing to

[MTBE contamination]” in other ways. DeBenedetto, 153 N.H. at 800.19 And incorrect, because

it is “well established” that “fault” under DeBenedetto extends to “a causal violation of a statutory

standard of conduct”—including one established by a strict-liability statute. Bagley v. Controlled

Env. Corp., 127 N.H. 556, 561 (1986). Such a violation “constitutes legal fault in the same manner

as does … causal negligence.” Id. (emphasis added). That established principle cripples the State’s

attempt to portray Bagley as irrelevant because it construed a different statute.20

The Superior Court’s plain DeBenedetto errors were not harmless. Contra State Br. 60.

They led the Superior Court to strike more than half of the roughly four thousand DeBenedetto

parties that were originally identified. See Add. 56, 60-62, 312-22. And they made it impossible

for Exxon to apportion liability to the remaining parties, because Exxon could not feasibly present

individualized evidence showing that each party responsible for an MTBE gasoline spill knew the

risks of MTBE—especially for the more than five thousand wells statewide that the State merely

predicted were contaminated (without actually locating them), and for the future wells that the

State claimed would someday be contaminated. See n.17, supra. The resulting prejudice is

19 The State claims (at 57) that Exxon failed to preserve this issue by not submitting an offer of proof at trial.

Exxon submitted numerous offers of proof describing the basis of liability for each DeBenedetto party. See Add. 42; App. 1275. Those offers of proof were more than sufficient to “apprise the court of the specific nature of the excluded evidence.” State v. Noucas, 165 N.H. 146, 158 (2013).

20 The State also barely defends (at 58) the Superior Court’s conclusion that apportionment under DeBenedetto is limited to third parties who knew of MTBE’s specific risks—presumably because it realizes such a requirement would be inconsistent with DeBenedetto itself, where this Court approved apportioning liability to separate parties with very different knowledge. See DeBenedetto, 153 N.H. at 795-96, 804; Br. 56-57. The State instead claims (at 59) that Exxon “has not identified any point where the court actually required it to prove that non-parties knew of the risks of MTBE.” But that simply ignores the Superior Court’s repeated rulings on this issue. See Add. 212-13, 222, 242-43.

22

obvious from the jury’s verdict, under which not one of the third parties that actually leaked MTBE

gasoline into the groundwater bore any responsibility for the resulting contamination. App. 1400.

IV. The Superior Court Disregarded Hess And Prejudiced Exxon By Taking Away From The Jury The Factual Issues Underlying The Parens Patriae Determination.

This Court clearly stated in Hess that parens patriae standing requires the State to show

“injury to a ‘substantial segment’ of its population,” which turns on numerous “factual issues for

the trial court on remand and for the finder of fact at trial.” 161 N.H. at 433, 438 (emphasis added).

Yet the Superior Court decided the “substantial segment” issue itself, including all the underlying

disputed factual questions. That contravened well-established law.21 While a court may address

standing as a pure question of law when the facts are undisputed, see Dover, 153 N.H. at 185, it

cannot do so by resolving disputed factual issues that are central to the merits of a plaintiff’s claim.

See Alliance for Envtl. Renewal v. Pyramid Crossgates Co., 436 F.3d 82, 88 (2d Cir. 2006);

Morrison v. Amway Corp., 323 F.3d 920, 930 (11th Cir. 2003). The State concedes (at 62) that

“some” of the factual issues identified by Hess “were jury issues,” but contends that these were

“issues related to the contamination of private wells” unconnected to the parens patriae question.

But of course they are connected—they are the very factual issues that determine whether there is

“injury to a ‘substantial segment’” of the populace. See Hess, 161 N.H. at 438 (State arguing that

“private well contamination affects its entire citizenry”). That is exactly why Hess declined to

resolve those issues, and instead reserved them for “the finder of fact at trial.” Id.

Notably, the State does not dispute that Exxon raised genuine factual issues at trial over

these issues and the ultimate “substantial segment” question. Thus if the Court meant what it said

21 The State’s initial claim (at 61) that Exxon waived this argument is plainly wrong. Exxon explicitly sought a

jury instruction allowing the jury to determine whether the State proved injury to a substantial segment of the population. Tr. 11207:10-20. The State argued vigorously (and successfully) against that request, see Tr. 11205:7-18, 11208:19-11210:6; and in so doing, it acknowledged that the issue “will go up” on appeal, Tr. 11213:5-6.

23

in Hess, then a new trial is required.22 The State’s attempt (at 63-64) to rehabilitate its discredited

expert testimony only confirms that a reasonable jury could have gone either way. See Bouthiette

v. Wiggin, 122 N.H. 774, 776 (1982) (the “weight to be given to evidence is within the jury’s

province, and the jury may accept or reject in whole or in part an expert’s testimony”).23

V. The State’s Claims Based On Future Expenses Are Unripe And Cannot Support Prejudgment Interest.

A. The State’s Claims for Future Sampling and Treatment Are Unripe.

The State argues that it could properly seek damages for extensive future testing and

treatment of all private wells in New Hampshire—including nonexistent wells—and sites that have

already undergone treatment. It contends (at 65) that those remote and contingent claims are ripe

because they result from the “proven existing injury” of MTBE contamination, and thus are the

same as a slip-and-fall plaintiff seeking “future medical expenses or damages for loss of income.”

That argument is fanciful. Ripeness depends on “the degree to which the defined issues in

a case are based on actual facts … and are capable of being adjudicated on an adequately developed

record.” Appeal of State Emps.’ Ass’n, 142 N.H. 874, 878 (1998). A slip-and-fall plaintiff who

seeks future medical expenses has “actual facts”; she can point to exactly where her injury is. The

State cannot do the same here. It seeks damages for MTBE contamination, but it has no idea where

22 The State argues (at 63-64) that Exxon “misunderstands the applicable standard of review,” and that the Superior

Court’s decision should not be reversed unless clearly erroneous. But it is the State that misunderstands the correct standard: the Superior Court made a legal error by resolving disputed factual issues itself rather than leaving them to the jury, and that legal error is reviewed de novo. See Progressive N. Ins. Co. v. Concord Gen. Mut. Ins. Co., 151 N.H. 649, 652, 659 (2005). When the judge intrudes on the province of the jury, the judge does not get the benefit of the jury’s standard of review. That would add insult to injury, rather than correcting the injury.

23 In any case, the State’s rehabilitation of Dr. Fogg’s testimony is unpersuasive. Dr. Fogg admitted it was possible that no private wells in the RFG counties were contaminated above the maximum contaminant level (MCL). Tr. 1019:11-21. And he admitted the data set he used for the RFG counties found no private wells at all in the non-RFG counties contaminated above the MCL—so he used a different data set for those counties. Tr. 979:6-980:16. Finally, the State simply mischaracterizes the record by claiming (at 64) that Dr. Fogg determined that the data used for the non-RFG counties “were in fact not biased.” Dr. Fogg testified that the data set was biased. Tr. 981:17-982:9. He then backpedaled, claiming the data nevertheless gave an “unbiased, you know, reasonable picture.” Tr. 981:1-16.

24

most of that contamination may be, or its scope if it even exists. Its claimed damages include

future costs for testing hundreds of thousands of wells, but the State does not expect to find MTBE

above the MCL in ninety-eight percent of those wells. Br. 62-63. They likewise include the future

costs of treating wells in which the State predicts contamination may (someday) be found, even

though the State has not identified and cannot identify which wells those are. Its claims are based

on wells that draw from manifold aquifers, and any future contamination in those wells will depend

on the structure of the underlying ground, the (unidentified) sources of MTBE contamination, the

amount of precipitation, and the number of future wells that will exist. See Br. 65-67. Because

the State cannot yet identify just what contamination has occurred (or will occur), and just what

treatment is needed (or will be needed), its claims are not yet ripe. See Chamber Br. 7-11.

The State contends (at 66) that it faces “significant hardship” because “delaying litigation”

would impede the State’s desire “proactively to address the full extent of MTBE contamination.”

But the ripeness requirement is intended to prevent hardship to parties forced to defend against ill-

defined and uncertain claims, like Exxon here. Nothing prevents the State from “address[ing] the

full extent of MTBE contamination” and obtaining damages to treat that contamination when it

actually identifies what, exactly, has been contaminated.24 The State is left to assert (at 67) that

Exxon’s argument only challenges the reliability of Dr. Fogg’s evidence. But the relevance of Dr.

Fogg’s evidence is that, even if accepted, it demonstrates that the State’s claims are based on the

exact sort of unknown, unknowable, and unaccounted-for variables that signal abstraction and

generality, not concreteness and particularity. In short, this case raises precisely the concerns

animating the ripeness doctrine, and this Court should not permit the State to elide that limitation.

24 The State alleges (at 66-67) that Exxon “identifies no case holding similar claims unripe.” But even accepting

its unpersuasive attempt to distinguish In re MTBE, it is the State’s burden to prove ripeness, see Renne v. Geary, 501 U.S. 312, 316 (1991), and it cites no case even hinting that claims like the ones advanced here are ripe.

25

B. The Superior Court Erred by Awarding Prejudgment Interest.

The State claims (at 68-69) that the text of RSA 524:1-b forecloses Exxon’s challenge to

the Superior Court’s illogical award of prejudgment interest on costs not yet incurred. But that

statute only authorizes the award of prejudgment interest when the plaintiff has suffered “any other

type of loss for which damages are recognized.” RSA 524:1-b (emphasis added). The term “loss,”

standing alone, naturally means a cost or harm that has already been incurred, rather than a future

expense. See Black’s Law Dictionary (10th ed. 2014) (defining “loss” as “the disappearance or

diminution of value”). The text of the statute thus favors Exxon’s position, or at the very least is

ambiguous. In either case, this Court should interpret that text in light of the clear purpose of pre-

judgment interest: “to compensate plaintiffs for the lost use of money” between the time they are

injured and the time they are paid. Galloway v. Chicago-Soft, Ltd., 142 N.H. 752, 761 (1998).25

The State does not dispute this purpose, or that where (as here) a plaintiff has not yet incurred the

expenses at issue, prejudgment interest only provides an unjustified windfall.26 That is why

numerous federal and state courts have rejected pre-judgment interest on future costs, see Br. 68-

69 & n.29, and why this Court should reject that theory as well.27

CONCLUSION

The judgment of the Superior Court should be reversed or, at a minimum, vacated.

25 The State argues (at 69-70) that RSA 524:1-b is also intended “to accelerate settlement,” but its only citation

for that purported additional purpose is pure dicta. See Metro. Prop. & Liab. Ins. Co. v. Ralph, 138 N.H. 378, 385-86 (1994) (holding that prejudgment interest under RSA 524:1-b should be simple rather than compound).

26 Unlike the State’s cited cases (at 69 n.70), this is not a case where prejudgment interest would compensate the plaintiff for the delay between suffering a past harm and being recompensed for that harm. The State simply will not “suffer” the future expenses of testing and treatment until it actually undertakes that testing and treatment.

27 The State argues (at 68-69 & n.70) that Exxon’s state cases are irrelevant because they interpret “a state statute that materially differs from the New Hampshire statute.” But the two cases it cites (at 68 & n.69) as interpreting “statutory language comparable to RSA 524:1-b” likewise do not involve the key “any … type of loss” language.

PaurD. CleururArguing Counsel(admittedpro hac vice)

BANCROFT PLLC1919 M StreetNWSuite 470Washington,DC 20036(202) 234-00e0

TuBoooRnE. Tsrrenroes(admittedpro hac vice)

WEIL, GOTSIIAL & MANGES LLP767 FifthAvenueNewYork, NewYork 10153(212) 310-8000

March 17,2015

BnucB W. F¡I-rr¡I-v (Nfl Ben 787)Perrucr H. Tewon (1.[H Ban 1 7 I 71)MCLANE, GRAF, RAULERSON &MIDDLETON, PROFESSIONALASSOCIATION

Ciry Hall Plaza900 Elm StreetManchester, NH 03101(603) 62s-6464bruce. fel m I y@mclane. com

CERTIF'ICATE OF' SERVICE

I hereby certifr that on March 17,2015,I served the foregoing Reply Brief ForAppellants

Exxon Mobil Corporation And Exxonmobil Oil Corporation by hand-delivering two copies thereof

to K. Allen Brooks, Esq., Senior Assistant Attomey General, Chief, Environmental Protection

Bureau, Offrce ofAttorney General, 33 Capitol Street, Concord, NH 03301, counsel for the State

of New Hampshire.

BRucnW Fervrv (NH