In Re: Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation

Filing 4411

TRANSCRIPT of Proceedings re: conference held on 3/29/2016 before Judge Shira A. Scheindlin. Court Reporter/Transcriber: Patricia Nilsen, [phone]. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 5/9/2016. Redacted Transcript Deadline set for 5/19/2016. Release of Transcript Restriction set for 7/15/2016.(McGuirk, Kelly)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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In Re: METHYL TERTIARY BUTYL
ETHER ("MTBE") PRODUCTS
LIABILITY LITIGATION

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00 MDL 1358 (SAS)
00 CV 1898 (SAS)

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Telephone Conference
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New York, N.Y.
March 29, 2016
2:35 p.m.

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Before:
HON. SHIRA A. SCHEINDLIN

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District Judge

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APPEARANCES

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MILLER AXLINE & SAWYER
Attorneys for Plaintiffs
BY: DUANE C. MILLER
MICHAEL AXLINE

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JACKSON, GILMOUR & DOBBS
Attorneys for Plaintiffs
BY: JOHN D.S. GILMOUR

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COHN LIFLAND PEARLMAN HERRMANN & KNOPF LLP
Attorneys for Plaintiffs
BY: LEONARD Z. KAUFMAN

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WEITZ & LUXENBERG, P.C.
Attorneys for Plaintiffs
BY: WILLIAM J. WALSH

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McDERMOTT WILL & EMERY LLP
Attorneys for ExxonMobil
BY: JAMES A. PARDO

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SEDGWICK LAW
Attorneys for Shell Oil Company
BY: PETER CONDRON

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EIMER STAHL
Attorneys for CITGO Petroleum
BY: LISA MEYER
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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APPEARANCES (continued)
JAMES B. HARRIS
Attorney for Petrobas America

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OBSERVING FOR DEFENDANTS:
Ira Matesky
Daniel Krainin
Chad Higgins
Jessica Farley
Stephanie Weirick
Pamela Hanebutt
Albeniz Fuentes
Jeremiah Anderson
Andrew Langan
James Tuite
Meghana Shah
Barry Goheen
Matthew Conley
Robert Wilson
Susan Dean
OBSERVING FOR DEFENDANTS VIA TELEPHONE:
Kelly Murrie
Jennifer Aspinall
Stephanie Hall
Steve Dillard
Dawn Ellison
Alejandro Cepeda
Amy Parker
Michael Regan
William Stack
Edward Goolsby
Matthew Parisi

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SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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(In open court)

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THE COURT:

Good afternoon, Mr. Walsh.

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MR. WALSH:

Good afternoon, your Honor.

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THE COURT:

Mr. Miller, Mr. Axline, Mr. Kaufman,

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Mr. Gilmour.

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Mr. Pardo.

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MR. PARDO:

Good afternoon, your Honor.

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THE COURT:

Ms. Meyer, Mr. Condron.

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MR. CONDRON:

Good afternoon, your Honor.

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THE COURT:

Mr. Harris.

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MR. HARRIS:

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THE COURT:

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MR. LANGAN:

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THE COURT:

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MR. ANDERSON:

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THE COURT:

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MS. HANEBUTT:

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THE COURT:

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MR. KRAININ:

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THE COURT:

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Oops, the phone.

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Good afternoon.

Good afternoon, your Honor.
Mr. Langan, there you are.
Good afternoon, your Honor.
Mr. Anderson?
Good afternoon, your Honor.

Ms. Hanebutt.
Good afternoon.

Mr. Krainin.
Good afternoon, your Honor.

I have your agenda.
Who's on the phone?
This is Judge Scheindlin.

There are

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eleven of you on this phone call, so I won't be greeting you by

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name, but I will give this list to the court reporter so she

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will know who has been on the phone.

And I should say that to

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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the other folks who I didn't greet, but your names are on the

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appearance sheet and will be on the record.

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So if you don't have too long an agenda for today.

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It's primarily New Jersey and Puerto Rico.

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it's much the same issue in both.

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And in some sense

Starting with New Jersey, I was told I would get an

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update, if there is any update, on the phase one remand.

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then we should talk about structuring phase two.

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So, Mr. Kaufman, did you want to start?

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MR. KAUFMAN:

And

Your Honor, if I might give you an

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update.

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come here, I got a call from Judge Wilson's chambers.

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the judge in New Jersey to whom this has been assigned.

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make a long story short, the upshot is that the case is being

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referred to magistrates.

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conference scheduled sometime sooner, rather than later, so

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that we can set a schedule for everything that needs to be done

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in order to try the case.

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that as well when I arrived here today.

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Literally as I was leaving my office this afternoon to
She's
To

And there will be a case management

So I've informed defendants about

So that's the status on phase one.

It looks like it

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is starting to move and hopefully will get to a trial sooner,

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rather than later, in that matter.

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THE COURT:

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trial as you understand it?

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What is the structure of the phase one

MR. KAUFMAN:

What will be tried in phase one?

We will try all issues of liability and

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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damages for the trial sites.

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THE COURT:

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MR. KAUFMAN:

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THE COURT:

All issues.

So it's an all-issues trial?

That's my understanding, yes.

Okay.

So that's the update.

Does anybody

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have anything to add about the update that Mr. Kaufman just

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gave?

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No?

Of course.

So let's talk a little bit about phase two.

You have

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written letters back and forth as to how you think it should be

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structured.

The plaintiffs' letter starts with two alternative

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ideas.

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approach, which was pretty much used in New Hampshire.

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I understand it, it did reach the highest court of

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New Hampshire.

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one possibility.

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One is what they call a statistical extrapolation

And the verdict stood, so to speak.

And as

So that's

The second proposal from the plaintiff is that the

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phase two proceeding be a bifurcated trial that first

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determines liability and punitive damages, and then after that

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verdict would take up compensatory damages.

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understand the details in this second alternative as to how

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many or which sites would be tried.

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I understand trying liability and punitive damages first and

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compensatory damages second.

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sites are that you're pointing out.

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But I didn't

I understand bifurcation.

But I don't understand what the

So the plaintiffs also go on in their submissions to
suggest that defendants should stipulate to certain facts about
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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ownerships of sites and suppliers to those sites and who paid

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for remediation of those sites.

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this Court to direct the parties to draft a case management

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order for how to resolve all the remaining claims in a single

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additional trial.

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And then the plaintiffs ask

Defendants were not entirely clear as to what approach

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they would take, but they said we shouldn't even be talking

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about phase two until after phase one is completed.

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they're forced to talk about it, they're leaning towards

But if

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something called an enhanced focus site approach.

And this is

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the idea of putting sites into three categories, or buckets.

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And so you'd have these three subcategories where the sites

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would be separated by fact patterns or other criteria.

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they say that doing that, we can try more than the 20 sites in

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phase one.

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5,000.

And

But more would not get us anywhere near, I assume,

So there really has to be a way to do this.

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So my thought is that, of course, plaintiffs have the

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better of it in the sense of we can't have endless trials.

It

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is certainly better to structure phase two in some way that

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makes it not only the second trial but the last trial, if

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there's a way to do that; because trials, if they occur, are

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expensive and long for the Court.

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Court when they're very long; three months, six months, nine

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months.

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them.

They're an imposition on the

They're very difficult things.

You can't keep trying

Even 50 at a time won't get you there when you're
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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talking about 5,000 sites.

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second trial, a third, and then 20th and 50th trial.

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can't be done.

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Court's system can't accommodate that.

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So it's not realistic to have a
It just

The Court really can't accommodate that.

The

So there has to be some way to do less than all but

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more than you do in phase one.

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to understand now to some extent what approach is taken so that

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the discovery, which remains in the purview of the MDL Court,

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can be organized toward that goal of a meaningful phase two

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And it wouldn't be a bad idea

trial.

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Now, while the Court can't and won't order anybody to

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stipulate to things -- people aren't ordered to stipulate;

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that's a voluntary act, so I can't order people to stipulate --

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but a master list, sites where there is knowledge, should be

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created that names the site and the ownership and the supplier

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and remediator per site for all known locations.

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would be a start.

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That at least

But how to really structure a phase two trial is a big

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topic.

The statistical extrapolation approach is something

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that I think not only New Hampshire has proved, but there was a

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recent Supreme Court decision this week in a very different

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context, Tyson Foods -- you saw that.

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with overtime hours and donning and doffing uniforms.

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point was the Supreme Court accepted the notion that you could

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do it by statistical extrapolation.

Tyson Foods had to do
But the

And it was the only

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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realistic way to do it.

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going to have different uniforms to take on and off and is

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going to take a different amount of time.

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recognized that that was not a feasible way to proceed.

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Every worker and every location is

And the Court

So there is some now Supreme Court authority, albeit

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distinguishable and different contexts.

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will want to write long briefs telling me that it's totally

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different.

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extrapolation was addressed.

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I get that.

I'm sure defendants

But the concept of statistical
So that's certainly one thought.

I don't mind the defense notion of enhanced focus

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sites by subcategories, if they would agree that if you tried

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the -- let's say three or four buckets' worth of categories,

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you would agree to that, extrapolate those findings, the

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remaining sites that could fall into those buckets.

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okay, too, but there would have to be an agreement in advance.

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The parties would negotiate how many categories, how many sites

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they want to try per category.

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whatever findings come out of that jury trial, they would agree

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in advance to apply to the remainder that fall into that

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category.

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can then be assigned to one of the categories, the findings

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would apply.

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of New York in big cases, agreed in advance to apply findings

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to futures cases.

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That's

Then they would agree that

Even over time, even if the site turns up later but

And we've done that here in the Southern District

But that is an approach, too.

It's not really the

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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same as statistical extrapolation.

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approach, where the parties negotiate and agree that certain

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findings can be applied going forward, once they figure out the

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categories.

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It's a common sense

So those are probably the two approaches that make the

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most sense to me.

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my successor shouldn't even be discussing this until after

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phase one is done.

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with discovery, even as you're getting ready to try this big

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I don't agree with the defendants that I or

Why put it off?

I mean, we need to proceed

phase one case.
And so I turn briefly -- and of course I'll hear from

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you in a minute, but I might as well cover Puerto Rico, because

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it's not all that different.

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too, in a way.

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because the remand was just issued.

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early to even expect a report on phase one.

Puerto Rico has the same issue,

We don't know anything about a phase one trial,
So it's probably much too

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But would you agree, Mr. Axline, with what Mr. Kaufman

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said, that phase one is meant to be an all-issues trial for the

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focus sites?

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MR. AXLINE:

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THE COURT:

Yes.
So in that sense it's the same.

And so,

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again, you said you've been having some meet and confers on

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that particular case.

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update the Court on the status of your discussions at the

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conference.

And your letter states that you will

So I think I should pause from speaking and ask if
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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you have any update as to the results of your meet and confer

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as to how to structure phase two.

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MR. AXLINE:

All I can tell you is that we're

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continuing to meet and confer.

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resolution, but I think --

We haven't reached a

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THE COURT:

What ideas are you kicking around?

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Ms. Meyer, if you want to confer, the usual approach

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here is to say, may I have a moment, then confer, so I was not

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talking over you.

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So what are some of the thoughts that are being kicked
around as to how to conduct a phase two trial?

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MR. AXLINE:

With respect to a phase two trial and

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discovery, we've discussed getting together to draft CMOs,

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potentially conflicting CMOs, but trying to identify areas of

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commonality.

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You will recall that in December there was a meeting

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with some of the readded defendants who came back into the

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case.

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the defendants.

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terms of anything specific that I could say on behalf of my

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client in Puerto Rico or the defendants with respect to phase

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two, we don't have --

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And your Honor ordered us to provide some information to
We're in the process of doing that.

THE COURT:

But in

What is your notion of the best approach

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for phase two?

Do you, again, agree with Mr. Kaufman that

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so-called phase two should be the last trial?
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. AXLINE:

Yes.

That is the position the

Commonwealth is taking.

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THE COURT:

So assuming that, how do you try the vast

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number of sites that there are?

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as big as New Jersey or smaller, but whatever the number is,

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what is your approach as to how you try that?

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MR. AXLINE:

I don't know if the number is

Well, it's quite a bit smaller than

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New Jersey.

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warrant using a statistical approach or a bifurcation.

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But nevertheless, I think it's large enough to

those are the two --

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THE COURT:

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MR. AXLINE:

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I think

damages.

Or a bifurcation.

What does that mean?

Where you try liability first and then

So the --

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THE COURT:

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MR. AXLINE:

For what sites?
Well, you would try liability in terms of

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the defendants' liability for delivering MTBE to sites that are

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not questionable whether the defendants delivered to sites in

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Puerto Rico, and then the number of sites I think and the

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extent of the damage at sites would determine the damages.

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So --

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THE COURT:

So when it becomes site specific would not

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be until the damages part of the bifurcation, is that what

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you're saying?

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MR. AXLINE:

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THE COURT:

Correct.

Yes.

So in the first part of the bifurcation in

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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phase two, it's not site specific?

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MR. AXLINE:

Right.

You'd get a special verdict on

product liability and have the jury try that.

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THE COURT:

And so the only time -- I'm sure I'm

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repeating that you get -- site specific is on the damages phase

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of the second trial?

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MR. AXLINE:

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THE COURT:

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on every site in Puerto Rico?

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MR. AXLINE:

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THE COURT:

Not if you took a statistical approach.

But in the bifurcated approach that you

just described --

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MR. AXLINE:

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THE COURT:

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MR. AXLINE:

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So then you'd have to have full discovery

So you could --

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Correct.

Yes.
-- you would have to?
No.

No.

These the not mutually

exclusive, your Honor.

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THE COURT:

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MR. AXLINE:

I see.
So you can try on liability.

Assuming

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liability was found, and the special verdict form would look a

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lot like the New Hampshire form that we submitted as an

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exhibit, then you would present the statistical evidence to the

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jury on the likely number of wells impacted, release sites and

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so on.

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THE COURT:

What are the numbers in New Jersey -- in

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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Puerto Rico?

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MR. AXLINE:

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THE COURT:

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Who wants to be heard from the defense side about the

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They're roughly 400.
Okay.

Thank you, Mr. Axline.

phase two in either of these jurisdictions, either or both?

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MR. PARDO:

I'll begin, your Honor.

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THE COURT:

Okay.

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MR. PARDO:

With respect to the statewide statistical

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extrapolation approach, my colleagues, Ms. Meyer, Mr. Condron,

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may also have items to add.

But I'll begin.

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THE COURT:

Okay.

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MR. PARDO:

Can I just step us back, though, for one

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second about the focus site approach; because not only do I

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want to explain why the defendants are going towards an

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enhanced focus site idea, but I want you to understand that the

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approach that you put in place -- because this was your idea

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ten years ago -- has worked, okay?

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importantly, it has not come to fruition yet.

Has worked.

More

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THE COURT:

Well, that's true.

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MR. PARDO:

We're not saying that it's premature to be

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talking about phase two case structuring.

Obviously we're

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talking about it now, and we've had meet and confers with

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plaintiffs.

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ourselves to taking the focus site approach, declaring it a

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failure, which I think is what the plaintiffs are doing, and

What we're saying is that it's premature to commit

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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putting it into the trash can, just as --

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THE COURT:

I don't think so at all.

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it's -- that's phase one.

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can.

I thought

They're not putting it in the trash

They're ready to try the focus site approach, I thought.

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MR. PARDO:

They will.

But what they're saying is it

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hasn't and it won't work for phase two.

And what I want to

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tell you is that I think it will, okay.

When you think about

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what you've accomplished, what your idea has done here in the

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New Jersey case, one of the biggest cases the State of

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New Jersey has probably ever seen, ever will see, okay, you

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haven't even had your first focus trial yet.

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had a trial yet.

You have not even

And more than half your defendants are out.

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THE COURT:

That's true.

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MR. PARDO:

They've settled.

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THE COURT:

Yes, indeed.

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MR. PARDO:

-- that's been paid to the state.

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THE COURT:

Right.

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MR. PARDO:

It's a lot of money.

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THE COURT:

Yes.

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MR. PARDO:

The whole point of the approach was to get

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Out -- they've settled.
There's 107 million

plus --

It's a lot of

parties.

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this case -- not up to trial, but through trial, and then to

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see where we're at.

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THE COURT:

That's true.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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MR. PARDO:

That process needs to play itself out, I

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think, before we commit ourselves to doing a 180 and

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throwing -- it is a 180.

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different from anything that we've ever done in this MDL, that

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really has been done almost anywhere.

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THE COURT:

What they're proposing is completely

I don't agree with that.

What they're

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saying is phase one is the approach that we've taken, as you've

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said, for ten years.

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resolve in a global settlement, we need to be ready to proceed

It will go to trial.

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to wrap this case up.

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permanent, like permanent revolution, permanent litigation.

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I'm sure Chairman Mao would agree it shouldn't be forever in

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litigation.

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That's a good idea.

If that does not

So the question is:

Cases should not be

How do you wrap it up if, at the

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end of phase one, there is not a settlement, global settlement?

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And they say you don't want to address that that day because

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then you lose another two years waiting to be ready.

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they're saying is the approach should be thought about now so

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that you're on two tracks:

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trial; but another team is moving forward to be ready to deal

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with the remainder, if there's not a global settlement.

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MR. PARDO:
disagree.

So all

One, some team is getting ready for

And we agree.

We agree.

We don't

That's, again, why we're having the conversation.

What I'm saying is our approach says, we believe the
focus site approach has worked.

Let's not throw it away.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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THE COURT:

We're not throwing it away.

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MR. PARDO:

Let's take it, let's enhance it.

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make it more efficient.

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do the next phase --

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THE COURT:

Let's make it more focused.

Let's
And let's

That's fine, if you took my additional

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idea on top of it.

And if you said, in phase two we will use

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the categories approach, we'll use these buckets.

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lot more sites in because we're going to have not just 20 from

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one trial; we'll have buckets of 20, buckets of 30.

We'll put a

So maybe

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we're not going to try as much as 90, but that leaves 4,500.

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So unless we are willing to agree up front that after we try

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these categories with common fact patterns and we have

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verdicts, we will agree to apply those verdicts and wrap this

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thing up.

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MR. PARDO:

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bad one.

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defense group.

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I appreciate the ideas, yes.

It's not a

plaintiffs.

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It's one we haven't talked about, of course, as a
Certainly haven't talked about it with

But let me be clear:

No one on either side of the

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table here is suggesting to you or to the next judge or to

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anyone that 5,250 sites are going to be tried.

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there has to be a way to do it, get resolution on all of those

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without actually trying them all.

You're right,

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THE COURT:

That's right.

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MR. PARDO:

But there has to be a way to do it that

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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respects what you have said for 15 years in this case, 15

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years.

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THE COURT:

Which is?

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MR. PARDO:

That sites matter.

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different.

That every site is

That there are individual issues, okay.

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THE COURT:

But that would be the benefit of your

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suggestion about the buckets.

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they're not that different.

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different, but the categories can be made to be similar.

Every site is different, but

In other words, the detail is
And

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if you pick enough buckets -- not limited to three, it could be

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five -- I think every site can be in one of those buckets.

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really do.

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the bucket.

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that's not one trial but four.

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buckets.

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at the end of those four -- they could be simultaneous.

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could be parceled out to different judges in the building.

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knows?

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matter of assigning the remaining sites to one of the buckets

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and agreeing to apply the findings.

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I

They have common characteristics that puts them in
Then you try those common buckets, and maybe
Let's say you pick four

The Court could live with four more trials.

But when they're tried, that's it.

But if
They
Who

Then it's just a

That's my view.

Anyway, you said it's new, so it's something to think
about at least.
MR. PARDO:

It's something to think about.

But even

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under that approach, that approach would be a significant

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change from what we've done.

And from what you've said again

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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and again and again, going all the way back -- I'll give you a

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name of a case that maybe you'll remember:

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THE COURT:

What's the name?

4

MR. PARDO:

Lasouza, remember?

Lasouza.

5

Parisha, Berry and

Lasouza (phonetic), 2001, and initial class actions.

6

THE COURT:

I don't.

7

MR. PARDO:

I think I was an associate.

8

THE COURT:

Okay.

9

MR. PARDO:

I had a lot more hair, too.

10

the New York private wells.

11

putative class.

12

Court, they couldn't tell us if their wells had ever been

13

actually impacted.

14

or any damage.

They were a class.

These were
They were a

And the problem was they couldn't tell the

They couldn't tell if there was any injury

15

THE COURT:

That would be down the road, because this

16

is a quasi focus site effort.

17

categories, those wells, you will know.

18

It's only after that with the remainder, when you're trying to

19

put them in buckets, that you could then say, this well doesn't

20

belong in any bucket, because you haven't given us any proof

21

that it's ever been impacted.

22

procedure.

23

Dalkon Shields, used in asbestos, used in big settlements all

24

the time.

25

It's just a matter of applying it in a claims resolution type

When you create these buckets or
Those are known wells.

That's like a claims resolution

It's been used and used.

You know, it was used in

People know what to do after the first few trials.

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process.

2

there, that site falls out.

3

one of the four buckets or five or three, whatever the number

4

is.

5

There's minimum proof needed.

And if the proof isn't

If the proof is there, it goes in

And you apply the findings from the trial to that bucket.
So it's just a matter of being creative and thinking

6

it through.

7

essentially no-pay sites.

8

out.

9
10
11

But you're probably right that some sites will be

MR. PARDO:

That's fine.

It will work itself

Right. in fact, I think there will be many

sites that are -THE COURT:

Maybe there will be some disputes.

I have

12

that in securities fraud cases, where, when the claims process

13

starts, there are challenges to reliance, for some investors

14

probably didn't rely they should get anything.

15

We have a process.

16

We work it out.

But there's no more trials.

The liability trials you call them, Mr. Axline, up

17

front that's determined that now we're essentially in the

18

second site-by-site damages phase.

19

trial in New Jersey, once we try a focus group in the bucket.

20

So I think it's a good idea, but we're not going to solve it

21

today, anyway; is putting out there a good process, a

22

suggestion based on your letters and my experience and

23

thinking.

24

we'll see what we can do.

25

But we shouldn't do it by

And I want you to take it under advisement.

And

Now, whether we can do anything in the remaining 30
SOUTHERN DISTRICT REPORTERS, P.C.
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days that I happen to be the judge, I don't know.

2

nice, nice legacy for MTBE cases to have some kind of a thought

3

for how to resolve it.

4

like to try to see where we could go.

5

MR. PARDO:

And if not, such is life.

It would be

But I would

This issue is important enough, I think,

6

that it's safe to say, speaking for the defendants, we think it

7

would require a fair amount of time on briefing and argument,

8

your Honor.

9

THE COURT:

I'm not sure you want to do that.

10

Briefing?

11

statistical approach denies us due process?

12

proposing a statistical approach.

13

little trouble anyway between the Supreme Court and

14

New Hampshire.

15

What's there to brief?

You're going to say the
I'm not even

But I think you'd have a

But putting that aside, I'm not even proposing that.

16

Don't reject what might be the right way to go reflexively.

17

Obviously, whoever you are lucky enough to get next is never

18

going to have the 15 years of experience that we just spoke

19

about on knowledge of these cases.

20

intensive discussions in the remaining time, that would be

21

good.

22

discovery, the more efficient it is.

23

prized.

24
25

So if we could have some

The more we know where we're heading with the remaining
And efficiency should be

And it's really not to defend -- I don't think it's
really to defendants' advantage to delay and delay and delay.
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I don't see how that's particularly good for your companies.

2

If you can wrap this long-running litigation up, there is

3

advantages to that, too.

4

put us on an organized track to someday conclude these

5

litigations.

6

defendants' goal.

7

obvious.

So don't reflexively reject ideas and

That should be the plaintiffs' goal and the
I'm sure it is the plaintiffs' goal.

That's

But it should be your goal, too, Mr. Pardo.

8

MR. PARDO:

It is my goal, your Honor.

9

THE COURT:

Good.

Then in that case, as far as I'm

10

concerned, we can meet again in two weeks to discuss this idea

11

further.

I'm serious.

12

Anyway, it would be so nice to see you again.

13

MR. PARDO:

14

It would be nice to see you, too, again,

your Honor.

15

THE COURT:

I hope that will be the case.

16

MR. AXLINE:

It's hard to say good-bye.

17

THE COURT:

18

But in any event, so who else wants to be heard?

19

Yes, indeed.
You

implied that Ms. Meyer might want to be heard?

20

MR. PARDO:

It really depended on where the

21

conversation between us went.

22

THE COURT:

I don't know if my colleagues --

Somebody might want to comment as to why

23

you think there's a need for briefing.

I mean, briefing would

24

come in if you were going to challenge, I think, the

25

statistical extrapolation approach, because the other approach
SOUTHERN DISTRICT REPORTERS, P.C.
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is not a matter of challenging.

2

a structure that makes sense.

3

can work without some agreement, those approaches.

4

It's a matter of whether it's

There's nothing about it that

But the statistical approach could be imposed on you.

5

And that's why briefing would be required; if somebody was

6

going to try to impose that on you, the statistical

7

extrapolation approach.

8

And maybe it's thoughtful.

9

company out here might actually make their clients happy by

10

But this approach is quite different.
And maybe, as I said, some defense

trying to wrap this up.

11

MR. PARDO:

And I want to be clear --

12

THE COURT:

Someday.

13

MR. PARDO:

-- I'm not rejecting that.

I hope I

14

didn't say something to suggest to you that I was knee-jerk

15

rejecting your idea.

16

discussed as a defense group.

17

THE COURT:

18

So does anybody else wish to be heard?

19

MR. CONDRON:

20

The approach you've outlined today, I think, merits

I'm not.

It's just one we haven't

I understand.

Your Honor, Peter Condron.

21

some serious consideration on our part.

22

reject the statistical extrapolation.

23
24
25

THE COURT:
least.

I will say we would

I kind of thought you would like that the

I have some understanding of why.
MR. CONDRON:

Yes.

But I think we do need to talk to

SOUTHERN DISTRICT REPORTERS, P.C.
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our clients.

2

We need to talk to each other and take it under

advisement.

3

THE COURT:

For sure.

I appreciate that, Mr. Condron.

4

Anybody else wish to be heard?

5

MS. MEYER:

I would echo that, your Honor.

And I

6

think if you would like to hear more about the problems that we

7

see with the statistical extrapolation approach --

8

THE COURT:

Sure.

9

MS. MEYER:

-- I'm happy to go into that.

10
11
12
13

But we can

also save that for briefing down the line.
THE COURT:

Then I probably won't get to hear it, so

I'd like a little preview.
MS. MEYER:

I think the number one problem is the due

14

process clause.

As these cases have been tried over the last

15

10 to 15 years, the defendants have had the opportunity to put

16

on site-specific defenses that range from statute of

17

limitations, lack of injury, lack of causation, sometimes lack

18

of failure to warn at a site like you just found in the Puerto

19

Rico sites.

20

statistical extrapolation approach, because the defendants

21

simply do not have a chance to make those arguments.

And those defenses disappear in any kind of

22

THE COURT:

Those site-specific arguments.

23

But in Mr. Axline's proposal, he said the second half

24

of the second phase would be a site-specific damages approach.

25

It would just be bifurcated.

So liability would be out of the

SOUTHERN DISTRICT REPORTERS, P.C.
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way.

Earlier letters had said liability and punitive damages,

2

but, okay, would be out of the way.

3

the -- not phase two; the second half, the bifurcation in phase

4

two would be a site-specific damages approach.

5

for Puerto Rico, where there's no more than 400 sites.

6

probably impossible in New Jersey, where there's 5,000, because

7

if they're contested, you really are asking the courts, in this

8

case the federal courts, to somehow have 5,000 minitrials.

9

And that can't be.

And then phase two of

That's possible
It's

Courts have an obligation to

10

manage their dockets.

And that's well established in the law,

11

too.

12

courts have to survive a mass tort case.

13

out creative ways over the years to survive mass tort type

14

cases.

15

elastic, pretty reasonable in accepting whatever approach it

16

has worked out, because the Court has to manage its docket.

17

And that's important, too.

So while you have rights to due process, of course, the

18

And they've worked

And I think the higher courts are going to be pretty

MS. MEYER:

We serve many clients.

I agree with that, your Honor.

And I

19

think that's -- my client is no longer in the New Jersey

20

matter.

21

alternative is something that would lead to a conclusion of the

22

case in advance of having to try 5,000 sites.

23
24
25

But what I've heard the defendants suggest as an

THE COURT:

That's what I was picking up on in what I

spoke about as a combination of the ideas.
MS. MEYER:

I would submit, your Honor, there are many

SOUTHERN DISTRICT REPORTERS, P.C.
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other legal challenges that we would make to a statistical

2

extrapolation approach that, even under this bifurcated

3

proposal, I don't see how plaintiffs would be proving causation

4

and injury to key elements to any claim proving product

5

liability or failure to warn in the abstract, without

6

discussing actual causation and injury, with respect to any

7

sites and --

8

THE COURT:

Mr. Axline, I think, needs to answer that.

9

She is saying that in the first half of the second

10

phase of the bifurcation, if it's general and not

11

site-specific, how do you deal with such things as causation

12

and injury?

13

liability without it.

When you talk about liability, you can't have

14

MR. AXLINE:

15

correct the record slightly.

16

Understood, your Honor.

And I do need to

I believe when you asked me about the second phase in

17

the Puerto Rico example, I did say that we would want to look

18

at using statistical evidence on damages.

19

site-specific evidence, but there may also be some use of

20

statistical evidence.

21

THE COURT:

22

MR. AXLINE:

23

THE COURT:

So there may be some

So --

On the second half.
On the second half.
But in the first half, what Ms. Meyer is

24

saying is, how do you even try liability, the generality, when

25

there are site-specific elements that you have to prove
SOUTHERN DISTRICT REPORTERS, P.C.
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affirmatively, or that they have to defend by site?

2

mentions in terms of your burden of proof causation and injury.

3

MR. AXLINE:

And she

Well, it's a matter of degree, your

4

Honor.

5

argument she's making would be made in the case of the bucket

6

approach as well.

7

I think the problem she's pointing out would -- the

At some point you have to --

THE COURT:

Well, not necessarily, because in that

8

approach, it's site-specific for every site in the bucket,

9

right?

That is site specific.

So whether it's 30 cases per

10

bucket or 40 or 20, they're specific.

11

that you do have to agree in advance that you apply the

12

findings to anything -- any other site that can fairly be put

13

in that bucket.

14

sites won't be in any bucket, because they will defend those

15

sites by saying there's no damage at all.

16

happened in all these claims, big claims cases.

17

are full out.

18

chance to prove no injury or a statute of limitations has run.

19
20
21
22

That should have assured Mr. Pardo that some

Respond.

There's no proof of an injury.

MR. AXLINE:

Understood.

That's

Some claims

So there is a

So that I think of as almost

an administrative matter, your Honor, frankly.
But in the New Jersey case they were able to try the
case to a jury.

23

THE COURT:

24

MR. AXLINE:

25

All I, then, propose is

New Hampshire.
I'm sorry, New Hampshire.

Try the case

to a jury with a special verdict that looked -- that didn't
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have any individual sites but, rather, looked at the degree of

2

culpability of the defendants for the failure to warn.

3

that was common to all the defendants.

4

site and say, did you fail to warn at the site, because they

5

didn't issue warnings to anybody at any time.

6

take a look at their market share, the commingling of products

7

going into the relevant geographic area, the market share that

8

each of them had, and you assign responsibility for the total

9

damages --

10

THE COURT:

11

MR. AXLINE:

12

THE COURT:

And

You don't go site by

And then you

No, I understand --- based upon market share.
I understand that.

But that doesn't deal

13

with causation and injury individually.

It deals with failure

14

to warn.

15

contamination and injury to the site.

16

I get that.

MR. AXLINE:

But it has to have caused the

But I think it does deal with causation

17

and injury, because it is the state that is the plaintiff.

18

There's no question, as the New Hampshire court pointed out,

19

that the state has been injured.

20

a very big way.

21

assuming that's the verdict, is so large that it's difficult

22

for the plaintiff to use anything other than statistical

23

evidence to get its arms around the entire damages.

24
25

In fact, it's been injured in

And the injury which these defendants caused,

So I think that's the sort of thing we'd like to talk
to you more about and maybe do another letter brief before a
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two-week meeting on.

2

state as a plaintiff -- especially Pennsylvania, New Jersey, to

3

some extent Puerto Rico -- the damage caused by these

4

defendants is so massive that you've got to find a creative

5

way, once you've found liability, to allow a jury to consider

6

what is an appropriate amount to award as damages.

7

may not involve --

8

THE COURT:

Because the reality is when you have a

Wait.

And that

Are you saying that it's not site

9

by site, because the owner of all the sites is the same owner,

10

so it almost doesn't matter if 50 out of the 400 sites are not

11

actually contaminated?

12

saying, because the other 350 are damaged and they're all owned

13

by the same owner, namely the state?

14

damages figure; it's not a site-by-site payment?

15

MR. AXLINE:

It doesn't matter, is that what you're

Yes.

Yes.

You work out one big

And as with any injury, you

16

use statistics to do that, particularly when you're talking

17

about what is going to be the impact on the state in the

18

future.

19

case.

20

state doesn't have the money to spend to find out what the full

21

impacts are.

22

itself over the years.

23

awarded a specific category of damages for.

24

states face that as well.

25

That was the category of damages in the New Hampshire

Because one of the elements of the damage is that the

It's got to sit back and wait for it to reveal
So that's something that the jury
And the other

So the other aspect of this is that -SOUTHERN DISTRICT REPORTERS, P.C.
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THE COURT:

What did you think of my sort of qualified

2

bucket approach; in other words, starting with that idea and

3

then applying it to the remainder?

4
5

MR. AXLINE:

Do you mind if Mr. Miller responds?

Because he has some thoughts on that.

6

THE COURT:

I don't mind at all.

7

MR. MILLER:

8

New Jersey is a little different.

Thank you, your Honor.
You haven't heard

9

much about the statistics that go beyond the 5,000 sites.

10

going to explain this very briefly to illustrate why the

11

I'm

defendants' approach is less workable.

12

There are 440,000 private wells in New Jersey.

13

any home is sold, it is required that they test for MTBE, among

14

other things.

15

440,000 wells.

16

which, if extrapolated to the larger population, is 55,000

17

wells.

18

When

We now have data on testing 118,000 out of the
Out of that about 12 percent were contaminated,

So it's not just a claim that's related to what's

19

going on at the gasoline station?

What do we have to do to

20

clean it up?

21

anything left, so therefore there's no injury?

22

And when you talk about a bucket, it only makes sense to try a

23

bucket if you assume that a relatively small group is

24

representative of the whole.

25

THE COURT:

How much has been done to clean it up?

Is there

It's not that.

That's right.

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MR. MILLER:

2

THE COURT:

3

MR. MILLER:

4

THE COURT:

5

MR. MILLER:

6
7

And that's exactly -By characteristics.
That's right.

Otherwise --

Common characteristics.
Otherwise, the bucket approach totally

fails.
THE COURT:

Oh, well, no.

I said that.

That's why I

8

called it the modified bucket approach, is that you would be

9

able to do that.

You would have common characteristics -- that

10

is the bucket -- and you put focus sites into that bucket where

11

there is 20, 30 or 40 per bucket.

12

it to whatever is common to that group of characteristics.

13

it's a combination of both approaches.

14

MR. MILLER:

Right.

But then you have to apply
So

But there are several claims that

15

aren't as directly tied to the gas station itself.

16

you an example, which means that at the end of the day, if

17

you're trying to get a representative, manageable group to try

18

and to apply it to project a much larger number that applies to

19

the whole universe, which would you rather use:

20

outdated bucket technology, or mathematics that predict

21

accurately that if you take a sample randomly, you're going to

22

pick up a known injury site; you're going to pick up a statute

23

of limitations site?

24

estimate you can.

25

And I gave

What I call

And you can use that to make the best

At the end of the day, with the size of this case, all
SOUTHERN DISTRICT REPORTERS, P.C.
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we will ever have is an estimate.

2

number.

3

THE COURT:

4

MR. MILLER:

There will never be a

No, I realize that.
And my client would prefer to have the

5

most accurate tool that can be used, which is scientifically

6

supported, to make that projection and still have something

7

that's manageable and triable.

8
9

THE COURT:

So what would you try, a selective sample

that -- a mathematically selected sample, a predictive sample?

10

MR. MILLER:

11

might -- it depends.

12

THE COURT:

Well, let's say that for each claim you

Each claim?

Are you using "claim" now to

13

be synonomous with bucket; in other words, each common

14

characteristic type claim, is that what you mean?

15
16

MR. MILLER:

Let me give you an example of public

wells.

17

THE COURT:

18

Okay.

MR. MILLER:

There are hundreds of public wells in

19

New Jersey with MTBE.

We could scientifically select among the

20

wells and project that to the well claim and select among the

21

sites and project that to the site claim.

22

suggesting which one should be done with which tool.

23

on the claim, it may make more sense to vary it from a

24

statistical approach even.

25

that fits the claim being made -- and what is heartening to me

Now, I'm not
Depending

But if you want an accurate measure

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is they finished the New Hampshire case in three months.

2

THE COURT:

3

MR. MILLER:

4

tool.

5

representative.

6

I know.
So I don't think you can get a better

And I think buckets ultimately don't work unless they're
So it's based on the same conceptual premise.

I think the parties need to sit down, discuss the

7

claims and the tools that would be used to resolve each of them

8

individually, as opposed to saying one size fits all.

9

you're going to say any measure, any tool is most likely to be

But if

10

usable as applied to everything, statistics work.

11

can predict the probability that you will be within 5 percent

12

or 10 percent by selecting very carefully the sample size.

13

THE COURT:

I mean, you

But that approach standing alone, to me,

14

doesn't account for different characteristics by category.

15

It's the best way I can put it.

16

it four times.

It's the same idea, but you do

That's all I'm saying.

17

MR. MILLER:

18

THE COURT:

Yes.
You do what you're proposing, but you

19

divide it into groups with common characteristics; because if

20

you do it across everything, I think you'd have too many

21

confounding factors in the mathematical analysis.

22

separate out -- I don't know whether the categories are private

23

wells, public wells, gas stations.

24

beyond my knowledge.

25

called it the combined approach, or my approach, then it begins

But if you

I don't know that.

That's

But if you do it that way, which is why I

SOUTHERN DISTRICT REPORTERS, P.C.
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2

to make some sense to me that we can extrapolate.
But if you just put it all in one enormous bucket,

3

there's some unfairness about that, because they have such

4

different characteristics.

5

MR. MILLER:

Now --

I think you'll find more commonality if

6

you focus on groups of claims than you will if you focus on gas

7

stations, which is all --

8
9

THE COURT:

I wasn't recommending how to create the

buckets, because I don't have that knowledge.

But I still like

10

that approach that isn't a "one size fits all," but it still

11

uses the same tools and concepts you're talking about but does

12

it by category, which I think sounds fair, more fair.

13

MR. MILLER:

14

THE COURT:

Yes, your Honor.
That's why I'd like you to think about

15

what I was saying.

16

defendants, don't reject it out of hand.

17
18

At least, again, as I said to the

MR. MILLER:

Yes.

Think about it.

I encourage that, and I would also

encourage a meeting in two weeks.

19

THE COURT:

20

MR. AXLINE:

I'd like to do that.
If I might add to that, your Honor, I

21

think what happened in the New Hampshire case, if you look at

22

the verdict that's attached as Exhibit C to our reply letter,

23

is that the plaintiffs, in order to get a quicker trial, made

24

some cuts on the damages that they were claiming.

25

suggesting that that would necessarily happen with New Jersey.
SOUTHERN DISTRICT REPORTERS, P.C.
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I'm not

34
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And we are talking right now mostly about the discovery leading

2

to a trial, so --

3

THE COURT:

4

MR. AXLINE:

Yes, we are.
We want to have the trial in mind when we

5

consider the best approach to discovery, but the categories of

6

damages here are ones that lended themselves to a state-wide

7

either complete approach, which is -- for example, past

8

clean-up costs is on page two of the special verdict form, part

9

two.

So the state was able to put in --

10
11

THE COURT:

MR. AXLINE:

THE COURT:

15

MR. AXLINE:

19

And that --

There it is.
That, by the way, has some answers to the

defendants' causation arguments.

17
18

I'm on page two, I

There are two parts to the verdict form.

The first one was the causation part.

14

16

Where is this?

thought.

12
13

Wait.

THE COURT:

Now I'm on page two.

Damages.

You said

past -MR. AXLINE:

Past clean-up costs, put on evidence of

20

what it actually costs the state so far.

Cost to characterize

21

and clean up the highest-risk sites, which was, I think, a

22

strategic choice that New Hampshire made about what damages it

23

was going to claim there.

24

That's a number that you can put together statewide based on

25

the number of wells and what it would cost to conduct a sample

Then sampling drinking water wells.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

35
g3temtbec
1

at each well.

2

contaminated with MTBE at or above the MCL.

3
4

And then testing drinking water wells

THE COURT:
okay.

That's

You said testing.

5

MR. AXLINE:

6

THE COURT:

7

You meant treating, not testing.

Yes.
You said testing.

according to the verdict sheet.

8

MR. AXLINE:

9

THE COURT:

10

MR. AXLINE:

Yes.

You meant treating,

Treating?

I'm sorry.

Treating.

Yes.

Thank you.
Those were two separate categories, but

11

they were based upon the numbers that could be obtained pretty

12

easily.

13

that out -- that avoids the -- this is something that the

14

plaintiffs would have to think about one by one, of course.

15

And so that's another option -- I just wanted to point

But I do want to point out that there are ways to

16

slice the onion that, in fact, avoid the site-specific issues

17

altogether, or at least are able to give the jury site-specific

18

information in volume that is relevant to the damages.

19

THE COURT:

I would still personally feel that the

20

combined focus site approach with the statistical approach has

21

greater fairness to both sides, so they are hearing as an

22

example some site-specific type of evidence and defenses.

23

then if the verdict is in favor of the plaintiff, so to speak,

24

it's agreed to be applied through statistics to the remainder

25

that fall in that category.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

But

36
g3temtbec
1

Well, I think we've probably gone as far today, since

2

there won't be an order today.

3

important is to have the appropriate discovery begin.

4

the goal, is to have the appropriate discovery begin as to the

5

remaining parts of this case.

6

the MDL.

7

this point that will figure out the discovery for the remaining

8

sites.

9
10

But the reason an order is
That's

The nonremanded portion are in

And it's this Court, and not the remand court, at

Yes.
MR. PARDO:

And to that point, your Honor, that has

11

started, as you know.

12

New Jersey.

13

The discovery in Puerto Rico is focused on --

14
15

We have discovery that's going on in

We have discovery that's going on in Puerto Rico.

THE COURT:

Do you remember I mentioned the master

list during this conversation?

16

MR. PARDO:

I do remember.

17

THE COURT:

So that's something that can be done and

18

can be begun sooner, rather than later.

19

that can and should be done by the MDL court.

20

we structure how phase two would play out, because it helps to

21

focus the discovery.

22

So there are things
And it helps if

So if we go with this combination approach that I've

23

been talking about for the last close to an hour, we would know

24

how many buckets, what defines the buckets and how many sites

25

per bucket.

So we would know things that would focus the
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

37
g3temtbec
1

discovery, so to speak.

2

Again, I don't know that we should do any more today.

3

We've had a good, fruitful conversation, as they say in

4

diplomatic circles when they've accomplished nothing.

5

said, we're very fruitful.

6

means people at least began to talk.

7

even though it's fast, there's a reason for it to be fast

8

here -- in a couple weeks to see if we've refined our views,

9

any of the three of us; that is, the plaintiffs, the

They

That's what they say, because it
And then come back --

10

defendants, the Court.

11

goes to someone who's had no experience at all with the MDL

12

that you've all been living in for so many years.

13

And that's all I can do.

And then it

And most of you, by the way, don't change, which is

14

good.

Most of you are players who have been playing for many,

15

many years.

16

do.

So you do have a wealth of knowledge, the lawyers

But the Court won't.

17

Okay.

Anything else we should take up today?

18

I understand that Pennsylvania was originally on the

19

agenda, but you worked out the dispute on that issue.

20

So that

isn't for the Court today.

21

Is there anything else, then, for the Court today?

22

MR. PARDO:

23

MR. KAUFMAN:

24
25

No.
Just, your Honor, are you going to set a

time for us to get back?
THE COURT:

I think that's not a bad idea.

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

I know

38
g3temtbec
1

Mr. Pardo doesn't seem to want to come back and see me.

2

MR. PARDO:

3

happy to come back.

4
5

That is not accurate, your Honor.

MR. KAUFMAN:

I'm

We would like to see you at least one

more time.

6

THE COURT:

The reason I thought he didn't is because

7

it's so soon, he feels, to come to any real consensus as to how

8

to proceed.

9

conversation.

But it can only do good to advance the
And the shorter the time, the better.

10

could also be three weeks.

I'm still here.

11

matter.

12

So it

It doesn't really

a bigger group, much bigger than yours.

If that helps, there's a little more time.

13

They have

So let me glance at the calendar and see how it looks.

14

After all, today is not even April.

So April.

15

Tuesday, April 26th?

16

How about

you the most time for a conversation.

That's as late as I can go.

And it gives

17

MR. PARDO:

That's fine for us, your Honor.

18

THE COURT:

But I don't want -- what time did we meet

19

today?

20

26th of April.

21

Okay.

22
23
24
25

2:30.

That's what I want again, 2:30.

Anything else?

All right.

2:30 on the

It's good to see

you all.
Folks on the phone, the conference has just ended.
Thank you.
(Adjourned)
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]