Thursday, March 5, 2015

Know your Legal Lingo Part 3 – Case Law and Expert Opinions

When is a strainer a container? When it’s a leaking landfill that conformed to the “state of the art” at the time of construction. How can that be? Well, that's the case law – for now – in the Western District of Michigan.

Case law?  How does that relate to experts?

It is important for you, the expert, to know the case law or precedent governing certain issues on which you are providing expert opinions. The jurisdiction of your case – whether in state or federal court - dictates the case law the judge will abide by when making his/her rulings. Knowing to ask your attorney about the applicable case law not only demonstrates your knowledge of the legal system, but more importantly having the information ensures you are sufficiently aware of what the court will be considering on various issues when you are forming your opinions, preparing your expert report and testifying in deposition and at trial.

Here we explain the basics of the U.S. court system and provide an example of how case law was used to resolve a question of law concerning a pollution exclusion provision in an insurance coverage matter involving groundwater remediation.

Case Law

The U.S. justice system relies on “stare decisis”, Latin for “to stand by things decided,” which means, courts adhere to or abide by prior court decisions on cases containing similar issues and questions of law. The collection of cases in which prior court rulings were made is referred to as “case law,” a term that attorneys use regularly when considering which cases to cite in arguing their position before the court. The term “precedent” or rule of law is the actual decision or case law that a court relies on or considers when deciding a current case with similar issues.  Both judges and lawyers conduct legal research to determine the relevant precedents established in their jurisdiction and how they apply to the present case.  The jurisdiction in which a case is pending is extremely important because it dictates the applicable and controlling case law.

As shown in the figure below, at the state level, jurisdiction refers to the groupings of trial courts that are bound by decisions made by the higher controlling regional appellate court.  All regional appellate courts are bound by the decisions made by the highest court in the state, usually called the “Supreme Court.” When precedent has not been established from the highest court, then a ruling by the appellate court becomes binding upon the lower courts in the same jurisdiction until such time as the supreme court of that state hears the case and reaffirms, modifies or overturns, or rules in another case on similar facts, thus setting precedent for the state.

At the federal level, there are 94 District Courts that fall under the jurisdiction of  the U.S. Court of Appeals with one located in each of 13 separate circuits (Circuit Courts). These appellate circuit courts are bound by decisions of the U.S. Supreme Court. The appellate courts in different circuits are not bound to each other, though in a number of cases one circuit  court may be guided by decisions made in another circuit court and make similar rulings, as we previously blogged about in a recent Daubert post. Diversity jurisdiction occurs when a lawsuit is removed from state court to federal court, but the law of the state in which the case was originally filed would be applied by the federal court.    

The leaking landfill: an example of expert opinion in the context of case law

Recently, in Decker Manufacturing Corporation v. The Travelers Indemnity Company, the U.S. District Court in the Western District of Michigan (a federal court “sitting in diversity,” applying Michigan state law) held that policyholders do not lose insurance coverage under the pollution exclusion provision just by putting their hazardous waste in landfills that are meant to contain the waste materials.  A great summary of the case can be found on Orrick’s Policyholder Insider blog. In short, the Court held that the release of waste from the landfill as opposed to the intentional placement of waste into the landfill was the “relevant discharge” to consider in terms of what Decker (the policyholder) “expected or intended” when it used the landfill. The Court found that the landfill was equivalent to a “container” such that Decker would have expected it to behave like a container – i.e. the placement of materials inside it would not be nor result in a “discharge.”

Why did the court rule this way? Case law.

In his opinion, Judge Robert Holmes Bell provided a thorough analysis of the applicable Michigan case law pertaining to the landfill issue in the case. In brief, he found there wasn’t a precedent set by the Michigan Supreme Court on the “precise issue of relevant discharge for purposes of applying pollution exclusion in the context of a landfill”; therefore he was bound to Michigan Court of Appeals decisions if they were relevant. He ultimately cited two cases involving pollution exclusion in the context of landfills as the basis for his decision.  Judge Bell stated, “[t]he landfills at issue in Kent County and South Macomb are virtually identical to the Landfill at issue in this case.” He was referring to Michigan appellate court decisions from prior cases: South Macomb, 225 Mich.App. 635, 572 N.W.2d 686; Kent County, 217 Mich.App. 250, 551 N.W.2d 424. In these cases, the court had ruled the landfills at issue were analogous to a container as long as the landfills were “state of the art,” meaning built in conformance with the contemporaneous standards.  

The Court in Decker agreed with defendant Traveler’s expert that the landfill was not designed or constructed to prevent the escape of pollutants to the soil or groundwater. Where the Court disagreed, was in determining the applicable standard for the landfill. Traveler’s expert opined the landfill did not conform to “state of knowledge” (emphasis added) because it did not meet standards defined by the engineering and scientific communities at that time. The Court disagreed - stating the applicable standard was “state of the art” (emphasis added): what was known at the time by the designers, inspectors and licensors. Applying this standard and citing City of Albion, 73 F.Supp.2d 846, South Macomb and Kent County, the court ruled the landfill did conform to the applicable standard in Michigan - it was equivalent to a container despite the fact that it had leaked contaminants into the environment.

This case is a perfect example of how case law is used by courts to resolve questions of law and how expert testimony is considered in the context of the case law and precedent.

Other jurisdictions on leaking landfills

Other state supreme courts have weighed in on the issue of what constitutes “relevant discharge” under an insurance policy’s pollution exclusion provision – the placement of wastes into a landfill or the subsequent escape of wastes from a landfill. Similar to Decker is the Supreme Court of California’s decision in State of California v. Allstate Ins. Co. (45 Cal. 4th 1008, 201 P.3d 1147, 90 Cal. Rptr. 3d 1), concerning the infamous StringfellowAcid Pits in which policyholders also did not lose insurance coverage just by putting their hazardous wastes in sites that are meant to contain them.  In contrast, the Supreme Court of Montana held that the policyholder’s intentional disposal of hazardous wastes into a landfill represented the relevant discharge and not the subsequent migration of hazardous wastes from the landfill into the groundwater (Travelers Casualty and Surety Company V. Ribi Immunochem Research Inc), 108 P.3d 469 (Mont. 2005)).

The bottom line: Know your jurisdiction and the context of the relevant case law as it applies to your opinions.


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