State ex rel. Jennings v. Monsanto Co.

299 A.3d 372

STATE of Delaware, EX REL. Kathleen JENNINGS, Attorney General of the State of Delaware, Plaintiff Below, Appellant, v. MONSANTO COMPANY, Solutia, Inc., and Pharmacia LLC, Defendants Below, Appellees.

No. 279, 2022

Supreme Court of Delaware.

Submitted: March 29, 2023

Decided: June 22, 2023

Ralph K. Durstein III, Esquire (argued), Christian Douglas Wright, Esquire, DELAWARE DEPARTMENT OF JUSTICE, Wilmington, Delaware; Alison S. Gaffney, Esquire, Daniel Mensher, Esquire, KELLER ROHRBACK L.L.P., Seattle, Washington; Keil Mueller, Esquire, Steven C. Berman, Esquire, STOLL STOLL BERNE LOKTING & SHLACHTER P.C., Portland, Oregon, for Plaintiff Below, Appellant State of Delaware.

Christian J. Singewald, Esquire, Timothy S. Martin, Esquire, Daryll Hawthorne-Searight, Esquire, WHITE AND WILLIAMS LLP, Wilmington, Delaware; Kim Kocher, Esquire (argued), Thomas M. Goutman, Esquire, David S. Haase, Esquire, SHOOK, HARDY & BACON L.L.P., Philadelphia, Pennsylvania, for Defendants Below, Appellees Monsanto Company, Solutia, Inc., and Pharmacia LLC.

Kenneth T. Kristl, Esquire, WIDENER UNIVERSITY DELAWARE LAW SCHOOL, Wilmington, Delaware as Amici Curiae Legal Scholars, in support of Appellant.

Richard L. Renck, Esquire, Mackenzie Wrobel, Esquire, Michael Gonen, Esquire, DUANE MORRIS LLP, Wilmington, Delaware; Robert M. Palumbos, Esquire, DUANE MORRIS LLP, Philadelphia, Pennsylvania; Jonathan Urick, Esquire, U.S. CHAMBERS OF COMMERCE, Washington, D.C., as Amici Curiae the Chamber of Commerce of the United States of America, the American Tort Reform Association, and the American Coatings Association in support of Appellees.

Anne M. Steadman, Esquire, REED SMITH LLP, Wilmington, Delaware; James C. Martin, Esquire, REED SMITH LLP, Pittsburgh, Pennsylvania, as Amicus Curiae The Product Liability Advisory Council in support of Appellee.

Before SEITZ, Chief Justice; VALIHURA, VAUGHN and TRAYNOR, Justices; MCCORMICK, Chancellor, ¹ constituting the Court en Banc.

SEITZ, Chief Justice:

According to the allegations of the complaint, for over forty years, Monsanto was the only U.S. manufacturer of polychlorinated biphenyls, or "PCBs." PCBs are forever chemicals that, when released into the environment, persist indefinitely. PCB exposure has been linked to many serious health effects, so much so that the federal government in 1977 banned PCB production. The federal government and the states have spent enormous sums cleaning up PCB environmental contamination. The State of Delaware is no exception.

The State alleged that Monsanto knew that the PCBs it produced and sold to industry and to consumers would eventually be released into the environment and would cause lasting damage to public health and the State's lands and waters. The State brought this action to hold Monsanto responsible for its cleanup costs. It asserted claims for public nuisance, trespass, and unjust enrichment.

The Superior Court dismissed the complaint. The trial court reasoned that, even though the State alleged that Monsanto knew for decades that PCBs were toxic and would contaminate the environment for generations, the State could not assert a public nuisance claim or trespass claim because Monsanto manufactured PCB products, which entered the environment after sale to third parties. The court also found that the State did not have standing to bring a trespass claim because it held public lands in trust rather than outright and therefore did not have the exclusive possession of land needed to assert a trespass claim. And the court held that the Superior Court lacked subject matter jurisdiction to hear the unjust enrichment claim as a standalone claim. It also concluded that the State could not use an unjust enrichment claim to recover future cleanup costs.

On appeal, the State argues that there is no product-based exclusion or control element of a public nuisance or trespass claim. According to the State, it is enough to allege that Monsanto substantially contributed to causing the public nuisance and trespass by selling PCBs to others knowing their end use would cause widespread and lasting environmental contamination. In addition, for its trespass claim, the State contends that it has exclusive possession of lands it owns directly and of lands it holds in trust and thus has standing to assert the claim. Finally, the State argues that it need not demonstrate the lack of a remedy at law for the Superior Court to have jurisdiction to hear its unjust enrichment claim, and it sufficiently alleged how Monsanto has been unjustly enriched.

The Superior Court held correctly that the State lacks standing to pursue a trespass claim for land it holds in trust because it does not have exclusive possession of those lands. And while the Superior Court does have jurisdiction to consider an unjust enrichment claim, we agree with the court that the State cannot assert the claim to recover PCB cleanup expenses because Monsanto did not owe a legal duty independent of its public nuisance and trespass claims.

However, we disagree with several of the Superior Court's rulings. First, whether a product is involved, and whether there is control of the product once sold, are not elements of an environmental-based public nuisance or trespass claim under Delaware law. For environmental public nuisance and trespass claims, the question is whether the defendant participated to a substantial extent in carrying out the activity that created the public nuisance or caused the trespass. Here, the State has pled sufficiently that, even though Monsanto did not control the PCBs after sale, it substantially participated in creating the public nuisance and causing the trespass by actively misleading the public and continuing to supply PCBs to industry and consumers knowing that PCBs were hazardous, would escape into the environment after sale to third parties, and would lead to widespread and lasting contamination of Delaware's lands and waters. Second, the State alleged that it owns some land directly – not in trust – and therefore has the exclusive possession of that land needed to assert a trespass claim. Thus, we affirm in part and reverse in part, and remand for further proceedings consistent with this opinion.

I.

A.

At this stage of the litigation, we accept the well-pled allegations of the complaint as true. ² In 1929, Swann Research, Inc. began commercial production of PCBs in the United States. ³ Six years later, Monsanto purchased Swann Research. From 1930 to 1977, Monsanto was the only manufacturer of PCBs for widespread commercial use in the United States. ⁴

PCBs are a group of synthetic chemical compounds with unique qualities that make them useful in commercial products. ⁵ They are fire resistant, minimally water soluble, chemically stable, and have excellent dielectric properties. ⁶ They can persist in the natural environment for centuries. But human exposure to PCBs "can cause serious liver damage, depressed immune system function, skin conditions such as acne and rashes, significant irritation of and harm to the nose and lungs, gastrointestinal discomfort, changes in the blood and liver, depression, fatigue, and learning capacity impairment." ⁷ In children, PCBs can alter their development, and exposure can happen prenatally or through breast milk. ⁸ The Environmental Protection Agency (the "EPA") declared PCBs as probable carcinogens. PCBs also have harmful non-carcinogenic effects on the immune, reproductive, nervous, and endocrine systems of humans. ⁹

PCBs are harmful to animals, including fish, mammals, pinnipeds, and birds. In animals, PCBs "accumulate in lipid rich tissues and substances, such as the fatty tissues of wildlife, birds, fish, and other animal life." ¹⁰ One study found a correlation between PCB exposure and a decline in population and reproduction impairment in minks and certain bird species. ¹¹ Once PCBs enter the environment, they "are transported through soil, sediment, air, and water," and humans and animals are exposed to PCBs through ingestion, inhalation, or direct contact. ¹²

B.

According to the complaint, Monsanto knew since 1937 about the negative effects of PCBs. That year, it circulated an internal memorandum that explained the toxic effects PCBs had on humans and animals. ¹³ Yet, it continued to "develop[ ], produce[ ], and market[ ] PCBs for use in a wide range of commercial and industrial applications," without warning to the public. ¹⁴ Monsanto manufactured a total of 641,246 metric tons of PCBs in the United States between 1930 and 1977. ¹⁵

PCBs "were advertised and predominantly used as components of dielectric fluids—materials used for electrical insulation—in capacitors, transformers, and other electrical systems." ¹⁶ PCBs entered the environment through the use in both open and closed products. In "open applications" – coolants, flame retardants, plasticizers, paint, etc. – PCBs entered the environment through usage. ¹⁷ Closed applications emitted PCBs through "leaks, maintenance, or by volatilizing into the air." ¹⁸

Monsanto knew as early as the 1950s that PCBs escaped into the environment. ¹⁹ In the 1950's and 60's, scientists reported on the widespread and harmful effects of PCBs. But Monsanto "repeatedly misrepresented those facts, telling consumers, the public, and government entities the exact opposite—that the compounds were not toxic and that the company would not expect to find PCBs in the environment in a widespread manner." ²⁰

In 1947, in response to a customer's inquiry about the hazards of PCBs, Monsanto told the customer that Aroclor 1268, one of its PCB products, was almost non-toxic, "but ‘[t]he vapors of other Aroclors studied are toxic and should be avoided.’ " ²¹ In 1949, it created its own statement regarding the risks of PCBs to distribute to inquiring clients and customers:

TOXICITY—Prolonged exposure to AROCLOR vapours will lead to systemic toxic effects. However, this is not significant

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