Sterling v. Velsicol Chemical Corp.

No. 78-1100 (W.D. Tenn. August 1, 1986)

ELR Digest

In a class action spanning 65 trial days, the court holds that Velsicol Chemical Corporation (Velsicol) is liable to plaintiffs, based on the doctrines of strict liability, common law negligence, trespass, and nuisance. Plaintiffs are persons who owned or occupied property within a three-mile radius from the northern boundary of a chemical waste burial site in Hardeman County, Tennessee. The site was operated by Velsicol from 1964 to 1973, when Tennessee ordered it closed as hazardous. Five representative plaintiffs were selected for full review by the court. Plaintiffs alleged serious physical injuries, emotional distress, and property damage caused by contamination of their well water by wastes from Velsicol's site. In addition to their injuries being permanent, plaintiffs alleged they face increased risks of incurring disease such as cancer in the future.

The court first holds that under Tennessee law, strict or absolute liability applies to non-natural, ultrahazardous, and abnormally dangerous activities. The court notes that Tennessee has adopted the Restatement (Second) of Torts $402A, dealing with strict products liability, but that no Tennessee case has expressly adopted Restatement (Second) of Torts § 519, dealing with abnormally dangerous activities, or its English common law foreunner, Rylands v. Fletcher, L.R. 3 H.L. 330 (1868). The court reviews Tennessee case law on strict liability and concludes that if confronted with the question Tennessee courts would apply strict or absolute liability to ultrahazardous activities.

The court next holds that the creation, location, operation, and closure of the Velsicol hazardous waste site was an inherently and abnormally dangerous activity and that Velsicol is strictly liable for any resulting damages. The court reasons that there was a high risk of harm, the harm which could occur would likely be great, the risk could not be eliminated by the exercise of reasonable care, Velsicol's actions were not common and violated the state of the art, Velsicol's hazardous waste site was inappropriately located, and activities at the site had no value to the community and thus were outweighed by their dangerous attributes.

The court holds that common law negligence applies and that Velsicol was negligent in its handling of the wastes. It first notes that Velsicol had a duty to protect others from unreasonable harm from its chemical dumping. The court then holds that Velsicol breached this duty in several ways: it failed to investigate site geology and hydrology; it failed to monitor the site and to investigate further after a warning by the United States Geodetic Survey (USGS) that chemicals were entering the aquifer; after expanding the site, it later failed to heed another warning from USGS and the state government; if failed to operate the site under the prevailing state of the art throughout its use of the site; it illegally disobeyed a May 1972 administrative order to halt dumping on a portion of the site, and failed to halt leakage from the site; it failed to monitor the site properly; it failed to close the site properly; it failed to register the site with the Tennessee government and properly respond to government requests for information about the site; it failed to warn plaintiffs about dangers at the site; it failed to transport chemicals to the site properly; and it allowed chemicals to escape from the site into drinkable groundwater and the air. The court holds that Velsicol's breach of these duties was the proximate cause of plaintiffs' injuries.

The court then holds that Velsicol is liable under Tennessee trespass law for the invasion of plaintiffs' property by its chemicals. The court notes that Velsicol admits that its chemicals have migrated through the groundwater and entered the property of some plaintiffs and that Velsicol has admitted that this constitutes a trespass under Tennessee law, and rejects Velsicol's arguments concerning the remaining representative plaintiffs. As damages for this trespass, the court finds that the value of all property in the zone nearest the Velsicol site has been reduced to $275 per acre, in the zone next removed from the site the property value is reduced to $275 per acre plus 50 percent for any improvements, and in the zone farthest away within a three-mile radius of the site property is reduced by 10 percent of its value above $275 per acre. The court also rules that recovery is available for emotional distress over diminished property values and fear or potential health hazards, and that punitive damages are allowable on the trespass theory only.

The court next holds that the Velsicol site was a nuisance, intentionally created since Velsicol acted with full knowledge that harm was substantially bound to follow, while also holding that Velsicol acted negligently and carried on an abnormally dangerous of hazardous activity in an inappropriate place.

Turning to the question of damages, the court holds plaintiffs are entitled to recovery for emotional distress caused by Velsicol's conduct which caused contaminants to come into contact with each particular plaintiff's body. The fear or distress that plaintiffs suffered reasonably and naturally flowed from the disclosure of the nature of the chemical contaminants. Medical evidence justifies the conclusion that this fear will continue, and fear of developing a future disease such as cancer is a recognized element of damages. The court rules that damages for these emotional distresses are recoverable as personal injury claims and in a nuisance action as incidental to the property damages. Additionally, the court holds that damages are recoverable for disruption and inconvenience in the plaintiffs' everyday lives.

The court next rules that damages may be recovered for increased susceptibility to disease in the future, and that each plaintiff has such increased susceptibility. Enhanced susceptability is an existing condition, and not a speculative future injury. The court adopts a standard of "reasonable probability" as expressed by case law from other jurisdictions addressing similar issues, and concludes that this standard has been met in this case. The court holds that punitive damages are warranted against Velsicol. The court first notes that in Tennessee punitive damages may be awarded where there is fraud, gross negligence, oppression, disregard to social obligations, or such wilful misconduct or entire want of care as to raise the presumption of conscious indifference to consequence. Velsicol's actions at the site, particularly its failure to cease operationsafter warnings from government agencies, warrant punitive damages. Moreover, Velsicol's trial strategy of alleging that plaintiffs assumed the risk and were contributorily negligent, and alleging that emotional distress was the fault of the government agencies and news coverage involved, was so outrageous as to subject Velsicol to punitive damages.

The court next holds that prejudgment interest should be awarded beginning from July 1965, when Velsicol's chemicals were first found in home well water.

Lastly, the court reviews the particular facts surrounding the claims of the five representative plaintiffs and awards compensatory damages to each in the amounts of $673,492.50; $675,000; $350,000; $1,275,000; and $2,300,000. The individual plaintiffs' damages are itemized in several categories: personal injury and disability, including increased risk of disease; impairment of immune systems; psychiatric damage for post traumatic stress disorder, learning disorders, and fear of increased risk of disease; pain and emotional suffering; impairment of quality of life; loss of earnings capacity and lost wages; and property damage. The court awards prejudgment interest at 8 percent per annum on compensatory damages. In addition, the court awards punitive damages to the plaintiff class in a lump sum of $7,500,000, holding that Velsicol was grossly negligent and wilfully and wantonly disregarded plaintiffs' health and well-being and that of the environment when it created and operated its hazardous waste site.

The full text of this opinion is available from ELR. (Opinion: 118 pp., $15.50, ELR Order No. C-1357; Findings of fact incorporated by reference: 469 pp., $60.00, ELR Order No. C-1358).

Counsel for Plaintiffs
Sidney W. Gilreath
Gilreath & Associates
707 Gay St. SW, P.O. Box 1270, Knoxville TN 37901
(615) 637-2442

James W. Gentry Jr.
Gentry & Boehm
Suite 600, Dome Bldg., Chattanooga TN 37402
(615) 756-5020

Counsel for Defendant
James S. Wilder III
125 W. Market St., Somerville TN 38068
(901) 465-4227

Horton, J.

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]