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Shell Oil enjoyed a significant victory in the Seventh Circuit on Friday, with the Court finding no dangerous link between benzene in the groundwater and the class action claims against Shell.
Around 150 residents of the small Illinois town of Roxana had sued Shell in 2012 for "polluting its groundwater and soil with benzene levels as much as 26,000 times greater than allowed by state law," reports Courthouse News Service. But now they'll have to refocus their claims at the district court level even though their groundwater is most certainly toxic.
How did the Seventh Circuit come to back the polluters?
How Small Can a Class Be?
With the inimitable Judge Posner penning the opinion in Parko v. Shell Oil, he remarks that this case is the perfect opportunity to clear up some misconceptions in class action law.
First, in a move that seems very popular among oil companies, Shell argued that the class was improperly certified under Rule 23. It is arguably a small class (150 or so), but the Seventh Circuit reminds us that judges are not required to determine which members have valid claims before certifying the class. So even if only 10 of the 150 were actually injured by the benzene seeping into Roxana property, the certification could still be proper.
The bigger issue for the class of Roxana residents is the predominance requirement.
Predominance of Issues
The district court certifying the Parko class found that the plaintiffs had a common question in whether Shell's failure to contain benzene at its refinery resulted in the contamination of Roxana property. But this isn't necessarily a predominance of issues.
In Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, SCOTUS lays out that individual questions among class members cannot "overwhelm the questions common to the class." Without predominance of issues, there is little holding a class together, and the class action becomes unwieldy when compared to separate trials.
Unfortunately for class counsel everywhere, Wal-Mart Stores, Inc. v. Dukes is still controlling law, so it takes a bit more than the average pleading standard to certify a class. The problem is that the district judge simply assumed a pleading standard in accepting class counsels' assertions that contamination in the ground water equaled some sort of common damages.
However, there was no evidence whatsoever that benzene was present in Roxana drinking water (they use a separate aquifer) or that property values were commonly depressed due to benzene in the groundwater.
The Court distinguished Parko from Mejdrech v. Met-Coil, where certification for a chemical contamination class action was upheld. In Mejdrech the Court found claims that the toxic chemical was present in the water supply as well as evidence linking this contamination with property values of all homes in the area.
Since the Roxana class presented no such theory, and there is no evidence presented to support a link between contaminated groundwater (outside the water supply) and property values, the Seventh Circuit kicked the case back down to the district court to revisit certification.
If you're hoping to pursue a class action, you need to present some credible evidence of the link between the common question of your class and the damages to its members. You do not need prove every (or even most) class members were injured, but you must present some evidence of damages that makes the class coherent.