PHILADELPHIA (CN) — Highlighting its role as a government contractor, the Dow Chemical Company argued at the Third Circuit Tuesday that it should not have to defend itself in state court against New Jersey’s claims that it polluted the environment with a chemical solvent.
Dow’s lawyer Kasdin Mitchell said Tuesday that this case is the kind that motivated Congress to allow defendants to have their arguments heard in a federal forum.
“Having New Jersey residents in a New Jersey state court hear a claim by New Jersey about injury to the entirety of the New Jersey resources system is exactly the kind of case that we need a federal court’s protection in order to fairly litigate our federal defense,” Mitchell told the appellate panel.
But U.S. Circuit Judge Anthony Scirica pushed back on the Kirkland & Ellis attorney’s arguments.
“Does Dow really face any risk of state court prejudice?” the Ronald Reagan appointee questioned.
In the original environmental complaint brought in state court against Dow by the New Jersey attorney general and the New Jersey Department of Environmental Protection, the Garden State accused the chemical manufacturer of contaminating its waterways and ground water with 1,4 dioxane — a “likely human carcinogen” that is known to cause liver, gall bladder and other cancers.
Hausfeld attorney Renner Walker argued for New Jersey that Dow should not have federal forum privileges based on “an arms-length business arrangement for widely available commercial products.”
“It made a handful of sales to the federal government,” Walker said.
“Its purported relationship to the federal government is that of a regulator and a regulated entity and nothing more,” the attorney continued, pressing that Dow’s logic would bring every seller of a product into federal court as long as the government was one of its customers.
The U.S. government contracted with Dow to buy its vapor degreaser to use as a solvent stabilizer for military equipment cleaning. The 1,4-dioxane compound has been widely used by the U.S. military as a stabilizer for chlorinated solvents, particularly 1,1,1-trichloroethane, or TCA.
Mitchell emphasized Tuesday that when the company began selling the product, the year was 1966, and the U.S. was in the midst of the Vietnam War.
“In 1967, the Department of Defense issued a report to Congress — to the Armed Services Committee — saying that we were working with industry to come up with a product that would meet our vapor degreasing needs while complying with executive orders,” she said.
Dow argued that the case should remain in federal court since it was “acting under” the direction of federal officers in the production and sale of products containing 1,4-dioxane.
U.S. Circuit Court Judge Tamika Montgomery-Reeves, a Joe Biden appointee, did not seem convinced.
“Your brief talks about stepping in for the military with respect to this product — but you all attach sales records. I looked at those sales records, and it looks like the vast majority of them are not to the military — it’s to private entities or outside agencies,” Montgomery-Reeves said.
U.S. Circuit Court Judge Felipe Restrepo meanwhile questioned the extent of the government’s involvement in the product design.
“The initial court seemed to come to the conclusion that Dow never really acted under the control or the supervision of the government, right?” the Barack Obama appointee posed.
New Jersey maintained during the appeal Tuesday that this was the case.
“The product was designed in 1951 and it sold on the open market, and not specifically to the federal government,” Walker told the panel.
If the case remains in federal court, it may allow Dow to argue that it was complying with federal directives in its production of the contaminate, which could reduce its liability.
Removing 1,4-dioxane from water requires advanced technologies like advanced oxidation processes, which can be very expensive to implement — sometimes running millions of dollars to create capable water treatment facilities.
The case was initially filed in the Superior Court of New Jersey and then removed to the U.S. District Court for the District of New Jersey at Dow’s request. New Jersey federal court later granted the Garden State’s motion to remand the case to state court, which prompted this appeal to the Third Circuit.