A $48.1 million jury award to the City of Pomona, Calif., in a perchlorate contamination case was vacated on April 28 by the US Court of Appeals for the Ninth Circuit, according to Bloomberg Law.
The appeals court ruled that the US District Court for the Central District of California jury had only enough evidence to support awarding $30.2 million in damages, which is the cost of perchlorate abatement according to expert testimony at trial.
The Ninth Circuit vacated the jury’s award and remanded it to the district court to re-evaluate the award, or possibly order a new trial limited only to damages.
The jury awarded the $48.1 million to Pomona in 2021 as part of the city’s 2010 lawsuit against mining company SQM North America Corp. (GM Sept. 10, 2021). SQM appealed the jury’s ruling. The company and the City of Pomona did not immediately respond to a request for comment.
Pomona accused SQM, a subsidiary of Chilean mining conglomerate SQM Inc. (Sociedad Quimica y Minera de Chile SA), of contaminating its city drinking water with perchlorate, primarily in the 1940s and 1950s.
SQM imported fertilizer used in the Pomona area, but the fertilizer had higher concentrations of perchlorate than SQM announced or labeled publicly, leading to water contamination, according to Jason Sheasby, a partner at Irell and Manella LLP, who led the legal team representing Pomona in 2021.
The Ninth Circuit ruled that it found “no error” in the jury’s conclusion that SQM is liable for the perchlorate contamination.
SQM is not entitled to a new trial on the facts of the case, and testimony at trial adequately supported the jury’s conclusion that SQM’s fertilizer design caused the excess perchlorate in Pomona’s water, the appeals court ruled.
But facts of the case do not fully support the high damages award, the appeals court ruled. The jury relied on a cleanup cost estimate that included both nitrate and perchlorate, and the Ninth Circuit ruled that the district court is in the best position to re-evaluate the evidence for the damages.
“It is clear the evidence supports an award of $30.2 million, and we note Pomona offers theories to support the $48.1 million award that have not been addressed by the district court,” the Ninth Circuit ruled. “But the district court did not provide reasons supported by the evidence to uphold the jury’s damages award in denying” SQM’s motion for a new trial or remittitur.
Perchlorate, which is used in rocket fuel, can disrupt the thyroid gland and is considered a water contaminant. The US EPA took steps in 2011 to regulate perchlorate under the Safe Drinking Water Act, but EPA rolled back those plans during the Trump administration in 2020, saying perchlorate is too rarely found in drinking water to be public health concern.