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Ninth Circuit drains $48 million judgment over city’s polluted water supply

While the Chilean fertilizer company still owes the city of Pomona millions, $48 million was beyond the pale.

PASADENA, Calif. (CN) — A unanimous Ninth Circuit panel ruled Friday there isn't enough evidence to support a $48 million award for the city of Pomona, California, in its lawsuit against a Chilean fertilizer manufacturer that polluted the city's drinking water system decades ago.  

The lawsuit against brought against SQM North America, the U.S. subsidiary of Sociedad Química y Minera de Chile found that the company’s sodium nitrate fertilizer used in citrus orchards around Pomona between the 1930s and 50s polluted the city's drinking water system, including with a contaminant called perchlorate. Perchlorate interferes with the production of thyroid hormones, an important part of the development and function of tissues in the body, and can cause serious health issues, especially in developing fetuses, kids, and pregnant women.     

Pomona, about 30 miles east of Los Angeles, argued that several of its groundwater wells are contaminated with perchlorate, which the city says can be traced back to the Atacama Desert in northern Chile, more than 5,000 miles south of California. Perchlorate salts are often used as propellants for fireworks and as a component of rocket fuel.

SQM North America has maintained its fertilizer was not used in the California city and its product was not defective.

At trial, Pomona’s damages expert testified that the total cost to clean up the perchlorate would top $30 million. The jury ended up awarding the city a little over $48 million. 

“Here, while we do not foreclose the jury’s damages award, we vacate and remand because the district court’s reasons for upholding the damages award are infirm,” the three judge panel of U.S. District Judge Joan Ericksen, a George W. Bush appointee sitting by designation from the District of Minnesota, and U.S. Circuit Judges Daniel Bress, a Donald Trump appointee, and Joe Biden appointee Salvador Mendoza Jr. wrote in the unpublished memorandum

The panel found the trial court erred in awarding the city $48 million because SQM North America's own expert testified that Pomona would need to spend only $1,884,273 to remediate its perchlorate problems by running two anion exchange plants, and paying for a third one.   

“Based on the jury’s liability determination, SQMNA was liable for treating perchlorate, not nitrate; the district court should have considered the net cost of using AEP 1 and 2 to treat perchlorate over what it would cost to treat nitrate. Therefore, the district court erred in relying on a figure that represented treatment of both perchlorate and nitrate in justifying the jury’s damages award,” the panel wrote. 

While the panel determined that the evidence supports SQM North America's liability in causing the pollution, and that Pomona should at least get $30.2 million to clean up the perchlorate caused by the company's fertilizer, it ordered the lower court to re-evaluate the evidence and make a new determination for the appropriate amount of money Pomona should be awarded. 

“We believe the district court is in the best position to evaluate the evidence, and on remand, it may determine that the evidence supports the jury’s award for reasons other than those the district court previously gave,” the panel wrote. 

Last year, a federal judge ruled that the jury's original liability finding was supported by the evidence in the case, and that the damages award wasn't excessive even though the city had sought only $30 million.

Neither the city of Pomona or SQM North America returned calls for comment by press time.  

Categories / Appeals, Government

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