Utilities Are Ruled Liable for Pollution

Victims of contaminated water can sue utilities regulated by the state for violating safe drinking water standards, the California Supreme Court ruled unanimously Monday.

The decision clears the way for victims of ground-water pollution across the state to seek financial compensation from private companies and public agencies that provide contaminated water.

Mary Hulett, who argued before the court on behalf of regulated utilities, said her clients will fight the litigation because of the potential consequences.

“We have to protect water suppliers as well as the public,” she said. “If we had all these lawsuits, the cost of water would be really seriously affected.”

In the cases before the court, about 2,500 alleged victims of ground-water pollution in the San Gabriel Valley contend that they have been harmed by drinking water tainted by industrial solvents and other chemicals. Dozens of the plaintiffs say the contamination gave them blood-related forms of cancer. A state probe in 1998 found that the water was safe to drink.

Lawyers for the plaintiffs say the ground-water contamination began in the 1960s and persisted for decades. The federal government in 1984 designated the ground-water basin a Superfund cleanup site.

Residents sued regulated utilities and municipal and private water agencies, in addition to the industrial users who allegedly contaminated the water. The defendants all sought to dismiss the lawsuits on the grounds that the state Public Utilities Commission has jurisdiction over such matters.

Previous rulings suggested that the regulated utilities might prevail on this point, but the legal issues had never before been tested by the high court in just such a case. The San Gabriel Valley lawsuits are the first in the state in which water agencies have been sued for selling contaminated water, said a lawyer for one of the utilities. Most lawsuits have been aimed at the polluters.

Gary A. Praglin, who represents about 500 of the plaintiffs, said he hopes that Monday’s ruling prompts regulated companies “to think twice before they serve water that has contamination.” The ruling allows the plaintiffs to have a trial on their claims.

“And I hope they think about compensating the people who have cancer in this case before the people die,” said Praglin, whose Los Angeles law firm represented victims of ground-water pollution in a case made famous by paralegal Erin Brockovich.

In trying to dismiss the lawsuits, the defendants cited the 1998 investigation by the PUC into allegations of contamination in water delivered by regulated utilities.

The state regulatory agency concluded that the utilities had “substantially complied” with state requirements over the last 25 years and delivered drinking water that was safe.

In Monday’s decision, written by Justice Ming W. Chin, the state high court said plaintiffs can sue all of the defendants, including state-regulated utilities.

The decision reaffirmed the power of the PUC to regulate water utilities in both pricing and water quality. But the court said that allowing a jury to determine whether the utilities met government standards would not interfere with PUC regulation.

“A court has jurisdiction to enforce a water utility’s legal obligation to comply with PUC standards and policies and to award damages for violations,” Chin wrote in Hartwell vs. Superior Court, S082782.

The court limited the liability for regulated utilities, however. It ruled that these utilities cannot be held responsible for contamination if they delivered water that met government standards.

Hulett, the utilities’ lawyer, said she was disappointed that the ruling allows a jury to determine whether her clients met drinking water standards.

But she said the suppliers in the case at hand can show that they did comply.

“The water agencies are not going to settle because the last thing we need is to invite more lawsuits,” Hulett said.

“If we have not violated standards and we have not caused anyone to become ill ... we are not going to settle a lawsuit.”

Private water companies and municipal agencies can be found responsible for contamination even if the water they delivered met health standards at the time.

Joseph F. Butler, a lawyer for three private water companies sued in the case, said his clients will show that the water they delivered met government standards and caused no harm.

“To the extent that the cost of the litigation impacts the price that water wholesalers charge for the water, then it could ultimately impact the price to the consumer,” he said.

David A. Rosen, whose law firm represents about 2,000 of the litigants, said the ruling may spur residents elsewhere in the state to sue water agencies for harm caused by water pollution.

“People have been waiting to see whether they could go to court,” Rosen said.