Article - Defending A Class Action Odor Complaint

DEFENDING A CLASS ACTION ODOR COMPLAINT JAMES G. FAUSONE FAUSONE BOHN, LLP Northville, Michigan Your client, Big Industrialist, is served with a class action complaint by homeowners in the neighborhood. Plaintiff Homeowners claim they have suffered from odors constituting a nuisance from Defendant Big Industrialist’s plant. What steps can counsel undertake to bolster the defense? An actionable nuisance occurs when the activity of one landowner substantially and unreasonably interferes with a neighboring landowner’s use of his or her property. Adkins v. Thomas Solvent Company, 440 Mich 293, 307-308 (1992). To establish a nuisance, there must be more than an occasional, offensive odor. The nuisance must be substantial and not fleeting. In order for an odor to be an unreasonable interference, the odor must materially interfere with the plaintiffs’ use or enjoyment of property. The determination of whether an interference is unreasonable is based on the following considerations: (1) the amount of harm caused by the defendant and the nature of Plaintiff’s use of its property, (2) the nature of Defendant’s action and the defendant’s use of its property, (3) the locality, and (4) the parties’ priority and time in the area. In a private nuisance, the Court balances the Defendant’s activities against the type and degree of the interference. An unreasonable interference is found when the injury outweighs the utility of Defendant’s conduct. The term “unreasonable interference” includes conduct that is prescribed by law or is known or should have been known by the actor to be of a continuing nature that produces a permanent or long-lasting significant effect on plaintiffs’ rights. Wagner v Regency Inn Corp., 186 Mich. App. 158 (1990).

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In defending such a claim, objective data can be collected that demonstrates any odors from Big Industrialist did not cause Homeowners significant harm.

Counsel can collect

statistical data, statements, evidence of the conduct of the residents themselves, real estate sale conditions and building permits. a. Statistical Survey of Residents. Information provided by homeowners in the class area may contradict Plaintiffs’ assertion that they have been significantly harmed by alleged odors from Big Industrialist. For example, in our case we engaged a statistician, a professor of statistics from a local college, to evaluate the odor experiences of homeowners in the class area. Prior to the class certification, the professor conducted a telephone survey of a statistically significant sample of the 900 households in the area around Big Industrialist (“class area”). The results of the telephone survey indicated that approximately 50% of the households in the subject area never noticed industrial odors at their homes. The survey further revealed that 75% of the households had never changed their plans for use of their property based upon the existence of an unpleasant odor. That so many residents in the subject area had never been bothered by industrial odors contradicts Plaintiffs’ claim that odors from Big Industrialist have caused significant harm. The engagement of the statistician was done with an eye toward the admissibility of the evidence. Her credentials were impeccable and certainly she would qualify as an expert. We also ensured the methodology she used was standard in telephone surveys so that it would withstand a Daubert challenge. Indeed, Plaintiff’s counsel never challenged the expertise or validity of the statistics.

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b. Interviews of Opt Out Residents. Once the class was certified, the members were given the opportunity to opt out interviews provided defense counsel with a look into the lives of the class members. Interviews of members who have opted out of the class contradict Plaintiffs’ assertion that they have been significantly harmed by alleged odors from Big Industrialist. Plaintiffs’ counsel had previously solicited an “Odor Survey” from potential class members prior to class certification. These surveys gave homeowners every opportunity to vent. (In fact, having the opportunity to “vent” may have biased the results.) At the time of class certification, 18 families dropped out of the class. A review of the odor surveys completed by the opt-out homeowners would never lead one to believe that they would not participate in the class. The interviews by Defendant’s private investigator of the opt-out homeowners resulted in statements that suggested that any odors in the neighborhood may not have been as bad as reflected in the odor surveys. They said such things as: “the odor was always about the same, but had gotten better in recent years”; “the odor has not caused him to change or alter his lifestyle in any way, the odor is noticeable but not a nuisance”; “the smell doesn’t affect their lifestyles, only the odor and smell are bothersome”; “the rate of occurrence was infrequent to rare and not caused lifestyle changes”; and “the odor was mostly the same and had forced no lifestyle changes”. These more recent statements cast doubt on the reliability of Plaintiffs’ assertions that odors from Big Industrialist have caused significant harm and the “odor survey” results.

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This information was helpful in formulating the questions that would later be asked of class members.

The terminology used by the opt out members assisted counsel in using

language which rang true with the others in the neighborhood. c. Real Estate Data Real estate data may confirm that plaintiffs have not been significantly harmed. Homes in the class area sell as fast and for just as much money as other comparable homes. In our case, we were able to show by testimony of a real estate professional based on multi-service list data from the sale of properties in the class area. During that period, 869 homes out of a housing stock of approximately 20,000 units (approximately 4%) were sold. Overall, the average time it took to sell a home during that period was 94.44 days. By contrast, 15 homes out of 467 homes in the class area (approximately 3%) were sold during that period. The average time that homes in the class area were on the market was 93.93 days, a few days less than the local average. As for sales price, the expert determined that the average sales price in the class area during the relevant period (based on the reported market data) was $109,500 – the same as comparable homes elsewhere. This data shows that occasional odors attributed to the industrial activity had no effect on real estate activity in the class area during the relevant period. d. Building Permits. The extent and cost of investments made in homes in the class area also confirms that Plaintiffs have not been significantly harmed by alleged odors from Big Industrialist. The improvements reflected in the permits had an aggregate value of millions of dollars. All sorts of

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home improvements requiring permits are reflected in these permits. Homeowners in the class area are unlikely to continue to invest in a piece of property that is eroding because of significant harm from a nuisance. e. Inspection and Weather In order to constitute a nuisance, a defendant’s conduct must be intentional. It is not enough that the person creating the nuisance knows that harm “might result”. As the Court said in McCracken v Redford Township, 176 Mich. App. 365, 371 (1989), “to establish intent, the Plaintiffs must show that the Defendant creator continued the condition causing the nuisance while they knew or must have known that injury was substantially certain to follow, i.e., deliberate conduct.” It is unlikely that evidence exists to support that Big Industrialist intentionally created odors. Big Industrialist encourages residents and regulators to notify it of any fugitive odors, and has a comprehensive and responsive process for investigating odor complaints received from neighbors. When odors occur, the manager of Big Industrialist’s plant promptly takes action to identify and eliminate the source of odor. While the residents may think that the odors are somehow controlled by a valve, nothing could be further from the truth. There is no intentional act or omission by Big Industrialist which creates the odors. The operational phenomena that may give rise to odors from oil reclamation processes are complex, variable and affected by the weather. Like any area of mixed industrial and residential use, the occasional odor will emanate from industrial areas. Under certain conditions, weather and operations, the odors may travel into residential areas. But the mere existence of an odor is not a nuisance.

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The Michigan Department of Environmental Quality (MDEQ) investigates each complaint called into its office. The controlling air quality rule is known as R901, which states: R.336.1901 Air contaminant or water vapor, when prohibited. Rule 901. Notwithstanding the provisions of any other department rule, a person shall not cause or permit the emission of an air contaminant or water vapor in quantities that cause, alone or in reaction with other air contaminants, either of the following: (a) Injurious effects to human health or safety, animal life, plant life of significant economic value, or property. (b) Unreasonable interference with the comfortable enjoyment of life and property.” [Emphasis added.]

The same MDEQ inspector investigated the odor complaints over a four year period. The inspector’s investigation generally consisted of visiting both the Big Industrialist facility and the neighborhood to attempt to verify the odors, and then meeting with complainants and the company. As a result of these investigations, MDEQ issued one (1) notice of violation (NOV) for odors during the relevant period. In other words, despite the investigation of 70 supposed odor complaints over 1,460 days of operation, the DEQ only issued a single R901(b) violation. The sole 901 violation reflects a period that is 0.06% of the operating time. Additionally, meteorological data from the relevant period also showed that many of the households that complained of odors probably could not have experienced odors caused by Big Industrialist. Some of the complaints received by MDEQ were made by households located south of Big Industrialist’s plant. During that same period, National Weather Service data shows that the most frequent wind direction in the area came from 180° (directly from the south). Because it is rare for the wind in the general area to travel from north to south, it is safe to

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conclude that households that are located south or southwest of the Defendant’s facility would rarely if ever be affected by an offensive odor.

Conclusion When faced with a class action case, gather the available data. Defendant should move quickly to gather data before the class is certified. Consider having an admissible telephone survey performed using scientific and verifiable methodology. Redefine how the game is to be played. The information will have a positive impact on case evaluators, facilitators and the trier of fact.

Jim Fausone is a founding partner of Fausone Bohn, LLP located in Northville, Michigan. He has been practicing law for nearly 30 years, with special emphasis on environmental matters. He has an environmental engineering degree from the University of Michigan and his resume is posted on www.fb-firm.com

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