Applying Toxic Tort Economics to Construction Litigation - It Can Be Done
May 1, 1995
The Blue Water Paradigm
In 1990 and 1991, in Contra Costa County, five residential subdivisions were
built in a gorgeous semi-rural area nestled in the hills. The only problem with
hundreds of these beautiful new homes was the residents could not use their tap
water for drinking, cooking, or bathing because it contained copper which could
cause flu-like symptoms. The was bright blue. Three years and a host of related
lawsuits later, experts from as far away as London are still debating the source
of the copper which caused the "blue water". When the problem first
came to light in 1990, a special investigative committee was formed to identify
the cause(s) of the problem and the cure for the tainted water. The committee’s
efforts were unsuccessful. Lawsuits followed. The water district and the
developers were sued by homeowners and they, in turn, filed cross-complaints
against contractors, subcontractors, manufacturers, distributors, and suppliers
of all types of plumbing fixtures. They also sued the realtors who sold the
property and the lenders that financed the purchases of individual homes.
In an attempt to determine the cause of the blue water, the developers built
model home where, using water and pipe samples, they could experiment with
possible remedies (e.g., flushing the home plumbing systems with a citric acid
solution). The efforts proved fruitless. The water district increased the level
of chlorine in its water treatment protocol. While it was widely accepted that
the water’s blue color was the result of excessive levels of copper in the
water and that the copper was somehow leaching out of the water pipes, it was
not apparent why this was so and whether the affected piping was in the home
plumbing systems, in the laterals running from the water mains, or in both. The
obvious query, particularly by defendant manufacturer, was why this blue water
phenomenon was unique to these subdivisions and Contra Costa County and
experienced elsewhere in the country where the same types and brands of copper
tubing, flux, and other plumbing materials were used.
Different theories on the causation of the blue water phenomenon were
advanced by numbers parties and their consultants. Examples included
microbiological organisms; an electrolytic process resulting from the interplay
of electrical currents from power lines, the copper pipe and the water; pitting
and corrosion on the inside of the copper pipe from the annealing process of its
manufacture; excessive use of flux or solder at the pipe joints; or some
synergistic combination of the above. To this day, the actual cause of the blue
water has not been definitively established.
A special master for discovery issues was appointed. The special master
severed the construction defect claims-raised by a number of the homeowners-from
the blue water claims. Although initially the cases were consolidated under one
caption, as homeowners in different subdivisions filed new cases, the loosely
managed consolidation unraveled. The daily litigation mail which had to be
reviewed was often over a foot high and required a case clerk to file and
organized.
One peripheral supplier was not sued by the plaintiffs, but was instead sued
by plumbers and other suppliers on cross-complaints for indemnity and
contribution. A decision was made to negotiate a settlement directly with
plaintiffs. Plaintiffs’ counsel enthusiastically embraced this idea and even
gave the supplier a "discount" for being the first litigant to settle.
The plaintiffs’ attorney called a "town meeting" where the proposed
settlement was explained and thereafter sent letters to each client advising the
terms of the proposed settlement and soliciting written consent to the
agreement. The homeowners accepted the settlement and the supplier was dismissed
from the case. The court entered an order determining the good faith of the
settlement ($50 per house) and dismissing all cross-complaints for indemnity and
contribution.
Counsel for peripheral players should maintain a low profile to minimize
costs. To minimize costs and to avoid drawing unwanted attention to your client,
attend only mandatory appearances and defer designating any expert witnesses. In
the blue water cases, counsel took the initiative by filing a motion to adopt a
case management order which would have brought with it the probable dismissal of
numerous peripheral defendants. Merely moving for the case management order
motivate many voluntary dismissals.
Related Practices