‘Plastics Recycling Fraud’ and the Continued Expansion of Public Nuisance Claims

In one of the first cases alleging “plastics recycling fraud,” a federal district court in California recently denied a motion to dismiss the plaintiffs’ public nuisance claim. Citing prior decisions in cases involving the manufacture and distribution of handguns and opioids, the court held the plaintiffs had plausibly alleged a public nuisance claim based on the defendant’s manufacture, distribution, and promotion of polymers for single-use plastics. The court’s decision represents not only a significant development in the evolution of plastics litigation but also a significant development in the application of traditional nuisance theories to address alleged environmental and societal harms arising from the manufacture and sale of lawful products.

In Sierra Club v. Exxon Mobil Corp., four environmental groups (the Plaintiffs) allege that defendant Exxon Mobil Corporation created a public nuisance by producing, distributing, and promoting plastic polymers for single-use purposes despite knowing that single-use plastics are technically and economically difficult to recycle and/or dispose of safely. The Plaintiffs theorize that Exxon knowingly misrepresented the feasibility of recycling single-use plastics to drive consumer demand and to “increase its bottom line.”

The Plaintiffs assert that, in doing so, Exxon injured Californians who must contend with “choked beaches and waterways wasted with wrappers” and microplastics pollution impacting “the land, air, sea, and even human bodies.” Taking the Plaintiffs’ allegations as true and viewing them in the light most favorable to Plaintiffs, the court concluded that the Plaintiffs alleged enough to support their public nuisance claim.

In doing so, the court rejected Exxon’s arguments that the Plaintiffs failed to allege a viable theory of nuisance liability because (1) the Plaintiffs’ claims were nothing more than a products liability claim in disguise and (2) the Plaintiffs failed to sufficiently plead causation, identifying only a handful of pro-recycling statements over the course of several decades. The court disagreed with Exxon’s contention that the Plaintiffs could plead their product-liability fact pattern as a nuisance claim only if Exxon knowingly promoted its products for a “hazardous use,” concluding that a nuisance claim is plead where a defendant is alleged to have engaged in “affirmative conduct that assisted in the creation of [the] hazardous condition [complained of].”

Drawing comparisons to the opioid and firearms litigation, the court opined that nuisance liability for a product manufacturer flows not only from knowingly promoting a product for a hazardous use but also where a manufacturer knowingly supplied a product to market with the knowledge that the product is being abused and diverted for unlawful purposes, whether that unlawful purpose is an illegal sale or illegal pollution. With that backdrop, the court determined that the Plaintiffs’ allegations about Exxon’s production and distribution of plastic polymers in conjunction with the company’s alleged misleading and deceptive promotion of plastics recycling provided sufficient grounds to plausibly aver that Exxon undertook the necessary affirmative conduct that led to the creation of a hazardous condition (i.e., the alleged plastic pollution crisis).

Turning to Exxon’s causation argument, the court noted that the causation element in a nuisance claim “is satisfied if the conduct of a defendant is a substantial factor in bringing about the result. . . , requiring only that the contribution of [a defendant] be more than negligible or theoretical.” The court determined that the Plaintiffs plausibly alleged “Exxon’s activities are a substantial factor in California’s pollution crisis” because they averred that Exxon sold massive quantities of non-recyclable plastic polymers while misleading the public about the recyclability of those plastics with the knowledge that the polymers produced would not degrade, leading to the plastic pollution crisis complained of.

In sum, the court determined that, taking all allegations as true, the Plaintiffs sufficiently alleged that Exxon manufactured, distributed, and promoted plastic polymers that it knew would harm the environment and misled the public about the inevitable harm by suggesting the harm could be mitigated through recycling. Collectively, the court found these allegations sufficient to state a claim for public nuisance.

IMPLICATIONS

The court’s decision is the first in the recent wave of plastics litigation in which a court has found plaintiffs’ allegations sufficient to state a public nuisance claim. Less than a year earlier, a New York state court rejected a similar public nuisance claim that sought to hold a manufacturer of products sold in single-use plastic packaging liable for widespread plastics pollution. The court there reasoned that a public nuisance claim was not viable in the absence of evidence that the product was defective or unlawful and concluded that the public nuisance at issue was caused by third parties who improperly disposed of the plastic packaging. [1]

The California court’s reliance on public nuisance law developed in the context of the handgun and opioid litigation—other lawful, non-defective products, alleged to have given rise to a public nuisance—suggests that the plaintiffs’ bar has identified a theory for pursuing public nuisance claims arising from the manufacture and sale of plastic polymers, and perhaps other lawful products, that may gain traction in other courts.

This development is significant because the use of public nuisance law to circumvent traditional product liability, negligence, and fraud defenses and pleading requirements presents several advantages to plaintiffs seeking to hold defendants responsible for societal harms. It allows plaintiffs to pursue a cause of action premised on alleged interference with broad public rights rather than individual harms, allows plaintiffs to pursue recovery for alleged harms from defendants they have no direct relationship with, and subjects defendants to potential liability for actions of downstream users of their lawful products.

It is not yet known whether the Plaintiffs in Sierra Club v. Exxon will prevail on their public nuisance claim and/or what relief they might obtain. However, the fact that the Plaintiffs were able to plead a viable public nuisance claim—to survive the initial pleadings stage—creates significant litigation risk for others involved in the manufacture, distribution, and sale of plastic polymers—and perhaps other lawful products.

To minimize litigation risk, it is imperative that companies pay close attention to the marketing and promotion of their products, particularly with respect to sustainability and recycling claims, to ensure that their statements are accurate, specific, verifiable, and quantifiable. Even then, Sierra Club v. Exxon suggests that a plaintiff might survive a motion to dismiss if the plaintiff plausibly alleges that such statements ultimately were misleading.