E-Alert Case Updates

Defendant’s Request for Bond Premium Costs Denied in Maryland Mass Toxic Tort Litigation

Exxon Mobil Corp. v. Ford, et al.
No. 16, September Term, 2012 (Court of Appeals of Maryland, June 25, 2013)
by Anna C. Horevay, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

In Exxon Mobil Corp. v. Ford, the Court of Appeals of Maryland considered whether the assessment of costs for the premiums of a supersedeas appeal bond could be assessed to the plaintiffs in a mass tort case. Because the Court had previously ordered that all appellate costs be paid pro rata by Plaintiffs, Exxon requested that the costs for the bond premiums also be allocated to Plaintiffs. Noting that requiring Plaintiffs to pay the premium costs of Exxon’s supersedeas bond would deter future litigants in mass toxic tort cases from pursuing meritorious claims against large corporations, the Court denied Exxon’s request.

Plaintiffs resided in Jacksonville, Baltimore County, Maryland. In January 2005, one of Exxon’s contractors punctured an underground gasoline feed line at an Exxon Mobil-owned gasoline service station. The puncture went undetected for about a month, and over that time, 26,000 gallons of gasoline leaked into the local underground aquifer and allegedly contaminated the source of wells supplying water to the eighty-seven (87) residential households of Plaintiffs. At trial, $146 million was awarded to more than 200 individual plaintiffs. This award was affirmed in part, and reversed in part, by the Court of Special Appeals.

Exxon then petitioned the Court of Appeals, contesting the award to Plaintiffs. The Court reversed in part and affirmed in part the judgment of the Court of Special Appeals, which resulted in the reversal of the award for damages of fear of contracting cancer, future costs of medical monitoring, and the judgments awarding damages for diminution in property value for the plaintiffs whose wells lacked any toxic contamination. Following the judgment of the Court, Plaintiffs filed a motion for reconsideration. In response, Exxon filed a request for bond premium costs, seeking reimbursement in the amount of $920,566 for the cost of premiums on its supersedeas bond.

The Court quickly denied the motion for reconsideration of Plaintiffs, but examined Exxon’s request for reimbursement. The Court first noted that a supersedeas bond is a “writ or bond that suspends a judgment creditor’s power to levy execution usua[lly] pending appeal.” Exxon posted a supersedeas bond to suspend execution of the judgments in each of the cases considered in Ford, pending appeal. Between the entry of the judgments in trial court and the date of the mandate from the Court, $920,566 in premium costs accrued.

Because Exxon was awarded costs by the Court, Exxon motioned for the premiums of the bond to be paid by Plaintiffs. Under MD. RULE 1-406, “[u]pon request of the party entitled to costs[,] the premium for a bond required to be filed in an action shall be included in costs.” Despite this rule, the Court held that requiring Plaintiffs to bear nearly $1 million in premium bond costs was both unreasonable and unconscionable under the circumstances. The Court noted that cost allocation is not to be used as a punitive measure or to deter litigation. Instead, judicial fairness should be a consideration. Because the Court considered the fairness of the situation, it held that requiring Plaintiffs to pay approximately $1 million in premium costs for the supersedeas bond would be unjust and unreasonable and would potentially deter future mass toxic tort litigation simply because of the fear of the high costs associated with prosecution of an appeal of a possible judgment. As a result, the Court changed the mandate from Ford to order that all parties shall bear their own costs.