By Scott Flaherty, from The Litigation Daily

After 25 years of litigation over contamination from the Rocky Flats nuclear weapons plant in Colorado, a federal appeals court has ruled that Dow Chemical Co. and Rockwell International Corp. should be on the hook for nuisance claims by nearby property owners that could total in the hundreds of millions of dollars.

In an unusual move, the U.S. Court of Appeals for the Tenth Circuit ordered the lower court to reverse its ruling and enter judgment for the plaintiffs, instead of sending the case back for reconsideration. The court’s move was prompted in part by the extraordinary delay in resolving this case, with the court noting the “titanic” amount of time and expense it has taken up, including a 2006 trial. “We can imagine only injustice flowing from any effort to gin up the machinery of trial for a second pass over terrain it took 15 years for the first trial to mow through,” wrote Judge Neil Gorsuch for the majority.

Merrill Davidoff of Berger & Montague argued the appeal for the plaintiffs, who consist of roughly 12,000 Colorado property owners. Kirkland & Ellis’ Christopher Landau argued for the two defendant companies.

A Dow spokeswoman said in a statement that the company was disappointed and considering further appeal options. She also noted that Dow is entitled to be indemnified by the U.S. Department of Energy because it operated Rocky Flats under a government contract.

Dow operated the Rocky Flats plant from 1952 to 1975, when Rockwell took over. In 1989, the Federal Bureau of Investigation found evidence that plant workers had for years mishandled radioactive waste, allowing it to leach into nearby soil and bodies of water. The plant was shut down and Rockwell later pled guilty to environmental crimes.

The value of nearby property plummeted, and in January 1990, local landowners lodged a putative class action against Dow and Rockwell under state nuisance law and the federal Price-Anderson Act, which applies to lawsuits that allege liability for nuclear incidents. Price-Anderson limits companies’ liability in certain cases, with the government paying a portion of any damages.

After years of pretrial wrangling, a jury in early 2006 sided with the plaintiffs and awarded $377 million in damages. On appeal, the companies argued that the district court’s jury instructions included an overly broad definition of what constitutes a nuclear incident under Price-Anderson. In 2010 the Tenth Circuit agreed that the jury instructions were too permissive.

When the case went back to the district court, Berger & Montague engaged in “a little judicial jujitsu,” as Tenth Circuit Judge Neil Gorsuch put it on Tuesday. Conceding that the plaintiffs couldn’t prove that a nuclear incident had taken place, they abandoned the Price-Anderson claim, but continued pursuing the nuisance claim. They maintained that the 2006 jury verdict should allow the district court to enter judgment in the plaintiffs’ favor on that state law claim, without the need for a new trial.

The district court sided with Dow and Rockwell, which had argued that the plaintiffs’ earlier pursuit of federal Price-Anderson claims pre-empted their state nuisance claims. On Tuesday, the Tenth Circuit panel rejected that argument. (None of the three judges involved in Tuesday’s ruling were part of the first appellate panel.)

“Dow and Rockwell appear to have persuaded even the plaintiffs that this case does not involve a nuclear incident within the meaning of the Price-Anderson Act,” wrote Gorsuch. “But that does not mean the defendants are insulated from any liability—or that the jury’s verdict is a pointless piece of paper.”

In a concurring opinion, Judge Nancy Moritz agreed that the case deserved a remand, but wrote that she would have sent it back for a new trial on the nuisance claim.

We reached out to Berger & Montague’s Davidoff but didn’t immediately hear back.

For more on this story go to: http://www.litigationdaily.com/id=1202730423270/Surprising-Reversal-in-Rocky-Flats-Case#ixzz3e63SSV6I