Propane Odor Fade Litigation: Past, Present & Future — Part 2

Part 1 of this series in last month’s column reviewed the origins of the propane odor fade theory that plaintiffs’ lawyers have used to attack the propane industry for the last 40 years. In the late 1980s and early 1990s, these lawyers and their experts took advantage of new legal theories, such as product liability and failure to warn, to mount an aggressive attack on the propane industry.

Plaintiffs zeroed in on the alleged limitations of ethyl mercaptan, the industry’s odorant of choice, collectively labeling these limitations as “odor fade.” They claimed that the alleged propensity for “odor fade” made ethyl mercaptan and the propane odorized with it “defective and unreasonably dangerous,” in the words of the product liability laws that had by that time been adopted in one form or another by most — if not all — states in the United States.

Mounting Casualties

Finally, plaintiffs coupled the attack on ethyl mercaptan with a failure-to-warn claim that was especially dangerous for retail distributors with no systematic program to provide and document safety education to their customers. Those retailers that provided no safety literature to customers or provided literature that made no mention of odor fade were easy prey. If they provided literature but didn’t document it, they left themselves open to a plaintiff’s testimony that he or she “never received it.”

The casualties mounted.

What did the industry do in the face of this onslaught? First, the dosage level of ethyl mercaptan odorant was increased. There is no formal standard for this, but original industry practice had been to add 1 pound of ethyl mercaptan for every 10,000 gallons of propane. This level was reaffirmed in NFPA 58 (from the National Fire Protection Association), which does not mandate the use of any particular odorant in any particular amount, but which does state in an appendix to the code that “experience has shown” that ethyl mercaptan at the level of 1 pound per 10,000 gallons “has been recognized as an effective odorant level.”

In the face of the oncoming litigation onslaught, and in light of the Bartlesville report discussed in last month’s column, the industry moved to a dosage level of 1.5 pounds per 10,000 gallons, a 50% increase. (Take a moment to consider the pure power that ethyl mercaptan has as a propane odorant — a mere 1 pound or 1.5 pounds of this chemical added to 10,000 gallons is all that is needed for effective odorization.)

Taking Samples

The industry also beefed up its litigation defense capability. It began to hire defense counsel who were not only great in the courtroom but also had intimate knowledge of the industry. The industry was alert to bad incidents and mobilized immediately to respond to a scene with the appropriate experts to preserve and properly document all of the evidence before the bulldozers came. And perhaps most importantly, these experts immediately took liquid samples of propane from the customer tank and had these samples scientifically tested for odorant levels. In virtually all cases, the samples demonstrated odorant levels well in excess of the NFPA 58 standard.

In response to the often-asserted claim that odorant blends other than ethyl mercaptan should be used, research confirmed that ethyl mercaptan is indeed the best, albeit not perfect, alternative. In my experience — and I think other propane defense lawyers would agree — the claim that the industry should be using other chemical blends instead of ethyl mercaptan has pretty much disappeared in the last several decades.

‘Conspiracy’

The failure to warn issue was more difficult for the industry to address because each individual propane retailer is responsible for communication with its own customers. So, when the odor fade litigation began to hit the industry, retail distributors distributed a wide variety of brochures and other materials to their customers about safety. Some were minimal and some were more extensive, but none mentioned the possibility of odor fade. This was also true of the materials that wholesale distributors provided to retailers that purchased propane. And it was also true of the manufacturers of odorant.

This opened the door for plaintiffs’ attorneys to present a narrative of a vast industry “conspiracy” to “hide the facts” regarding odor fade from their customers. And the retail distributor was not the only target. A typical odor fade lawsuit in the early days of this litigation included the entire distribution chain for the propane that ended up in the customer tank, starting with the odorant manufacturer, as well as all wholesalers and pipelines that were in the chain leading to the customer tank.

A series of court decisions taught the wholesalers, pipelines and odorant manufacturers that they could pass the warning liability down to the propane retailer by conveying clear, written warnings about odor fade to the next company in the chain.

Holding the Bag

This left the retail distributor in a vulnerable position; its suppliers provided the retailer with information about odor fade and told it to pass that information on to the retailer’s customers. Those that did not do so were under attack not only from the plaintiffs in a lawsuit, but also from all their codefendants. It was a clever strategy on the part of the plaintiffs’ lawyers. It resulted in substantial verdicts and settlements against vulnerable retailers that were pretty much left holding the bag.

How did retailers defend themselves in this situation? The best defense (although not necessarily the only defense) against a failure-to-warn claim is to warn. However, it took a few years for retailers to have access to sophisticated warning brochures that accurately discussed the limitations of the odorant. One of the major odorant suppliers was Phillips 66 (now Conoco Phillips). Starting in 1988, Phillips came out with a customer brochure that addressed odor fade and other consumer safety information. This brochure was a good start, but it was never clear how much research had gone into the preparation of it. It gained some usage among retailers but certainly was not widespread.

PERC to the Rescue

The real game changer was the Propane Education & Research Council (PERC). PERC was created by a federal statute enacted in 1996. It began operations several years later. One mission of PERC was to promote the safe use of propane. It took that mission seriously and had the resources to back it up. By the early 2000s, PERC staff were working on the development of a customer safety brochure that could be used by all retailers.

From the start, PERC did it right. A warnings expert was hired to make sure the wording and presentation of the brochure properly communicated safety issues in a clear and understandable way. Focus groups were conducted to test the language and presentation of the brochures. The first PERC brochure came out in 2005 and has been appropriately revised in the years since. It certainly seems to have gained broad acceptance within the industry, both by companies that use it and companies that have developed their own materials based on its principles. In my experience, the PERC brochure has been very well accepted by juries across the country. In one odor fade case that my former partner, John Hansen, and I tried in 2010, Michigan jurors were clearly impressed with the PERC brochure that the propane retailer had distributed to all its customers, including the plaintiff. The result was a defense verdict.

All of this has put the propane retailer in a much better position to defend an odor fade lawsuit. However, one remaining issue has emerged, and it was developed by plaintiffs’ lawyers in parallel to odor fade theory and is very much related to it. That is the electronic fuel gas detector. As propane retailers improved their defenses to the odor fade claims, plaintiffs’ lawyers and experts began to argue that retailers should offer or at least warn about these fuel gas detectors as a supplement to odorization to warn of a gas leak. Next month’s column will trace the history of the development of these detectors and their impact on litigation against the propane industry up through the present.