Nanotechnology Litigation: Winning the War Before it Starts

Promising revolutions in fields as diverse as computing, alternative energy, pharmaceuticals, and material science, nanotechnology’s allure is undeniably irresistible. Several hundred nanomaterial-containing products ranging from air purifiers to zinc oxide sunscreens are already commercially available, and while analysts disagree about the proper definition (and thus true size) of the current “nanotechnology market,” consensus exists for dramatic global expansion in the next few years. Although it remains to be seen, the incoming Obama administration’s reported support for aggressive deployment of cleantech and alternative energy projects could portend a particularly rapid expansion of nanotechnology products and applications related to those areas.

Companies manufacturing, using, or selling nanoproducts in the Unites States would be well-served, at this early stage, to think proactively about minimizing future litigation risks. Candidly, the legal world has thus far lagged behind the growth in nano-related products and enterprises. But if the encyclopedic history of toxic tort, product liability, and environmental litigation in this country is any guide whatsoever, there is no reason enterprising plaintiffs’ attorneys are less likely to tackle nanotechnology than other lucrative products and technological advances. Indeed, references to a potential link between carbon nanotubes and lung cancer have already sprouted on plaintiff-oriented websites across the country.

Several recent trends suggest that nanotechnology-related businesses are presently in a crucial – and dangerous – period that will shape the size and scope of future litigation for decades to come. Particularly in a society that increasingly views chemical substances as “dangerous,” these developments may foreshadow significant future litigation risk for nanotechnology companies.

Growing Focus On Health and Environmental Risks

First, calls for research into nanotechnology’s potential health and environmental hazards are gaining real traction. Advocacy groups like Greenpeace and the NRDC are becoming increasingly vocal about nanotechnology’s purported health and environmental implications, and the National Research Council recently issued a report criticizing federal efforts to evaluate nanotechnology risks as inadequate. These calls are beginning to resonate with the mainstream media, as underscored by a December 4, 2008 New York Times article describing “nanophobia,” or “the fear that that tiny components engineered on the nanoscale… could run amok inside the body.”

More importantly, efforts to boost nanorisk research are yielding concrete results. The federal EH&S budget coordinated via the National Nanotechnology Initiative has grown from $35 million in 2005 to more than $76 million in 2009, and multiple agencies are ramping up nano-related activity. In late 2007, for example, the Agency for Toxic Substances and Disease Registry formally indicated interest in developing a full toxicological profile for undefined “nanomaterials.” EPA’s Nanoscale Materials Stewardship Program, launched in January 2008, seeks voluntary submissions on potential nanomaterial risks (including data on potential health hazards, worker and other human exposures, environmental releases, and risk management procedures). NIOSH has similarly adopted a wide-ranging, multiyear research agenda that includes worker exposure routes, nanoparticles toxicities, and risk assessment models.

Coupled with emerging research in the dozens of nanotechnology-related journals launched in recent years (as well as even more government-funded research programs in the EU and elsewhere), these kinds of federal initiatives signal that significant strides forward in knowledge about nanotechnology’s potential health and environmental risks are coming.

An Emerging Trend Toward Active Regulation

Second, an historical regulatory reluctance to treat nanoparticles differently than other chemical substances may be evaporating. In October 2008, EPA gave public notice that carbon nanotubes may be considered new chemical substances - and thus subject to onerous reporting requirements - under the federal Toxic Substances Control Act (TSCA). See 73 Fed. Reg. 64946. EPA has also taken preliminary steps to regulate certain silica and alumina nanoparticles as significant new uses under TSCA, and recently solicited public comments on the potential regulation of all nanosilver-containing products under the Federal Insecticide Fungicide and Rodenticide Act. See 73 Fed. Reg. 65743, 65763 and 73 Fed. Reg. 69644.

It is hardly a stretch to envision this trend toward nano-specific regulation accelerating under a Democratic administration in 2009 and beyond. As agency rulemaking gains steam, reports will be generated about the purported dangers underlying each new regulation. Plaintiffs’ lawyers pursuing claims against nanotechnology-related defendants will inevitably use these documents as a backdrop for future claims.

Public Opinion is Largely Unformed, And Potentially Negative

Third, public perception of nanotechnology is still nascent and largely unshaped. According to a recent poll published by the Project on Emerging Nanotechnologies at the Woodrow Wilson Institute, only 25% of American adults have heard a significant amount about nanotechnology. In contrast, three-fourths of American adults have heard little to nothing at all about nanotechnology. Public opinion – and thus future juror opinion – remains precariously subject to influence by advocacy groups and others aligned with the plaintiffs’ bar.

To the extent any public opinion has coalesced, other reports should give nanotechnology businesses cause for concern. In a 2008 study, researchers from the University of Wisconsin-Madison and elsewhere polled 1,015 U.S. adults and found that only 29.5 percent deemed nanotechnology “morally acceptable.” A follow up study released in December concluded that religious attitudes strongly influence public opinion about nanotechnology, and that the American public is less accepting of nanotechnology than European countries.

Winning the War Before it Starts

This unique conflux of scientific, regulatory, and public opinion forces represents a critical period that could shape the litigation landscape for many years to come. The good news, however, is that this formative period also offers businesses an extraordinary opportunity to minimize future liabilities and legal costs.

As an initial step, nanotechnology companies should begin crafting careful responses to foreseeable inquiries from employees, stockholders, and the media as coverage about nanotechnology’s supposed dangers builds. Being caught flat-footed is a surefire way for businesses to look bad, provide inaccurate answers, and ultimately lose the battle for public opinion. Conversely, thoughtful and accurate responses can help ensure that defendants get a fair shake in the jury system later.

Nanotechnology businesses should also consider monitoring scientific and regulatory developments across all sectors, and weighing in where appropriate. Through active and transparent participation in the growing public discourse about nanotechnology’s potential hazards, companies can help ensure that future rulemakings proceed based on balanced, objective evidence. Failure to participate now may cause irretrievable harm in future litigation.

Additionally, companies need not wait for formal regulation before reducing potential worker exposures and environmental releases. Not only should businesses identify and eliminate exposures and releases where feasible because it is the right thing to do, but from a legal perspective, anticipatory action may reduce the number of future claimants. Moreover, rapidly emerging hazard information will be used to support arguments about corporate indifference many years after the fact. Voluntary adherence to guidance documents and industry standards now may demonstrate the kind of good faith efforts necessary to defeat punitive damages claims in future litigation.

Finally, companies manufacturing and selling nano-related products should weigh the possible implications of any information (or lack thereof) in labeling, Material Safety Data Sheets, and product literature. “Failure to warn” claims have proven fertile grounds in past personal injury cases and consumer product class actions. Even though the risks purportedly associated with nanomaterials remain speculative, businesses should think, on a case-by-case basis, about opportunities to mitigate future claims through appropriate disclosures.

In the 6th century B.C., Chinese strategist Sun Tzu observed that “victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” These words remain instructive for 21st century nanotechnology companies inevitably facing growing litigation risks as concerns about health and environmental implications continue to mount. As scientific research, regulatory action, and public opinion begin to crystallize, businesses still have a rare chance to shape the future fight. By anticipating trends and taking proactive measures now, nanotechnology companies may even win the war before it starts.

By Orlyn “Skip” Lockard, III. Skip Lockard is a partner in the Atlanta office of Alston & Bird LLP. His practice focuses on toxic torts, mass actions, and environmental litigation. Alston & Bird also has extensive experience in pre-litigation management of product liability and toxic tort issues. Mr. Lockard can be contacted at (404) 881-7126 or skip.lockard@alston.com

Source: Nanowerk