Objections Filed To Rubbertown Settlements Posted: April 23, 2009
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
JUDITH DONAWAY et al.,
ROHM AND HAAS COMPANY,
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OBJECTION TO PROPOSED CLASS ACTION SETTLEMENT
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Comes Eboni Neal Cochran, by counsel, and respectfully submits for the Court’s consideration, the following objections to entry approval of the Settlement of Class Action proposed in this matter. As grounds for her objection, Ms. Cochran states as follows:
1. Ms. Cochran is a resident of Metro Louisville, residing and owning property at 4304 Winnrose Way, Louisville, Kentucky 40211. Ms. Cochran is a Board member of REACT (Rubbertown Emergency Action), which advocates on behalf of residents of west Louisville for better controls on air toxics from Rubbertown industries.
2. Ms. Cochran was formerly a plaintiff in the pending case of Eboni Cochran et al. v. Zeon G.P. LLC, et al., Case No. 3:06CV-363-H, in which claims similar to those made by Plaintiffs in this case, have been made.
3. Ms. Cochran requests that this court find that the proposed class action settlement is not fair, reasonable and adequate, for these reasons:
a. The relief obtained for class members bears no reasonable relationship to the harms alleged to have occurred, and offers no meaningful relief to class members while requiring that each class member take affirmative steps to opt out or suffer the loss of their right to assert claims against Rohm and Haas Company (Rohm and Haas) for a broad range of property and health-related injuries.
As noted in the Joint Motion for Preliminary Approval of Class Action Settlement, a class action settlement should not be approved unless it is “fair, adequate, and reasonable”. This Court has substantial discretion in determining whether a proposed settlement is fair.
The parties seek to resolve this case with a class action settlement that will bind some 7,000 homes and all residents and owners of those properties (within a 2-mile radius of the facility) to the terms of the settlement unless they opt out.
The complaint alleged nuisance, personal injury and adverse health effects associated with emissions from the defendants’ facility, and sought monetary and injunctive relief.
The proposed settlement would result in $700,000 “less attorneys fees and costs” being deposited into a scholarship fund to provide “scholarship assistance in the form of grants to help defray college or university expenses of graduating high school students residing in the Class Area. According to the documents, the Plaintiffs will file a separate request for Attorney’s Fee and costs, seeking 1/3 of the $700,000 in fees ($233,333.33), leaving $466,667, with an as-yet undetermined amount of the $700,000 figure for costs associated with the litigation. Subtracting the $25,000 used for settlement expenses, at most, $441,667 would be available for the scholarship fund.
According to the Scholarship Endowment Fund Agreement, the scholarship fund will amount to $441,667, and 5% of the annual fund balance would be used on an annual basis for scholarship assistance. Assuming an 8% return, as the filing does, the fund will yield $35,333 in interest in the first year. If the proposed Distribution Policy remains in place, only 5% of the Fund balance would actually be available each year for grants, so that only $23,850 would be available at the end of the first year, with some $4,417 being paid out of that for Administrative Fees and $839 paid in supplemental fees, according to the provided chart. The actual amount available for grants would be approximately $18,000 after year one, providing grants for up to 18 individuals. Assuming 8% return and 5% distribution, at the end of year five (when the injunction expires) a total of 89 persons might benefit from the settlement out of a Class containing 7,000 homes and twice or more that number in actual residents (assuming a conservative 2/residents per household).
Assuming a more realistic rate of return of 2.5%, the amount of interest in Year 1 would be $11,317. With a 5% of fund balance distribution limit, $22,635 would be distributed, causing a decline in the fund principal rather than an increase in fund balance.
Assuming that only the interest amount were distributed, no accrual of principal would occur for year 2 and subsequent years. If the fund were augmented by the proposed DuPont settlement monies, the total principal in Year 1 would be $816,667.00. At the current 2.5% rate, it would accrue $20,416 in interest in Year 1, and using a 5% of fund balance distribution formula, would pay out over twice the interest accrued ($41,854.15). If a decision were made to limit distribution to accrued interest, it would fund up to 20 $1,000 grants and eliminate any addition to principal for Year 2 or subsequent years.
A relative handful of school-age persons benefiting from a settlement out of a class that includes 7,000 or more homes, is unreasonable since it provides no benefit to the overwhelming majority of the class members and is unrelated to the basis for the lawsuit and the claims released in consideration of the settlement. While the Settlement Agreement asserts that the Settlement Funds are intended to “compensate Members of the Class for any past, present, or future nuisance or trespass”, for “property damages” and for “personal injuries allegedly related to air emissions, releases or odors”, it provides no compensation of any kind to over 7,000 homeowners and to the many more residents who reside in those homes, while attempting to extinguish a broad spectrum of past and future claims.
b. The two Settlement Agreement sections describing the forfeiture of legal rights and claims, Numerical paragraphs 17 and 18, are vague, overbroad, and unreasonable in light of the limited relief provided to a small fraction of the 7,000 homes affected. In return for providing nominal educational support to a handful of high school graduates, the entire class forfeits a both personal injury and property claims that could have been or could be asserted against the Defendants for past and future operations at the facility.
According to the Joint Motion for Preliminary Approval of Class Action Settlement, “Rohm and Haas Company Class Members will release Rohm and Haas Company from all claims, causes of action (whether class, individual or otherwise in nature), injunctive relief of any kind, punitive and other damages of any kind, liabilities of any nature whatsoever, that any Class Member or Members, ever had, now has, or hereinafter shall, can or may have relating to the matters alleged and complained of in the Litigation including, without limitation, any claims that have been or could have been asserted in the Litigation.” The Settlement Agreement language, at Section 17, releases the defendants from “all manner of claims, demands, actions, suits, [and] causes of action” “known or unknown, suspected or unsuspected[. ]” The language appears broad enough to preclude any claims for property damage whether discovered or not at the time of the settlement.
The relief proposed bears no apparent relationship to the nature of the claims asserted, yet in return for a college scholarship that at best will marginally contribute to college tuition costs for a small class subset of high-school aged students, 7,000 homeowners and all persons living in those homes will lose their right to assert claims for personal injury for past exposure to a range of air toxics, and for reduction in the value of their homes associated with the emissions of those odors and the interference with the use and enjoyment of those properties.
In addition to extinguishing claims that could have been asserted, the settlement agreement would preclude assertion of claims for personal injury or property damage going forward unless the claims arise from “future operations by Rohm and Haas Company that both (i) involve substantially different manufacturing processes and (iii) result in substantially different or greater releases or emissions than current or historical operations. There are several problems with such a sweeping bar against future claims.
First, by excepting only claims for personal injury in Paragraph 17(a) from the Released Claims, claims for property damage, nuisance or trespass that could not have been asserted prior to the Settlement Agreement date may by negative inference be barred.
Additionally, the language in 17(c) appears to bar all claims based on future operations unless the future operations involve “substantially different manufacturing processes” and result in “substantially different or great air emissions, releases or odors than current or historical operations.” Yet the phrase “substantially different” is nowhere defined, nor is “historical operations,” a phrase broad enough to encompass emissions of air toxics that occurred prior to the installation of pollution controls under the Clean Air Act Taken together, even a substantial increase in emissions from existing processes over currently authorized levels would give rise to no liability. Because both substantially different manufacturing processes and substantially different or greater releases or emissions than current or historical operations, are required to exempt a claim from the release, a future operation resulting in substantial increases in emissions over the highest emission rate in the history of the facility from a manufacturing process not “substantially” different than the current operation, would be immunized from liability.
Ironically, in an action that sought injunctive relief against the facility’s emissions, it is the class members who are instead proposed to be enjoined. Numerical Paragraph 18 purports to enjoin the class members from bringing a suit for damages or injunctive relief against the Defendants for a period of five years, even where the claim arises out of events that occur after the settlement of this suit. The only exceptions to this injunction are for personal injury claims that “could not have been asserted, in whole or in part, prior to December 15, 2008”, claims based on a catastrophic release, and claims based on substantially different manufacturing and substantially different or greater releases.
The personal injury exception suffers from an ambiguity mentioned below, in light of the bar in Paragraph 17(a) against future assertion of “unknown” and “unsuspected” claims. The other exception to this five-year injunction would give the facility carte blanche to cause nuisances, trespass or other property damage, as long as it did not substantially change manufacturing processes or release odors or emissions substantially different than current emissions or greater than the highest level of releases in the facility history.
The scope of the injunction in Numerical Paragraph 18 appears overbroad for another reason – it seeks to enjoin individuals who purchase property within the Class Area after December 1, 2009, and in so doing, extends the injunction to individuals who had no notice, no opportunity to opt out, and who may come to purchase the property (from a Class Member or someone who had opted out of the Class) without knowledge that their right to assert a claim for post-lawsuit emissions has been extinguished for a five year period and has been curtailed thereafter by the release.
The Settlement Agreement states that the Released Claims do not include “claims for personal injury that could not have been asserted, in whole or in part, prior to the date of this Settlement Agreement.” Yet the same paragraph includes among the Released Claims those claims that are “known or unknown, suspected or unsuspected,” giving rise to a substantial concern that a person who has suffered past exposure but whose exposure has not manifest in illness, or who is not currently aware that the illness is related to exposure to air toxics released by the facility, might face a bar against asserting a claim in the future. Given the latency period for cancer, it is a concern that past exposure that manifests as illness in the future, may be barred as an “unknown” or “unsuspected” claim.
In sum, the proposal to preclude for a five-year period, and to inhibit thereafter, claims based on future operations from the facility, and unknown and unsuspected claims based on past exposure, is more than what can reasonably be expected in settlement of an action. The release for accrued claims is overbroad in seeking to bar “unknown” and “unsuspected” claims. Finally, the release appears to be unfair, since it deprives a broad class of thousands of homeowners and residents of rights, while providing only a relative few class members who are high school graduates a partial scholarship of $1,000 or more.
c. The “Class” includes individuals who formerly resided or owned property in the proposed “Class Area” after November 1, 2001 and the date of the settlement agreement, but who would not have notice that their rights are being extinguished unless they opt out, since only the current property owner or resident would have received the mailed opt-out notice.
d. It is noted in the Settlement Agreement preamble that Rohm and Haas had announced the cessation of certain industrial processes during 2009, and that such cessation of processes would reduce air emissions and result in decommissioning of the tanks and buildings involved in those processes. There is no indication that the decision of Rohm and Haas to do so bore any relation to the pendency of this suit, nor is there anything in the Settlement Agreement binding Rohm and Haas to any announced cessation of processes. In evaluating what is surrendered and what is gained by Class Members, the cessation of these processes should not be considered in determining the fairness and adequacy of the settlement to Class Members, absent some demonstration that the decision was the result of the litigation rather than a response to market conditions, business planning or regulatory changes (including the STAR air toxics control program).
WHEREFORE, for the reasons stated above, Eboni Cochran respectfully requests that this Court find and determine that the proposed Settlement Agreement is not fair, adequate and reasonable, and that this Court deny the request to certify a class for purposes of entry of the proposed settlement agreement.
Thomas J. FitzGerald
Kentucky Resources Council, Inc.