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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Objections Lodged To Proposed Zeon Class Action Settlement  Posted: June 14, 2009


UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
Civil No 3:06-CV-363-H

EBONI COCHRAN, et al.

PLAINTIFFS

V.

ZEON G.P., LLC.and ZEON
CHEMICALS PARTNERSHIP
d/b/a ZEON CHEMICALS, L.P.

DEFENDANTS )


* * * * *

OBJECTION TO PROPOSED CLASS ACTION SETTLEMENT

* * * * *

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 is a named plaintiff in this case and a Class Member.

3. Ms. Cochran requests that this court find that the proposed class action settlement is not fair, reasonable and adequate, for these reasons:

I. INTRODUCTION

The Plaintiffs (other than Ms. Cochran) and defendant Zeon G.P. LLC and Zeon Chemicals Partnership, d/b/a Zeon Chemicals, L.P. (collectively “Zeon”) have proposed a settlement class identified as the “Algonquin/Greenwood Class” consisting of “all lawful residents and owners of real property within two miles of the Zeon facility” and comprising, according to the Joint Motion for Preliminary Approval of Class Action Amended Settlement (hereinafter “Joint Motion”) of “approximately 6,750 homes.” Joint Motion, at p. 5.

According to the Joint Motion, the nature of the Plaintiffs’ Complaint was nuisance, i.e. “alleged interference with the use and enjoyment of their property” for which “an award of money damages to compensate them for their property injuries and a cessation of the noxious odors emissions to allow the Plaintiffs full use and enjoyment of their property.” Id., pp. 5-6.

The joint Motion describes the settlement terms as these:

- Zeon agrees to “undertake certain actions designed to further reduce emissions from the Facility. In brief, those improvements will include making engineering improvement to the plant’s emissions system and revised operational processes to further reduce air emissions, releases, and odors from the Facility. The cost to Zeon of the improvements and revised operations processes is estimated to have a value of approximately $3.9 million.” Joint Motion at p.8.

- Zeon agrees to pay “$1,100,000” which will be used “both to compensate certain Algonquin/Greenwood Class Members for their alleged injuries and to pay all settlement administration costs and attorneys’ fees and costs approved by the Court.”

- Zeon agrees to pay “$400,000”, $100,000 per year over a four year period, which shall be contributed and utilized for the air monitoring activities being performed by the University of Louisville in connection with the West Louisville Air Toxics Study.”

- Zeon agrees to pay $100,000 to fund an audit or confirmation that for each of the seven (7) years after the initial three (3) year period after the settlement in which virtually all claims against Zeon are barred, the annual emissions haven’t exceeded the emission for calendar year 2006.

- Zeon agrees to pay $100,000 to the University of Louisville to provide seminars, programs, and information regarding health and environmental issues for residents of the Rubbertown neighborhoods.

In return for these actions and payments, those Class Members who do not effectively opt out forfeit a sweeping array of legal rights, both as to accrued claims, and for a three-year (expandable to ten-year) period.

SUMMARY OF OBJECTIONS

Ms. Cochran objects to the proposed Settlement Agreement as being unfair, unreasonable and unjust, and respectfully asks that this Court reject the proposed agreement in its entirety, or alternatively, that the Court reject those aspects of the agreement that are most objectionable. Ms. Cochran also requests that due to the failure to mail the map identifying the class and subclasses until late in the notice period, that the opt-out period be extended for a period of 60-days commencing with the date that the maps were actually mailed.

The proposed Settlement Agreement arbitrarily creates a settlement class of persons within a two-mile radius, while providing monetary damage award only to a subclass which is defined as those within a one-mile radius. No justification is provided for the distance-based class definition, nor for the decision to compensate only a small subset of the settlement class while depriving those living within one – to – two (1-2) miles of a broad array of accrued and future rights without compensation.

The proposed Settlement Agreement is unreasonable since it purports to extinguish rights of action with respect to nuisance and property damage while providing only nominal compensation to some class members and none to the vast majority of class members. The proposed Settlement Agreement purports to require Zeon to undertake $3.9 million dollars in plant “improvements”, yet the actions Zeon has agreed to undertake in Numerical Paragraph 13 of the “Amended Settlement Agreement” are those measures to which Zeon had already committed to undertake in order to come into compliance with the STAR air toxics reduction regulatory program. Additionally, nothing in the Amended Settlement Agreement commits Zeon to implement measures to reduce acrylonitrile or styrene emissions (Num. Para. 13(a)(vi)) so the $2,500,000 identified for implementation of the studied options should be completely discounted. The actual value of the identified improvements to which Zeon committed are $1,600,000, and the value of these improvements for purposes of this settlement is nil, since those measures were already committed by Zeon to be undertaken in order to reduce the cancer risk of the emissions to near or below target risk levels under the STAR program.

Finally, the settlement is overbroad, unfair and unreasonable, and overreaches in extinguishing both accrued claims and future rights of action that may arise from continued operations at the Zeon facility. The release and injunction attempts to include both those who have opted out, and future residents and landowners who move into the area and are without notice and cannot be bound as nonparties to such an injunction.

I. THE CLASS DEFINITION AND CREATION OF INFORMAL SUBCLASSES WITHIN THE PROPOSED SETTLEMENT CLASS IS ARBITRARY AND UNREASONABLE

The proposed Settlement Agreement arbitrarily creates a settlement class of persons within a two-mile radius, while providing monetary damage award only to a subclass defined as those within a one-mile radius. No justification is provided for the distance-based class definition, nor for the decision to compensate only a small subset of the settlement class while depriving those living within one – to – two (1-2) miles of a broad array of accrued and future rights without compensation.

The Class Action Complaint and Jury Demand was brought alleging that the Plaintiffs “and all other similarly situated” had suffered “material injury to Plaintiffs’ person and property through negligence, gross negligence, nuisance and trespass. The Plaintiffs were alleged to reside in neighborhoods immediately contiguous with Defendants’ manufacturing facilities, and the Complaint asserted that the “putative class comprises approximately 1,938 homes and 4,500 persons.” Class Action Complaint and Jury Demand, at pp.1-2.

The Amended Settlement Agreement purports to bind a significantly larger class of landowners and residents, comprising, according to the Joint Motion, “approximately 6,750 homes”. No explanation is given for this significant expansion in the geographic and numerical scope of the class.

Perhaps the most troubling aspect of this significant enlargement of the putative class for settlement purposes, is that with the exception of the $400,000 in support for air toxics monitoring and the $100,000 to support production of health and environmental information, all of which accrues directly to the University of Louisville and only indirectly to the members of the one-to-two (1-2) mile radius subclass, that subclass takes nothing of value from the Amended Settlement Agreement yet is stripped of a broad array of current claims and future protections against injury from Zeon facility operations.

Fairness, within the meaning of the term in reviewing a proposed class action settlement, requires “a comparative analysis of the treatment of class members vis-à-vis each other and vis-à-vis similar individuals with similar claims who are not in the class." Federal Judicial Center, Manual for Complex Litigation 315 (4th ed. 2004).

In this instance, the parties have provided no reasonable basis for the creation of two subclasses within the settlement class, nor for the preferential limitation of compensation to the subclass within one (1) mile of the facility and the failure to provide compensation to all class members. Nor have the parties justified the substantial enlargement in geographic scope of the proposed settlement class, which sweeps in an additional 4,812 homes and, based on a 2.32 multiplier (1,938 homes = 4500 persons according to the Class Action Complaint) potentially an additional 11,164 persons, yet for the vast majority of the class, provides no financial compensation for past property-related claims and extinguishes a broad array of past and future protections.

The burden of “proving the fairness and adequacy of the settlement agreement is on the parties proposing the settlement.” Berry v. School District of the City of Benton Harbor, 184 F.R.D. 93, 98 (D.C. W.D. Mich. 1998), (citing 2 Herbert B. Newberg & Alba Conte, Newberg on Class Actions, ("Newberg") § 11.42, p. 11-94 (Shepard's 1992); 7B Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure § 1797.1, p. 392 & n.8 (West 1986); In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106 (7th Cir.), cert. denied, 444 U.S. 870, 62 L. Ed. 2d 95, 100 S. Ct. 146 (1979). A district court's decision to approve a settlement is discretionary and must depend on a careful consideration of the facts of the particular case. Id., (citing Federal Practice & Procedure, § 1797.1, pp. 393-94.)

Absent some empirical data or other information demonstrating that the impacts on property value from the emissions from the Zeon facility become undetectable at one-mile distant from the facility, the use of a one-mile radius is arbitrary. Absent some demonstration that there is an appreciable and fundamental difference in emissions, effects of emissions, or degree of damage to property between one- and one and one-tenth (1 and 1.1) mile, and between one-mile and two-miles, that would justify both the enlargement of the class and the decision not to compensate those living between one and two miles while stripping them of their accrued and future rights of action, the Amended Settlement Agreement is overbroad and arbitrary and should be rejected.

“Because Rule 23 is ‘designed to protect absentees by blocking unwarranted or overbroad class definitions,’ a district court must give ‘undiluted, even heightened attention’ to its protections before certifying a settlement-only class – one formed just for the purpose of settlement, not for litigation.’” International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America v. Ford Motor Company, 497 F.3d 615, 625 (6th Cir. 2007), (citing Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 138 L.Ed 2d 689 (1997).

In this instance, the class definition and subclass distinctions must be adequately explained and justified, or rejected.

II. THE VALUE OF THE PLANT IMPROVEMENTS PROPOSED IN THE AMENDED SETTLEMENT TO THE SETTLEMENT CLASS IS NIL SINCE THOSE IMPROVEMENTS WERE ALREADY INCLUDED IN THE COMPLIANCE PLAN DEVELOPED BY ZEON IN ORDER TO COMPLY WITH THE AIR POLLUTION CONTROL DISTRICT’S STRATEGIC TOXIC AIR REDUCTION (STAR) REGULATORY PROGRAM

The Amended Settlement Agreement purports to require Zeon to undertake $3.9 million dollars in plant “improvements”, yet the actions Zeon has agreed to undertake in Numerical Paragraph 13 of the “Amended Settlement Agreement” are those measures to which Zeon had already committed to undertake in order to come into compliance with the STAR air toxics reduction regulatory program. Additionally, nothing in the Amended Settlement Agreement commits Zeon to implement measures to reduce acrylonitrile or styrene emissions (Num. Para. 13(a)(vi)) so the $2,500,000 identified for implementation of the studied options should be completely discounted. The actual value of the identified improvements to which Zeon committed are $1,600,000, and the value of these improvements for purposes of this settlement is nil, since those measures were already committed by Zeon to be undertaken in order to reduce the cancer risk of the emissions to near or below target risk levels under the STAR program.

That the measures committed to in Numerical paragraph 13 of the Amended Settlement Agreement were already part of the Zeon compliance strategy for the STR program is evidence in the chart included in the initial Settlement Agreement proposed between the parties. The one-page chart was captioned “Zeon Chemical Kentucky Plant – STAR Compliance Plan Options and Schedule” and included seven (7) “main compliance plan elements” intended to reduce the risk to the public to 8.8x10-6) or 8.8 in a million additional cancer risk, and two “options to address remaining risk above goals”, one of which is “consider further emissions reductions to meet 7.5 x 10-6 Risk.” Those seven main compliance elements are the same as those proposed in Num. Para. 13.

It is apparent that this lawsuit did not produce those emission reduction measures, since they were designed to meet the STAR risk levels. While the parties might argue that the inclusion of those compliance measures in the Amended Settlement Agreement provides additional assurance that the measures will be undertaken, in fact the STAR program includes regulatory controls that will assure that those measures or other comparable measures in reduction of toxic emissions will be undertaken. In fact, according to the STAR Compliance Plan Schedule, all of the main compliance plan changes were to have been implemented by the first quarter of 2009. The value of these improvement commitments for purposes of evaluating the fairness and reasonableness of the proposed settlement, is nil.

III. THE OPT-OUT PERIOD SHOULD BE EXTENDED UNDER JULY 15 SINCE THE MAP THAT WAS TO ACCOMPANY THE NOTICE OF PROPOSED SETTLEMENT, AND WHICH WAS THE ONLY WAY IN WHICH A RECIPIENT COULD DETERMINE IF THEY WERE WITHIN THE 1 OR 2-MILE RADIUS, DOES NOT APPEAR TO HAVE BEEN MAILED TO SOME OR ALL CLASS MEMBERS UNTIL MAY 15.

As noted above, the proposed Algonquin/Greenwood settlement class consists of two informally defined subclasses: those within zero-to-one (0-1) miles of the Zeon facility, and those within a one-to-two (1-2) mile radius.

While the notice could have been speciated so that those residing or owning property within one mile of the facility would receive a notice indicating that they were within that one-mile radius and were eligible to file a proof of claim for a portion of the money damage award, and those outside the one-mile radius and within the two-mile outer radius could have received notice that they were not eligible for a money award but that they would receive the remaining generalized “benefits” and lose the enumerated rights, the parties instead chose to send a notice that referenced a map identifying the one- and two-mile radii overlaid on a map of the various streets.

A person receiving the mailed notice would have to refer to that map in order to tell, with any degree of certainty, where he or she fell between the two subclasses, or whether he or she fell outside of the two-mile radius entirely.

As Ms. Cochran and undersigned counsel spoke at several community gatherings during the months of April and early May, it became apparent that none of those attendees had received a copy of the map with their mailed notice. Undersigned counsel contacted Plaintiffs’ counsel to express this concern, and received a response that the map had been “remailed” on May 15, 2009.

Since any person who had received the initial mailed notice would not have been able to identify where their property was located in relation to the two subclasses proposed in the Settlement until the map was received in mid-May, Ms. Cochran respectfully requests that the opt-out period be extended for a period of 60-days from the May 15 mailing of the map, or July 15, 2009.

IV. THE SETTLEMENT IS OVERREACHING, OVERBROAD, UNFAIR AND UNREASONABLE IN EXTINGUISHING BOTH ACCRUED CLAIMS AND FUTURE RIGHTS OF ACTION THAT MAY ARISE FROM CONTINUED OPERATIONS AT THE ZEON FACILITY

In approving a proposed class settlement, this Court must conclude that it is “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(1)(C). The court's review "'must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.'" Clark Equipment Co. v. Int'l Union, Allied Industrial Workers of America, AFL-CIO, 803 F.2d 878, 879 (6th Cir. 1986).

Ms. Cochran respectfully requests that this Court reject the Amended Settlement Agreement insofar as it overreaches both in extinguishing accrued claims, and in curtailing future rights both of the Algonquin/Greenwood Class and of those who have opted out of the settlement.

The first concern is that the “Releases” language in Numerical Paragraph 23(a) of the Amended Settlement Agreement extinguishes all accrued claims for property damage and for personal injury, despite the acknowledgment by the parties that the Complaint “alleged interference with the use and enjoyment of their property as well as diminution in property values due to noxious air emissions from the Facility. Plaintiffs’ Complaint sought an award of money damages to compensate them for their property injuries and a cessation of the noxious odors emissions….” Joint Motion, at p. 5.

Given that the gravamen of the complaint was based on property damage, it is objectionable to sweep aside the causes of action that class members might possess for personal injury due to exposure to Zeon’s emissions (particularly so with respect to the one – to – two (1-2) mile class member, who receive no compensation for those lost rights.

The second concern is with the overbroad forward-looking nature of the release. In Numerical paragraph 23(b), the parties propose that this Court approve the extinguishment of future rights, since the funds paid are “to compensate Members of the Algonquin/Greenwood Class for any past, present, or future nuisance or trespass . . . compensate Members of the Algonquin/Greenwood Class for any past, present, or future property damages . . . [and to] compensate Members of the Algonquin/Greenwood Class for any past, present, or future claims related to negligence, strict liability, health effects, personal injuries or bodily injuries allegedly related to air emissions, releases, or odors from the Facility[.]” (Emphasis added).

Further clarifying this attempt to extinguish as-yet unaccrued rights going forward, the Amended Settlement Agreement states that “claims by any Member of the Algonquin/Greenwood Class for personal injuries or bodily injuries referred to above are released for a period of three (3) years from the final and effective date of this Settlement Agreement, as set forth in Paragraph 12.”

The effect of this blanket release is to bar any person residing in the 2-mile radius area who does not effectively opt out, for a three-year period, from maintaining any action for future personal injury suffered unless the injury arises from substantially different manufacturing processes and substantially different or greater regulated air emissions, releases, or odors than current or historical operations; or if the claim is based solely on a “catastrophic release” which is defined as an “unexpected, accidental incident resulting in releases atypical in nature and dramatically greater in amount than those historically associated with regular plant operations.

One example suffices to show how much this proposal overreaches, and how underprotective it is of the rights of the class members.

Under current regulation, emission increases over regulated values is allowed during “start-up, shut-down, and malfunction” conditions, and facility permittees are required only to “operate in a manner consistent with safety and good air pollution control practices for minimizing emissions.” During such periods, releases could be significantly higher on a temporary basis, causing adverse health consequences to those exposed from the current manufacturing processes and currently released chemicals. Such conditions are not catastrophic, but could nevertheless inflict personal injury that under this overbroad waiver of future claims would not be actionable.

The Amended Settlement Agreement is unfair and unreasonable for a third reason, which is that it purports to enjoin all persons within the 2-mile radius for a three-year period from bringing any type of claim for damages or injunctive relief against Zeon unless the releases are from a substantially different manufacturing process and involve substantially different or greater releases, or arise from a catastrophic release. By couching the injunction in the language in Numerical Paragraph 23(f)(i), the parties would attempt to bind even those who had opted out from such claims:

"(i) For a period of three (3) years from the date of entry of this Order, no person or entity of any description that owns property or resides within the Algonquin/Greenwood Class Area as defined below may assert any claim . . . ."

The use of “person . . . that owns property or resides within the “Algonquin/Greenwood Class Area,” rather than “Algonquin/Greenwood Class Members” reflects an effort to bind individuals who have opted-out, to this injunction that is a part of the settlement. The provision is overbroad and violative of the rights of those who have opted out of the Algonquin/Greenwood Class, for several reasons.

The language of Numerical Paragraph 23(f)(iv) provides that the three-year injunction (expandable to ten years under (f)(ii)) applies to “persons who, or entities that, come to own property or reside within the Algonquin/Greenwood Class Area after the date of this Settlement Agreement.” It is axiomatic that injunctions do not bind non-parties unless they are in privity with a party, and in this instance, the parties are seeking to bind future residents and landowners, regardless of whether they purchase property from a person who opted-out or not, and whether or not they had notice of the terms of the Settlement Agreement as future residents. The scope of this injunction cannot be so expanded to include strangers to the class area.

The language of Numerical Paragraph 23(f)(iv) also seeks to apply the injunction to those who have attempted to opt out, since it states that the injunction is;

"not applicable to persons who owned property or resided in the Algonquin/Greenwood Class Area on or before the date of this Settlement Agreement (except to the extent those persons acquire a new property interest or occupy a different residence after the date of this Settlement Agreement), whose rights to assert claims against Zeon with respect to the matters settled in this action shall be governed by the terms of the Release set forth in this Settlement Agreement and nothing in this injunction shall affect, limit, or modify the terms of that Release or its enforceability."

Read together with Numerical Paragraph 23(f)(i), this exclusion of persons only of those who are covered by the Release in Numerical Paragraph 23(a)-(e), which are Class Members, means that the injunction would apply to those persons residing within the Class Area who had opted out of the settlement.

To the extent that any injunction should be allowed going forward, which Ms. Cochran believes is inconsistent with the public interest and is contrary to Kentucky’s public policy as codified in Kentucky Constitution Section 14, the injunction must be limited to Class Members, and not be unfairly and unreasonably extended to nonparties and those who have opted out of the settlement class.

The Amended Settlement Agreement is unfair, unreasonable and arbitrary for a fourth reason, which is that in Numerical paragraph 30, under the “Miscellaneous Provisions”, the parties attempt to extend the scope of the settlement agreement to extinguish Zeon’s liability to nonparties, including but not limited to those who have opted out.

Specifically, the offending provison states:

"This Settlement is intended to be a final and binding resolution of Zeon’s liability to all Claimants and potential Claimants for all claims herein settled and released and, to the extent permitted by law, of Zeon’s liability to all other persons and entities, including opt-outs, for all claims for punitive damages." (Emphasis added).

The provision overreaches by attempting to extinguish the rights of opt-outs and of other persons and entities not members of the Algonquin/Greenwood Class.

CONCLUSION

WHEREFORE, for the reasons stated above, Eboni Cochran respectfully requests that this Court find and determine that the proposed Amended Settlement Agreement is not fair, nor adequate, nor reasonable, that the release and injunction are overbroad and overreach the rights both of members of the Algonquin/Greenwood Class and those who have opted-out of that class (as well as strangers to this case) and that this Court deny the request to certify a class for purposes of entry of the proposed settlement agreement.

Respectfully submitted,
_s/ Thomas J. FitzGerald____
Thomas J. FitzGerald
Kentucky Resources Council, Inc.
P.O. Box 1070
213 St. Clair Street Suite 200
Frankfort, Kentucky 40602-1070
(502) 875-2428
(502) 875-2845 fax
fitzKRC@aol.com

Counsel for Eboni Neal Cochran

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