Class Action Settlement In ZEON Chemical Air Emissions Case Unfair, Unreasonable, Unconscionable

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Statement of Tom FitzGerald, Director, Kentucky Resources Council, Inc. concerning the proposed class action settlement in the case of Cochran et al. v. Zeon G.P. LLC et al., Case No. 3:06CV-363-H (D.C. W.D. Ky)

I have been requested to review the proposed Settlement Agreement that has been lodged with the U.S. District Court for the Western District of Kentucky in the case of Cochran et al. v. ZEON G.P., LLC et al., Case No. 3:06CV-363-H, and offer these observations. The Court has scheduled a "Fairness Hearing" on November 20, 2007 at the hour of 1:30 p.m., at which time the Court will hear from counsel for the Parties and any objectors to the Agreement, as to whether the settlement is fair, reasonable and adequate, and whether the agreement should be approved.

In summary, KRC believes the ZEON Agreement to be unfair, unreasonable and unconscionable. The Kentucky Resources Council, Inc., which has represented without cost neighborhood residents in the Algonquin Neighborhood in the past concerning emissions and odors from other Rubbertown facilities, is evaluating intervention or other form(s) of participation in the Fairness Hearing in order to raise these concerns for the Court?s consideration:

1. The benefits to the class members are negligible beyond those that will be achieved in the absence of the lawsuit and settlement, particularly relative to what is being given up.

In terms of achievement of improvements in emissions reductions, ZEON does not appear to have made a commitment to undertake any actions that it had not already indicated it would undertake in order to comply with the STAR program reductions.

Given that each of the actions, projects and processes agreed to by ZEON in numerical paragraph 13 of the agreement filed with the Court on August 2 had already been committed to by ZEON in a June 28 STAR Program Compliance Plan filing with the Air Pollution Control District, there appears to be nothing of air quality or health benefit to the class members that will be produced by this agreement and lawsuit beyond compliance that ZEON already has committed to achieve in order to satisfy local air toxics regulations.

Also, by way of clarification of prior reporting regarding the dollar commitment in the agreement by ZEON, the company is NOT obligated to spend the 2.5 million on styrene and acrylonitrile controls in Nuemrical Paragraph 13(vii), just to evaluate it. The dollar figure for actual controls or other actions committed to is $1,675,000.

2. The amount of money that will likely be available to the residents in the form of compensation for property injury is likewise minimal and is in our estimation inadequate to provide fair compensation relative to what is being ceded in terms of legal rights.

In a nuisance action or trespass action, (the former dealing with unreasonable interference with use and enjoyment of property and the latter, with physical intrusion by particulate or otherwise), the measure of damages is the loss of rental value if the nuisance is temporary and loss of fair market value if it is permanent. It is likely that the money available will not begin to compensate for those losses on an individual basis.

3. The rights that would be surrendered are staggering in their scope and unconscionable in their breadth.

a. The releases bar any future actions by any class members for personal injury, which is significant since in Kentucky, a right to sue for chemical exposure-related injury, which can have a latency period of years and decades in the case of cancer, does not accrue until the injury appears, so that for a minimal dollar settlement, the company is achieving closure on all future claims for personal injury for those who have most suffered exposure to their ground-level and stack emissions and releases of air toxics. Waiver of future unaccrued claims and causes of action as opposed to settlement of claims for past damage, is a significant loss of rights.

b. The exception to the release for claims based on future operations does not adequately protect current and future landowners. In a typical nuisance case, if you increase significantly the intensity, duration, or nature of an existing activity, it can form the basis for a new claim. Here, ZEON is protected against future claims from the class members for any nuisance or injury from site activities that use the same manufacturing processes even if they substantially increase the toxicity or volume and duration of emissions, releases and odors. Only catastrophic releases appear to be exempted.

Additionally, the use of "historical operations" as the benchmark for determining whether there have been "substantially different or greater" emissions is vague and problematic since historical emissions from 10 or 20 years ago are much greater than current.

c. The attempt to impose an injunction preventing both any person currently owning property AND any future property purchaser within the defined area, from asserting any claim relating to the emissions, odors or releases unless they involve both a substantially different manufacturing process and substantially different or higher releases than "historical," is inappropriate on constitutional and legal grounds.

The right of a person to access to Kentucky Courts for redress of harms inflicted is constitutionally protected right in Kentucky, and the idea that this agreement could strip persons who move into an area and who are not part of the class, of their legal rights to sue ZEON for nuisances or personal injury in the future, overreaches and is repugnant both as a matter of constitutional principle and fairness.

The provision both attempts to bar a claim even before that injury has occurred and right to make a claim has accrued, and asks the Court to approve injunctive relief against persons who are not identifiable members of the current class, who are not on notice, who are not represented, and who are not necessarily in privity with those who are within the class.

For example, the bar against suit would attach to a subsequent property owner who may currently not reside in state or might currently be a minor who later would like to buy a home. Also, the injunction claims to bar future actions by subsequent purchasers within the "Class area" (which is the 2-mile radius of the plant) regardless of whether the current owner of the property opted out or was a member of the Class, so that subsequent purchasers even of properties owned currently by persons who opt out would be burdened with this injunction, which might adversely affect the ability of a current owner who opts out to sell that property for its fair market value.

Such as sweeping injunction is beyond the traditional scope of injunctions.

d. With respect to that same attempt to enjoin future complaints from property owners, the language of paragraph 22 provides a rolling 5-year injunction as long as ZEON's total emissions reported under the Superfund program (SARA) do not exceed those in 2006. This means, effectively, that even though they've committed to make changes in processes and otherwise under STAR to achieve reductions (and pledged those same actions in the settlement) even if there are no reductions over the 2006 levels, they can't be sued again with respect to nuisance from that level of emissions. The immunity under the paragraph would also allow for significant increases in the emissions of the more potentially toxic compounds provided that the overall emissions reported did not increase over the 2006 levels. The only protection that landowners would have is that the STAR program would be able to prevent such increases.

e. Finally, the nondisparagement clause has the effect of a gag order, silencing forever any criticism of ZEON from the voices of some of the most effective neighborhood advocates - residents whose plight, and whose courage in the face of exposures resulting from the use of the public's air by Rubbertown industries for industrial waste disposal, spurred adoption of the STAR program.

In short, the settlement gives little to the residents of the Algonquin / Greenwood area, and demands much. In my estimation it is fundamentally unfair, unreasonable, and as counsel for three decades for those who have lived downwind of industrial facilities, unconscionable.

Tom FitzGerald

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By Kentucky Resources Council on 09/23/2007 5:32 PM
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