CHARLESTON – While the average water consumer would collect about $500 from a pending settlement of claims over contamination of the Elk River, law firms would collect up to $850 an hour.
Lawyers applying for fees up to $40 million reported that they worked 30,248 hours and their employees worked 16,657 hours.
In the course of three years and four months, those totals equal about 175 hours a week for lawyers and about 100 a week for support staff.
Charleston lawyer Kevin Thompson led the list with 4,152 hours. Melissa Ellsworth, of his support staff, reported 2,698 hours. Those totals equal about 24 hours a week for Thompson and 16 for Ellsworth. Thompson’s partner, David Barney, reported 1,497 hours.
Van Bunch, an Arizona lawyer with a West Virginia license, reported 3,574 hours. Brent Jordan, from the same Arizona firm, reported 3,001 hours. Those totals equal about 21 hours a week for Bunch and 17 a week for Jordan.
Stuart Calwell’s firm in Charleston devoted thousands of hours to the case, though Calwell delegated most of the load to others. He reported 895 hours, while Alex McLaughlin of his firm reported 3,142 hours, and Chris Hedges of his firm reported 1,175 hours. Cheryl McLane, of Calwell’s support staff, reported 3,850 hours. Calwell’s executive assistant, Dante DiTrapano, reported 915 hours.
Thompson, Bunch and Calwell litigated before U. S. District Judge John Copenhaver. Other lawyers who pursued claims in Kanawha County court worked fewer hours, partly because their cases languished for a while in federal court.
Anthony Majestro of Charleston led their list with 2,046 hours. Patrick Stephens, of Mark Underwood’s firm in Huntington, reported 1,632 hours. Underwood reported 679 hours. Marvin Masters of Charleston reported 1,272 hours.
Rodney Jackson of Charleston reported 769 hours of work on the case, but he also reported a $268,750 contribution for experts and other expenses.
The lawyers who chose federal court and those who chose state courts battled each other along the way, but they settled their differences last year. They jointly negotiated a settlement of claims in all courts this year.
Background
The crisis began Jan. 9, 2014, when West Virginia American Water Company interrupted tap service to about 224,000 persons. A chemical for washing coal had leaked from Freedom Industries into the Elk River.
By the time WVAWC restored full service, consumers had filed suits against it and Freedom Industries in Kanawha County court and federal court. Federal complaints also sought damages from Eastman Chemical of Kingsport, Tennessee, producer of the chemical.
Freedom Industries filed a bankruptcy petition on Jan. 17, 2014, leaving WVAWC and Eastman to bear the brunt of the litigation. WVAWC removed the Kanawha actions to federal court, where plaintiffs moved to bounce them back across the street to the county court.
In March 2014, Thompson, Calwell and Bunch asked Copenhaver to certify a class and appoint them as class counsel. They wrote that in the first two days of the crisis, they retained expert consulting witnesses who began to characterize the nature of the contamination and possible consequences for human health.
Copenhaver appointed them on an interim basis in June 2014, after consolidating four cases and designating Crystal Good as lead plaintiff. In 2015, plaintiffs said they would seek to certify a class of all persons in dwellings with tap water from WVAWC on Jan. 9, 2014.
They proposed to include business owners and hourly wage earners in the class. They proposed trial on damages from loss of tap water, with further trials on later losses, personal injuries, and medical monitoring.
The parties retained mediator Stephen Dalesio of Huntington, who for two days led a conversation among plaintiff lawyers in federal and state actions, defense lawyers, company representatives, and insurers.
On Oct. 8, he wrote to Copenhaver that they made progress and declared a recess.
Surprise
That night, Copenhaver sprang a surprise.
He certified a liability class and denied certification of a damages class. He excluded plaintiff expert Harvey Rosen, who estimated that area businesses lost $78 million and residents lost $52 million.
Copenhaver found it far from clear that Rosen’s estimate of business loss was a reliable or helpful means of measuring actual damages. He found considerable danger that Rosen’s formula ignored important factors unique to individuals while creating an illusion of precision. He wrote that potential inaccuracies created additional doubt. He wrote that determination of damages from residential loss of water was necessarily tied up in factors unique to each household.
At a hearing the next day, Copenhaver asked lawyers when they would get back together for mediation.
Eastman Chemical counsel Marc Williams, of Nelson Mullins in Huntington, said,
“We need to digest the impact of your ruling from last night,” said Eastman counsel Marc Williams, of Nelson Mullins in Huntington.
Calwell said it might shed some light on scheduling another session if plaintiffs got a clear idea about how a trial would be structured.
“We would propose to the court at some point that perhaps the same jury might hear maybe the damage issue,” Calwell said.
Williams said mediation needed to be far enough down the road where there was more clarity about the nature of the claims being asserted.
“The large expanse of the case had not been sufficiently narrowed that all the parties didn’t have a firm understanding of which part of the case had real value and which part didn’t,” Williams said.
Majestro said the barrier to mediation wasn’t liability.
“The barrier is the parties’ differing valuations as to the damages,” he said. “After yesterday’s order, we’re probably further away than we were before.”
Copenhaver said a jury might continue for some purposes but he doubted the jury would cover all claims.
“If you could have done that, the court might have certified the class as to damages,” Copenhaver said.
Bellwether
At the next hearing, Bunch said the order opened a new aspect that a jury would allocate fault among defendants and the absent Freedom Industries. He said there was almost no class certification discovery about Freedom Industries.
Calwell proposed a sort of bellwether trial.
“We would hope to get some guidance from this first jury, presuming we prevail on liability, as to what the value of these representative plaintiffs’ claims are individually and in a compensatory sense, and any other aspect of damages that the evidence adduced during the liability phase would support,” Calwell said.
WVAWC counsel Kent Mayo, of Baker Botts in Washington, D.C., said he didn’t plan discovery on anything that would be tried in the next phase.
“Our understanding is that the class trial is focused on comparative fault issues of the defendants and Freedom,” Mayo said.
Williams said, “Trying to jam into this process at the end of this trial a bellwether selection process that is based upon their individual selection of representative plaintiffs in inappropriate.”
Calwell said that after a liability verdict, plaintiffs might suggest additional issues for further certification.
Plaintiffs produced a trial plan, but at the next hearing Copenhaver panned it at as “just too complicated.”
He brightened Majestro’s day by saying he would remand actions against WVAWC to Kanawha County.
Protest
At the next hearing, in January 2016, Majestro showed up and Calwell protested.
“What standing does he have to come into court and say, I’m opting people out, if he’s not in this case?” Calwell said. “People are trying to solicit people that they don’t represent, just solicit class members on the promise that it’s a good thing for you to get out of this because we can do a good job for you over in state court, and that is what’s going on.
“We don’t know how many people they actually represent. They keep saying 2,000. Well, I haven’t seen 2,000 contracts. They don’t have a case pending in front of you. They just simply have a law license and to say, I’m opting all these people out, I don’t think that’s fair to the defendants.”
“I guess Mr. Calwell is right,” Majestro replied. “I have a law license which I value very highly. I worked really hard to get it and one of the things that I learned in law school was, you didn’t make representations to the court that weren’t true.”
Majestro said he asked clients to let him file paperwork with his signature.
“I can take lots of binding legal actions on their behalf with just my signature,” he said. “I think Mr. Calwell is offended by the fact that there are people who don’t want to let him be their lawyer.”
At the next hearing, Calwell brought to Copenhaver’s attention “a concerted effort by disgruntled lawyers” to misinform the class. He said their singular purpose was to subvert the class and create a rogue class.
“I understand that the main drivers of this state court cabal have not sued one of the most culpable defendants in the case, Eastman Chemical,” he said.
'Intolerable'
Plaintiffs proposed another trial plan, and at the next hearing Copenhaver called the number of liability experts intolerable.
“Neither side needs that much,” he said. “Stop threatening each other and get down to the point of finding who it is that you need to depose and just do it.”
The plaintiffs issued almost 100,000 notices to the class, and Masters challenged it on behalf of state court clients. He wrote that 34 percent understood that they received notice, and 52 percent indicated they didn’t receive it. He wrote 31 percent recalled it after being read the title, and 47 percent of that group didn’t remember any details.
Copenhaver found the notice sufficient.
The next hearing didn’t improve his outlook.
“I see no progress whatever on the trial plan,” he said. “The plaintiffs have furnished nothing more than they did before. The court asked for specificity. There is none.
“What I want to impress on you is this, the court doesn’t expect to try liability but once and you need to put everything in it now. You need to set forth by count the issues that you are presenting for liability and to the extent that they’re not there, they will be deemed abandoned.”
Williams called for a single settlement of state and federal actions.
“I don’t have any expectation that there is going to be any success towards resolution of this case unless all the lawyers of all the cases are involved,” Williams said.
Calwell resisted, saying state court plaintiffs represented a mere handful.
“I understand that there may be some fifteen hundred residences that opted out, and about a hundred and seventy some businesses,” Calwell replied.
Copenhaver said, “The prospects of a settlement are of course vastly improved if everyone can be gathered into the same tent.”
Mediation
Resistance ended there, and plaintiff lawyers agreed to negotiate together.
At a hearing last June, Copenhaver asked where mediation stood. WVAWC counsel Thomas Hurney, of Jackson Kelly in Charleston, said he and insurance carrier representatives would appear for mediation.
“Eastman is ready, willing, and able to resolve this case amicably, but it requires information, both for Eastman Chemical to evaluate and, if appropriate, for its insurance carriers to,” Eastman counsel Robert Scott, of Blank Rome in Houston, said. “We don’t have that and so our view at this point is that a mediation next week has no point with regard to Eastman, that the chances of any success are beyond remote.”
Bunch said, “I guess you would say we have given them half a loaf.”
Scott said, “We don’t even have a slice. We’ve got a crumb right now if that.”
Calwell said, “Do you make a hundred thousand people come forward with receipts from Kroger’s for bottled water? … Are they to just be shut out because they simply can’t come forward with an accountant or some sort of academically approved theory or methodology to decide what it’s worth to interrupt your life for ten days because you don’t have water?”
Hurney said, “You can understand the difficulty of trying to resolve a case when all you hear about is, we need a lot of money.”
Broadcast
On the eve of mediation, WOWK-TV 13 broadcast information from the litigation.
At a hearing, Williams said plaintiffs provided the information, “to drive Eastman to the table and exert pressure on them with this upcoming mediation.” He told Copenhaver some of the information was confidential, subject to a protective order he entered. He said Thompson acknowledged that he provided information in violation of the protective order.
“We advised Channel 13 yesterday, and I spoke with their news director this morning, and they are taking steps to take that down,” Williams said.
Thompson said he had his staff pull a clean copy and deliver it to the station.
“The relations with the press were absolutely not intended in any way, shape or form to influence the outcome of a mediation,” he said.
Dalesio conducted sessions on June 23 and 24, and the parties declared a recess.
“The state court lawyers were with us at the mediation, and we were speaking with one voice,” Bunch said at the next hearing. “We got much farther along than we did before.”
Hurney said WVAWC would continue talking with plaintiffs.
“But the idea that we’re going to settle these cases out of thin air, I think is very difficult,” he said.
On Sept. 1, Copenhaver set trial to start Oct. 25. He never adopted a trial plan, stating at a hearing that his rulings on summary judgment motions would form the plan.
Settled
He held hearings the week of Oct. 25, but did not start trial. On Oct. 31, the lawyers told him they settled.
WVAWC agreed to guarantee $76 million for simple set payments to households and businesses. Eastman agreed to guarantee $25 million for property damage and physical injury claims or for simple payments to households and businesses.
Households would receive about $525 for the first person and about $170 for each additional person. Businesses could file simple claims up to $40,000.
WVAWC also agreed to provide a contingent fund up to $50 million for women who were pregnant at the time, and for reimbursement of documented losses, medical claims, or lost wages.
Copenhaver pushed the trial back to give them time to close the deal, and he pushed it back four times in four months this year.
On April 27, with a trial date 40 days away, the parties filed a settlement and moved for preliminary approval. On May 8, class counsel moved for 30 percent of American Water’s $76 million fund for simple payments and 30 percent of Eastman’s $25 million fund. Thirty percent of those amounts would equal $30.3 million.
Class counsel also sought 25 percent of American Water’s $50 million contingent fund for mothers and others. At most that would produce $12.5 million, bringing the total to $42.8 million.
Their motion listed $2.4 million in expenses, two thirds of it for experts, bringing the amount available for fees down to $40.4 million.
On May 15, Copenhaver set trial for July 25.
As of May 22, he had not set a hearing on the settlement.
