Company’s Lawyers May Have Lost Gamble By Going to Trial Rather Than Settling Case

posted on:
February 24, 2002

author:
Virginia Bladwin Gilbert

category:
Environmental

THE NEWS: A decision by the Alabama Supreme Court in September led Solutia and its lawyers to rethink their tactic of settling suits before a verdict.

THE ISSUE: The Alabama jury’s verdict against the company on several broad counts, including a count of "outrage," has encouraged lawyers representing 15,000 plaintiffs in another PCB case in federal court.

In the first lawsuit involving Solutia Inc. and polychlorinated biphenyls contamination that went to a jury verdict, the company lost big.

On Friday, a jury in Etowah County, Ala., ruled against Solutia and its predecessor, Monsanto Co., on counts of negligence, wantonness, trespass, nuisance, suppression and outrage. All of the counts stemmed from allowing PCBs made at a chemical plant in Anniston, Ala., to get into surrounding land and water — and for concealing it.

PCBs were used for more than 50 years as fire-safe lubricants in electrical devices.

The last count, outrage, "means that the conduct is basically intolerable in a civilized society," said Adam Peck, an atomic for Solutia. "That was the most disappointing result for us."

And it was the most encouraging point for lawyers representing 15,000 plaintiffs in another PCB case, this one in federal court. "It’s refreshing for a jury to return facts and get a verdict," said Jere Beasley, who expects to face Peck and the other Solutia lawyers in U.S. District Court in Birmingham, Ala., next year.

Since Solutia was spun off by Monsanto in 1997, Solutia has settled other suits before they reached a verdict. It also has continued Monsanto’s practice of declining to discuss the number of suits it is involved in or has settled.

Monsanto and Solutia are based in St. Louis. Monsanto merged in 2000 with what is now Pham1acia Corp., of Peapack, N.J. The old Monsanto’s agricultural business was spun off by Pharmacia and carries the Monsanto name.

The verdict Friday in state circuit court is just the first step in the case. Damages haven’t been discussed.

The Alabama verdict shows the jury believes PCB contamination in Anniston "is not a simple mistake, but intentional wrongdoing," Beasley said.

Solutia denied that PCBs are as dangerous as they’ve been portrayed. It also said Monsanto and Solutia have tried to protect the environment and the public ever since Monsanto voluntarily halted PCB production at Almiston in 1971.

An outrage claim "had never been submitted to a jury under the context of a suit like this, concerning toxicity," said Peck, Solutia’s lawyer. "Outrage requires more than just exposure. It usually requires some sort of illness or disease."

The 17 plaintiffs represented in the trial claimed property damage, rather than illness or personal injury, although some of the 3,500 co-plaintiffs have claimed PCBs injured their health.

Peck said the charge of suppression was hard to take as well. "The evidence is that we’ve been communicating with regulators back to the early 1970s. It’s the only way we can deal with the problems. We can’t go in and test people’s property, we have to work with the Environmental Protection Agency."

Solutia issued a statement Friday, saying it has investigated more than 8,000 acres of land; collected more than 5,000 samples of soil, water, sediment and fish; and cleaned about 300 acres of land and more than a mile of drainage ditches. In all, Solutia has spent $40 million on sampling and cleanup efforts in addition to court settlements.

"We continue to work cooperatively with government agencies and the community on a

comprehensive long-term cleanup solution," the statement said.

And it will continue to meet its Anniston critics in court.

The verdict Friday determined liability. It is unclear whether the judge will ask the jury to assess damages for the 17 plaintiffs or hear more complaints first.

Circuit Judge Joel Laird told the lawyers and jury to be back in court Monday afternoon. He said he would have some questions for the jury, but wasn’t specific, Peck said.

Laird told the Associated Press that he had not decided when or how damages against the companies would be set.

Solutia settled a suit brought by a group of landowners along Alabama waterways in 1999, agreeing to pay $43.7 million for cleanup and damages. Last April the company settled halfway through a trial in a separate suit brought by several Anniston residents. It agreed to pay $40 million. Both of those cases were in federal court.

A decision by the Alabama Supreme Court in September led Solutia and its lawyers to rethink their tactic of settling suits before a verdict. The state’s highest court ruled that people couldn’t claim pain and suffering just because they feared they would get sick from PCB exposure. They had to show they had a disease and link it to their exposure, the court said.

After that, Solutia and its lawyers felt the state case was "a very defensible case," said Jere White, lead counsel for Solutia along with Peck.

In fact, company executives and lawyers said they might not have settled the last federal case for $40 million if the state high court’s decision had come sooner.

The amount of that latest federal court settlement encouraged more suits there, White said. Most of them are being added to the pending federal case, which is in early stages and not expected to go to trial before early next year in Birmingham.

Monsanto made PCBs in Sauget as well. Solutia and the EPA signed a consent order in 1999 that the company would clean up contamination in Dead Creek, near the plant.

Solutia says it has set aside reserves sufficient to handle its environmental litigation and cleanup. But the verdict, even without damages, made investors nervous. Solutia’s stock lost about a third of its value Friday, closing at $5.80, down $2.95.

If Solutia were unable to cover its liabilities, Monsanto would be next in line. Its stock took a $2 dive right after the verdict was announced midday Friday, but climbed back to $30.80, up 1 cent. Pharmacia, which would be liable for cleanup if Monsanto could not pay, closed at $40.40, up 50 cents.

The history of PCBs

1929: Swann Chemical Co. in AImiston, Ala., begins making polychlorinated biphenyls, or PCBs, a class of lubricants that do not ignite at high temperatures.

1935: Monsanto Co. buys Swann.

1939: Monsanto adds PCB production at its plant in Monsanto, Ill., now Sauget.

1961 : Monsanto closes one clay-lined landfill in AImiston and opens a second nearby.

1966: A study published in Sweden finds PCBs in the environment.

1970: An intemal Monsanto memo reports that fish in the Mississippi River near the

Sauget plant had PCB levels as high as 9 parts per million, and fish near the AImiston plant had levels of more than 30,000 parts per million.

1971: Monsanto stops PCB production in Anniston.

1976: Electrical equipment manufacturers announce they have developed altematives to PCBs.

1977: Monsanto stops making and selling PCBs.

1979: The U.S. govemment bans the manufacture of PCBs.

1988: Monsanto stops putting waste in the second Anniston landfill.

1992: Fish in a creek that flows from Monsanto’s Anniston property are found to be contaminated with PCBs. The E:m.vironmental Protection Agency issues a warning against eating fish in several creeks that flowed into Lake Logan Martin, 30 miles away. Property owners along the way file a class action suit in 1996.

1993: Tests reveal that PCBs are leaking from both landfills in Anniston.

1995: Monsanto offers to buyout properties around the plant. Since then, Monsanto or Solutia have• bought 120 parcels.

1997: Monsanto spins off its chemical business, including its liabilities, into Solutia Inc. Monsanto .. retains backup liability.

1999: Solutia agrees to pay the lake and waterway property owners $43.7 million.

2000: Solutia agrees it
will, under EPA supervision, remove contaminated surface soil from Anniston _ properties and clean up a ditch and creek that flow from its property.

2000: Monsanto merges with Pharmacia & Upjohn to form Pharmacia Corp. and spins off the agricultural business into a "new" Monsanto Co., which retains secondary liability for litigation.

2001: The EPA identifies 21 Alabama properties that have PCB contamination high enough to require removal. Solutia begins the first property cleanup.

April 2001 : Solutia agrees to pay $40 million to a group of 1,600 Anniston residents to settle a federal suit.

Sept. 2001: The Alabama Supreme Court rules that fear of future health risks is not sufficient to force Solutia to pay for medical monitoring.

January 2002: Trial begins in Alabama district court on claims from 3,500 people alleging injury or property damage from PCB contamination by Solutia. These are reduced to 16 residential property owners and one business.

Feb. 22, 2002: Jury finds against Solutia on six counts; damages have yet to be determined.

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