New Zeon Class Settlement Approved

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION


TIMOTHY DICKENS, et al.
PLAINTIFFS

V

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

* * * *

MEMORANDUM IN OPPOSITION TO FINAL APPROVAL OF THIRD AMENDED CLASS ACTION SETTLEMENT

* * * * *

Comes Intervenor Eboni Cochran, by counsel, and files this Memorandum In Opposition To Final Approval of the Third Amended Class Action Settlement.

In the May 3, 2011 Memorandum and Order, the Court recognized that the proposed settlement ?involved individually nominal amounts,” and that the “settlement’s sufficiency can be raised at the fairness hearing.” For the reasons stated below, Ms. Cochran respectfully requests that the Court reject the proposed Agreement as being unfair and unreasonable. Alternatively, Ms. Cochran urges this Court to direct certain changes be made to the proposed settlement in order to reduce that adverse impact of the agreement on the members of the class who have, involuntarily, been included and whose rights will be dramatically and adversely affected, and that the agreement be re-noticed in plain language in order to assure that the decision to opt-out or remain in the class is fully informed.

INTRODUCTION


Ms. Cochran objects to the entry of the Settlement Agreement as being overbroad, unfair and unreasonable. What is proposed for class members is a nuisance payment in return for an unconscionably broad release of present and future claims for personal injury and property damage.

The settlement would release Zeon from all claims that any class members “ever had, now has, or hereafter can have” relating to the matters alleged in the lawsuit, including all claims that could have been asserted, except for personal injury claims that could not have been asserted at the time of the settlement. The class members who do not opt out “agree” that the settlement funds compensate them for past, present and future claims for nuisance or trespass, property damage, negligence, strict liability, health effects, personal injury or punitive damages relating to air emissions, releases and odors, provided that the air emissions and releases are not greater than they were at any time or for any year during the past five years. The only future claims that could be made would be claims based on substantially different manufacturing processes and resulting in substantially different or greater air emissions, releases, or odors than current or historical operations and for claims based solely on a catastrophic release from the Facility (i.e., an unexpected, accidental incident resulting in releases atypical in nature and dramatically greater in amount than those historically associated with regular plant operations).

In addition to the broad release of past and future claims, Class Members are also bound by an injunction barring any class member from filing any lawsuit for damages or an injunction against Defendants arising from or relating to air emissions, releases, or
odors from the Facility, except for claims for personal injury that could not have been asserted, in whole or in part, prior to the date of this Settlement Agreement or any claims for relief based solely on future operations of the Facility that involve both substantially different manufacturing processes; and result in substantially different or greater air emissions, releases, or odors than current or historical operations, and claims for relief based solely on a catastrophic release from the Facility.

In 2009, this Court rejected a proposed class settlement that offered up to $450 in cash for those within 1-mile of the Zeon facility, and nothing for those between 1- and 2-miles of the facility, and which also purported to offer $3.9 million in environmental improvements and $500,000 in additional monitoring funds, for a total settlement amount of $6.2 million. In so doing, the Court expressed concern with the arbitrary nature of the 1 and 2-mile zones, and rejected the agreement, stating that “[w]hat the Court will not approve is the arbitrary division of class members, questionable releases and extensive immunity from future actions, absent greater tangible benefits.”

The Third Amended Class Action Settlement contains many of the same flaws that caused this Court to reject the prior agreement. The proposal offers no improvements in environmental performance beyond those already undertaken by the facility, and provides nominal payments of $750 for 607 landowners within 1 mile and $100 to 1,786 landowners within 1-2 miles, while granting sweeping liability protections to Zeon for past and future emissions of air toxics and odors, and an overbroad injunction that allows exceedance of historic emission and odor levels with virtually no limitation.

For the reasons stated below, Objector Eboni Cochran respectfully requests that this Court reject the Third Amended Settlement, and requests further that if the Court does approve the agreement that it condition approval on several significant changes in the agreement that would make it less unfair and unconscionable.

I. THE EXTREMELY LOW LEVEL OF RESPONSE TO THE NOTICE OF PROPOSED CLASS SETTLEMENT SUGGESTS THAT THE NOTICE PROCESS WAS INADEQUATE TO INFORM THE RECIPIENTS OF THE PROPOSED SETTLEMENT AND ITS CONSEQUENCES OR THAT THE NOMINAL NATURE OF THE COMPENSATION IS UNFAIR AND UNREASONABLE

In the Plaintiffs’ Motion for Approval of the Settlement Agreement and For Entry of Final Judgment, it is stated that notice was sent by U.S. Mail to “14,212 homes[.]”

A review of the filed list of addresses reflects that there are roughly 1,975 separate properties within the 1-mile radius. When the Complaint was filed in this action, the putative class was identified as “approximately 1,938 homes and 4,500 persons.” A multiplier of 2.32 was apparently used to estimate the average number of persons residing in those homes.

Applying the 2.32 multiplier, there would be 4,582 potential claimants within 1-mile. The Plaintiffs’ Motion states that only 607 claims were filed for properties within the 1-mile radius (Zone 1), which means that only roughly 13% of potential Zone 1 claimants responded by filing claims.

Plaintiffs’ Motion indicates that “over eight hundred (800) telephone calls concerning the settlement” were received, which, it is suggested, demonstrates satisfaction by the Class Members with the agreement. 800 calls is hardly indicative of class support, representing as it does only 5% of the homes within the proposed settlement class area and only 2.4% of the potential claimants, using the 2.32 multiplier.

For the residents in the 1-to-2 mile zone (Zone 2), after applying the 2.32 multiplier to the 12,239 properties in that zone, a pool of 28,394 potential claimants exists. According to the Plaintiffs’ Motion for Approval of the Settlement Agreement, only 1,786 claims were filed within Zone 2, representing only 14% of the properties and only 6.2% of eligible claimants. 104 opt-out forms were received.
Overall, assuming a population of 32,872 (Zone 1 and 2 population less 104 opt-outs), only 7.2% of those in the settlement class will be compensated. Assuming that each claim represented a different property, rather than multiple claims for each property which would divide the $750 or $100 per-property cap, the Zone 1 settlement class will receive an aggregate of $455,250 divided by 607 claimants or $750 per person, and for Zone 2, claimants will receive $178,600, or $100 per claim. The balance of the two funds, totaling $316,150 (144,750 + 171,400) would be added to the school fund.

According to Plaintiffs’ counsel, the Settlement Class has “expressed satisfaction with the settlement” due to “the extremely low exclusion rate” and the “high number of telephone contacts.” With due respect, it is far more likely that the extremely low overall claim rate reflects not “satisfaction with the settlement,” but underlying problems with communication of the nature of the rights lost and compensation available under the settlement, or dissatisfaction with the nominal nature of the compensation, inasmuch as it would not be expected that a person would knowingly and intentionally remain in the settlement class without filing such a claim unless the person either did not understand the notice, or did not believe the compensation to be worthy of taking the time and effort to file a claim.

In light of the very low response, the deadlines for both filing a claim and for opting out should be extended and additional, plain language should be provided property owners who neither opted out nor filed a claim.

Re-noticing the proposed settlement would also provide an opportunity to notify the public regarding the deadline for opting out of the settlement class. As reflected in Exhibit 8, Page 6, no deadline was given for when opt out forms were required to be postmarked; instead, the Notice indicated that

IF YOU ARE A MEMBER OF THE CLASS AND YOU WISH TO BE EXCLUDED FROM THE CLASSS, YOU MUST SEND A WRITTEN REQUEST TO BE EXCLUDED, POSTMARKED ON OR BEFORE [INSERT DATE] TO THE FOLLOWING ADDRESS…

In light of the lack of a deadline for opting out under the section of the notice captioned “RIGHT OF PERSONS IN THE CLASS TO OPT OUT,” the opt out period should be extended to a date certain and notice be given of same.

II. THE SECTION CAPTIONED “INJUNCTIVE RELIEF” IS UNREASONABLE AND UNFAIR IN SANCTIONING VIRTUALLY UNLIMITED EMISSIONS WITHOUT LIABILITY THE FIVE-YEAR PERIOD FOLLOWING THE SETTLEMENT APPROVAL

Ms. Cochran requests that this Court reject the Settlement Agreement due to the extremely broad nature of the injunctive relief, or that the Court condition any approval of the Settlement Agreement on the acceptance by the parties to removal of the Section of the Third Amended Settlement Agreement captioned “Injunctive Relief.”

The scope of the proposed injunctive relief is unreasonable and unfair, and overrides for a period of five (5) years following the entry of the agreement, the more limited liability language in the Section captioned “Releases.” The scope of the proposed injunctive relief is on its face unfair, unjust and unreasonable in the degree of unjustified insulation it affords Zeon regarding liability for future emissions, odors and releases during the first five (5) years following approval of the Settlement Agreement, irrespective of the amount, duration, or frequency of such releases, odors, and emissions.

The scope of the rights surrendered under Numerical Paragraphs 20 and in the Section captioned “Releases,” while excessive in relation to the nominal nature of the compensation, are at least “bounded” in some manner. By contrast, the proposed injunction language lacks such boundaries, instead allowing unlimited emissions, odors and releases during the five (5) year period provided that they are from the same or similar industrial processes and not due to catastrophic event. While Ms. Cochran believes the boundaries of the Releases are inadequate (as will be argued below), for the purpose of this section those boundaries are summarized in order to highlight the unbounded and extreme nature of the proposed injunction.

In Numerical Paragraph 20(a), all types of claims that a class member “ever had, now has, or hereafter can…have” are “released and forever discharged”, with the boundary that claims for personal injury that “could not have been asserted” at the time of settlement are preserved.

In Numerical Paragraph 20(b), it is proposed that the nominal settlement amounts compensate the Class Members for any “past, present, or future claims” for nuisance, trespass, negligence, strict liability, health effects, personal or bodily injuries arising from emissions, odors or releases, and for any “past- present, or future property damages” including punitive damages, provided that the level of emissions, releases or odors emanating from the Facility don’t exceed the highest annual rate or highest rate at any time during the five (5) preceding years. While the scope of the release is overbroad in that it would allow Zeon to emit up to rates that occurred during malfunctions and upsets (which are much higher than otherwise-allowed under permit), there is at least some attempt to impose an upper-bound limit proposed on emissions, odors and releases beyond which Zeon is not immunized from accountability for injury or damage. Ms. Cochran has concerns that the upper-bound limit language needs clarification and further definition, as argued below.

In Numerical Paragraph 20(c), the settlement proposes that if Zeon engages in “substantially different manufacturing processes” which result in “substantially different or greater” emissions, releases or odors than “current or historical operations” that the release is inapplicable. Thus, the liability protection afforded Zeon is bounded by reference to levels of releases or odors from current or historical operations. Likewise, in the event of a “catastrophic release” from the facility, the release would not protect the facility from liability.

In stark contrast, the scope of Injunctive Relief grants Zeon, for a five (5) year period following final approval of the Third Amended Class Action Settlement Agreement, the right to emit air emissions, odors and releases at any volume or rate without liability. The only manner in which Zeon’s liability is bounded is with respect to limitations paralleling those in Numerical Paragraph 20(c), i.e., substantially different manufacturing processes involving substantially different or greater emissions, and catastrophic releases.

If one accepts, as has been suggested by this Court, that the limits imposed under Numerical Paragraph 20(b)(i), (ii) and (iii) are not unreasonable because they cap the emissions at values that have been emitted without “apparent” personal injury or property damage, then the absence of corresponding caps in Numerical Paragraph 21(a) is facially unreasonable for its failure to limit the emissions, odors and releases during the five years for with the proposed Injunction would remain in effect, in the same manner and at the same upper-bound levels that limit the company’s protection from liability under Numerical Paragraph 20.

For these reasons, if the Court does not reject the agreement in its entirety, Intervenor requests that the Court condition any approval of the Settlement Agreement on an agreement by the parties to modify Numerical Paragraph 21 of the Third Amended Class Action Settlement to impose an upper-limit range of the injunction or to remove Numerical Paragraph 21 in its entirety, inasmuch as proposed Injunctive Relief is unnecessary in light of the Releases in Numerical Paragraph 20.

III. THE SCOPE OF LIABILITY PROTECTIONS IN NUMERICAL PARAGRAPH 20 SHOULD BE LIMITED BY CAPPING THE RELEASE AT EMISSIONS LEVELS REPORTED AFTER INSTALLATION OF CURRENT POLLUTION CONTROL EQUIPMENT AND EXCLUDING EMISSIONS FROM MALFUNCTIONS, UPSETS, SPILLS OR OTHER RELEASES

Numerical Paragraph 20 of the Third Amended Settlement Agreement defines the scope of the rights relinquished by the settlement class, providing that

"(b) The Settlement Funds paid and actions to be taken by Defendants in settlement of the Litigation are intended, among other things, to:
(i) compensate Class Members for any past, present, or future claims
based upon any theory of nuisance or trespass arising from, or
related to air emissions, releases, or odors from the Facility,
including, without limitation, damages for discomfort,
inconvenience, lost use, or annoyance related to, or based upon any
air emissions, releases or odors emanating from the Facility in total
annual quantities or at levels that existed at any time during the
five (5) full calendar years prior to the effective date of this
Settlement Agreement;"

Emphasis added.

The release of property damage claims, personal injury claims, and punitive damage claims contain the same language.

There are three problems presented by the proposed agreement language. The first is that it is not clear that emissions, releases, or odors above the total annual quantities or at levels that existed at any time during the five-year period, is outside the scope of the release and would be actionable, since the language speaks in terms of “in total annual quantities” and “at levels that existed” rather than “only up to” those quantities or levels, but not above them. Clarification is needed when such fundamental jural rights are proposed to be curtailed.

An additional problem is created by the failure to bound the upper-bound quantities and levels by limiting them to “allowed” emissions and specifically excluding quantities and levels that may have been emitted during malfunctions, start-ups and shut-downs, during which time quantities and levels significantly higher than those from steady-state operation are often emitted. Likewise, emissions and odors from spills and other releases should be excluded.

According to data submitted by Zeon to EPA, “non-production releases” of various TRI chemicals have occurred during the period of 1991 – 2010, including non-production releases of 556 pounds of 1,3 Butadiene in 2006, 3080 pounds of ethyl acrylate in 1992, 820 pounds of acrylonitrile in 2000 and 453 pounds of the same in 2006. Source: EPA Envirofacts Warehouse /TRI. These chemical releases are required to be reported as a result of “remedial actions, catastrophic events, or other one-time events not associated with production releases.” Exclusion of these values from consideration in determining the release quantities and levels is important to incentivize better control over spills and releases, and to reflect levels achievable through proper controls on production processes.

A third problem is presented by the use of a five-year historic period rather than one that reflects emission limits achieved and achievable through employment of more-recently installed pollution control equipment. The emissions data presented as Exhibits to the proposed agreement reflect that, during years 2009 and 2010, emissions of styrene, acrylonitrile, and butadiene have been reduced significantly below levels emitted in 2006, 2007 and 2008, particularly with respect to 2006 and 2007. From 2008 to 2009, according to Exhibit 2, emissions of acrylonitrile were reduced from 23,234 to 3,004 pounds per year, and for styrene, from 14,067 pounds per year to 0. Similar reductions were achieved in Butyl Acrylate and 1,3 Butadiene emissions. According to TRI data submitted to the EPA by Zeon, total TRI Chemical releases into the air in 2009 (43,593 pounds) were almost half of the 2008 emissions (82,065 pounds), and 2010 emissions remained at 75% of 2008 levels (at 62,152 pounds).

Given these significant reductions in emissions during the 2009-2010 period, it is unfair and unreasonable to grant Zeon immunity from liability for releases that occurred at much higher levels than they are currently able to achieve. The historic period should be limited by excluding years 2006-2008, and limiting the liability protections of the agreement to emissions levels reflective of what the facility has demonstrate can be achieved through employment of maximum available control technology. While the new agreement provides no commitment to further reductions in the use of the public’s air for Zeon’s waste disposal, the company should not be allowed to emit at quantities and levels higher than it has demonstrated it is capable of controlling, without incurring potential liability for any personal or property damage resulting therefrom.

IV. THE RELEASE AND INJUNCTIVE RELIEF PROVISIONS SHOULD BE REQUIRED TO BE MODIFIED TO EXCLUDE ANY MENTION OF RELEASES OF CLAIMS FOR PERSONAL INJURY

In the May 3, 2011 Memorandum and Order, this Court noted that “Mr. Fitzgerald also raised the issue of class members releasing defendants from all future physical ailments or injuries contracted to the emissions of the Zeon plant.” The Court continued, noting that “no class member had produced any evidence of a medical condition related to the plant emissions and Plaintiff’s counsel had actually withdrawn their complaint for personal injuries.” (Emphasis added). Given that personal injuries are no longer a component of the litigation, and that Plaintiff’s counsel had withdrawn from this litigation any claims related to personal injury, it is not at all clear that the interests of the involuntarily affected class members in retaining the right to assert such claims has been adequately represented, and the resulting proposed Class Settlement should not seek to bind Settlement Class members to forego claims that are no longer a part of the underlying lawsuit.

V. CLAIMANTS SHOULD BE ASSURED OF A MINIMUM PAYMENT OF AT LEAST $300 IF WITHIN ONE (1) MILE OF THE FACILITY AND $30 IF WITHIN 1 TO 2 MILES OF THE FACILITY

The Third Amended Settlement Agreement contains no representation that a claimant within the defined Class Area who successfully files a claim will receive a minimum payment of either $300 or $30, depending on whether that claimant is within a one- or two-mile zone.
In contrast, both the “Short Form Notice” and the longer form notice both represented to the recipients that if a claimant participates:

"(a) You will receive between $300 and $750, if you reside within one mile of the facility.
(b) You will receive between $30 and $100 if you reside within one and two miles from the facility."

Short Form Notice, Num. Para. 6; Notice, Summary of Proposed Settlement.

Since the language in the proposed short and long-form notice that represented that a participant in the class action settlement who files a claim would be guaranteed a minimum payment of between $300 and $30, and since this notice would be the information relied upon by an individual in determining whether to accept the payments in return for class membership, this Court should require that the actual terms of the proposed Settlement Agreement be revised to provide for such minimum guaranteed payments, or, in the contrary, that a new set of notices reflecting the actual text of the settlement agreement more accurately be issued.

CONCLUSION AND PRAYER FOR RELIEF

For the reasons stated above, Intervenor Eboni Neal Cochran respectfully requests that this Court enter the proposed Order denying approval to the Third Amended Class Settlement Agreement, and, failing that, that the Court condition approval of same on the changes sought in this Memorandum, and for any and all other relief to which Intervenor may appear entitled.

Respectfully submitted,
_s/ Thomas J. FitzGerald____

---