Ferguson v. Lieff, Cabraser, Heimann, A091877.

• Citation: 95 Cal.App.4th 154,115 Cal.Rptr.2d 342
• Decision Date: 11 January 2002
• Docket Number: No. A091877.,A091877.
• Court: California Court of Appeals
• Parties: Brent FERGUSON et al., Plaintiffs and Appellants, v. LIEFF, CABRASER, HEIMANN & BERNSTEIN, LLP et al., Defendants and Respondents.

115 Cal.Rptr.2d 342

95 Cal.App.4th 154

Brent FERGUSON et al., Plaintiffs and Appellants, v. LIEFF, CABRASER, HEIMANN & BERNSTEIN, LLP et al., Defendants and Respondents.

No. A091877.

Court of Appeal, First District, Division 4.

January 11, 2002.

Review Granted May 1, 2002.

Adams Nye Sinunu Walker LLP, David J. Becht, Bruce Nye, San Francisco, Ross L. Libenson, for appellants.

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Jerome B. Falk, Jr., Ethan P. Sehulman, Deborah A. Kane, San Francisco, for respondents.

REARDON, Acting P.J.

Appellants, objectors to a proposed class action settlement in the In re Unocal Refinery Litigation stemming from a chemical release at the Unocal refinery in Rodeo, sued class counsel shortly after they secured awards in an arbitration proceeding established to allocate the settlement fund.¹ The trial court sustained demurrers to their fraud causes of action and then entered summary judgment in favor of Lieff Cabraser. We affirm the order sustaining the demurrer as well as the summary judgment.

I. BACKGROUND

A. Class Action Lawsuit and Stipulation

In August 1994 a processing tower at the Unocal refinery in Rodeo developed a leak, resulting in release into the atmosphere of the toxic chemical compound "Catacarb." Thousands of residents from neighboring communities were affected.

Respondent law firm Lieff Cabraser filed a class action complaint against Unocal in February 1995. Other firms filed complaints against Unocal on behalf of individuals and on behalf of putative classes. For example, appellants signed contingent fee contracts with Michael Meadows and the Casper, Meadows & Schwartz firm (Casper Firm) to represent them against Unocal, and they were named as plaintiffs in an action filed by the Casper Firm on behalf of multiple individual plaintiffs. (Abercrombie et al. v. Union Oil Company of California et al. (Super. Ct. Contra Costa County No. C94-04141).)

Pursuant to a pretrial order, the trial court consolidated the related actions, designating them as "complex litigation" and assigning them for all purposes to a single department. The court vested primary responsibility for managing the litigation with a steering committee of plaintiffs' counsel, with Lieff Cabraser appointed as co-lead class counsel and co-liaison counsel and the Casper Firm appointed as co-lead direct action counsel and co-liaison counsel.

Lieff Cabraser submitted the first amended complaint in February 1996, identifying four potential classes: personal injury, property damage, medical monitoring and punitive damages. Four months later Lieff Cabraser, its co-lead class counsel and Unocal entered into a stipulation and proposed order concerning class certification, subject to court approval. They agreed as follows: (1) plaintiffs would withdraw the allegations of the personal injury and property classes; (2) notice of withdrawal would be by publication in a manner approved by the court; (3) the parties would stipulate to certification of a mandatory, non-opt-out punitive damages class, defined as all persons entitled to compensatory damages as a result of the "Catacarb" release; (4) the issue of certification of a medical monitoring class would be scheduled for briefing and decision by the court; (5) individuals with claims for personal injury or property damage would be given 60 days to file claims; and (6) in the event Unocal moved to substantially modify or decertify the punitive damages class, plaintiffs could move to certify the personal injury and property classes, on an expedited basis.

The court approved the stipulation after a hearing at which Michael Meadows, appellants' individual counsel, participated. The stipulation and order was served on appellants' counsel.

The court also approved the form of notice to all class members advising them of withdrawal of the class action allegations concerning personal injury and property damage claims, and found that "[notice as specified in [the] stipulation shall be deemed adequate notice to all class members." The notice was published October 7, 18, 25 and November 1, 1996, in the San Francisco Chronicle.

Meanwhile, Lieff Cabraser engaged in extensive discovery. From January through July 1996, the firm conducted depositions on a nearly daily basis, reviewed hundreds of thousands of pages of documents and consulted extensively with experts in the fields of toxicology, chemistry, air dispersion modeling, property valuation, refinery operation and litigation risk assessment. Plaintiff claims questionnaires were reviewed, individual claims were worked up and dozens of Unocal employees were deposed.

B. Settlement

Beginning in September 1996 Lieff Cabraser began negotiating in earnest with Unocal, often with the assistance of Judge Daniel H. Weinstein (ret.), the court-appointed settlement master. Judge Weinstein reviewed written submissions, met with counsel, presided over presentations by expert witnesses and conducted a joint settlement conference during which time he monitored excerpts of video depositions. Negotiations culminated in April 1997 with a tentative $80 million global settlement of the consolidated class and individual actions. The proposed settlement called for dismissal of the punitive damage allegations.

In the beginning of May 1997, the court approved a stipulated order of reference to Judge Weinstein, referring all issues concerning the good faith and scope of the settlement as well as the allocation of Unocal's settlement payment among plaintiffs. Judge Weinstein endorsed the settlement, observing: "At all times, the negotiations were conducted at arm's length by highly qualified counsel who were thoroughly knowledgeable about the evidence and the law. These attorneys have been fully cooperative in sharing factual and legal information with me to allow me to become thoroughly knowledgeable in connection with the potential trial exposure of defendants. The $80,000,000 settlement which was reached is, in my opinion, a fair, reasonable, and just settlement for all of the settling parties. This negotiated settlement could not have been achieved without Class Counsel's agreement to dismiss with prejudice the punitive damage allegations of the non-opt-out punitive damage class.... [¶] I respectfully recommend that the Court grant Class Counsel's motion to dismiss the punitive damages class claims with prejudice. I have received and considered the handful of objections to the proposed dismissal, ... and find these objections to be unpersuasive."

The court set the motion to dismiss the punitive damages class claims for hearing on June 27, 1997, and ordered class counsel to send notice of the hearing by first class mail to all known members of the punitive damages class. As well, the court ordered publication of notice.

Notice was published in the San Francisco Chronicle on June 9 and 12, 1997, and the West County Times on June 6 and 9, 1997. On June 6, 1997, the court-approved notice was mailed to 12,186 persons identified by class counsel as all persons who might be entitled to compensatory damages. That notice cautioned that a determination to dismiss the punitive damages class claims would be binding on all class members and such dismissal would bar any further suit by or on behalf of class members for punitive damages against Unocal. The notice also specified that objections to the dismissal must be received and served by June 20,1997.

On June 12, 1997, Lieff Cabraser moved to dismiss the punitive damages class claims and served the motion on appellants' individual counsel. The motion included authorizations from attorneys for individual plaintiffs permitting Lieff Cabraser to dismiss their claims in exchange for participation in the $80 million global settlement. Attorney Michael Meadows attended plaintiffs' counsel meeting where he and others signed a document authorizing such dismissal on behalf of appellants.

Appellants admitted that they received notice of the hearing in early June 1997, prior to the hearing date. Indeed, they both filed timely, written objections. Appellant Ferguson attended the hearing and personally spoke against the settlement. Their objections went solely to the purported insufficiency and unfairness of the settlement.² Appellants proceeded in pro. per. because the Casper Firm refused to represent them in objecting to or opposing the dismissal and they were unable to find another lawyer to assist them. Eight objections in total were received, out of a total class of over 12,000.

The court approved the settlement and dismissed the class action, remarking as follows: "I have had extensive communication with Judge Weinstein, and he has approached this settlement in the manner in which I would have expected him to. I think a lot of consideration, time and effort has gone into determining whether or not this is a fair settlement. Judge Weinstein feels it is a fair settlement for all parties concerned and that it is a very liberal settlement for the plaintiffs." Further, addressing objecting class members the court stated: "I'm . .. satisfied that those concerns that you have have been fully considered by the class counsel that are proposing this settlement. And I'm satisfied that this appears to be a fair and reasonable settlement for all parties involved .... [f] My understanding [is] that the $80 million settlement does encompass all punitive damages claims that have been filed, and I'm hearing from everyone that I have a great deal of confidence in that this is a settlement that should be approved and that the dismissal of the punitive damages claims would be appropriate."

In the written order dismissing the punitive damages class claims, the court indicated it had concluded that "the public's interest in punishing Unocal for its conduct at its San Francisco Refinery, and in deterring Unocal from future such conduct has been achieved." Judgment of dismissal was entered; no appeal followed....