Good v. W. Virginia-American Water Co., Civil Action No. 14-1374
| Decision Date | 06 July 2017 |
| Docket Number | Civil Action No. 14-1374 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | CRYSTAL GOOD, individually and as parent and next friend of minor children M.T.S., N.T.K., and A.M.S., and MELISSA JOHNSON, individually and as parent of her unborn child, MARY LACY and JOAN GREEN and JAMILA AISHA OLIVER, WENDY RENEE RUIZ and KIMBERLY OGIER and ROY J. McNEAL and GEORGIA HAMRA and MADDIE FIELDS and BRENDA BAISDEN, d/b/a FRIENDLY FACES DAYCARE, and ALADDIN RESTAURANT, INC., and R. G. GUNNOE FARMS LLC, and DUNBAR PLAZA, INC., d/b/a DUNBAR PLAZA HOTEL, on behalf of themselves and all others similarly situated, Plaintiffs, v. WEST VIRGINIA-AMERICAN WATER COMPANY, d/b/a WEST VIRGINIA AMERICAN WATER, and AMERICAN WATER WORKS SERVICE COMPANY, INC., and AMERICAN WATER WORKS COMPANY, INC., and EASTMAN CHEMICAL COMPANY and GARY SOUTHERN and DENNIS P. FARRELL, Defendants. |
Pending is the parties' Joint Motion for Preliminary Approval of Class Settlement, Conditional Class Certification, Directing Notice to the Class, and Entry of Scheduling Order, filed April 27, 2017 (ECF No. 1136). Also pending is plaintiffs' Motion for Award of Attorneys' Fees, Reimbursement of Costs and Incentive Awards, filed May 8, 2017 (ECF No. 1140). After reviewing the procedural history of this case and the terms of the proposed Settlement Agreement, the court will turn first to the motion for certification and preliminary approval and then to the motion for attorneys' fees and costs.
On January 9, 2014, over 224,000 residents in Charleston, West Virginia, and the surrounding area suffered an interruption in their water supply. The interruption was caused by a spill into the Elk River of a mixture composed primarily of a chemical known as Crude MCHM. Crude MCHM consists primarily of the chemical 4-methylcyclohexane methanol. The mixture was prepared and owned by, and being stored in a facility owned and operated by, Freedom Industries, Inc. ("Freedom Industries"). Freedom Industries called the mixture that spilled into the Elk River "Shurflot 944" and marketed it to coal companies for coal cleaning purposes. Shurflot 944 mixed Crude MCHM with other elements, present in relatively small proportion. The mixture containing Crude MCHM infiltrated and contaminated the water treatment plant in Charleston, known as the Kanawha Valley Treatment Plant, which draws its water from the Elk River.
Following the spill, individuals and businesses asserting claims against various defendants commenced dozens of civil actions in federal and state courts. This action was filed in federal court on January 14, 2014, and later consolidated with several other cases. See Good v. Am. Water Works Co., 2:14-CV-01374, 2014 WL 2481821, at *1 (S.D.W. Va. June 3, 2014). Other similar litigation, including putative class actions against the same defendants, was filed in state court, and some of it was removed to this court, consolidated, and then remanded to state court. Desimone Hosp. Servs., LLC v. W. Va.-Am. Water Co., 2:14-CV-14845, 2015 WL 9244434, at *5 (S.D.W. Va. Dec. 17, 2015). Following remand, the state court consolidated the various cases before the West Virginia Mass Litigation Panel ("MLP") in the case captioned In re Water Contamination Litigation, Civil Action No. 16-C-6000, which has been stayed.
Plaintiffs filed a First Amended Consolidated Class Action Complaint in this case on December 9, 2014. Plaintiffs' class action allegations stated that they intended to represent "[a]ll persons and businesses supplied with, using, or exposed to water contaminated with Crude MCHM and provided by West Virginia-American Water Company in Logan, Clay, Lincoln, Roane, Jackson, Boone, Putnam, and Kanawha Counties and the Cullodenarea of Cabell County, West Virginia as of January 9, 2014." First Am. Consolidated Class Action Compl. ¶ 123. Plaintiffs brought suit against West Virginia-American Water Company ("WV American Water"), American Water Works Service Company, Inc., and American Water Works Company, Inc. (collectively, "the water company defendants," although at times referred to simply as WV American Water), as well as Eastman Chemical Company ("Eastman"), Gary Southern, and Dennis P. Farrell.
Plaintiffs asserted that the water company defendants and Eastman could have prevented the incident with better precautions, regulatory compliance, and use of reasonable care. Some class members operated businesses that lost revenue due to the interruption. Others claimed physical injuries, asserting that exposure to Crude MCHM in the environment through human pathways caused bodily injury and necessitated medical monitoring. Still others were alleged to have incurred costs for property damage, water replacement, travel, and other associated expenses.
On October 8, 2015, the court granted plaintiffs' class certification motion and certified an issues class under Fed. R. Civ. P. 23(c)(4) respecting fault and comparative fault issues defined by the court. Good v. Am. Water Works Co., Inc., 310 F.R.D. 274, 299 (S.D.W. Va. 2015). The certified class includedresidents and businesses served by WV American Water and all persons who were hourly wage earners working for businesses served by WV American Water, all of whom are also included within the proposed settlement class. Id. at 299-300.
In late October 2016, on the eve of the Phase I fault trial in this court, the parties participated in extended settlement negotiations. These negotiations resulted in settlements with Eastman and WV American Water that were memorialized in Term Sheets lodged with the court on October 25 and October 31, 2016, respectively (ECF Nos. 1096, 1108).
After extensive negotiations, the parties submitted the pending Settlement Agreement for preliminary approval on April 27, 2017 as a resolution of all claims — both claims at issue in this case and claims at issue in the various state court actions filed against defendants in relation to the Freedom Industries spill. Class Counsel in this case allied themselves with state MLP counsel to reach a global settlement, and consequently intend that the proposed settlement will remunerate both federal and state counsel, their clients, and all other proposed class members. The parties represent that the settlement of this action may affect a class composed of over 224,000 class members in some 105,000 households and over 7,000 businesses and governmental entities. Pls.' Mem. in Supp.Joint Mot. Prelim. Approval 19 (ECF No. 1137) ].
The parties' proposed settlement has a two-tier common fund from which the Settlement Administrator will pay monies to class-member claimants through a claims submission process. The first tier, dubbed the guaranteed fund, consists of $101 million supplied separately by funds from each of Eastman and WV American Water.1 The guaranteed fund is intended to pay "Simple Claims" that do not require documentary support or proof of causation. The parties have estimated amounts for each type of Simple Claim, although those amounts are subject to change depending on the number of Simple Claims actually paid out of the funds. After attorney fees and costs are paid, the guaranteed fund will be used to pay Simple Claims, to pay checks mailed to WV American Water's residential customers who did not submit claims, to pay claimants who submit claims through an "Individual Review Claim" process with more stringent proof andcausation requirements, and, if the guaranteed fund is not exhausted, to make additional payments to Residential Simple Claimants, in that order. It is likely that all or almost all of the guaranteed fund will be paid out to class members through this process.
The second tier, dubbed the contingent fund, consists of $50 million supplied entirely by WV American Water to pay Individual Review Claims only if the guaranteed fund is exhausted. The Settlement Agreement requires the Settlement Administrator to seek permission from the court before issuing either Simple Claim or Individual Review Claim payments.
The Settlement Agreement defines the Settlement Class in this matter as follows:
The settlement contemplates payment of four types of claims: Residential Claims, Business Claims, Wage Earner Claims, and Medical Claims.3 In order to submit any type of claim, a claimant must be a member of the defined class. Within each category, however, various distinctions exist that may affect the amount of money a claimant can receive.
Residential Claims are claims by residents of homes and multiunit residences within the area affected by the incident who were customers of WV American Water. The residents have claims for damages arising from physical damage to their property caused by the presence of contaminated water within their pipes. Residents may also have claims that arise from expenses incurred in buying bottled water, throwing out and replacing food, repairing or replacing appliances affected with contaminated water, seeking alternate lodging, and other extra expenses.
To be entitled to file a Residential Claim, a person must have been a resident of the affected area on January 9, 2014. Residents include both renters and homeowners....
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