Late Monday afternoon, U.S. District Judge John T. Copenhaver made public the “term sheets” in tentative class-action settlements with West Virginia American Water Co. and Eastman Chemical Co. aimed at resolving litigation over the role both companies played in the water crisis that followed the Jan. 9, 2014, chemical spill at Freedom Industries.
The settlements are far from final, and there are many steps left to go before residents, businesses and workers will see any compensation. Here’s a look at what we know and what we don’t know at this point:
How much money is involved?
The total settlement amount is up to $151 million. It’s “up to” that amount because at some point, if claims filed by residents and businesses don’t use up all the money, some of it will go back to West Virginia American and Eastman.
Of the total amount in the two settlements, $126 million of it will come from the deal with West Virginia American Water, its parent company, and an affiliated service company. The other $25 million comes from Eastman Chemical. It’s not entirely clear at this point how much of the settlement comes from insurance policies, but a new lawsuit filed by West Virginia American against one of its insurers suggests some of the water company’s insurers are paying, but at least one of them had as of Friday been balking at providing coverage for the settlement.
What is the settlement about?
The central lawsuit that prompted the settlement is called Crystal Good v. American Water Works Co, for a local resident who was the lead named plaintiff and for West Virginia American Water’s parent company. It was set for a trial to start on Oct. 25, in which the focus was not so much what caused the Freedom Industries spill, but what caused the spill to be allowed to contaminate the region’s drinking water supply.
While West Virginia American Water and Eastman in their defense wanted to point to Freedom’s criminal negligence, the plaintiffs planned to present a detailed case about the water company and Eastman.
For example, the plaintiffs planned to present evidence that West Virginia American was treating and storing drinking water at far below its capacity in the cold days prior to the spill, leaving it with little in the way of backup water that would have allowed it to briefly close the Elk River intake until the worst of the spill had passed. Plaintiffs alleged that the water company, by allowing the drinking water to be contaminated, had breached its contract with its customers across the region. The plaintiffs alleged that Eastman didn’t warn Freedom Industries that the Crude MCHM Eastman sold could corrode Freedom’s chemical tanks, and that Eastman officials knew the Freedom site was in terrible disrepair, but did nothing about it.
The trial itself, though, was only going to be about fault — whether the water company and Eastman were liable for the drinking water contamination. Had the plaintiffs gone to trial and won on that issue, any awarding of monetary damages could have taken much longer, through a separate legal proceeding.
Who is covered by the settlement?
The case that was set for trial covered a broad class that included three categories of people: Everyone who lived at the time of the spill in a dwelling supplied with tap water by the West Virginia American Kanawha Valley Treatment Plant, everyone who at that time owned a business supplied with water by that plant, and everyone who worked at a business supplied with water from the plant, but who lived in a dwelling that got its tap water from some other source.
Expert testimony in the pre-trial phase of the case put the size of the resident class at about 224,000 people and the business owner class at more than 7,300 people. It is not clear how many wage earners could be covered.
The water company settlement’s term sheet, though, states that a final agreement — still to be prepared by the lawyers for both sides — “will identify a proposed settlement class” that would have to be approved by the court.
What if I didn’t sign up for any lawsuits?
Generally speaking, class actions don’t work that way. Anyone who fits into the class definition that is eventually approved by the court as the “proposed settlement class” would automatically be part of the case. The intent of the settlement is to resolve all litigation over the water crisis with Eastman and West Virginia American. This includes not just the “Good” case that was set for trial, but a variety of other cases that were pending in state and federal courts.
At least one case has already been identified as not being part of the settlement, one brought on behalf of the West Virginia Hospitality Association. People who fall within the definition of the class will also have an opportunity later to “opt-out” of the settlement. But the term sheets also indicate that, if enough people do that, the defendants can decide to pull out of the deal. For example, if more than 1,100 claimants opt-out of the Eastman settlement, Eastman can terminate its obligation to pay. West Virginia American can back out of the deal if either 900 individuals or 250 businesses opt-out of the settlement.