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From Products Liability Law Daily, November 25, 2013

Settlement agreements between Monsanto and Putnam County residents for toxic dioxin emissions upheld

By Pamela C. Maloney, J.D.

Challenges to two settlement agreements reached between an agricultural company and residents who lived near the company’s Putnam County chemical plant to settle damage claims resulting from the company’s release of a toxic dioxin as a by-product of the plant’s operation were rejected by the West Virginia Supreme Court of Appeals in a decision upholding a circuit court’s order approving the settlements (Allen v. Monsanto Co., November 22, 2013, By the court).

Background. The appeal arises out of the approval of two settlement agreements in a class action complaint alleging negligence, nuisance, strict liability, and trespass against Monsanto’s corporate predecessor (referred to by the court as “Old Monsanto”). The complaint arose out of allegations that the burning of 2,4,5-T waste materials resulted in air inhalation exposure to dioxin and elevated blood serum dioxin levels to individuals in the “Class Affected Area,” defined as the area encompassed within a five-mile radius from the Old Monsanto plant in Putnam County. The complaint also alleged that the burning caused dioxin to be deposited on the ground and in the houses located in the affected area.

The trial court originally certified two classes: (1) the medical monitoring class, which was comprised of those persons who have resided, worked full-time, or attended school full-time in the Class Affected area; and (2) the property class, which was defined as current owners of real property in whole or in part within the Class Affected Area. Monsanto was successful in persuading the trial court to de-certify the property class after the court determined that the testimony given by the expert who offered to prove the amount of funds potentially needed to remediate the real property located within the Class Affected area was not reliable.

Terms of settlement. The main terms of the medical monitoring class settlement agreement were as follows: (1) creation of a fund that would provide testing for class members over a 30-year period; (2) contribution by Monsanto of at least $3 million for each of the seven screening periods, resulting in an obligation to provide at least $21 million in funding for screening; (3) contribution by Monsanto of an additional $63 million if certain benchmarks are triggered, i.e., if more than twenty-five percent of the participants in the medical monitoring program have blood serum dioxin levels greater than the background range, provided that at least 100 participants have serum samples drawn that are capable of analysis; (4) repeated blood testing every five years for a period of thirty years, unless the triggering event occurs, in which case, every two years; and (5) medical monitoring be limited to class members who resided, attended school, or worked for minimum periods of time in a smaller area subsumed within the larger Class Affected Area, referred to as the Settlement Area. The main terms of the property class settlement agreement provided for: (1) the creation of a fund to be used to pay for cleaning the interior surfaces of living spaces within eligible residences within the Settlement Area; (2) a contribution by Monsanto of $3 million per year over a three-year period, for a total contribution of $9 million; and (3) the return of unused funds to Monsanto. In addition, Monsanto agreed to pay fees in the amount of $22.5 million and costs in the amount of $7 million.

Decision. The trial court rejected all of the objections raised by the petitioners, concluding that the settlements were fair, adequate, and reasonable. First, the appeals court determined that there was no need for the trial court to conduct another hearing when it decertified the property class because the decertification was based on the merits of the class claims, not on the prerequisites for certification. The court also found that there was no basis on which members of the property class should have been given an opportunity to opt-out of the class which had been properly certified. Finally, the trial court’s decisions on these two issues did not violate due process.

Moving on to the argument that the class settlements provided benefits for only a small fraction of class members, the appeals court rejected the notion that a settlement could not be approved unless all class member benefit. The evidence established that only about 5,000 people had significant exposure to qualify for medical monitoring benefits and that the evidence was insufficient to establish a claim for property damage for those properties located furthest from the plant.

The appeals court also rejected the claim that Class Counsel and the class representatives could not represent both classes adequately after the decertification order. The court found no concrete evidence of a conflict of interest or collusion between counsel and Monsanto. The court also found no error in the trial court’s refusal to allow discovery of the parties’ mediation in order to obtain evidence of collusion.

The case number is 13-0418.

Attorneys: Thomas F. Urban II (Kahrl Wutscher LLP) for Virdie Allen. Charles M. Love III (Bowles Rice LLP) for Monsanto Co.

Companies: Monsanto Co.

MainStory: TopStory ClassActLitigationNews SettlementAgreementsNews ChemicalNews WestVirginiaNews

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