Freedom moves lawsuits to federal court
CHALRESTON, W.Va -- Shortly after its bankruptcy hearing concluded on Friday, Freedom Industries began moving the lawsuits filed against it from state court to federal court, a process that will likely delay litigation, but not have a large effect otherwise.
By 3 p.m. Saturday, Freedom had moved 20 lawsuits from Kanawha County Circuit Court to U.S. Bankruptcy Court, although cases had been trickling in individually throughout the day.
There are at least 30 lawsuits against Freedom for the company's early January chemical leak that contaminated the water of 300,000 West Virginians.
It's unclear why Freedom decided to move all the cases, although, for a variety of reasons, defendants often prefer to have cases tried in federal courts and plaintiffs prefer state courts.
"State and federal courts have different procedural rules and, in some cases, also use different substantive law," writes the Legal Information Institute, a research group run out of Cornell Law School. "For example, a plaintiff suing a large corporate defendant might sue in state court, predicting that a local jury would be more sympathetic than a federal jury."
A paper presented to the American Bar Association in early February lays out further reasons why plaintiffs prefer state court.
"Many states do not limit expert testimony," write Ellen Relkin and Brian Hardingham, attorneys with the New York City firm Weitz & Luxenberg, P.C. "Federal juries require unanimous verdicts, whereas most states do not; the attorney may prefer state courts without the heightened federal pleading standards...or the attorney might be more accustomed to practicing in state court."
Mark Freedlander, an attorney representing Freedom, declined to comment on Saturday when asked why the company was moving the lawsuits.
Ultimately, the plaintiffs' attorneys can file a motion to move the cases back to state court, but it will delay the process.
Freedom's bankruptcy and its limited assets -- it will go out of business completely once it winds up its affairs and cleans up its Elk River site -- may make the entire process moot.
Anthony Majestro, a Charleston attorney who had brought a suit against Freedom, has dropped Freedom as a defendant and is now only suing West Virginia American Water Company.
Majestro predicted that none of the lawsuits filed against Freedom will come to fruition, and any money that comes from the company will come through administrative claims filed in bankruptcy court.
Majestro said that if the lawsuits were allowed to proceed all of Freedom's remaining assets would likely be used for legal fees, leaving nothing for potential payouts.
"Whatever money there is going to be is going to come from the claims process, and that's what you're going to recover from Freedom," Majestro said. "It's unlikely there's ever going to be any litigation."
At Friday's hearing in U.S. Bankruptcy Court, Judge Ronald Pearson urged lawyers to work together to come up with a customized claims form that would require uniform documentation when claims are submitted. This would make the claims process more efficient, cutting down on administrative costs and resulting legal fees.
Almost all of the lawsuits that Freedom moved also include West Virginia American Water as a defendant. So, even if the Freedom lawsuits never amount to anything, the shuffling between courts delays the cases filed against the water company.
"It slows down the litigation against the water company," Majestro said. "As of yet, no one has removed cases [from state court] just against the water company."
Reach David Gutman at email@example.com or 304-348-5119.