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Approval sought for revised Kanawha Valley water crisis class-action settlement

Gazette-Mail file photo
West Virginia American Water’s intake on the Elk River.

Attorneys for tens of thousands of Kanawha Valley residents, businesses and workers have filed a revised settlement in the class-action lawsuit over the January 2014 water crisis, and are hoping that changes made to the agreement with West Virginia American Water and Eastman Chemical will resolve objections raised by the federal judge who is overseeing the case.

The amended settlement agreement aims to avoid what the judge felt were disparities between settlement payments to different sized businesses, provide a more thorough avenue for water-crisis victims to appeal the amount of their individual settlement payments, address the court’s concerns about payments and eligibility for medical claims, and create a potential avenue for some payments to be made quickly, even if the settlement itself faces a legal appeal.

Broad terms of the new proposal, filed Friday night in U.S. District Court in Charleston, remain essentially the same: Residents, businesses and workers who couldn’t use tap water following the contamination of the West Virginia American regional system by the Freedom Industries chemical spill will share in a total of up to $151 million in payments from the water company and Eastman.

The process for residents, businesses and workers to file claims for their share of the settlement will not start until the settlement gets preliminary approval from U.S. District Judge John T. Copenhaver Jr. Notices will be published and sent to eligible class members once the judge has issued that preliminary approval.

Copenhaver had ruled in July that the settlement was a “strong result” that provides “substantial benefits” for the victims of the water crisis, but said the deal needed more work before he would give it preliminary approval and begin the formal process for spill victims to have their say about the deal or opt-out of the settlement.

Among other things, the revisions would increase the estimated payments to households who choose to file a simple claim form — one that doesn’t require documentation of money spent on things like bottled water — from $525 for the first resident and $170 for each additional resident to $550 for the first resident and $180 for each additional resident. The base payment for a family of four therefore increases from $1,035 to $1,090, without the family having to prove specific losses or injuries.

New language would also require the hiring of an “Independent Appeal Adjudicator” who would hear challenges from victims to claim decisions made by a settlement administrator.

“The amended settlement agreement is the product of further extensive negotiations between the parties, undertaken to ensure that the court’s concerns identified in the July 6 order were well understood and fully addressed,” lawyers for the water crisis victims said in a legal brief filed Friday night. “Thus, at this juncture, the parties submit their request for preliminary approval of the amended settlement agreement as fair, adequate and reasonable and in the best interest of all parties.”

The amended settlement comes 10 months after the parties agreed, on the eve of trial, to general terms of a deal to resolve the complicated case over the region’s ability to use its tap water during the “do not use” order period that followed the contamination of the Elk River supply by a spill of Crude MCHM and other chemicals from the Freedom Industries facility just 1.5 miles upstream from the water company intake.

In the case, lawyers for residents and businesses alleged that West Virginia American did not adequately prepare for or respond to the spill and that MCHM-maker Eastman did not properly warn Freedom of the dangers of its chemical or take any action when Eastman officials learned that the Freedom facility was in disrepair. West Virginia American and Eastman continue to deny any liability, and say the blame for the crisis rests with Freedom Industries, which admitted to criminal pollution violations related to the spill.

The class covered by the case includes 224,000 residents and about 8,000 businesses. It includes basically any business or resident who received tap water from the Elk River intake plant and any hourly wager earner whose employer closed because of the spill and resulting water system contamination.

Generally under the settlement, residents and businesses can obtain uniform settlement payments by filing simple claim forms or potentially receive larger distributions by providing receipts or other proof of money spent for things like replacing hot water tanks or buying bottled water. If the settlement administrator rules out some portions of more complex claims, the administrator must then advise the victims if they would be able to instead accept payment of the simple form’s base amount if that amount would be greater.

The settlement also provides additional payments to women who were pregnant at the time of the spill, residents who had medical expenses, and hourly-wage earners who lost money when businesses they worked in closed during the water crisis.

The amended settlement includes language that would cut — as ordered by the judge — the payment to lawyers for the plaintiff class from 30 percent of the settlement to 25 percent. It also would place firmer restrictions on the ability of any lawyers to charge clients for assistance in filling out simple claim forms. Originally, law firms that did not sign onto a settlement petition for fees, but who had clients eligible for the class-action deal, would have been able to charge for that work.

Copenhaver had been concerned the original settlement would have provided businesses that file simple claim forms with just under $1 million in annual revenue with a payment equal to 1.25 percent of their annual revenue, while a business with just over $1 million in revenue would be entitled to a payment of 5 percent of its annual revenue. The amended proposal would give simple claim form businesses with annual revenue of $1 million or less a base payment of $1,875 plus 4 percent of an amount equal to their 2013 revenue. Businesses with more than $1 million in annual revenue would receive estimated uniform payments of $41,875, which is the amount that a business with $1 million in revenue would receive using the same formula as for businesses with less than that in revenue.

To address Copenhaver’s concern about delays in claims being paid should eventual approval of the settlement be appealed, the amended deal sets up a procedure for both sides would confer to decide if some claim classes might not be affected by the outcome of the appeal, allowing them to be paid before the appeal is resolved. Alternatively, the amended deal allows for early funding, into escrow accounts, so that the water crisis victims would at least have the benefit of interest on those funds in exchange for the delay in being paid.

Reach Ken Ward Jr. at kward@wvgazettemail.com, 304-348-1702 or follow @kenwardjr on Twitter.

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