- DuPont lawyers beat back plaintiffs' drive to
stake a below-surface multimillion dollar land claim. You should thank
them...
-
- By Margaret Cronin Fisk Corporate Counsel August
9, 2001
-
-
- E.I. du Pont de Nemours and Company went to trial in
Beaumont, Texas, in a poison well case with the deck stacked against it,
and the stakes high.
-
- But DuPont won that bet, saving the company multimillions
and frustrating trial lawyers' hopes to establish property rights deep
below the surface of the earth. The plaintiffs suing DuPont demanded $173
million for underground storage and environmental damage. Their claim:
that the cancer-causing chemicals a DuPont plant was flushing through its
wells into the earth had traveled beneath their land, had trashed their
mineral rights, and would ultimately pollute their drinking water.
-
- Plaintiffs' lawyers around the United States were watching
to see whether such cases might pay off. DuPont and other companies have
wells like these around the country; their potential liability is enormous.
And it might go further still. A plaintiffs' victory might firmly establish
property rights under the earth -- which could be used as the foundation
for other environmental and mineral rights suits.
-
- The test case in Beaumont seemed ideal for the plaintiffs'
bar. The people claiming that DuPont's wells had polluted their property
were none other than the McFaddins -- one of the most prominent families
in Texas. A McFaddin had fought at the Battle of San Jacinto, which had
helped win the state independence from Mexico. A McFaddin owned the land
under Spindletop dome, the location of the 1901 oil strike that put Beaumont
on the map and helped change Texas' image from the home of slow-talking
cowboys to the land of risk-taking wildcatters.
-
- The firm representing the McFaddins was Beaumont's Provost
& Umphrey Law Firm -- one of the state's richest, best-known firms.
It's one of five hired by the Texas attorney general to pursue litigation
against the tobacco industry. Provost & Umphrey's share of the $2.3
billion in tobacco case legal fees means it could well afford the estimated
$1 million cost to go after DuPont. (The firm would not confirm that figure.)
-
- Provost & Umphrey fielded a crack trial team, led
by partners J. Keith Hyde and Greg Thompson. (Thompson is known for having
won a $129 million verdict in an asbestos case.)
-
- Worse yet for DuPont: The suit was tried in a jurisdiction
renowned as a plaintiffs' heaven. "If you get your feelings hurt easily,
or you can't take a whipping every once in a while, you can't be a defense
lawyer here," says DuPont's local counsel in the case, M.C. Carrington
of Beaumont's Mehaffy & Weber.
-
- The plaintiffs' claims also were problematic. They contended
that toxic waste had migrated from under DuPont's Beaumont Works chemical
plant to the plaintiffs' land and destroyed the value of their mineral
rights -- a charge akin to murder in oil-and-gas country. And they claimed
that the value of the surface acreage of the legendary McFaddin property
was cut in half. That's like saying DuPont had defiled a Texas monument.
Or at least that's how the plaintiffs hoped jurors would see it.
-
- Key evidence seemed to work against DuPont. Plaintiffs
had a map prepared by the company to gain the federal government's permission
to build what's technically called a "deep injection well." Such
wells are, essentially, multilayered high-tech pipes, thrust deep into
the bowels of the earth, through which manufacturing plants flush their
toxic wastes. Those chemicals then remain in the earth's brine-water layer,
where, supposedly, they more or less stay put, or, if they span out, it's
in a diluted form. On its map, DuPont predicted that injected chemicals
could creep underground, below the land owned by the McFaddins. As Provost
& Umphrey's Hyde puts it: "These deep wells inject hazardous waste
beneath someone else's property. This [case] centered around a trespass."
-
- U.S. District Judge Thad Heartfield in Beaumont, Texas
thought that allegation was good enough for the case to go forward. And
he set the bar relatively low for the plaintiffs to make their case. Refusing
DuPont's motion to dismiss, he noted that the Texas Supreme Court has "recognized
the viability of subsurface trespass claims under Texas law." And
every unauthorized entry is considered a trespass in Texas, he noted --
even if there is no damage and no interference with use.
-
- DuPont feared that if the plaintiffs won, they'd be establishing
those rights, as Silvio DeCarli, the company lawyer in charge of the defense,
puts it, "to the center of the earth." Then a flood of poison
well and other deep-earth suits might be unleashed. All told, companies
have about 500 of these "Class I injection wells" around the
United States. "We viewed this as the next wave of litigation"
by the plaintiffs' bar, says DuPont's other outside counsel on the case,
Damond Mace, a partner in Cleveland's Squire, Sanders & Dempsey. "If
they won here, it would march across the country."
-
- Imagine the relief -- the jubilation, even -- when, at
the end of the trial, a jury on March 13 rejected the plaintiffs' case.
It was, says Thomas Sager, DuPont's top legal officer, "one of the
top five wins I've seen in my time at DuPont." And Sager has been
with the company for 25 years.
-
- Sager attributes the win to DuPont's ability to assemble
a multifirm team, a virtual law firm for the case, rather than pay one
firm for all the needed expertise. DuPont's injection well team was put
together in 1998, soon after the company received its first letter from
the plaintiffs. DeCarli was DuPont's natural choice as inside point man;
he'd been an environmental engineer designing pollution-control systems
for 10 years before going to law school.
-
- DeCarli selected Beaumont's Mehaffy & Weber for its
local savvy: knowledge of the players, potential impact on real estate
values, that sort of thing. But "I got to Damond Mace by chance,"
DeCarli says. His Lexis search of reported opinions on injection well cases
found a few, one of which had gone to verdict and appeal. The Ohio Supreme
Court upheld a win for Cleveland's BP Chemicals, Inc., over a plant in
Lima, Ohio. Mace had represented BP.
-
- The Delaware-based DeCarli met with the plaintiffs' lawyers,
clients, and scientists in Beaumont, his technical experts by his side.
It was, he says, "a mediation without a mediator." But as the
DuPont lawyer listened, he came to believe that the plaintiffs had no proof
of damages: "It just didn't seem like there had been any harm."
-
- And the only real evidence plaintiffs had of toxic chemicals
migrating beneath McFaddin land, he concluded, was DuPont's own maps. These
are the maps the company was mandated to give the Environmental Protection
Agency, depicting a worst-case scenario of where waste might travel. The
federal government requires companies to provide proof that the material
they propose to inject will do no harm to the environment, that it will
be contained in a defined zone for 10,000 years, and that it will not affect
oil or gas in the defined area. DuPont had passed that test. As a result,
since the 1980s the company has injected some 3.6 billion gallons of wastewater
containing acrylonitrile into the well, 4,200 feet under the Beaumont plant.
Acrolonitrile, the chemical produced by the plant, is a basic building
block for some plastics. It is also a known carcinogen.
-
- More than a year passed after that first meeting; letters
were exchanged. Then, in December 1999, plaintiffs filed suit. They insisted
that there were chemicals in the underground areas owned by McFaddin, and
that DuPont had to pay an underground storage fee. The price tag: $43 million
in compensatories, much of that in past and future storage fees -- plus
$130 million in punitives (based on the plaintiffs' assessment of how much
it would cost for DuPont to dispose of the hazardous waste somewhere else).
-
- The case barreled toward the courtroom. Settlement demands
were always too high, says DeCarli: "We had these wells at other plants;
so did other corporations. If we paid this claim, where would it stop?"
-
- Waste Management Inc. had settled an injection well case
in 1991 for $15 million. But plaintiffs fared less well last year in two
cases, both in Louisiana and both dismissed on summary judgment. With Boudreaux
v. Equitable Storage, Mace says, plaintiffs had a problem with their experts.
In Mongreu v. Monsanto, plaintiffs pursued the novel argument that the
injected materials migrating under their land was an unconstitutional taking
of their property. The 5th U.S. Circuit Court of Appeals affirmed Mongreu's
summary judgment in May. Both cases are on appeal.
-
- "These wells were an effort to utilize the best
disposal techniques to get rid of hazardous waste," says DeCarli.
"This was the most environmentally sound way of getting this stuff
out of the biosphere ... . There is no way this can migrate up to potable
water."
-
- So DuPont drew a line in the sand. There would be no
settlement, says Sager: "We were determined."
-
- Everyone's role was clear as the defense team prepared
for trial: Mace would handle the science; his undergraduate degree is in
chemistry. Carrington and his partner Sandra Clark would contribute their
insights into local opposing counsel. Carrington and Clark have been with
Mehaffy & Weber since each graduated from law school, about two decades
ago. Both specialize in defending large corporations in toxic torts and
environmental litigation in the Gulf Coast area.
-
- In fact, Carrington was not only familiar with the opposing
party, he was good friends with one of the named plaintiffs, Bill Wilson.
Their children attended the same private schools; they'd gone on weekend
trips with a mutual friend; Wilson even owned the building that houses
the offices of Mehaffy & Weber, the Bank of America building on Beaumont's
Calder Avenue at 10th Street. Suddenly adversaries in a high-stakes case,
they put their friendship on hold. "It was one of those uncomfortable
situations," says Carrington. "We weren't mad at each other,
but we didn't do much beyond nodding to each other when we saw each other
in the hall or the elevator."
-
- Carrington also knew two of the Provost & Umphrey
lawyers on the case. He'd already tried cases against both Hyde and Darren
Brown. "I knew they would come in with a blunt, sledgehammer approach,
that we were the greedy corporate raiders," says Carrington. So he
made sure the defense stayed low-key. Clark goes further, saying: "There
were no surprises at the trial." That's quite a claim. But the defense
was ready when plaintiffs' counsel began the trial by recalling Spindletop
and the Battle of San Jacinto and the family's vaunted place in Beaumont
history.
-
- "Part of the plaintiffs' strategy was to play the
historical family story high in the trial. They tried to make this appear
as if it was a family who cared about their land," says Clark. Wilson
and other name plaintiffs and family members took the witness stand to
tell the tale. The testimony would resonate with Beaumont jurors already
keenly aware of the McFaddin name. There's a McFaddin Wildlife Refuge on
the upper Texas coast. And on McFaddin Avenue in Old Town, Beaumont, a
beautiful Southern mansion built in 1906 by the McFaddin family is now
a museum.
-
- Nonsense, said the defense. Carrington went after his
buddy Wilson and doesn't mind saying, "I hammered him in cross."
-
- "While the land had been in the family for generations,"
explains Clark, "they had sold off most of the surface estate"
over the years. The land is now owned by corporate-type entities: estates,
trusts, and banks. And no one lives there. Since the McFaddin family first
sold part of the land to DuPont in the late 1940s, it's been converted
to industrial use. Other plants in the area include an Exxon Mobil refinery
and a Sun Oil terminal.
-
- "They're saying this is our heritage," says
Carrington. "I'm saying this is crazy." The McFaddins own only
about 230 acres now, plus the mineral rights under the entire site; about
20 percent of that mineral acreage is under the DuPont plant. "It's
not some homeland," says Carrington. "It's all about money."
-
- As for the science, the plaintiffs' geologists and computer
modelers claimed to show where a plume of toxic chemicals had spread; other
experts testified about how this had damaged the property's value.
-
- Mace says that the plaintiffs did a "great job of
signing up all the local experts." As a result, DuPont was forced
to turn to an outsider, Don Warner, professor emeritus of geological engineering
at the School of Mines and Metallurgy at the University of Missouri-Rolla.
Warner had done research for the EPA on deep injection wells when the federal
government was considering how to regulate them. For the DuPont case, Warner
analyzed the site's geology, looking at well logs, seismic data, and faults
to render an opinion on where the wastewater could flow. He spent four
hours on the witness stand rebutting the McFaddins' claims. "The injectate,"
insists Mace, "doesn't spread as far as they say it does."
-
- Still, some of the most effective testimony for DuPont
may have come from its passive witnesses: huge visual aids lugged into
court and kept before the jurors throughout the trial. One display was
an 8-foot-tall, 3-foot-wide, multicolored chart showing what DuPont believes
is the geology of the area beneath the plant -- and why that land formation
could not allow wastewater to migrate to the McFaddin property. At the
top of this chart, putting everything into perspective, is a tiny dot depicting
the tallest building in Beaumont. The rest is an enormous cross-section
of the 8,000 feet of layers beneath the DuPont plant: aquifers, shale,
and clay. It looks, says Mace, "like a layer cake."
-
- The defense also hauled into court 200 pounds of pipe
-- a scaled model of the top two feet of an injection well. The pipe has
an outer casing of steel, followed by inner layers of concrete, then steel,
then the injection pipe. Hazardous materials are pushed with water through
the innermost pipe. At the same time, water is injected at high pressure
in a surrounding casing so that, DeCarli explains, "if there is a
leak in the internal pipe -- a hole, a rupture or puncture -- the waste
doesn't flow out; the water flows in."
-
- The defense also pushed hard on this key scientific issue:
The chemicals were being injected into existing brine water -- which naturally
has high levels of arsenic and metals. "Brine water is itself toxic,"
says Mace. "If you tried to use it to water crops, it would kill them.
It's already unusable. By definition, pollution makes water unfit for drinking,
but the brine water was already unfit."
-
- After an 11-day trial, the jury had deliberated just
two hours, Carrington recalls, when the parties were called back to the
courtroom. "We thought the jury had a question. But as we came in,
the marshal said, 'You've got a verdict,' and the jurors started filing
in. It caught us off guard, but we felt, with this quick a verdict, it
had to be a favorable result for us. If a jury is going to give away money,
they're going to take a little time."
-
- Judge Heartfield looked at the verdict and handed it
to the clerk to read aloud. At first Mace thought something had gone terribly
wrong. Jurors were rejecting DuPont's assertion that plaintiffs were barred
from making their claims by the statute of limitations. Surprised, he started
to get very nervous. "It was only a matter of a few seconds between
the verdict on the first question and the next one," says Mace, "but
it seemed like hours." Then, in quick succession, the jury rejected
the rest of the plaintiffs' case, finding no trespass, no violation of
the plaintiffs' storage rights, and no intentional pollution.
-
- Talk to the jurors today, and they'll tell you that the
defense's experts were simply more convincing. Juror Wallace Wilbanks,
for example, says that the plaintiffs' first paid professional witness,
Philip Bedient of Rice University, "kept talking about the poison
that DuPont was dumping on the McFaddins' property. It was 'the poison
this,' 'the poison that,' " says Wilbanks. But then the professor
"admitted that the brine water that was 4,300-5,000 feet underground
was very poisonous itself. You give it to cattle, your cattle will die.
You drink it, you will die. That told me right quick that what DuPont was
putting down there wasn't as bad as what's down there already."
-
- The jurors were particularly unimpressed by the plaintiffs'
real estate expert, says Wilbanks, who lives about two miles from the McFaddin
land. "The plaintiffs' expert had devaluated the property by half
and said the mineral rights were worth zero, but he admitted he never set
foot on the property," recalls Wilbank. In contrast, a defense real
estate appraiser "had walked over the whole property. He knew it."
This expert talked about how a drag strip had been on the land years before.
"I used to drag cars over there," says Wilbanks. "He knew
what he was talking about."
-
- DuPont triumphed. But the case cost the company significantly
more than $1 million. The McFaddins did not file an appeal, not even a
motion for a retrial. Perhaps they decided $1 million was enough to spend
on a lost case. Whatever their reasoning, injection well suits may not
dry up as completely as DuPont would like. Hyde does say, "If we had
another case with similar facts and similar circumstances, we still would
pursue it. We still think our clients' property rights were violated."
-
- Surely, what happens to the two cases in Louisiana will
help shape trial lawyers' view of poison well cases' potential. In Beaumont,
though, things are more resolved. After a two-year hiatus, Carrington and
Wilson are friends again. It may even be that there's an added respect
between them. Recently, Carrington reports, Wilson hired him to handle
a lawsuit.
|
