Lewis, Thomason, King, Krieg & Waldrop, P.C.
enter
close

News Release

LEWIS KING VICTORY IN CLASS ACTION CASE

The United States District Court for the Eastern District of Tennessee has dismissed a significant and historic environmental class action lawsuit. A class of Plaintiffs comprised of owners of property adjoining a river first sued the Defendant, an upstream manufacturing facility, in 1989. In a continuous series of subsequent lawsuits, the Plaintiffs have repeatedly claimed that the facility causes water pollution resulting in a nuisance to downstream property owners. In the most recent case alone, the Plaintiff class sought in excess of $20 Million Dollars in alleged damages.

Lewis King’s class action defense team was retained to defend the most recent case filed in 2005. On September 13, 2012, the federal district judge overseeing the case granted a Motion for Summary Judgment, thereby dismissing the matter in its entirety. The Court found that the class of Plaintiffs had no evidence that the activity of the manufacturer was responsible for any alleged pollution of the river: “[T]his court cannot conclude that the plaintiff has offered sufficient proof of a causal link between the discharges from defendant’s mill and harm to the plaintiff class nor of the scientifically verifiable health risks created by the exposure to the chemicals released from the mill in order to withstand summary judgment.” The defense team worked through several significant issues to obtain this historic result.

Federal Court Jurisdiction

The Plaintiff initiated the current lawsuit in state court. Thereafter, in an apparent effort to avoid federal jurisdiction, the Plaintiffs divided the lawsuit into multiple separate suits covering distinct six month periods of time while limiting the total damages for each suit to less than the $5 Million Dollar threshold required by the Class Action Fairness Act (“CAFA”). The defense removed the individual lawsuits. The cases were consolidated by the federal district court but remanded back to state court. The Lewis King team successfully appealed the remand to the United States Court of Appeals for the Sixth Circuit. Reasoning that the Plaintiff failed to demonstrate any colorful basis for dividing the claims “other than to avoid the clear purposes of CAFA,” the Court of Appeals determined, in December 2008, that the trial court’s remand was improper. Proceedings then ensued in the United States District Court for the Eastern District of Tennessee.

Thereafter, when the United States Supreme Court adopted the “nerve center” test for determining a corporation’s principal place of business in the landmark case of Hertz Corp. v. Friend, 130 S.Ct. 1181, 1192 (2010), the Plaintiff filed another motion to remand claiming that the Defendant’s principal place of business was actually Tennessee (rather than out-of-state) and, therefore, the case met the “home state” exception to CAFA. Again, the Lewis King class action defense team fought the remand, and the court ultimately agreed that the Defendant’s principal place of business was in North Carolina, thereby creating sufficient diversity to defeat the home state exception to CAFA. The federal court retained jurisdiction throughout the remainder of the proceedings.

Certification

The Plaintiff certified a class of approximately 350 individuals and entities who owned property along a river downstream of the Defendant manufacturing facility. The Lewis King defense team objected to class certification, arguing that the individual issues and factual dissimilarities predominated over any common questions of law and fact. Specifically, the defense claimed that quality and content of the water varied as the water passed the different property owners; the physical characteristics of the river changed as it flowed past different property owners; the present use of parcels of land adjacent to and along with river varied from one proposed class member to another; the various class members did not enjoy the same nature or extent of river access; and the parcels varied in their suitability for future development. The defense also argued that claims of the represented party were not typical of the claims of the entire class and the represented party was unable to adequately protect the interests of the entire class. However, the trial court found that doubts about certification should be resolved in favor of the Plaintiffs and, on September 30, 2011, certified the class under Rule 23 of the Federal Rules of Civil Procedure.

Environmental Issues

The case raised several interesting environmental issues. The Plaintiffs acknowledged that the manufacturer was in compliance with its NPDES discharge permit but sought recovery claiming that alleged pollution created a legal nuisance, despite permit compliance. The Lewis King defense team retained a combination of national and local experts to analyze, study, and test the river water. Dr. Kenneth Wagner (Massachusetts), Dr. Charles Coutant (retired from Oak Ridge National Laboratory), Dr. Larry Wilson (University of Tennessee – Knoxville), and Mr. Michael Corn (Nashville), prepared reports and were prepared to testify that the river presented absolutely no threat to human or ecological health. Their testimony demonstrated that Defendant’s activities caused no harmful impact to the quality of the river water.

Damages

The Plaintiffs’ alleged damages in excess of $20 Million Dollars for the seven year period of time covered by the lawsuit. The Plaintiffs argued that the quality of the river water caused a decline in their property values and denied them the opportunity to develop a rental cabin industry that otherwise would have flourished along the river. The Lewis King team retained specialized experts to specifically attack the Plaintiffs’ damage claim. Margaret Nealon (North Carolina) and R. Jeffrey Fletcher (Knoxville) did extensive studies of the real estate market and condition of the property at issue. They concluded that the condition of the river water was not even a factor in the lack of development. Instead, they pointed to several other reasons why the property was not suitable for a rental cabin industry. In fact, after reviewing extensive records concerning property transactions, Mr. Fletcher concluded that Plaintiffs’ property values had actually increased.

The Team Approach

One of the factors that led to success was the creative use of a unique legal defense team. Attorney Richard W. Krieg led the defense team and selected Lewis King lawyers with specific strengths and skill sets to identify and creatively tackle the complex issues. Larry Giordano and Mary Ann Stackhouse spearheaded trial preparation and served with Mr. Krieg as trial counsel. Linda Mowles was responsible for all appellate briefing and participated in the motion practice. Janet Hayes also worked on motions as well as strategy and class certification issues. Joseph Ballard assisted on class certification as well as strategy and research. Lars Schuller also did research while focusing on real estate and damages issues. Cathy Hulsey served as paralegal support to the entire class certification team. Lewis King also teamed with Attorney Billy Clarke and the Asheville, North Carolina law firm of Roberts & Stevens on environmental issues.