Rhode Island news
Station victims’ claims contested
10:04 AM EDT on Friday, September 28, 2007
PROVIDENCE — A month ago, lawyers for those who lost loved ones or suffered injuries in The Station nightclub fire told a federal judge that some of the parties they’d sued had tentatively agreed to pay $13.5 million to settle the victims’ claims. They asked the court to allow them to hire a special master who would decide how the settlement money would be divvied up.
But lawyers for two foam manufacturers who are being sued by the fire victims — General Foam and Foamex — are now objecting to the court’s appointment of a special master. And in a move that may further delay any money getting to the victims, they say in newly filed court papers that they intend to object to the proposed settlements and challenge a law, enacted last year by the General Assembly, that is aimed at facilitating pretrial settlements in cases in which there are 25 or more deaths.
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Special Report: Our full report on the Station fire and its aftermath
Legal experts have said that the new legislation — which lawmakers call The Station fire bill — could result in monetary settlements with some of the seemingly most culpable defendants who have little insurance and few assets to reach settlements with the fire victims. It was modeled after one that was enacted to pay back credit-union depositors during the state’s banking crisis in 1991.
The new law was enacted despite objections from insurance defense lawyers, the Greater Providence Chamber of Commerce and several local and publicly traded companies. Those lobbying against it included lawyers for some of the large corporations the fire victims are now suing.
More than 300 fire victims and their survivors have lawsuits pending in U.S. District Court seeking money damages in connection with the Feb. 20, 2003, fire at The Station in West Warwick. One hundred people died in the blaze and more than 200 others were injured. The fire began when the tour manager for the rock band Great White set off fireworks inside the club. Sparks from the pyrotechnics ignited highly flammable polyurethane foam that the owners of the club, Michael and Jeffrey Derderian, installed on the walls as soundproofing.
Lawyers for the victims have worked out settlements with about a half-dozen defendants and say they are making headway in negotiating with a number of others.
But lawyers James A. Ruggieri and Gerald C. DeMaria, who represent foam manufacturers Foamex and General Foam, assert in papers filed last week that the new law the settlement offers are conditioned upon “is unconstitutional and invalid” and that they “fully intend to object to any proposed settlements on those grounds at the appropriate time.”
Up until the new law was enacted, no lawyer representing any of the Station fire victims had entertained any settlement offer because there was a risk that a victim might forfeit millions of dollars in damages if a jury were to find a party that settled primarily at fault for the fire.
But now, with the new law, there would be less risk in a victim accepting pretrial settlement offers because there would merely be a dollar-for-dollar write-off attached to whatever verdict is rendered at a trial. The degree of culpability will not be a factor in reducing a verdict for this special class of fire victims.
The old law — still in effect for most cases and all that involve fewer than 25 deaths, discouraged victims from accepting settlements before trial, because under the former system, if the victims were to accept a settlement of say $1 million from a defendant and a jury then rendered a $50-million verdict and found the settling party 50 percent responsible for the victims’ injuries, the $50-million verdict would be reduced by $25 million, leaving the victims with $25 million.
That’s because the old law mandates that a verdict be reduced by either the amount of a settlement or the proportion of liability that a jury ascribes to the party that settled, whichever is greater.
Under the new law enacted to benefit the fire victims, there is no proportion of liability set off — just a dollar-for-dollar reduction of the verdict. So if the fire victims were to accept a $10-million settlement from a defendant and the jury then returned a verdict of $500 million, the verdict would be reduced by just $10 million and nothing more.
That is precisely what DeMaria and Ruggieri are objecting to.
In a memorandum of law filed with Senior U.S. District Judge Ronald R. Lagueux, they say that the 2006 law operates to the detriment of deep-pocket defendants in mass tort cases who may have very little culpability. If these large corporations continue to go to trial and have a jury weigh the allegations against them, they could face having to pay for close to 100 percent of the damages awarded, even if they are found to be only minimally at fault.
DeMaria and Ruggieri declined to comment further this week when asked what their timetable for contesting the new law would be. They could seek declaration of the constitutionality of the act before Lagueux and then appeal to the 1st U.S. Circuit Court of Appeals if the judge rejects their constitutional objections. But the appeals court could decide to wait to take up the issue until after the case is tried and damages are awarded.
While it is anticipated that other defendants who haven’t offered to settle may also join in the fight over the constitutionality of the new law, the defendants who have offered to settle or the victims’ lawyers could also ask Lagueux to take up the issue soon, in an effort to speed the settlement process along.
The parties that have agreed to contribute to the proposed $13.5-million settlement are:
•Luna Tech Inc., of Alabama — and two of its European subsidiaries — which the lawsuits contend manufactured the pyrotechnics used by Great White the night of the fire.
•High Tech Effects Inc., a Tennessee company that is alleged to have sold the pyrotechnics used by Great White at The Station the night of the fire.
•Celotex Corp., which manufactured SoundStop board and then sold it for distribution to consumers. According to the lawsuits, the Derderians purchased SoundStop for their club from Home Depot and then installed it in the ceiling of the drummer’s alcove and elsewhere inside The Station.
•Triton Realty and Raymond Villanova, owners of the building on Cowesett Avenue where The Station was located.
•Joseph LaFontaine, of Warwick, owner of New England Custom Alarms, the company that installed the fire-alarm system at the club when it was owned by Howard Julian, before the Derderians bought it.
The victims’ lawyers are asking Lagueux to appoint a special master who would devise a grid for apportioning the settlement proceeds among the plaintiffs. They are proposing that the court appoint Francis E. McGovern, a law professor at Duke University who has performed similar duties in mass tort cases more than 50 times.
Lagueux has scheduled a hearing for Oct. 18 to determine whether he will appoint a special settlement master.
DeMaria and Ruggieri say that if the victims’ lawyers want to hire someone as a private mediator to help them come up with a formula to impartially divvy up settlement proceeds, they have no objection. But they don’t want Lagueux to approve the hiring of a special master as an arm of the court or having him involved in the process of sanctioning what he does.
They assert that the court should decide whether the settlements are fair without input from a special master.
And, they say in their court filing that they don’t want to face the prospect of having to pay any of the fees that a special master might charge for his services.
The fire victims’ lawyers, they say, “have not demonstrated exceptional circumstances necessitating a special master.” And Lagueux, they say, has not indicated that he needs any assistance in approving any of the proposed settlements. They contend that “the court should continue its practice of insulating itself from settlement negotiations so that it can more easily conduct trials as they become necessary.”
The court, they say, “should consider the propriety of allocation only at the end of plaintiffs’ internal allocation efforts, when plaintiffs’ work — and presumably that of their internal consultant — is completed. The court need not otherwise be improperly drawn into the internal process of allocation, which could very well be contentious among counsel and/or parties seeking compensation.”
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