August 3, 2011
$320 million verdict in lead smelter case
$320 million verdict in lead smelter case sends clear message
Lead smelter verdict
â€¢ $320 million in punitive damages
(Split equally among 16 plaintiffs, $20 million each.)
â€¢ $38.5 million compensatory damages
(Awards of $1.5 million to $3 million for each plaintiff.)
â€¢ Total damages awarded: $358.5 million
ST. LOUIS â€¢ The mystery Friday afternoon was not whether the jury would punish the Herculaneum lead smelter’s former owners for negligently exposing 16 children to harmful lead pollution.
The jury had already said it planned to award punitive damages, on top of a $38.5 million verdict as compensation for health problems and lost lifetime earnings.
The only question still lingering in the St. Louis Circuit courtroom at the end of a three-month trial was the size of that award.
The answer: $320 million.
The amount surprised even the plaintiffs’ attorneys. They had suggested to the jury a punitive award that was one-third lower.
“I’m stunned,” said Gerson Smoger, a Dallas attorney who worked on the case with St. Louis attorney Mark Bronson.
“They obviously wanted to send a message: Don’t choose profits over people,” Bronson said. “That’s what this case is about.”
Aside from the expected appeals and post-trial motions, this was the last phase in a lengthy and complex case, and it carried with it one last surprise with the staggering verdict.
Attorneys for the defendants departed the courtroom without commenting, their papers and files wheeled out in boxes as soon as court adjourned. The plaintiffs and their families, who cried and hugged after hearing the verdict, declined to comment. So did jurors leaving the courthouse.
This case was just one of many targeting the massive lead smelter in Herculaneum, about 30 miles south of St. Louis. The lawsuits claim former and current owners knowingly exposed residents to lead pollution, a neurotoxin that is especially harmful to children. Plaintiffs’ attorneys said their clients, children growing up near the smelter, suffered lost IQ points and other health effects from lead poisoning that the company knew existed and only reluctantly revealed.
This case is the first to reach trial. Current owners of the smelter, Doe Run Resources Corp., settled claims with the plaintiffs earlier this year, according to court records. The court case then centered on the plant’s operation from 1986 to 1994 under former owners Texas-based Fluor Corp., Virginia-based A.T. Massey Coal and Missouri-based Doe Run Investment Holdings Co.
On Thursday, the jury returned verdicts awarding compensatory and punitive damages. The compensatory amount was announced immediately, with the plaintiffs receiving awards of $1.25 million to more than $3 million each.
A separate hearing was held Friday to put a number on the punitive award, which in Missouri is allowed to be used to punish wrongdoing and deter future acts.
What happened during the hearing helps illuminate how the jury made its $320 million decision.
The day started with a forensic economist’s describing just how big and profitable a company such as Fluor is. Robert W. Johnson, hired by the plaintiffs, noted that Fluor posted $20.8 billion in revenue last year. The company also spent $265.2 million on stock repurchases and dividends. Johnson called it “free cash.”
Bronson asked him to explain the term.
“Free to leave the company as designated by the company and it will do no harm,” he replied.
Johnson also noted the financial status of A.T. Massey, which reported $3 billion in revenue last year and which was bought during the trial for $8.5 billion, and the Doe Run holding company, which had no financial data.
Jack Quinn, the defendants’ attorney, took a different tack with Johnson. Quinn reminded him that these companies were publicly traded and so were owned by pension funds and individual investors. But Johnson demurred, saying institutional investors accounted for almost all of the outstanding stock.
The two sides then made their final pleas to the jury to see things their way, to potentially raise or lower the amount of punitive damages.
Quinn, having already lost on the decision to award damages, tried to limit the amount.
“You have made your decision. I respect what you’ve done. Fluor respects what you’ve done,” he told the jury.
He reminded the jury’s six men and six women that they already had awarded a $38.5 million verdict. Quinn called it “a significant amount of money” and “a clear message.”
“Do you think management doesn’t hear it? They heard your message,” he said. “I believe your message has been sent and it’s been sent pretty clearly.”
As he neared the end of his argument, Quinn pointed out that the verdict form allows for an amount of zero.
“I’m not telling you to write ‘none,’” he said. “But what the instructions recognize is, if you think that the message already has been sent.”
Smoger, pleading once more for the plaintiffs, ended the hearing.
He attacked the Fluor leadership that, he said, allowed the lead poisonings to happen and never bothered to even show up in court.
“You’ve been here for months and you’ve never heard that they’ve done anything wrong. You’ve never heard, ‘I’m sorry,’” Smoger said.
â€”"‘We don’t care. We’re not sorry.’ That’s the message that you’re hearing,” he added.
The jury then went out to make its decision. The plaintiffs had asked for $208 million. The jury returned two hours later.
The verdicts for each of the 16 plaintiffs were identical: 11 of 12 jurors had agreed, $15 million in punitive damages from Fluor, $3 million from A.T. Massey and $2 million from the Doe Run holding company.
That added up to $320 million.
The last thing that Smoger had told the jurors before they made their decision seemed to have resonated, carried with them from the courtroom and into their deliberations.
“They hurt these children and did it for money. In our system, we can only punish them with what is most valuable to them,” he said, adding, “We punish them with money.”