Four contractors that installed or maintained government-issued trailers for storm victims after Hurricane Katrina have agreed to pay a total of $5 million to resolve claims that the temporary shelters exposed Gulf Coast residents to hazardous fumes, according to court filings Tuesday (May 29).
The documents don’t disclose how much would be individually paid by Shaw Environmental Inc., Bechtel Corp., Fluor Enterprises Inc. and CH2M Hill Constructors Inc. and the companies’ insurers, The Associated Press reported.
The deal is linked to a larger class-action settlement agreement between plaintiffs’ attorneys and several companies that manufactured travel trailers for the Federal Emergency Management Agency (FEMA) following hurricanes Katrina and Rita in 2005.
The proposed settlement with the trailer makers was expanded late Monday to include claims against Gulf Stream Coach Inc., Forest River Inc., Jayco Inc. and Monaco Coach Corp. Financial terms of that part of the deal haven’t been disclosed.
Last month, however, nearly two dozen other FEMA trailer manufacturers agreed to pay a total of $14.8 million to resolve claims over elevated formaldehyde levels in FEMA trailers following the 2005 hurricanes. Formaldehyde, a chemical commonly found in building materials, can cause breathing problems and is classified as a carcinogen.
U.S. District Judge Kurt Engelhardt is expected to hold a fairness hearing on the proposed settlement on Sept. 27. If he approves the deal, a group of Texas residents’ claims against FEMA would be the only formaldehyde-related claims that haven’t been settled or dismissed by the judge, according to lead plaintiffs’ attorney Gerald Meunier.
Meunier estimates that roughly 60,000 plaintiffs from Louisiana, Texas, Alabama and Mississippi who lived in FEMA trailers after the 2005 hurricanes would be eligible to participate in the settlement.
A federal jury on Thursday (Sept. 24) rejected a New Orleans family’s assertions that the government-issued trailer they lived in after Hurricane Katrina exposed them to dangerous fumes, in the first of several trials that could lead to hundreds of similar claims being resolved.
Five men and three women decided that a trailer made by Gulf Stream Coach Inc. and occupied by Alana Alexander and her 12-year-old son, Christopher Cooper, was not “unreasonably dangerous” in its construction. One juror said the plaintiffs’ attorneys never had the “smoking gun” that proved their case, according to the Associated Press.
The jury also concluded that Fluor Enterprises Inc., which had a contract to install FEMA trailers, wasn’t negligent. The federal government wasn’t a defendant in this first of several “bellwether” trials, which are designed to help the New Orleans court test the merits and possibly settle of other claims over formaldehyde exposure in FEMA trailers.
Lawyers on both sides wouldn’t speculate on how the verdict could affect other cases. A law professor who specializes in toxic tort cases said verdicts in bellwether trials can steer parties toward a mass settlement of similar claims.
Alexander and Cooper lived in a FEMA trailer for 19 months after Hurricane Katrina damaged their home in August 2005.
Alexander’s lawyers claimed elevated levels of formaldehyde aggravated Cooper’s asthma and increased his risk of getting cancer. Formaldehyde, a chemical commonly found in construction materials, can cause breathing problems and has been classified as a carcinogen.
Plaintiffs’ attorneys accused Gulf Stream and other trailer makers of using shoddy materials and methods in a rush to meet the Federal Emergency Management Agency’s unprecedented demand for temporary shelters after hurricanes Katrina and Rita. Gulf Stream denied its trailer jeopardized the health of Alexander and her family. A company lawyer also noted that Alexander took her son off a steroid medication for his asthma for more than two years.
The jury heard eight days of testimony and deliberated about four hours before delivering its decision.
Juror Roy Pierce, 43, of Boutte, said he was troubled by testimony about some of Gulf Stream’s “in-house practices” but didn’t think the evidence supported a verdict against the companies.
“You didn’t have the smoking gun,” he said.
Plaintiffs’ attorney Gerald Meunier said he was disappointed.
“We thought we presented a strong case. The jury has spoken on this one,” he said.
Andrew Weinstock, a lawyer for Nappanee, Ind.-based Gulf Stream, said FEMA had purchased thousands of trailers from the company since 1992 without receiving any formaldehyde complaints until 2006.
Weinstock said the company is pleased with the outcome, but he wouldn’t speculate on how the verdict could impact similar cases awaiting trial.
“If some good came from this, it’s that Christopher Cooper is now on the proper asthma medication … and we’re happy for that,” he added.
Pavel Wonsowicz, a UCLA School of Law professor who specialized in toxic tort and products liability cases as a trial attorney in Boston, said verdicts in bellwether trials can steer parties toward settling many others.
But lawyers typically wait for several cases to be tried, he said. For example, Merck Inc. had won 10 of 15 federal and state court verdicts — including four of five in federal court — when it agreed to a $4.85 billion settlement with people who had suffered heart attacks or strokes after taking its painkiller Vioxx for at least 30 days.
Before the trailer trial started, U.S. District Judge Kurt Engelhardt ruled that a two-year statute of limitations bars Cooper’s claims against the government. Pierce said he doesn’t know if the jury would have reached a different verdict if the government hadn’t been dismissed from the lawsuit.
“It was a tough decision,” he said. “It wasn’t simple.”
Alexander’s trailer was made in 2004 for FEMA to use after a hurricane in Florida, but it wasn’t occupied until her family moved in after Katrina. Weinstock said during his closing arguments that Gulf Stream wasn’t obligated to build a “perfect product.”
“It’s a nice piece of equipment. It’s not the Taj Mahal,” he said of the travel trailers, which are smaller than mobile homes.
Plaintiffs’ attorney Mikal Watts said Gulf Stream made an “unreasonably dangerous” trailer and Flour compounded the formaldehyde risks by improperly installing it. FEMA relied on the companies to provide safe shelters, Watts added.
“Frankly, I think they were trying to clean up somebody else’s mess, and they should not be held responsible,” Watts said of FEMA.
Weinstock told jurors that formaldehyde is found in safe levels in many products, including cosmetics, foods and shampoo. He downplayed the link between formaldehyde and cancer, saying only one scientific group has classified the chemical as a carcinogen.
Government tests on hundreds of trailers in Louisiana and Mississippi found formaldehyde levels that were, on average, about five times what people are exposed to in most modern homes. FEMA downplayed formaldehyde risks for months before those test results were announced in February 2008.
“If these trailers weren’t dangerous, would there be 30,000 of them sitting in a field?” plaintiffs’ attorney Tony Buzbee said.