David Hudson, representing Georgia-Pacific, argued that homeowners’ claims of environmental problems have too many individual issues to warrant class certification. (Rebecca Breyer)
Georgia-Pacific Consumer Products is trying to kill a class action alleging property damage from pollution around its Savannah River Mill, with the Georgia Supreme Court hearing the company’s appeal last week.
The company narrowly missed shooting down class certification last year when the Court of Appeals voted 4-3 to uphold a decision by an Effingham County Superior Court judge. Supreme Court justices have also been divided on the case, voting 4-3 to take up the case, which was heard Feb. 17.
The lawsuit was filed in 2010 by two couples who own homes in the area, Kirbi and Aaron Ratner and David and Kathy McDonald. They asked that the court certify a class consisting of the owners of 65 other properties near the plant. They claim Georgia-Pacific is liable for nuisance, trespass and negligence by releasing hydrogen sulfide gas onto properties near its facility in Rincon, where the company operates a paper mill, a power plant, a waste water treatment plant, a landfill and sludge fields, according to stipulated facts in the court documents.
Complaints from neighbors about “noxious gases emanating from the mill’s grounds” began in 1992, according to facts agreed upon in court documents. The mill had some success in rectifying the problem, according to the Court of Appeals ruling upholding class certification. But complaints increased in 2006, a result one of the lawyers for the plaintiffs blames on higher production.
Joined by Chief Judge Herbert Phipps and Judges Anne Elizabeth Barnes and M. Yvette Miller, Judge John Ellington wrote last July’s opinion affirming class certification. He said there are significant questions common to all of the class members that predominate over the individual issues in the case.
Judge Elizabeth Branch wrote a dissent, joined by Presiding Judge Gary Andrews and Judge William Ray II, saying the case shouldn’t go forward as a class action. She wrote that the plaintiffs had failed to establish even that the mill’s hydrogen sulfide releases actually affected each property included in the class. She noted a real estate appraiser testifying for the plaintiffs, when asked how to define the area defined by the gas releases, said “it’s a seat-of-the-pants kind of thing.” Branch also said it would be necessary to conduct numerous fact-intensive inquiries as to the scope of each class member’s injuries.
Georgia-Pacific asked the state Supreme Court to look at the case. The court agreed, barely, with Chief Justice Hugh Thompson and Justices Robert Benham and Carol Hunstein dissenting from the decision to grant Georgia-Pacific’s petition for certiorari.
The Supreme Court has received several amicus curiae briefs in the case, with groups such as the Georgia and U.S. Chambers of Commerce backing Georgia-Pacific, which is owned by Koch Industries, and environmental groups supporting the plaintiffs. A brief filed by a group of corporations called the Product Liability Advisory Council said the Court of Appeals’ “malleable approach” to class actions, if left to stand, would signal the state’s courts are open to class actions not viable in other states. The group also said the appeals court’s ruling would hurt the state’s economy.
The sheaf of briefs does not include one signed by lawyers at King & Spalding, which represented Georgia-Pacific through the Court of Appeals decision in the case. But Georgia-Pacific handed the Georgia Supreme Court duties to David Hudson, a lawyer in Augusta who said his firm, Hull Barrett, has a long history with the company.
Had King & Spalding handled the case at the high court, Justice David Nahmias almost certainly would have recused. His wife, Catherine O’Neil, is a partner at the firm, and Nahmias announced in 2009 that he would step off cases in which King & Spalding lawyers “are actively representing a party before” the court, with no recusal motion required.
Nahmias participated in both the decision to grant Georgia-Pacific’s certiorari petition and in last week’s oral argument.
Appearing for Georgia-Pacific last week in arguments, which are available for viewing on the Supreme Court’s website, Hudson highlighted his side’s problem with certifying the case as a class action: The case of the named plaintiffs could be tried repeatedly without resolving the claims of the other class members. For example, he said, proof that fumes impacted one lot doesn’t prove that fumes impacted another lot, which may be farther away from the mill or be a different kind of property.
Hudson said the Georgia Supreme Court has said that when as few as one individual issue is to be resolved, the case is inappropriate for class treatment. He said that’s been confirmed by the U.S. Supreme Court, including in its 2011 decision in WalMart v. Dukes. The idea of a class action, said Hudson, is to try the named plaintiff’s claims “and in one shot, at once, you resolve the main issues involving everyone else in the class.”
“Is that ever going to be possible in a class action?” wondered Hunstein.
“It is, your honor, mainly cases having to do with contracts,” Hudson replied, such as a case of whether a contract violates a usury law. “You make one determination on the legality of the contract, and it applies to everyone who had that contract.”
Hudson added that the property owners were not without recourse even if a class action were deemed inappropriate, saying they could file individual cases and even request that a group of cases be joined. He insisted the plaintiffs would be better off that way, noting the plaintiffs had “jettisoned” their personal injury claims. “They would preserve those cases in filing them themselves,” he said.
Nahmias told Hudson he thought it permissible for liability and causation to be established on a classwide basis but damages to be determined individually, such as in a mass tort case. “That’s a classic class action,” the justice said.
Hudson disagreed. Even liability could not be resolved on a class basis in the case, he said. And in the case against Georgia-Pacific, he said, determining damages would not come from a formulaic calculation, such as examining a contract to identify an overcharge.
Augusta lawyer John Bell Jr. of Bell & Bingham, representing the plaintiffs, told the justices that hydrogen sulfide “not only stinks” but turns into acid when it comes into contact with moisture. “We have the equivalent of the canary in the coal mine,” he said, explaining that all of the air conditioning units in the class area are failing because of toxic chemicals from Georgia-Pacific’s sludge fields.
“How are you going to prove causation in a common way?” asked Nahmias.
“First of all, from their admissions that this stuff is toxic,” Bell replied.
“That’s liability, not causation,” Nahmias rejoined.
Bell said he’d tried similar cases. “We’re not guessing at it. Now there are complicated ways to try cases and there’s simple cases, and I’ve worked with trial counsel opposite a number of these cases previously, the trial counsel for Georgia-Pacific, who is with us today and who I expect would be—”
Nahmias cut him off, urging him to answer the question, “not how it may have been done in other cases we didn’t rule on.” Bell continued that he would use evidence about the nature and location of the chemical and environmental experts and toxicologists to show the effects of the chemical. He said he’d call a real estate lawyer to explain the consequence of disclosing or not disclosing contamination when a property is put up for sale, and a banker to talk about what banks think about using contaminated property as collateral.
Justice Harold Melton wondered whether it wouldn’t be wise to at least group the class members based on the nature of their property, such as grouping the properties into categories such as residential, timberland, commercial and vacant lands. Melton suggested an expert would have to “use a whole different rubric” for determining the loss to each type of property. “How is there commonality amongst those?” Melton asked.
“The proper measure for appraisal is the highest and best use of the property,” Bell replied. He said the trial judge has discretion to either break the class into subclasses at the damages phase or decide damages on a classwide basis, allowing jurors to determine a total damages amount for the class.
Asked after the argument to whom he was referring in noting the presence of Georgia-Pacific’s trial counsel, Bell said J. Kevin Buster and Chilton Varner, both King & Spalding partners, were seated in the courtroom. Bell explained that Buster hasn’t withdrawn as counsel for Georgia-Pacific at the trial court, and, although she hasn’t been involved at the trial court level, Varner handled the company’s argument before the Court of Appeals.
Asked whether he was pointing out their presence to suggest that Nahmias should recuse, Bell said he was merely responding to questions from the bench about how cases such as his should be handled.
Neither Buster nor Varner could be reached for comment. Nahmias declined to comment.
Hudson, Georgia-Pacific’s lawyer at the Supreme Court, said that no King & Spalding attorneys worked on the Supreme Court appeal, and, as far as he knew, the firm wasn’t involved in the case at all anymore. “But you’d have to ask Georgia-Pacific,” he added.
As for why some King & Spalding attorney attended the argument, Hudson said, “I think they were very interested in the case. I would be if I had worked on it for a good while.”
A spokeswoman for Georgia-Pacific, Carrie Thompson, said the company wouldn’t comment on its reasons for switching appellate counsel or whether it expected King & Spalding would represent it when the case returns to the trial court.
Hudson said he didn’t take Bell’s remark as a back-handed recusal request. But, he added, “I don’t know why John did that. … That’s just a red herring.”
The case is Georgia-Pacific Consumer Products v. Ratner, No. S13G1723.