High Risks in Trial Over Explosion

For defendants facing a trial last fall over an explosion that destroyed a plant in Gramercy, La., the prospects looked grim. The defendants were companies that had helped make part of the plant’s electrical system, and the plaintiffs were attempting to hold them responsible for a power failure that set off the explosion. The blast had obliterated the Kaiser Aluminum & Chemical Corp. plant, injured 29 workers and caused property damage in the neighborhood. Kaiser’s insurers had paid $304 million to rebuild the plant and wanted the money back. Kaiser had spent another $150 million for uncovered damages and was seeking reimbursement of that as well, says defense attorney Ernest P. Gieger Jr. of New Orleans’ Pulaski, Gieger & Laborde. The corporate plaintiffs were combined for trial with personal injury plaintiffs. For the defense to win, a jury would have to reject people who had been horribly injured. Also in the trial, for liability purposes, was a class of 18,000 former and current residents of the plant’s neighborhood who had filed property damage, personal injury and emotional distress claims. The risks seemed so high that before the trial and during its first weeks, all but two of the defendants settled, leaving only Thomas & Betts Corp. and Schweitzer Engineering Laboratories. But on Nov. 19, 2001, a Convent, La., jury cleared the remaining defendants of all liability for the destruction of the Kaiser plant. This win for Thomas & Betts and Schweitzer leads The National Law Journal‘s 12th annual list of the biggest defense wins in civil cases nationally. The explosion occurred in the early morning of July 5, 1999, about half an hour after an electrical power failure hit the plant. The plant made a substance called alumina from bauxite, using a method in which bauxite is mixed with a sodium hydroxide solution to form a slurry, then pumped into a so-called digestion area of the plant. There, steam at high pressure was added to the slurry. When the power stopped, so did the pumps that moved the slurry. The plant’s gas-fired boilers, however, continued to deliver steam to pressure vessels in the digestion area. This caused an overpressurization within the system and set off an explosion in tanks where the steam was removed to cool the slurry and reduce it to atmospheric pressure. Kaiser contended that the power failure caused the overpressurization that led to the explosion. It blamed the failure on companies involved in designing and installing an electrical relay system within the plant and the manufacturers of two of the system’s components. Kaiser and its insurers sued these companies, claiming product defects and negligence. The primary defendants were Power and Control Systems Inc., which had designed the relay system; Merit Electrical and Instrumentation Inc., which installed the project; Excel, an electrical subcontractor; Manpower Inc., which supplied contract labor to Kaiser; and the two component manufacturers, Thomas & Betts and Schweitzer. The lawsuit was joined by 21 individuals who had sustained personal injuries in the explosion and the residents of the surrounding neighborhood. The plaintiffs were seeking more than $500 million. As the trial date neared, the defense had no idea which claims it would be defending. “The judge didn’t tell us what we were going to try,” says defense attorney Joy G. Braun of New Orleans’ Sessions, Fishman & Nathan. The court decided that all of the suits arising from the explosion would be tried on the issue of liability. The trial would also concern damages for four of the individual plaintiffs, plus Kaiser and the insurance consortium AXA Global Risks. This was the worst of all possible scenarios for the defense, says Gieger. The corporate defendants could finance the trial, while keeping the sympathetic personal injury plaintiffs at the forefront. And this was how the trial played out, he says. Kaiser let the personal injury attorneys take the lead. In the days before and after the trial opened, another set of problems emerged. Other defendants began settling. Just after voir dire, but before opening statements, Excel “settled the last of the claims against it and left the courtroom,” says defense counsel Sharon Smith of Pulaski Gieger. “Also, at that point, it became apparent that Manpower had reached an agreement with Kaiser,” the insurance company and all but one of the remaining personal injury plaintiffs. Thomas & Betts, she says, “had relied on these two co-defendants to assist in establishing that Kaiser was at fault in causing the explosion.” The settlements left Schweitzer and Thomas & Betts as defendants. But, says Gieger, who represented Thomas & Betts, “We were the target defendant. We had the most money.” Also on the Thomas & Betts trial team were Smith and Joy Braun and others from the Sessions firm: Robert E. Winn, Andrew A. Braun and Sharon C. Mize. The attorneys for Schweitzer were Martin Golden and Connell Archey of Baton Rouge, La.’s Kantrow, Spaht, Weaver & Blitzer. The specific charge against Thomas & Betts concerned plastic adhesive products the company manufactures. These products, “sticky-backs,” were used at the Kaiser plant to hold signal wires against walls and away from any electrical components. The plaintiffs contended that the sticky-backs came loose and the wires fell on the high-voltage electrical components, causing an electrical arc. This shut down the power to the digestion system, which set in motion the events causing the explosion. Photographs taken after the explosion showed some of these sticky-backs peeled from the wall and the signal wires down. The defense countered that this occurred after the explosion. “There was no doubt they fell,” says Winn, “but we were the victims, not the perpetrators.” Schweitzer manufactured the relays in the system. “The allegation against Schweitzer was that their device should have read and isolated the fault to prevent the whole plant from going black,” Gieger says. Schweitzer responded that the relays could have been programmed to do that but Kaiser had never requested or paid for this element. FEDERAL REPORT Another obstacle faced Thomas & Betts: a report on the explosion by the U.S. Mine Safety and Health Administration that seemed to give credence to the plaintiffs’ claims. It read in part: “An examination of the auxiliary cabinet in Switch House No. 2 indicated … that the current transformer leads had not been adequately secured to prevent movement. The leads had been attached to the cabinet wall by being tie-wrapped to stick pads. Three of the stick pads had come loose from the wall, permitting the leads to sag down very near the bus, possibly touching it.” The accident investigation team concluded, the report says, “that the leads contacting the bus was the most likely cause of the fault that resulted in the power failure on July 5, 1999.” To counter this, the Thomas & Betts attorneys focused on proving three theories: that there was no failure to warn; that the defendants did not cause a power outage; and that even if they did, a power outage would not have caused the explosion. But much of the team’s focus was on blaming Kaiser for the explosion. At the heart of this defense, Smith says, was the contention that “power outages don’t cause plants to blow up, or they’d blow up all the time.” The defense alleged that Kaiser was responsible because it failed to properly maintain the plant. Within the digestion system, all the valves had safety releases. “If they were simply maintained the explosion never would have happened,” Smith says. To support the claim that Kaiser was responsible, the defense introduced internal Kaiser memos on problems with the area where the explosion happened. The memos said the company “needed to upgrade certain portions of that system,” Smith says. Thomas & Betts put on evidence to show that there were problems with all 15 of the relief valves designed to protect the tanks and that some were inoperable. This was supported by data in the Mine Safety report. There was a fear that the jury’s desire to compensate the personal injury plaintiffs would overwhelm the defense. By the end of the trial, Thomas & Betts had settled with all but one of these plaintiffs. The only one remaining was Terrence Hayes, and he was one of the worst injured in the explosion. During the incident, caustic soda had splashed into his eyes, and it “continues to eat away at his eyes,” says Smith. Nothing can stop the progression. Hayes had received a substantial settlement before the trial from other defendants, “but we could not reveal that Hayes had received anything,” Smith says. The biggest worry, she says, “was the sympathy — that it would be so overwhelming for Mr. Hayes that the jury would not be able to reach a just verdict.” But the attorneys’ focus on Kaiser’s responsibility neutralized the jurors’ sympathy for Hayes. During the deliberations, says Smith, “the jury came out and asked, ‘If we find no fault for Thomas & Betts and Schweitzer, do we still award Hayes damages?’ “The court instructed the jury to assess damages,” Smith points out, because in Louisiana appellate courts review trials de novo and if the appellate court reassessed fault, a damage award would be in place. On Nov. 19, the Louisiana jury found Kaiser 75 percent responsible for the explosion and assigned the rest of the liability to two defendants that had settled, 20 percent for Power and Control and 5 percent for the Excel/Merit combination. The jury found no liability for Thomas & Betts or Schweitzer. The jury awarded Hayes $20.3 million. But because it found no liability for either defendant still at trial, he will receive nothing other than what he has gained from settlements. A final judgment has not yet been entered. An appeal is expected.