Judge rejects class, settlement plans in Whirlpool case

FORT SMITH — A federal judge has denied a request to form a class of property owners in a lawsuit against Whirlpool Corp. and rejected a proposed preliminary settlement between the company and the property owners.

U.S. District Judge P.K. Holmes III ruled Wednesday that an attorney for two people who would represent the class failed to prove that it was necessary to form a class of property owners to carry on the lawsuit against Whirlpool. He also ruled that it was not proved that the two class representatives would “vigorously prosecute the interests of the class.”

Holmes wrote that because he did not certify formation of the class, he did not need to list his reasons for denying the proposed preliminary settlement that Whirlpool was offering the property owners.

“The proposed class resolution was very generous and we will continue to work toward a resolution that is fair, timely and enables both the residents and the company to focus on meeting the goals of the ongoing remediation effort,” read a statement Thursday from Whirlpool spokesman Jeff Noel.

Whirlpool has been ordered by the Arkansas Depart-

ment of Environmental Quality to treat the toxic degreaser trichloroethylene that leaked from the refrigerator plant and that was discovered decades ago under the northern section of the Whirlpool property in south Fort Smith and under a neighborhood to the north.

Kenneth Shemin of Rogers, who represents Scott Day and Glenda Wilson in the suit against Whirlpool, said Thursday that he respected Holmes’ judgment and ruling, and that his clients were considering their next moves in the lawsuit.

Whirlpool had proposed to pay owners of as many as 104 properties in and around the neighborhood north of the closed plant to compensate them for the devaluation of their property. The property was devalued last year by the Sebastian County assessor’s office because of the trichloroethylene contamination. Whirlpool offered an additional 33 percent of the compensation amount to help the property owners cover the legal expense of pursuing the lawsuit.

In a hearing in October, Whirlpool representatives said the company expected to pay up to $3.9 million to the property owners in the settlement compensation package. In return, the property owners would drop any damage claims against Whirlpool and give the company access to their property for installation and checking of groundwater monitoring equipment.

“It was a good deal for the lawyer and a good deal for Whirlpool, but it was not a good deal for the property owners,” said Little Rock attorney Sam Ledbetter, who represents property owners in a separate federal lawsuit against Whirlpool and who opposed the proposed settlement.

On the issue of adequate representation, Holmes wrote that he was concerned that settlement negotiations began shortly after the lawsuit was filed without any effort by the plaintiffs to determine the chances of winning the suit on its merits and receiving full compensation for damages.

“The court is concerned that such a plaintiff will not vigorously prosecute the interests of a class,” Holmes wrote.

According to the proposed settlement, the class of property owners was to be divided into two subclasses. One was a well-ban subclass of property owners whose homes are above the plume of trichloroethylene that’s in the groundwater and would be subject to a ban on drilling water wells that would create a pathway for the toxic chemical underground.

The other subclass was to be the fringe subclass composed of properties just outside the contaminated area but that were devalued by the assessor’s office. Each of those property owners would receive a flat $5,000 rather than the amount that their properties were devalued, according to the proposed settlement.

Day was to represent the fringe subclass members and Wilson the well-ban subclass members.

Holmes appeared concerned in the 18-page opinion and order with the relationship between the plaintiffs and Whirlpool, remarking at one point on whether the property owners or Whirlpool were driving the class action.

He wrote that Wilson was not added as a plaintiff to the lawsuit until the day before the proposed settlement was filed in court in July and was added at the request of Whirlpool to ensure that the suit had a representative of the well-ban subclass.

Holmes also noted that Day and Wilson were to receive an incentive payment by Whirlpool for their representation of the class.

On whether the number of property owners necessitated grouping them into a class, Holmes wrote that size alone was not the determining factor.

Geographic proximity and ease of identifying members also play a role, especially in this case where the property owners are bunched together and can be quickly identified through assessor records, Holmes wrote.