FORT SMITH, Ark. (Legal Newsline) - A federal judge ruled on Wednesday that a proposed class will not get certification in a class action lawsuit against Whirlpool for alleged failure to clean up toxic chemicals at its refrigerator manufacturing facility that harmed surrounding property values.
District Judge P.K. Holmes III said that the plaintiffs, Scott Day and Glenda V. Wilson, failed to affirmatively demonstrate that the Rule 23(a) requirements are met and no further analysis of the issues raised by the motion are required, according to the Dec. 3 order filed in the U.S. District Court for the Western District of Arkansas.
"Movants have failed to affirmatively demonstrate that either Day or Wilson satisfies the requirement of adequate representation," the order states.
A representative who is not a property owner at the time of class certification is not a member of the class when property ownership is foundational to the class definition, according to the order.
"On this ground alone the parties have not met their burden to affirmatively demonstrate that Day is an adequate representative of the putative fringe subclass, making certification of that subclass improper at this point," the order states.
Holmes said that while there is no question that settlement is viewed as a favored outcome, when a plaintiff begins a lawsuit with the desire to negotiate settlement rather than the desire to be "made whole," and does not even press his attorney to conduct discovery to determine the likelihood of victory on the merits or to give some context to the terms of the settlement offer, the court is concerned that such a plaintiff will not vigorously prosecute the interests of a class.
"The court’s concern extends to the other plaintiff in this action," the order states. "Wilson joined the lawsuit the day before putative class counsel moved for settlement. Based on the representations of counsel at the hearing, it appears Wilson was added so that the settlement could bind more people than just the original plaintiff, Day, and the other members of the putative fringe subclass."
Kenneth Shemin, the attorney for the plaintiffs, explained that Wilson was added because a member of the well-ban subclass was necessary for certification, according to the order.
"Mr. [Robert] Brunson, for Whirlpool, explained that Wilson was added, apparently at Whirlpool’s behest, as a result of extensive settlement discussions and because Whirlpool wanted to ensure settlement could reach the putative well-ban subclass," the order states. "That Wilson became a plaintiff and putative subclass representative at the eleventh hour at Whirlpool’s behest does not in and of itself render her inadequate as a subclass representative. It does, however, raise a significant question about the extent to which she would vigorously prosecute the interests of the subclass"
Holmes said that the proposed joint settlement filed on Sept. 26 in the U.S. District Court for the Western District of Arkansas made his concerns worse because the parties had not engaged in discovery and had only entered into settlement negotiations.
"The product of those settlement negotiations includes a clause under which all parties represent their intent to ask that the court give an 'incentive payment' paid directly by Whirlpool to the class representatives to compensate them for their 'efforts in representing the class,'" the order states.
Although such clauses are often standard in settlement agreements in truly adversarial proceedings, the instant case has been one of negotiation rather than litigation and the incentive clause raises questions about "vigorous prosecution."
"To the court, the cause appears to put the plaintiffs at odds with the putative subclasses because it offers the plaintiffs an award for deciding not to even begin pursuing their representative claims on behalf of the putative subclasses," Holmes' order states.
The class action lawsuit was originally filed on May 20, 2013, in Sebastian Circuit Court and was removed to federal court on June 25, 2013.
Day claimed Whirlpool's facility in Fort Smith, Ark., utilized a toxic chemical, trichloroethylene, to clean metal refrigerator parts before assembly at the manufacturing plant.
Whirlpool admitted that the chemical was gradually leaked into the groundwater at the facility over time from the north end of the property.
Day's property was located within the impacted area that was affected by the chemical.
The plaintiffs are represented by Shemin of Shemin Law Firm PLLC in Rogers, Ark.
Whirlpool is represented by Robert H. Brunson and Karen Crawford of Nelson Mullins Riley & Scarborough LLP in Charleston, S.C.; and Robert L. Jones III of Conner & Winters LLP in Fayetteville, Ark.
U.S. District Court for the Western District of Arkansas case number: 2:13-cv-02164
From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.