LANSING, Mich. (Legal Newsline) - Michigan’s agreement to pay $600 million to settle claims over its handling of the Flint water crisis marks a profitable end to litigation that had such potential from the start that plaintiff attorneys engaged in a loud public battle for control.
The state will deposit the money in a fund to pay residents and businesses in Flint for damages caused by the disastrous decision to try to save money by shifting the city’s water supply from Detroit to a restarted municipal plant drawing from the Flint River. Tens of thousands of children were exposed to higher-than-normal lead levels after the city botched the transition and pumped inadequately treated water through an aging pipe system that rapidly corroded.
Plaintiffs accused Michigan officials, including Flint’s state-appointed emergency manager and then-Gov. Rick Snyder of initiating the changeover, failing to act quickly enough to halt the damage and falsely reassuring Flint residents their water was safe.
Under the terms of the settlement announced yesterday, the State will pay $600 million into a special fund to pay claims, after subtracting an as-yet-unknown amount of court-approved attorneys’ fees. The pot may grow if other defendants including outside engineering firms and the Environmental Protection Agency join the settlement. The settlement proposes distributing 80% of the money to children who were exposed to lead in their drinking water.
Settlement docs will be filed within 45 days, Attorney General Dana Nessel said. A status conference is scheduled for Aug. 26.
The agreement comes two years after attorneys leading the plaintiff team broke in a bitter split over fees and tactics. Soon after higher lead levels were reported in Flint, lawyers descended on the city to recruit individual clients and file class actions. Ultimately at least 10 purported class actions were filed along with lawsuits naming hundreds of individuals.
In a March 2018 filing, Michigan attorney Michael Pitt and lawyers at Cohen Milstein accused co-counsel Hunter Shkolnik of recruiting hundreds of individual clients and signing contracts with contingency fees that exceeded Michigan’s 33% cap. Among other allegations, the lawyers said Shkolnik organized a community meeting at a Baptist church in Flint with actor Harper Hill, a series regular on “CSI: NY,” where he handed out retainer agreements.
Shkolnik, they said, failed to honor his obligation to “maintain the highest standards of decorum and cooperation among counsel.”
Shkolnik fired back with his own accusations that Cohen Milstein and Pitt, ostensibly representing a potential class of Flint claimants, had a conflict of interest because they also signed up individual clients who ultimately would be fighting for a share of the same pot of money. They asked the judge to remove Shkolnik from the plaintiff team to gain “complete control of the litigation so that they can line their own pockets,” Shkolnik said in an April 2018 filing asking the judge to disqualify his co-counsel.
“In short, the motion is nothing more than a blatant money grab,” he said in that filing.
To resolve fee disputes, Shklonik’s firm, Napoli Shkolnik, proposed an order that would allow a special master to periodically review time-and-expense submissions. Cohen Milstein demanded all such submissions go straight to it and demanded 80% of the common benefit funds and a third of whatever other lawyers earned on individual cases, Shkolnik said at the time.
In the end, U.S. District Judge Judith E. Levy refused both requests, after a hearing in which she expressed displeasure with the allegations, including the fact Pitt had portrayed himself as class counsel while also representing 1,000 individual clients. She praised lawyers for protecting consumers against dangerous products and said “attorney fees are an important part of this process.”
“But that is only true if the players in this system play by every one of the rules that has been set forth and only then,” the judge said. To prevent future fighting over fees, she appointed a special master, Deborah Greenspan of Blank Rome, to help oversee the water litigation. She also ordered plaintiff lawyers to submit contemporaneous monthly time sheets reflecting their billing on the case.
The multiple lawsuits over the Flint water crisis drew in lawyers from around the country, including Napoli Shkolnik, Weitz & Luxenberg and Levy Konigsberg, prominent asbestos law firms from New York; Houston’s Susman Godfrey; and Lieff Cabraser, the big California class action firm. Local lawyers included Pitt, who contributed more than $6,000 to the campaign of Michigan Gov. Gretchen Whitmer, who approved the settlement.