A Civil Action Mediation: Materials for Mediators and Students

In May 2010, Jan Schlichtmann filed suit on behalf of eight families against Beatrice Foods and W.R. Grace. Beatrice was represented by Jerome Facher, and W.R. Grace was represented by Bill Cheeseman. The complaint alleged that the defendants had contaminated the city of Woburn’s drinking water wells with TCE and other toxic chemicals, that the contamination had caused one child in each family to get leukemia, that five of the eight children with leukemia had died of that disease, and that other family members had become sick on account of the contaminated water.

Both sides hired experts. Plaintiffs’ experts built a strong case that the defendants had contaminated the wells and that the contamination had caused the deaths and illnesses. On the other hand, defendants’ experts correctly pointed out that much of the plaintiffs’ evidence was speculative and that there was no scientific consensus that TCE or other relevant chemicals cause leukemia or other illnesses.

W.R. Grace impleaded Unifirst. The plaintiffs amended their complaint to add Unifirst as a defendant and then settled with Unifirst.

The parties have now agreed to go to mediation to see if the case can be resolved. There are many “pressure points” that the parties are likely to raise at mediation. Among them are the following:

• The plaintiffs are expected to make very sympathetic witnesses at trial. The stories that they will tell at trial are truly tragic. In contrast, large W.R. Grace is a large corporation with little goodwill among potential jurors.

• Although plaintiffs’ counsel would like a large monetary award, the plaintiffs themselves are more interested in having the defendant accept responsibility and prevent future harm.

• W.R. Grace is also being investigated by the E.P.A. It is concerned that Schlichtmann’s experts, if allowed to testify at trial, will give the E.P.A. new legal and scientific theories that it could use against Grace.

• Although the plaintiffs’ experts have documented a link between TCE and leukemia, that link is not widely accepted among scientists.

You should assume the facts and law as described in Jonathan Harr, A Civil Action, except:

You should assume that the mediation is taking place around p. 264 of the book. That is, discovery is over, but trial is about a month away. Students and mediator should assume that they do not know anything that happens later in the book – how well witnesses testify at trial, how much the real case settled for, how the judge managed the trial, etc. In fact, for reasons discussed below, if the trial occurs, it might turn out very differently than described in the book.

30 years should be added to all dates in the book. So the lawsuit was filed in 2012 and is scheduled to go to trial in late 2016.

All negotiations should be in 2016 dollars. $1 in 1986 is worth $2 in 2016. For the same reason, all dollar figures in the book should be doubled. For example, Unifirst’s settlement should be assumed to have been $2,100,000 rather than $1,050,000. See p. 146.

The plaintiffs and W.R. Grace became dissatisfied with their lawyers and decided to fire Jan Schlichtmann, Bill Cheeseman, and their law firms. The plaintiffs and W.R. Grace have chosen new legal teams. These new legal teams have worked very hard and have mastered the facts of the case in a remarkably short period of time. The defendants’ lawyers will be paid their regular hourly fee. The plaintiffs and the new plaintiffs’ lawyers signed a contingency fee agreement under which the lawyers were entitled to thirty-three percent of any settlement or judgment, after subtracting costs.

The new plaintiffs’ lawyers successfully negotiated a settlement with Beatrice. Beatrice agreed to pay the plaintiffs 16 million dollars. The plaintiffs paid Jan Schlichtmann and his law firm 4 million dollars in exchange for an agreement from him not to claim any further reimbursement, compensation, or fees in the case. The plaintiffs distributed 6 million dollars from the settlement to the plaintiff families, each family receiving the same amount. The plaintiffs and new plaintiffs’ lawyers agreed to put the remaining 6 million dollars from the settlement in a bank account that the lawyers could use to pay their past and future litigation expenses. The plaintiffs and new plaintiff’s lawyers agreed that if any money were left over from the 6 million set aside for expenses, it would be distributed to the families in equal shares, but that if the plaintiffs’ lawyers spent more than 6 million in expenses, the lawyers would have no right to recover those additional expenses from the plaintiffs. Thus, whatever the plaintiffs received in settlement or judgment from W. R. Grace, thirty-three percent would go to the new plaintiffs’ lawyers and sixty-seven percent would go to the plaintiff families, without any adjustment based on litigation costs or expenses.

You should assume that Massachusetts applies the “pro-tanto” settlement setoff rule. That is, if the case goes to trial and plaintiffs prevail at trial against Grace, the settlements that the plaintiffs received from other defendants will be subtracted from the amount that the jury awards in damages. For example, if the jury awards the plaintiffs 20 million dollars, Grace would only have to pay $1,900,000 = $20,000,000 – $16,000,000 (settlement with Beatrice) – $2,100,000 (settlement with Unifirst). If the jury awards the plaintiffs 30 million dollars, Grace would have to pay $11,900,000 = $30,000,000 – $16,000,000 (settlement with Beatrice) – $2,100,000 (settlement with Unifirst). If the plaintiffs settle with Grace, there is no setoff and Grace would have to pay the entirety of the settlement amount to the plaintiffs and their lawyers.

Judge Skinner was hit by lightning at a Red Sox game and died. He was replaced by Judge Armer. Judge Armer is a USC graduate who spent most of her pre-judicial career as a criminal prosecutor. Since joining the federal bench, she has developed a reputation for fairness in civil cases. Neither the plaintiffs’ bar nor the defense bar view her as biased in favor or against them, although both complain that she is sometimes unpredictable in her rulings.

The new defense team has requested that the trial be divided into three phases. The first phase would decide whether Grace was responsible for contaminating the wells. If the jury decided that Grace was responsible for the contamination, then the case would proceed to the second phase. The second phrase would determine whether the contamination caused the plaintiffs and their families to become sick and die. If the jury decided that the contamination caused the sickness and death, the case would proceed to the third phase. The third phase would determine the damages. The plaintiffs would be allowed to testify only in the third phase. Judge Armer has not ruled on this request.

1L Mediation Exercise 1 Fall 2016