A 10-year legal battle over leaking polybutylene plumbing systems could be plugged by a $950 million settlement between Shell Oil Co., Hoechst Celanese Corp. and millions of homeowners. Announced Nov. 8, the settlement is significant because it unites two major competing national class-action lawsuits filed in Tennessee and Alabama. Lawyers for homeowners in those two cases had fought each other bitterly in court and the media.
It also would make history. Lawyers claim the settlement is the largest-ever U.S. property damage class action settlement. From 3 million to 6 million homeowners could be eligible for money to fix or replace their pipes and pay for damages.
A few legal clouds remain, however. Two judges must approve the agreement. And DuPont Co., which also supplied acetal, is not part of the deal, although negotiations are continuing. DuPont in May reach its own settlement with thousands of homeowners for $120 million.
Shell and Hoechst have not yet determined how they will divide the $950 million pie, said Hoechst spokesman Mike Opilla. The firms will negotiate over the amount, then submit it to binding arbitration, he said. Officials of Shell could not be reached for comment.
Hoechst Celanese, based in Somerville, N.J., made acetal resin used to make fittings for the pipe systems. Shell supplied the PB pipe resin.
The story of the huge settlement shows how $750 million can grow to $950 million.
In February, in a case handled by Washington-based Trial Lawyers for Public Justice, Shell, Hoechst and DuPont proposed a $750 million settlement in a Houston case. But the deal ended quickly when the judge refused to approve it, saying the court did not have jurisdiction over a national case.
The final deal began to take shape this past summer, with approval of an $850 million settlement by Judge Michael Maloan of Tennessee State Chancery Court in Union City, Tenn. That sparked an angry response from lawyers representing homeowners in Alabama Circuit Court in Eutaw, Ala., who had their own national class action case headed for a trial before Judge Eddie Hardaway.
At the same time, California homeowners filed their own suit in Superior Court in Monterey. With the permission of the other two judges, Judge Richard Silver put all the lawyers together until they reached a single, global, agreement.
Silver approved the $950 million settlement Nov. 8. He recommended approval by Judge Maloan and Judge Hardaway.
The amount could go even higher. According top Silver's ruling, if the $950 million is exhausted before all claims are made, Shell and Hoechst have the option of paying future eligible claims or facing more private lawsuits.