Federal court filing challenges reactivation of Avoca environmental lawsuit

By Jennifer Learn-Andes - jandes@timesleader.com | August 17th, 2016 12:01 am

NEW YORK — Thousands of past and present Avoca-area residents have no legal grounds to seek additional monetary awards for diseases and illnesses allegedly caused by the former Kerr-McGee Corp.’s wood treatment operation, the company’s current corporate owner argued in a new court filing.

These 4,400 Avoca plaintiffs already accepted payments in a bankruptcy settlement that precluded creditors “from seeking a second bite at the apple” through additional claims, the filing said.

“The Avoca plaintiffs are trying to take another bite,” it said.

The filing stems from a battle launched last fall when the Avoca plaintiffs tried to reactivate a suit in Luzerne County Court that had been filed in 2005 and stayed in 2009, pending the outcome of a bankruptcy involving Kerr-McGee and related entities.

The suit sought compensation for diseases and illnesses allegedly caused by the wood treatment facility that operated in the borough from 1956 to 1996.

Weitz & Luxenberg, P.C., a New York City firm, is lead counsel representing the Avoca plaintiffs. The continuing role and potential financial stake for Powell Law Group P.C., which initiated the Avoca litigation, is unclear due to confidential agreements between that firm and Weitz & Luxenberg.

Robert Powell, the Powell Law Group’s creator, was disbarred by consent and convicted of failing to report a detention center kickback scheme in Luzerne County’s so-called “Kids for Cash” juvenile justice corruption case. Powell has negotiated a settlement with juvenile victims and their guardians requiring him to pay them $4.75 million and possibly up to $2.5 million more if his net worth exceeds $4.75 million by the end of this year.

U.S. District Court Judge Katherine B. Forrest in New York City ordered the Avoca plaintiffs to drop the suit in February, saying their receipt of compensation through the bankruptcy settlement processed in New York and a related settlement injunction barred them from additional action.

The current Kerr-McGee Corp. — known as “New Kerr-McGee Corp.” in court records — is the only target left for the Avoca litigation, and this corporate entity cannot be held liable because it did not come into existence until 2001, several years after the negligence and injury alleged in the suit, Forrest concluded.

The Avoca plaintiffs challenged Forrest’s ruling in the Second Circuit U.S. Court of Appeals in New York.

In the latest appeal court filing, New Kerr-McGee stressed the Avoca plaintiffs never challenged the November 2014 permanent injunction involved in its $5.15 billion settlement payment, which included more than $600 million to pay toxic-tort claims to the Avoca plaintiffs and others — claims the bankruptcy court had valued at only $257 million in 2005.

“Wanting more, the Avoca plaintiffs moved to reopen their state-court cases,” the filing said.

The filing supported Forrest’s conclusion that the Avoca plaintiffs have failed to identify an outstanding claim not “extinguished” by the bankruptcy settlement.

“Even now, although too late in the day, they fail to identify such a claim,” the filing said. “The district court correctly sensed that their request for a chance to return to state court was ‘gamesmanship.’”

Allowing the Avoca plaintiffs “yet another chance to invent new claims” against New Kerr-McGee would go against both the injunction and general policy, encouraging mass tort settlements in large, complex cases, the filing said.

“Vigorous enforcement of the injunction not only protects the deal New Kerr-McGee struck to end the adversary proceeding, it promotes settlement efforts in future cases,” the filing said.

The filing was prepared by two law firms: Klee, Tuchin, Bogdanoff & Stern LLP in Los Angeles and Morgan, Lewis & Bockius LLP in Washington, D.C.

The Avoca plaintiffs had filed paperwork in May, maintaining the detailed wording in the bankruptcy settlement involving future claims did not prohibit them from pursuing the suit.

These plaintiffs consciously decided not to object to the bankruptcy settlement because the wording in the agreement kept the door open for them to revive the Luzerne County case, their filing said.

Former Avoca Mayor Jim Haddock, whose late mother is among the plaintiffs, has said the bankruptcy settlement covered about 32 percent of what the Avoca plaintiffs had claimed in damages. Most of the 4,400 have received their payments, he said Tuesday.

Haddock said he remains optimistic the Avoca plaintiffs will prevail and has not reviewed Kerr-McGee’s filing.

“It’s another event in the life of an appeal. It shows the case is moving along,” said Haddock, who currently oversees the county’s civil and criminal court records offices.

Document challenges reactivation of Avoca environmental lawsuit

By Jennifer Learn-Andes


Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.