The fallout
of environmental policies, considered standard operating
procedure throughout much of the 20th century, was being
uncovered. Soil and water supplies polluted by processing
or disposal systems had to be cleaned up. Government agencies
looked to the companies considered responsible for the contamination,
and those companies looked to their insurance carriers.
The issues of liability that needed to be addressed were
as numerous as the potential clean-up sites.
While Indianapolis
attorney George Plews does not claim to be clairvoyant,
he does recognize professional opportunity looming in the
distance. While the pollution now at issue may have been
the result of conduct considered legitimate in the 1960s
or 70s, somebody would have to shoulder clean-up costs.
It doesn't take a crystal ball to realize that the environmental
disasters being uncovered would require legal expertise
to rectify.
"The liability
obligation arises even though materials may have been taken
to sites lawfully a number of years ago and disposed of
in precise accordance with the standards that were in place
at the time," Plews said. "Subsequently, Superfund and other
statutes have said we are still going to charge parties
that placed materials here, or engaged or are alleged to
have engaged somebody to place materials here, with the
cleanup."
Since the late
1980s, Plews Shadley Racher & Braun has provided legal
counsel to a number of well-known Indiana companies. Dana,
Lear, Recticel and Inland, the shorthand titles
for cases that now play key roles in Indiana environmental
law decisions, have, along with several other environmental
cases, returned over $130 million for environmental cleanup.
The legal journeys, some taking nearly a decade to complete,
culminated in the last 15 months in settlements exceeding
$100 million.
The dollars
for environmental cleanup are vital. But from a legal standpoint,
explains Plews Shadley attorney Donna Marron, the body of
law developed over the last decade resulting from these
decisions and others has invalidated many of the defenses
that insurance companies assert against environmental claims.
For instance,
Marron points out that it is typically cheaper for a company
to clean up a site than to let a government agency do it.
However, insurance companies often claimed that no damages
were involved if the business did not have to pay an agency
to conduct a cleanup. When a demand by a government agency
is considered a lawsuit and whether clean-up costs incurred
by a company are, in fact, damages for purposes of coverage
were questions addressed by this evolving body of case law.
"The clear thing
that emerges from all the decisions taken as a whole is
that the Indiana courts – the trial courts and appellate
courts – want these claims paid," Plews said. "They
want them paid and the claims treated like any other covered
claim. Indiana law is probably as protective of policyholder
rights and the obligation of insurance companies as any
other state."
The Plews approach
One of the first things George Plews will say when asked
how he won a case is that "he" did not. Teamwork is at the
core of the environmental firm's strategy.
When they formed Plews Shadley in 1988, founding partners
George Plews, who was a partner at Baker & Daniels,
and Sue Shadley, who had recently left the Indiana Department
of Environmental Management, sought out attorneys who, in
addition to a legal background, had life and professional
experience that would expand their firm's storehouse of
knowledge. That, coupled with experience prosecuting environmental
and insurance coverage cases, Plews said, is invaluable
whether representing a plaintiff or defendant.
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IL
Photo/Robin Jerstad
The
Plews Shadley Racher & Braun environmental team includes
(seated) George Plews, (left to right) Donna Marron,
Peter Racher, Jeff Featherstun, Jeff Claflin, (not
pictured) Fred Emhardt & Jeff Townsend.
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Marron, for example, holds a doctorate from Berkley in
geology. Like others in the firm, she says that her science
background lets her communicate more effectively with experts,
recognize and pinpoint technical issues, and analyze reports
associated with contamination and cleanup.
While a number of "pioneer" environmental contamination
and coverage cases came to fruition in 2001, Plews explains
that the development occurred over a number of years, even
before the cases were filed, in the sense that the firm
was working steadily on the development of the law in the
area of insurance coverage for environmental liabilities.
"We have been able to combine good law – clarifying
law – on key issues and then do good hard discovery
work followed by mediation."
No double take required – he said mediation.
While mediation is an accepted part of the litigation process
in Indiana, many out of state attorneys involved in large-scale
environmental cases may have initially raised an eyebrow
or two at the prospect of mediating these disputes.
Mediation is credited with providing many of the key actors
in these litigations, particularly insurance companies,
with a better understanding of the nature of Indiana law.
"It is a whole different mindset or process that I try
to adopt for these larger cases," Indianapolis attorney/mediator
Bill Baten explains. "What it really boils down to is preparation,
preparation, preparation."
When a case is complex, as environmental matters often
are, parties often express surprise about the positions
being taken by the other side, Baten explained. The work
that occurs before the parties get to the table provides
clarity and an opportunity for one side to explain its stance.
Baten mediated the Recticel, Inland, and
Lear cases.
Baten begins the process by having a conversation with
a lawyer from each party involved to get a sense of the
individual standpoint. Often, he says, he requests preliminary
information such as key pleadings in order to get a grip
on the issues at hand. This process is followed by a conference
call allowing all involved lawyers to agree to a timetable
and pinpoint who should attend the mediation session.
In the Lear case, Marron recalls, Baten set up a
damages presentation led by lawyers who had previously defended
Lear in the government's environmental contamination action
against the company.
"Lear was interesting because the biggest part of
the cleanup – about seven miles of floodplain that
has PCB contamination in the sediment – is not done
yet, no one really knows what the cost will be," Marron
said. "The insurance company was really buying piece of
mind."
Because the information disclosed was confidential, the
mediation provided an opportunity for all parties in this
complicated case to get on the same page as a result of
listening to the various points of view, she adds.
Warsaw attorney/mediator Tom Lemon, who mediated the Dana
Corp. case, learned early the intricacies of managing large
mediations involving upwards of 50 litigants and over 60
individual clean-up sites. Like Baten, he created a schedule
detailing when each defendant would have a private discussion
with the plaintiff. That, he says, kept attorneys from sitting
around in hotel rooms waiting their turn. After primary
issues were resolved, parties could be reorganized, Lemon
explains, grouping carriers who were similarly situated.
Large-scale environmental mediations like these do not
happen overnight. Many of the cases take months, even years,
to work through and, like other types of litigation, often
settle on the courthouse steps. Attorneys and mediators
agree, however, that the process, which has brought in many
out of state attorneys, has produced mediation converts.
"When you consider the success rate of cases settled on
the day of mediation – about 85 percent – you
understand that you and your client should attend a mediation
as prepared to resolve the case as if going to trial," Lemon
said.
A client should know goals, negotiating strategy and be
fully appraised of what is going to happen at the mediation.
It is up to the attorney, Lemon says, to assure this has
occurred and to know the adversary's likely position.
The cost savings of taking a case to mediation is difficult
to calculate. Given the preparation of experts, compilation
of reports, trial process and likely appeals, any of these
cases, Plews said, would have likely cost seven figures
to try.
Instead, he says, in each case the firm has been able to
return more than 10 times the amount invested back to the
clients.
"In addition to dollar savings, there is a feeling that
when you mediate something you are in some sense in control
of the results – both sides have some reasonable degree
of control about how it finally comes out," Plews said.
"You take the accidental nature out of the result. For a
lot of clients, that is a more satisfying result."
