Jump to Navigation
Jump to Content

Petrovic v. Amoco Oil Co.

Citation: 30 ELR 20259
No. Nos. 98-3816, 99-1334, 200 F.3d 1140/49 ERC 1972/(8th Cir., 12/30/1999)

The court upholds a district court approval of a class action settlement between an oil company and landowners whose properties were contaminated as a result of underground oil seepage originating from the company's petroleum refinery. Various class members objected to the settlement, which divided the affected properties and awarded compensation based on proximity to the refinery. The court first holds that the district court's failure to divide the class into subclasses did not deprive the objectors to the settlement of adequate representation. Although the extent of the pollution varied from property to property, the objectors did not clearly explain why the remedial interests of the class members are in conflict. A conflict of interest requiring subdivision is not created when some class members receive more than other class members in a settlement. Further, there is not a stark conflict of interest between class members regarding exposure to migrating oil. Similarly, the class representatives did not come from one subgroup of the class. Moreover, a substantial difference in remedial needs is not present here. Each property owner stands to gain from the company's agreement to compensate landowners for damage already sustained to property. In addition, the participation in the class of a municipality did not create a conflict of interest. All of the plaintiffs, including the municipality, seek essentially the same things: compensation for damage already incurred, restoration of property values, and preventative steps to limitfuture damage.

The court next holds that the settlement agreement approved by the district court is fair, reasonable, and adequate. Although two property owners who opted out of the class received significantly higher punitive damages that outweighed the compensatory damages awarded the class, the speculative possibility of punitive damages isnot enough to find that the district court abused its discretion in approving the settlement. Further, the injunctive relief that the class received in the settlement is adequate because the likelihood that the objectors would have received injunctive relief at trial was small. Moreover, the district court explicitly considered and rejected evidence offered by the objectors when it approved the compensation zones created by the settlement. In addition, the relief provided to those in the third class of property owners furthest from the refinery is adequate. Also, while it is undisputed that the company could pay more than it is paying in the settlement, this fact, standing alone, does not render the settlement inadequate.

The court next holds that the notice of settlement sent to the class members complied with the requirements of Fed. R. Civ. P. 23(d) and Fed. R. Civ. P. 23(e). The notice unquestionably alerted the recipients that they were members of a pending class action, that a settlement had been proposed, and that they had the right to state their objections at a fairness hearing. A mailed notice of settlement need not contain a formula for calculating individual awards. The court then holds that the district court properly granted summary judgment to the company on the objectors Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) claim because of CERCLA's petroleum exclusion. Last, the court holds that the district court did not err in disqualifying an original class counsel and denying that counsel attorneys fees.

Counsel for Appellants
James R. Borthwick
Blackwell & Sanders
2300 Main St., Ste. 1000, Kansas City MO 64141
(816) 983-8000

Counsel for Appellee
Earl W. Taff
Sherman & Taff
1100 Main St., Kansas City MO 64196
(816) 471-6900

Before Bownman and Lay, JJ.