As far back as the 1980s, plumbing systems which were designed with polybutylene plastic were being projected to be far cheaper, as well as, a lot more long lasting than plumbing systems that were made of copper pipes. Polybutylene pipes were used for plumbing new homes, especially where rapid growth in the housing industry was taking place. As the years went by, millions of houses had polybutylene plumbing systems installed in them.
However, not too long after the installation, these polybutylene plumbing systems started to fail in their fittings and the pipes themselves. Nationwide, a lot of consumers laid blames on several factors which were poor design, faulty manufacturing, sub-par installation, as well as, material degradation resulting from chemicals that were present in the water. What followed was over a decade of litigation, a company going bankrupt, and huge money amounting to hundreds of millions spent before a class action resolution was finally reached.
Shell Oil Company kicked off the production of polybutylene resin in 1977 and remained the only producer of this raw material until 1996 when it took the product off the market. Over the years, however, Shell continues to produce this polybutylene resin and has greatly modified it for sale in the international market.
Hoechst Celanese Corporation is a producer of Celcon which is an acetal compound used prior to the 1990s for the production of fittings meant for plastic plumbing. Its competitors, DuPont manufacturers, are producers of Delrin which is another acetal product used in the production of fittings from 1983-1988. Today, both of these acetal products are still widely being used in the manufacture of a variety of consumer products which include car parts.
The US Brass Corporation purchased polybutylene resin, as well as, Celcon from Shell and Hoechst. With these products, it not only designed but produced plumbing systems and had the systems sold using a brand name called “Qest.” They, then, partnered with Shell to carry out a Nationwide marketing campaign which set up a firm ground for plastic plumbing systems. Then came along Vanguard Plastics who, also, made use of Celcon and Delrin as the fittings for its produced plumbing systems.
Litigation with regards to leaky plumbing systems kick-started in the 1980s in Texas, as well as, California. However, these cases were mostly sparse, involving home builders and municipalities. It was not until 1987 that significant litigation by a homeowner took place.
James Moriarty filed a lawsuit against US Brass, Hoechst, Shell, and also a home builder called General Homes Corporation. Prior to this, Moriarty had already filed a suit against GH corporation due to different reasons but scaled after being approached by a homeowner in La Porte in Houston. The homeowner approached him to discuss a case of leaking pipes. Moriarty had a mass tort experience that was small, as well as, a little experience in plaintiff consumer litigation.
He went ahead to represent 100 homeowners and filed a suit which alleged that the homeowners experienced damages to their property, as well as, mental anguish and were seeking for damages resulting from negligence, fraud, and a violation of the DPTA of Texas. All the plaintiffs were represented by Moriarty differently and the cases filed were not a class action but were done only on behalf of the homeowners. Moriarty got a trial date and successfully won a verdict amounting to $3.4 million.
After his research, Moriarty was led by the La Porte court case to see the huge potential that existed for litigation with respect to polybutylene plumbing. He entered into a partnership with a lawyer from a Houston-based law firm whose name was George Fleming. After establishing contact at a social event, they both realized that a common ideology was held by them both in terms of complex litigation. Then again, they both believed they could use technology as an advantage over their opponents.
They became partners in the La Porte case and, prior to their separation in 1992, were able to represent thousands of persons who had complaints about polybutylene plumbing, going on to consolidate various individual claims per trial. The goals of Moriarty were clear and straightforward which were –
- That his clients would receive a premium that exceeded what was necessary to resolve their plumbing problems.
- That America would be re-plumbed by the defendants.
Although these were their goals, neither of the two partners were able to initiate a class action. Since the DPTA made allowances for treble damages, the trial atmosphere was accommodating for consumer litigation, coupled with the fact that Texas allowed outsiders to file cases at its courts. Earlier cases were taken to the courts as fraud cases, and some of the allegations combined negligence, DPTA violations, strict liability, as well as, fraud. Most times, the plaintiffs won these cases which found their way to trial with judgments ranging from $25k to $50k each for the homeowners. From these settlements, all expenses, as well as, attorney fees were paid.
THE BEGINNING OF CLASS ACTION LITIGATION
Michael Caddell was the lead counsel for the PB class action case which was settled in 1995 and led to more than 320,000 houses getting a full re-plumb, repair, and inspection with no cost whatsoever on the part of the homeowner.
These pipes were manufactured around the 1970s and were projected as the best alternative for metal pipes. They were manufactured from byproducts of refined petrochemical, and they were advertised to be resistant to depreciation, totally immune to corrosion, and relatively easy with respect to maintenance and replacement. In fact, between 1978 and 1995, millions of houses had polybutylene plumbing. However, this was not the case as polybutylene the grades on contact with chlorinated water which was prevalent in the US. Thousands of houses experienced polybutylene failures.
Lawsuits against the manufacturers began to be filed, and these manufacturers either had their insurance exhausted or filed for bankruptcy. Settlements were awarded which amounted into millions of dollars, but over half of the money went towards legal costs. In fact, these homeowners usually had nothing substantial left to re-plumb their homes after settling the legal costs.
Caddell partnered with the TLPJ in 1993 and filed in Houston the very widely known national class action against shell, DuPont, as well as Celanese. These partners together were able to negotiate a huge settlement which successfully helped to re-plumb the homes of individuals who met the qualifications.
Caddell was appointed to be chairman of the entity which was set up to administer the settlement and helped to get over 320000 houses re-plumbed in just over 15 years. The court-supervised the administration but was not obligated to involve itself in the settlement of disputes. In total, more than $1.14 billion was spent by the defendants, and about 92% went towards homeowners relief while the administrative costs, as well as, the attorney fees took up the remaining 8%. In fact, about 96% of beneficiaries expressed satisfaction with the outcome.
Cox v. Shell which was the final settlement goes down in history as arguably the most successful class-action settlements and shows that class actions have the power to offer huge relief to a large number of affected persons efficiently.
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