After the Texas Explosion: A Firestorm of Lawsuits?

The West Fertilizer plant explosion is already attracting the attention of litigation lawyers who are casting a wide net for clients

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Mike Stone / REUTERS

The remains of a fertilizer plant burn after an explosion at the plant in the town of West, near Waco, in West, Texas, early on April 18, 2013

While the exact number of dead and injured have yet to be finalized, the damage in West, Texas is already quite evident: 75 homes demolished or badly damaged, a nursing home, an apartment complex and middle school laid waste, and West Fertilizer Company’s plant itself destroyed. Experts expect insurance claims to be in the millions of dollars. Already, property and casualty claims specialists have flooded the zone, according to Mark Hanna, spokesman for the Insurance Council of Texas. And so have the litigators.

Within hours of the April 17 explosion, websites and YouTube pitches by several law firms were already up. One of the first to launch a webpage was The Schmidt Firm, a leading national plaintiffs’ law firm headquartered in Dallas. “If you or somebody you know was harmed by the fertilizer plant explosion in West, Texas, you should contact our lawyers immediately for a free case consultation. We are currently investigating potential lawsuits involving personal injury claims, hearing loss, property damage, economic losses, recovery costs, and more,” the firm’s West Fertilizer Company explosion page reads.

Hanna estimates that actual dollar losses in the plant explosion likely will be lower than those seen following a typical spring storm in one of the Texas’ major urban areas. Hanna pointed to a storm that swept through Central Texas on March 25 and likely result in $100 million or more in claims. The Schmidt Firm’s founder, attorney C.L. Mike Schmidt, admitted to TIME that “We haven’t gotten very far in our investigation.” Nevertheless, he laid out what he anticipated will be the plan of action in the days ahead.

(PHOTOS: Texas Town Rocked by Fertilizer-Plant Explosion)

As the firm’s web posting indicated lawyers will be casting their net wide, not just seeking to represent the immediate victims of the blast in the small town of West. Schmidt anticipates “mass action” lawsuits, prompted by widespread damages from the blast. The blast could be heard over 40 miles away and the percussive impact of high decibel shockwave may have resulted in hearing loss and trauma, both physical and psychological, for a wide circle of individuals, farm animals, pets and property in the area, Schmidt says. Potential plaintiffs would thus include residents of the small towns and rural areas surrounding West, plus travelers along Interstate 35 that lies on the western edge of the small town.

The starting point, of course, for law firm investigators will be the West Fertilizer Company, the operator of the retail sales fertilizer plant, located on the edge of a small farming community settled by Czechs in the 19th century. It is possible the deaths and injuries from the West explosion could eclipse the 2005 BP Texas City refinery explosion that claimed the lives of 15 workers and injured 100. At last count there were14 dead and 200 injured. The multinational oil company set aside $1.5 billion to settle lawsuits and pay fines, a process that took four years to work through the legal and regulatory systems. But compared to the deep pockets of BP, the West Fertilizer Co. is very small potatoes in terms of its resources and insurance coverages. BP reported $237 billion in sales in 2012, compared to $4 million for West, according to Dun& Bradstreet.

The plant was founded in 1962, according to state records, as a grain storage and fertilizer distribution center for area farmers. The sight of silos and storage tanks on the edge of a small farm town is a familiar one to anyone traveling in the rural heartland of America. The plant was founded by Emil Plasek — a familiar name in a town founded by Czech immigrants where the old folks still chat in Czech and the town’s bakeries are a popular spot for Texas travelers buzzing from Austin to Dallas who stop to buy Czech donuts called kolaches. Many of the homes, apartments and other buildings leveled by the blast were erected after the plant’s founding as West grew as a small bedroom community for nearby Waco. The plant operated under the name Texas Grain Storage, Inc. until it was sold around 2008 to Adair Grain, Inc. and renamed the West Fertilizer Company.

(MORE: Fertilizer’s Dangerous Ingredient: The Health Hazards of Ammonia Exposure)

“This was just a small dealership,” said Donnie Dippel, president of the Texas Ag Industries Association, told The Wall Street Journal. The trade group  represents fertilizer and chemical businesses serving the agricultural sector. “It blended different types of fertilizers for whatever people needed,” Dippel said.

“Obviously, the first target is West Fertilizer Company,” says Baylor University School of Law Professor Jim Wren. “But it’s a very different story from BP in Texas City and that could introduce possibilities that some lawyers are looking at some other party.”

Plaintiffs’ lawyers could turn to an examination of trademarked manufactured products stored in the facility. “Were there manufacturing defects?” Schmidt wondered, adding that storage guidelines also could be examined. Those lines of investigation could expose national chemical companies to claims. It also would place lawsuits in federal court, rather than state courts.

If law enforcement investigations indicate trucks, train or pipeline transport played a role in the explosion, a factor that could provide another avenue for plaintiffs’ lawyers to pursue. “In the aftermath of this tragedy, residents of West will be looking for answers from the owners of the West Fertilizer plant and the railroad that delivers tankers filled with ammonium nitrate. These companies may be liable for devastation in this town,” the Schmidt webpage advises.

Texas “tort reform” now limits what is sometimes dubbed “court-shopping.” In the past, lawyers were able to cherry pick venues for lawsuits, choosing courts and judges perceived as pro-plaintiffs’ bar, according to tort reform advocates. Before reform, potential cases against West Fertilizer might have been heard far from the close-knit community where plant owners, customers and employees are neighbors. Nowadays, any state lawsuit will have to be filed in Waco’s McLennan County state courts, which oversees West.  However, if a trucking company based in Houston was involved or a railroad car under federal regulation implicated, that could set up a trial in a Houston state court or federal court.

(VIDEO:  Dramatic Footage of Fertilizer Plant Explosion Near Waco Texas)

Another key component of any law firm investigation will be the West Fertilizer Company’s regulatory record. There are approximately 6,000 retail fertilizer plants serving American agriculture, Kathy Mathers, vice -president of public affairs at The Fertilizer Institute told the Washington Post. These plants are regulated by state agencies, with some oversight from the US Environmental Protection Agency and federal agencies regulating pipelines and hazardous materials transportation. The Los Angeles Times reported Thursday the West Fertilizer Company paid $8,000 in federal penalties in recent years for “transporting anhydrous ammonia without a security plan and carrying it in tanks that were improperly labeled.”

The Center for Effective Government also reported Thursday the plant had reported to the EPA in its risk-management plan that it was storing up to 54,000 pounds of anhydrous ammonia at its facility, but did not regard fire or explosion as a significant hazard. The Texas regulatory record is sparse regarding the West plant which is small and therefore not subject to frequent, regular inspections. The Texas Commission on Environmental Quality investigated a 2006 complaint about a strong ammonia smell at the plant. Zak Covar, executive director of the TCEQ, told the Associated Press that no other complaints have been received by the agency and so no further inspections made. “Given the size of the facility and the authorized emissions from the plant, generally those are inspected based on complaints,” Covar told the AP.

The debate over whether state and federal oversight was rigorous enough is already under way, but neither the federal or state government likely will have any exposure in any lawsuit, according to Wren of Baylor University. The investigations, both governmental and legal are barely under way and while criminal activity does not appear to be involved in the explosion, a finding of criminal malfeasance would have an impact on any civil lawsuits. It could slow down action in civil courts as criminal trials take place first, but it also could impact jury awards. Says Wren, “It doesn’t change the [civil] law much, but it does heighten the desire of jurors to punish.”

MORE: Crews Seek Survivors, Bodies After Texas Blast