TLPJ HOME PAGE
Press Release

*Exhibits Available by fax

JoElaine Heaven
122 E. North Street
Coffeyville, KS 67337

Jerry R. Palmer
Palmer, Lowry, Leatherman & White LLP
112 Southwest Sixth
Suite 102
Topeka, KS 66603-3810

TRIAL LAWYERS FOR PUBLIC JUSTICE
F. Paul Bland, Jr.(petition for admission pro hac vice pending)
Arthur H. Bryant
Leslie A. Brueckner
Victoria Nugent
Trial Lawyers for Public Justice, P.C.
1717 Massachusetts Avenue, N.W.
Suite 800
Washington, D.C. 20036

INTRODUCTION AND SUMMARY OF ARGUMENT

While reserving to themselves the right to enter a "separate and independent" side deal with Farmland, the Named Class Representatives ask this Court to approve a settlement on behalf of all other class members. The proposed Settlement Agreement requires class members to release not only all of their property claims, but also any and all personal injury claims they now have or "may ever have" against Farmland, in exchange for a sum of money pegged solely to the tax appraised value of their homes. In addition, any class member who does not affirmatively act to opt out of the settlement will have automatically sold his or her home. Counsel for the Springers believe that is entirely without precedent in the jurisprudence of class actions to use the class action device to effect a mass sale of an entire class of persons' homes.

This sweeping and unprecedented settlement simply cannot be approved. The reasons are many. First, the Settling Parties have not met their burden of establishing that the class here can be certified. While the Settling Parties have differed sharply as to whether this action meets the requirements of § 60-223, they have stipulated here that it can be certified, though for settlement purposes only. This approach is contrary to the Supreme Court's teaching in Amchem Prod., Inc. v. Windsor, ___ U.S. , 117 S. Ct. 2231 (1997), which held that Federal Rule of Civil Procedure 23's requirements should not be relaxed in the context of a "settlement-only" class action. In short, the proposed settlement cannot be approved unless this Court finds that all of the requirements of K.S.A. § 60-223 have actually been met. The Settling Parties still bear the burden of establishing that K.S.A. § 60-223's requirements have been actually met.

In fact, it is clear that a class action is inappropriate here for the following reasons:
Because the Settlement Agreement is "separate and independent from any settlement that may be negotiated with" the Named Class Representatives, the Named Class Representatives do not have claims that are "typical" of those of other class members.

Because the Settlement Agreement is "separate and independent from any settlement that may be negotiated with" the Named Class Representatives, the Named Class Representatives are not adequate representatives for other class members.

Given that the Settlement Agreement releases any and all existing or potential future personal injury claims, individual issues predominate over common issues and the proposed settlement class may not be certified.

Individual class members have a strong interest in personally controlling litigation; and thus a class action is not the superior method of proceeding, where (a) the class members are being required to sell their homes as part of the suit; and (b) the suit includes any claims the class member may have for past, present and future personal injuries.

Even if the settlement class could be certified in this case, however, the Settling Parties have not nearly met their burden of establishing that the Settlement Agreement is a fair, reasonable and adequate settlement of the claims released. In particular, the Settling Parties have not addressed the value of the relief in comparison with any of the claims being released. There has been no showing, for example, that the tax appraised values of the properties is anything like their true fair market value. In fact, there objectors will introduce evidence that Farmland has recently purchased some class members' homes for far more than two times the homes' tax appraised value, suggesting that the compensation provided in the Settlement Agreement is substantially less than the market value of class members' homes (much less than the value of their homes plus all of their current and future tort claims.)

Similarly, the Settling Parties have filed no evidence to permit an evaluation of the nature and extent of claims for personal injuries that class members currently or "may ever" have, and thus there is no basis by which the Court can compare those released claims with the compensation provided by the Settlement Agreement. In addition, the Settling Parties have not justified the extraordinarily sweeping release contained in the Settlement Agreement.

Even if the settlement class could be certified, and even if the Settling Parties had met their burden of establishing that the proposed settlement is fair, reasonable and adequate, the notice that was sent to the class in this case does not meet the requirements of constitutional due process or of § 60-223. The notice does not inform class members, for example, of the Settlement Agreement's provision that it is "separate and independent from any settlement that may be negotiated with the named plaintiffs...." The notice also does not inform class members that they are releasing any personal injury claims they may now have or "may ever" have. Finally, the notice is likely to deflect class members' attention away from the extraordinary fact that if they do not affirmatively act to opt out of the settlement, they will have automatically sold their homes. An affidavit is being submitted with these objections from nationally known class action notice expert Kathy Kinsella, affirming that the notice in this case was inadequate.

Finally, even if this Court were to reject the Springers' arguments that the proposed settlement class should not be certified, that the Settling Parties have not proven that the proposed Settlement Agreement is fair, adequate and reasonable, and that the notice was inadequate, the Springers still urge the Court not to approve the settlement until the Springers have been allowed to conduct discovery into key aspects of this settlement. The Springers are entitled to know, for example: (a) what is the nature of any "separate and independent" agreement or negotiations between the Named Class Representatives and Farmland; (b) whether the negotiations regarding the Settlement Agreement were conducted at arms-length and in good faith; (c) whether Farmland has been paying significantly more money to persons living in the class area to buy their homes, as part of a pre-existing plan to expand its refinery, prior to entering into this Settlement Agreement; and (d) whether the plaintiffs conducted adequate discovery to enable them to fairly evaluate the proposed class's claims? The law is well established that objectors to a class action settlement are entitled to take reasonable discovery into contested issues related to the settlement, and each of these issues is of enormous importance in this dispute.

STATEMENT OF FACTS

Farmland Industries owns and operates an oil refinery in Coffeeville, Kansas. Farmland has faced a number of individual toxic tort lawsuits arising from the operation of this refinery, including more than 300 consolidated cases brought in federal court by attorneys from the firm of McMath, Vehik, Drummon, Harrison & Ledbetter, P.A. in Little Rock, Arkansas. A number of persons who are members of the proposed class in this case have brought their claims on an individual basis in the federal action.

In March of 1998, the plaintiffs in this case filed a putative class action on behalf of "all persons who have suffered or will suffer damage as a result of the release and/or threatened release of hazardous substances and odor producing agents caused by defendant on or around its oil refinery...." Petition at ¶6. The petition demanded damages for nuisance, including damages for threats "to the health, safety and welfare of the plaintiffs," and for interference with the use and enjoyment of their property. Id. at ¶ 24. The plaintiffs have suggested to this Court that this is a nuisance case, and not a personal injury case. Letter from Ralph K. Phalen to Judge Brazil, August 21, 1998 at 1. But the Petition in the case clearly seeks damages for threats to the "health" of the plaintiffs.

On May 20, 1998, Farmland moved to dismiss plaintiffs' class action allegations. Its supporting brief argued that "liability, causation and damages vary as to each individual plaintiff, and common issues necessarily do not predominate." Brief at 1. Farmland also submitted documentary evidence in support of its argument that Named Class Representative James Thomas's claims were not typical of those of other class members because he had previously "executed a release forever discharging Farmland from claims such as those asserted in the petition." Brief at 10, citing Brief's Exhibit A.

Plaintiffs opposed this motion, arguing (among other things) that it was premature because they had "not yet been provided with the opportunity to offer any evidence to support class certification . . . ." Plaintiffs' Memorandum in Opposition to Defendants's Motion to Dismiss Class Action Allegations at 3. Noting that the issue of class certification should arise in connection with a motion brought by themselves, the Plaintiffs did not offer any evidence in support of class certification.

This Court denied Farmland's Motion to Dismiss the Class Action Allegations on July 24, 1998. The Court noted that the allegations in the complaint must be presumed to be true, and that it anticipated resolving the class certification issue "after the facts have been more fully developed."

The docket sheet reflects that written discovery requests were exchanged, although there is no indication in the publicly-filed documents as to the nature or extent of the information actually exchanged by the parties. It is unclear whether the plaintiffs conducted any depositions in this case, or how many (and what sorts) of documents were reviewed by class counsel prior to reaching the settlement in this case.

On January 15, 1999, the parties notified the Court that they had reached a settlement. The parties stipulated that a class action is appropriate, though "for purposes of this settlement only," and only by stipulation of the parties. Settlement Agreement at ¶¶ 1, 4. The class definition was narrowed dramatically, so that it would only encompass about 65 identified persons living in a defined geographical area. Id. at ¶ 1. The Settlement Agreement offers no explanation for how the boundaries of the class area were chosen, and why some people were included and others excluded from the class definition. The Settlement Agreement provides that the parties expressly understand that it is "separate and independent from any settlement that may be negotiated with the named plaintiffs." Id. at 2. Under the terms of the Settlement Agreement's release, all class members (except, possibly, the Named Class Representatives) are releasing any claims that they "may ever have" against Farmland arising from the Petition. In the Petition, plaintiffs asserted claims for threats "to the health, safety and welfare of the plaintiffs." ¶ 24. Accordingly, it would appear that, if a class member were to raise a claim in the future for personal injuries arising from contamination from Farmland's refinery, that claim would be barred by this release.

A six page notice of Class Certification and Proposed Class Settlement was mailed to class members. Nothing on the first page of the notice informs class members that, if they do not take affirmative steps to opt out of the class within a short time, they will have automatically sold their house to Farmland. The notice also contains a certain amount of legal jargon, referring to "similarly situated" persons (page 1), the "memorialization" of commitments (page 4), and the like. On page 4, in the middle of a paragraph, the Notice states that "As part of the Proposed Settlement Agreement, each property owner within the settlement area will agree to sell his or her property to Farmland in exchange for Farmland's payment of money equal to two times the 1998 appraised tax value." The notice does not inform class members about the breadth of the release in the settlement, or about the fact that they will be releasing any claims for personal injuries that they may develop in the future.

On January 22, the Settling Parties filed a Joint Motion for Certification of Class Action and Preliminary Approval of Class Action Settlement. The Joint Motion stressed that "[s]olely for the purpose of settlement, the parties stipulate that this class satisfies the requirements of K.S.A. § 60-223(a) and § 60-223(b)(3)." The Joint Motion briefly summarizes the Settlement Agreement. No evidence on any topic is attached to the Joint Motion, and it does not address such issues as (a) the merits of why and how class certification is appropriate under the circumstances of this case or (b) the nature and value of the class members' property damage and personal injury claims.

This Court preliminarily approved the settlement and certified the class on January 22, 1999. The Court made no explicit specific findings, however, relating to the requirements of K.S.A.§ 60-223.

ARGUMENT
I. THIS CASE CANNOT BE CERTIFIED AS A CLASS ACTION, AND THUS THE PROPOSED SETTLEMENT AGREEMENT CANNOT BE APPROVED.

A. THIS COURT SHOULD CAREFULLY SCRUTINIZE THE PROPOSED SETTLEMENT AGREEMENT IN THIS CASE.

1. This Court Cannot Approve This Settlement Without Finding that
Class Certification is Actually Appropriate.

The Settling Parties have "stipulated" to this Court that, for settlement purposes only, this Court may certify the class defined in the Settlement Agreement. The Settling Parties have not argued that the facts and the law actually support (or even permit) class certification, but instead have stressed that this is merely a matter of agreement contingent upon this Court's approval of the deal. See Joint Motion at 1 ("Solely for the purpose of settlement, the parties stipulate that this class satisfies the requirements of K.S.A. § 60-223(a) and § 60-223(b)(3)."); Settlement Agreement at 2, ¶ 4 (same). Farmland has not backed away from any of the factual or legal arguments set forth in its Motion to Dismiss the Class Certification Allegations. Instead, with Farmland holding its nose, it appears that the Settling Parties are effectively saying that "this class doesn't really meet the terms of the class action statute, but, if we all agree to pretend that it does, this Court can certify it anyway and approve our deal."

The law is now settled, however, that the parties' mere stipulation that a class may be certified does not -- and cannot -- make it so. This Court cannot certify this settlement class, and thus cannot approve the Settlement Agreement, unless this Court finds that each requirement of K.S.A. § 60-223 has actually been met in this case.

This was the precise issue faced by the United States Supreme Court in the landmark Amchem case. The settling parties there had argued that Federal Rule 23's requirements should be applied in a more relaxed fashion in the context of a "settlement-only" class action, with the settlement itself supplying the sole basis for determining whether the requirements of the Rule have been met. The Supreme Court flatly rejected this argument, holding that, although a settlement may be taken into account in determining whether a class action would be "superior" to other methods of litigation in terms of its manageability, see Fed. R. Civ. P. 23(b)(3)(D), other requirements of Rule 23 actually require heightened scrutiny in the context of a settlement-only class action. Specifically, the Court wrote:

Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems . . . for the proposal is that there be no trial. But other specifications of the rule -- those designed to protect absentees by blocking unwarranted or overbroad class definitions -- demand undiluted, even heightened, attention in the settlement context. Such attention is of vital importance, for a court asked to certify a settlement class will lack the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as they unfold.

117 S.Ct. at 2248 (emphasis added).

The Amchem Court also specifically rejected the argument that, when a class action has settled, the only question before the Court should be whether the settlement itself is fair, adequate, and reasonable. This argument, in the Court's view, ignores that the Rule 23 requirements are not mere "impractical impediments" in the settlement class context. 117 S.Ct. at 2248. The Court concluded that mere "fairness" cannot salvage a settlement that does not otherwise meet the requirements of Rule 23.

The Settling Parties can jointly stipulate that the Sun rises in the West, but they cannot make it so. Nor can they make this class certifiable. This Court must determine the factual and legal reality of whether class certification is appropriate here. It is important to recognize that this respect for the requirements of the class action statute is not merely a matter of procedural nicety – if settling parties were permitted to settle lawsuits on a class action basis that could not be litigated on that basis, the plaintiffs would be very likely to enter into very poor agreements. Defendants agree to reasonable settlements only to avoid the risk that the plaintiff will proceed to trial and obtain a larger recovery. Where the plaintiff could never proceed to trial on a class basis in a contested action, the plaintiff has no leverage whatsoever, and thus will rarely achieve significant benefits for a settlement class. As the Supreme Court explained in Amchem, if a fairness inquiry alone controlled certification under Rule 23, "both class counsel and court would be disarmed. Class counsel confined to settlement negotiations could not use the threat of litigation to press for a better offer . . . and the court would face a bargain proffered for its approval without benefit of adversarial investigation." 117 S.Ct. at 2248-49.

2. The Settling Parties Bear the Burden of Establishing that Class Certification is Appropriate.

In Farmland's Brief in Support of its Motion to Dismiss, it correctly stated that "Plaintiffs bear the burden to establish that each certification requirement is satisfied," citing to General Telephone Co. v. Falcon, 457 U.S. 147, 161 (1982). Plaintiffs themselves agreed that they "carry the burden of showing that all of the prerequisites for class certification have been met . . . ." Plaintiffs Memorandum in Opposition to Defendant's Motion to Dismiss Class Action Allegations at 1. Now that Farmland has joined the Named Class Representatives in urging this Court to certify the class, however, it has also taken this burden upon itself. As noted in the previous section, this burden of proof must be heightened in the settlement context.

3. Close Scrutiny Of Class Action Settlements is Necessary to Guard the Rights of Absent Class Members.

Unlike settlements in normal individual cases, class action settlements must be approved by the court. K.S.A. § 60-223(e). The Author's Comments to the statute note that § 60-223(e) was added to the act by the legislature in 1980, and that the "amendment increases the protection afforded to absent class members. . . ." The Author's Comments also note that "The Kansas section now more closely approximates Federal Rule 23(e)."

While counsel for the Springers have located no published authority interpreting § 60-223(e), there is a good deal of federal authority suggesting that courts should closely scrutinize settlements under Federal Rule 23(e) to protect class members. The Court of Appeals for the Ninth Circuit has stated that "The primary purpose of Rule 23(e) is to protect class members . . . . whose rights may not have been given due regard by the negotiating parties." Ficalora v. Lockheed Calif. Co., 751 F.2d 995, 996 (9th Cir. 1985). One federal appellate court has stressed that class action settlements require careful scrutiny because of the profound differences between them and ordinary settlements:

[T]he settlement of a class action is fundamentally different from the settlement of traditional litigation . . . . [C]lass members, unlike individual litigants in traditional lawsuits, are bound by the settlement even though they do not individually consent to its terms. Instead, consent is given by class representatives, who derive authority to represent members not by obtaining their consent, but by obtaining a court order designating them the representatives.

* * *
[I]n order to protect the rights of absent class members, the court must assume a far more active role than it typically plays in traditional litigation.

Epstein v. MCA, Inc., 50 F.3d 644, 666-67 (9th Cir. 1995), rev'd on other grounds sub nom. Matsushita Elec. Indus. Co. v Epstein, 116 S. Ct. 873 (1996). It is "imperative" for trial courts to conduct a "careful inquiry" into the fairness of a proposed class settlement, because of the risk of a collusive settlement. Mars Steel v. Continental VII. Nat. Bank & Trust, 834
F. 2d 677, 682 (7th Cir. 1987). See also Amchem, 117 S. Ct. at 2248 (the rights of absent class members must be "the dominant concern" of the court, especially in the settlement context).

B. THE NAMED CLASS REPRESENTATIVES' CLAIMS ARE NOT TYPICAL OF THE CLAIMS OF ALL CLASS MEMBERS.

K.S.A. § 60-223 requires that the named class representatives' claims be typical of the claims of all class members. The Settling Parties have not met their burden of establishing that this important statutory requirement has been met here, and the very terms of the Settlement Agreement demonstrate that it cannot be met here.

First, as noted above, the Named Class Representatives have reserved their right to pursue a "separate and independent" agreement with Farmland. Ms. Cash and Mr. Thomas – however well-intentioned -- cannot reserve the right to reach a separate accommodation with Farmland and still have claims that are typical of those of other class members who will not have such a right. The Named Class Representatives necessarily stand on an entirely different footing from all other class members.

Second, Farmland has introduced evidence to this Court that Mr. Thomas had reached an agreement with Farmland and released any and all claims that he may have against Farmland prior to bringing this case. If Farmland's statements are true, then Mr. Thomas does not have claims that are typical of those of the other class members. The plaintiffs provided no evidence to this Court to rebut this assertion in connection with the briefing related to Farmland's motion to dismiss the class action allegations, and the Settling Parties provided no evidence to refute this issue when they moved for preliminary approval of the settlement. The Settling Parties have not met their burden of producing admissible evidence to demonstrate that Mr. Thomas has not placed himself in a position atypical of the positions of other class members.

Third, as noted above, the Settlement Agreement releases any claims that the class members may currently have or "may ever have" for personal injuries. But the Settling Parties' brief pleading in support of the Settlement Agreement is entirely bare of any showing as to what claims for personal injuries Ms. Cash or Mr. Thomas may have, or as to what claims for personal injuries the absent class members may have or may be expected to have. It might be that neither Named Class Representative has any claim for personal injuries, but that some other class members do have such claims. If this is true, their atypicality will also raise adequacy of representation problems. If the Named Class Representatives have no personal injury claims, while other class members do have such claims, this fact would not only render the Named Class Representatives atypical, but would raise grave concerns relating to adequacy of representation. For example, in such a situation, the Named Class Representatives might well be satisfied with a settlement that provides compensation merely for the sale of their house (and indeed, the relief provided by this Settlement Agreement is pegged exclusively to the tax appraised value of the class members' homes), where other class members might have a strong interest in not waiving their personal injury claims without compensation for those claims.

C. COUNSEL HAVE NOT ADEQUATELY REPRESENTED THE CLASS IN THIS CASE.

1. Under K.S.A. §60-223(a)(4) and the Due Process Clause, the Settlement Agreement Cannot Be Approved Unless the Class Representatives and Class Counsel Have Adequately Represented All of the Class Members.

One of the essential requirements of due process in class actions is the requirement that the representative parties -- and their counsel -- must fairly and adequately represent the interests of the class. K.S.A. § 60-223 (a)(4), like Fed. R. Civ. P. Rule 23(a)(4), provides that a class action may be maintained only if "the representative parties will fully and adequately protect the interests of the class." This requirement is also a minimum requirement of due process. As Justice Ginsberg recently wrote in her concurrence in Matsushita Elec. Indus. Co., Ltd. v. Epstein, 116 S.Ct. 873, 875 (1996), "adequate representation is among the due process ingredients that must be supplied if the judgment is to bind absent class members." See also Herbert Newberg & Alba Conte, 1 Newberg on Class Actions § 1.13 (3d ed. 1992).

Even if the provisions of a class action settlement agreement appear to be substantively fair, moreover, it cannot be approved if counsel did not adequately represent the class. See In re General Motors Corp. Engine Interchange Litig., 594 F.2d 1106, 1125 n.24 (7th Cir. 1979), cert. denied, 444 U.S. 870 (1979) ("No one can tell whether a compromise found to be 'fair' might not have been 'fairer' had the negotiating [attorney] . . . been animated by undivided loyalty to the cause of the class.") (citation omitted).

2. Class Counsel and the Named Class Representatives Have Failed to Adequately Represent the Class.

As noted above, the Settlement Agreement reserves the right of the Named Class Representatives to reach a "separate and independent" deal with Farmland. The Settlement Agreement does not disclose the nature of any such deal that may have been reached, or the status of any negotiations relating to such a deal.

The Settlement Agreement class in this case creates a clear conflict between two groups of class members: the Named Class Representatives, and all the other class members. While all of the absent class members lose any and all claims that they may now have, or may ever have, the Settlement Agreement puts the Named Class Representatives in a different position. They, and they alone, are in a position to negotiate additional relief for themselves beyond the relief provided in the Settlement Agreement. By putting themselves in a different – and better – position than the "similarly situated" (according to the Class Notice, at p. 1) absent class members, the Named Class Representatives have established that they are not adequate representatives. The Settlement Agreement creates the possibility that the Named Class Representatives will receive more generous compensation than the other class members, and is thus prima facie evidence that the Named Class Representatives have not been vigorous advocates for the interests of other class members. Cf. Manual for Complex Litigation § 30.42 at 264-65 (3d ed. 1995) (one factor that may be taken into account in determining the settlement's fairness is whether "particularly segments of the class are treated significantly differently from others. . . . ") Such an outcome also indicates that class counsel are not adequate representatives. Cf. In re Ford Motor Co. Bronco II Prods. Liab. Litig., 1995 U.S. Dist. LEXIS 3507 (March 15, 1995) (one of the dangers inherent in class action settlements is that class counsel "may try to 'sell out' the class in exchange for substantial attorneys' fees").

In addition, by not disclosing the nature of the "separate and independent" agreement reached or negotiated for the Named Class Representatives, Class Counsel may well have breached their ethical obligations to the unnamed class members. Kansas Supreme Court Rule 226 provides, in pertinent part, that "[a] lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of . . . the clients . . . unless each client consents after consultation, including disclosure of the existence and nature of all the claims and of the participation of each person in the settlement." Here, Class Counsel have sought to reach an aggregate settlement without disclosing the nature of the Named Class Representatives' participation.

There have also been some indications that before this lawsuit was brought, and entirely independent of this lawsuit, Farmland was intending to expand its refinery, and intending to purchase the property of these class members. See, e.g., Glenn Craven, "Farmland takes its expansion to the people," The Coffeyville Sunday Journal, at 1-A, July 16, 1995, attached as Exhibit 3 hereto. And, as noted below, there is also evidence that Farmland has already purchased some homes within the class area for significantly more than it will pay the remaining class members under this Settlement Agreement. The Springers wish to take discovery relating to these issues, but these factual indications raise the possibility that class counsel are not vigorously pursuing the interests of their would-be clients, but are instead serving as real estate agents for Farmland, helping this corporation purchase neighboring properties for below-market prices.

The adequacy of representation requirement is also not met here because the Named Class Representatives -- who have not alleged any personal injuries for themselves in this action -- are attempting to settle the personal injury claims of other class members. In Amchem, the Court held that the class failed to meet the adequacy-of-representation requirement of Rule 23(a)(4) in light of serious conflicts between class members -- including conflicts between those who have already suffered an injury and those who may only become ill at some future point in time. It pointed out that, whereas the presently-injured have an interest in maximizing "generous immediate payments" under the settlement, the future victims want to ensure an "ample, inflation-protected fund for the future." 117 S.Ct. at 2251. This irreconcilable conflict of interest between present and future victims, the Court concluded, rendered the class representatives incapable of fairly and adequately representing the interests of the entire class. Id. Class counsel from the firm of Humphrey, Farrington & McClain should be familiar with this problem, as one federal court has already found inadequate representation in a proposed class action involving present and future personal injury claimants in a case in which they were counsel for the proposed class. See Walker v. Liggett Group, Inc., 175 F.R.D. 226, 233 (S.D.W.Va. 1997).

D. CLASS CERTIFICATION IS INAPPROPRIATE HERE BECAUSE INDIVIDUAL ISSUES PREDOMINATE OVER COMMON ISSUES IN THIS CASE.

K.S.A § 60-223(b)(3) provides that a class may be certified only where "the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members . . . ."

As this Court noted in its opinion denying the Motion to Dismiss, a number of cases indicate that claims like those set forth in the complaint are "rarely" appropriate for class action treatment. Now that the Settlement Agreement sweeps in claims for current and potential future personal injuries, however, class certification is even less appropriate. Class members who have already manifested symptoms of illness that give rise to possible claims for personal injuries are on a very different footing than class members who "may" in the future suffer injuries. And there has been no argument from the Settling Parties (much less any evidentiary showing) that the personal injuries of the class members are "common" in any way. There has also been no showing that a common injury or set of injuries flows from the sort of pollution to which class members have been exposed.

This case is thus very similar to Amchem, where the Supreme Court held that the proposed class of present and future asbestos victims did not satisfy Rule 23(b)(3)'s predominance requirement in light of the "myriad disparate questions" of fact and law underlying the class members' claims, including class members' different levels of exposure to asbestos-containing products and different injuries and smoking histories.

E. HANDLING THIS CASE ON A CLASS ACTION BASIS IS NOT SUPERIOR TO OTHER METHODS OF RESOLVING THIS DISPUTE.

K.S.A. 60-223 (b)(3) provides that a class action may be maintained where "a class action is superior to other available methods for the fair and efficient adjudication of the controversy." The statute elaborates on this "superiority" requirement (which largely tracks the requirement of Federal Rule of Civil Procedure 23 (b)(3)) as follows:

The matters pertinent to the findings include: (A) interest of members of the class in prosecuting or defending separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against members of the class; (C) the appropriate place for maintaining and the procedural measures which may be needed in conducting, a class action.

In this case, two of the three factors set forth in the statute strongly argue against a finding that a class action is the superior method of proceeding (and the third factor is neutral). First, class members here have a very strong interest in individually prosecuting their actions. The Settlement Agreement automatically sells the home of each class member who fails to opt out. The sale of one's home is a uniquely personal and individual decision, with enormous implications for one's standard and method of living. It is entirely inappropriate to use the class action device – where class representatives and their counsel may settle a case without ever directly consulting absent class members, on the basis of a single written notice a month or so before they must decide – to conduct a mass-sale of class members' homes. Kansas law is extremely clear that land sales contracts are extremely personal transactions. In DeBauge Bros., Inc. v. Whitsitt, 512 P.2d 487, 489, 212 Kan. 758 (Kan. 1973), the Supreme Court held:

Plaintiff had no adequate remedy in money damages since the real and personal properties to be conveyed were unique and were not available to plaintiff from any other source. Land conveyances are frequently the subject of specific performance due to the unique properties of each parcel which cannot be duplicated.

In addition, as noted above, the Settlement Agreement in this case requires each class member to release any and all personal injury claims they now have or "may ever" have in the future. Claims for injury and potentially even death are particularly individual personal claims, and their potential magnitude suggests that class members have a strong incentive to maintain individual control over these claims.

The second factor also militates against class certification. A good deal of litigation has already been initiated by members of the class. As noted above, a number of class members have already initiated individual or consolidated property damage and/or personal injury actions against Farmland. The existence of these actions speaks directly to the criterion identified in K.S.A. § 60-223 (b)(3) (B), and indicates that class certification is inappropriate.

II. THE SETTLING PARTIES HAVE NOT MET THEIR BURDEN OF ESTABLISHING THAT THE SETTLEMENT IS FAIR, ADEQUATE AND REASONABLE.

A. THE SETTLING PARTIES BEAR THE BURDEN OF PROOF AS TO THE SETTLEMENT'S FAIRNESS.

It is well settled that the burden of proving the fairness of a class action settlement is on the settling parties. See In re General Motors Corp. Engine Interchange Litig., 594 F. 2d at 1126 n.30; In re Matzo Food Products Litig., 156 F.R.D. 600, 605 (D.N.J. 1994) ("The burden of proving the fairness of the proposed settlement is on the proponents."); H. Newberg & A. Conte, 1 Newberg on Class Actions §11.42 at 11-94 (3d ed. 1993). This is not a burden of allegation (which was all the Named Class Representatives needed to do to defeat Farmland's Motion to Dismiss the Class Action Allegations) or a burden of stipulation, but a burden of proof.

B. THE SETTLING PARTIES HAVE OFFERED NO EVIDENCE FROM WHICH ONE COULD COMPARE THE FUNDS PROVIDED WITH THE VALUE OF THE CLASS MEMBERS' CLAIMS.

In determining whether the Settlement Agreement is fair, adequate and reasonable, this Court must determine that the relief provided is reasonable in light of the value of the class's claims, when discounted by the risks and costs of litigation. Mars Steel v. Continental VII. Nat. Bank & Trust, 834 F. 2d 677 (7th Cir. 1987). In this case, the compensation for the class is reasonably fixed – a sum of money equal to two times the tax-appraised value of each home – but the Settling Parties have not provided any argument or evidence with respect to the value of the class's claims.

First of all, if the Settling Parties are calling for a mass property sale, they should establish that they are paying the fair market value of the class members' properties. (There should be no litigation risk or cost discount to this factor, as there is no reason to suggest that Farmland could simply take the class members' homes without fair market valuation.) The Settling Parties have provided no evidence -- no real estate appraisals, no comparable sales records, no expert testimony, nothing -- to compare the tax appraised values with the fair market values. The Springers suggest that this Court could take judicial notice of the fact that houses are routinely sold for sums that are very different from the values for those houses to be found in tax appraisals. Indeed, the law in Kansas is established that "assessed valuation of property for tax purposes is not admissible to establish the value of the property." Mettee v. Urban Renewal Agency and the City of Kansas City, 213 P.2d 787, 789, 518 P.2d 555, 557 (1974).

In fact, as noted above, there is evidence that Farmland was attempting to purchase the class members' properties even before this lawsuit was filed. And at least some persons formerly living in the class area sold their homes to Farmland for significantly more than two times the appraised tax values. See Affidavit of Mrs. Levoter Johnson, attached as Exhibit 4 hereto, at ¶ 5 ("According to my calculations, Farmland paid more than three times the Real estate appraised value for the property itself.")

Second, the Settling Parties have provided this Court with no evidence of the nature and extent of the personal injury claims that are being released. The Settling Parties have offered none of the sorts of evidence that would be expected, and their sole brief pleading in support of the Settlement Agreement makes no mention of any health survey of class members; of any evidence of the amount and nature of pollution to which the class has been exposed; or any expert evidence relating to the nature and extent of injuries that might be expected from persons exposed to these sorts of pollution; or anything else. The Settling Parties want to use the class action device to settle the health claims of numerous absent class members, but they have not yet bothered with any proof that the settlement they have reached is reasonable.

C. THE RELEASE IN THE SETTLEMENT IS UNREASONABLY BROAD.

The Stipulation of Settlement filed by the settling parties asserts the following:
The named plaintiffs and Class Counsel, on behalf of all members of the class, agree that with respect to each class member, every claim or cause of action that he or she has accrued as of the date of the Court's final approval of this Proposed Settlement Agreement, or may ever have against Farmland that arises in whole or in part from facts alleged in Plaintiffs' Petition in the captioned case, will be fully and completely released and barred by an Order of the Court approving the Proposed Settlement Agreement unless and until the class member files a written request to be excluded from the class in compliance with the deadline set forth in the Court's Order approving certification of this class.

Stipulation at 3.

As set forth above, this provision releases not only the class members' property claims, but also any claims for personal injuries they may now have or "may ever have." Accordingly, the release is unconscionably broad. Many illnesses caused by pollution have long latency periods, and class members may some day have very substantial claims of which they are now entirely unaware. It is unfair and unreasonable to impose a release of all possible future claims upon a class of persons who cannot reasonably evaluate what those claims may be.

III. THE INADEQUATE NOTICE VIOLATES THE CLASS MEMBERS' RIGHTS TO RECEIVE INFORMATION ABOUT THE SETTLEMENT'S TERMS BEFORE DECIDING WHETHER TO OPT OUT OR OBJECT.

As set forth in Part I above, the proposed class in this case cannot be certified under K.S.A. § 60-223, and thus the settlement cannot be approved. Even if the settlement class could be certified, however, as set forth in Part II above, the Settling Parties have not met their burden of showing that the Settlement Agreement was fair, adequate and reasonable. Even if the class could be certified and the Settlement Agreement were fair, adequate and reasonable, however, the Settlement Agreement here still could not be approved because the Notice is entirely inadequate to meet the requirements of Due Process and K.S.A. § 60-223. As Kathy Kinsella, the nationally-recognized notice expert, has opined, "the content of the Notice is not adequate to protect class members' rights as intended by K.S.A. Section 60-223...." Exhibit 1 at ¶ 11.

A. THE CLASS MEMBERS HAVE THE RIGHT UNDER RULE 23 AND THE DUE PROCESS CLAUSE TO RECEIVE ADEQUATE NOTICE OF THE SETTLEMENT'S TERMS BEFORE DECIDING WHETHER TO OPT OUT OR OBJECT.

Notice and opportunity to be heard are essential elements of due process in class action proceedings. Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950). Under Mullane, the notice to class members must be "reasonably calculated, under all the circumstances, to apprize interested parties of the pendency of the action and afford them an opportunity to present their objections." Id. at 314. These due process interests of class members were not adequately protected by the notice provided here, which was inadequate in several important respects.

B. THE NOTICE HERE DOES NOT PROVIDE CRUCIAL INFORMATION TO CLASS MEMBERS, AND INEFFECTIVELY COMMUNICATES OTHER CRUCIAL INFORMATION.

1. The Notice Contains No Information About the Named Class Representatives' "Separate and Independent" Agreement With Farmland.

As noted above, the Named Class Representatives have reserved the right to pursue or obtain some separate accommodation with Farmland. As also established above, this fact goes to the heart of the question of whether the Named Class Representatives are adequate representatives for the class, and raises the possibility that the Named Class Representatives may have sold the class's claims very cheaply in exchange for a more generous settlement for themselves. This fact is of enormous importance, and one that every class member has a right to know before being made to agree to or reject the settlement. See Kinsella Affidavit, Exhibit 1 at ¶ 10. Unfortunately, the Notice in this case makes no mention of the provision for "separate and independent" relief for the Named Class Representatives.

2. The Notice Contains No Information About the Fact that the Settlement Agreement Releases Class Members' Present and Future Personal Injury Claims.

As established above, the release set forth at page 3 of the Settlement Agreement, when read in conjunction with ¶ 24 of the Petition, releases all present and future personal injury claims that class members have or "may ever have" against Farmland. Every class member should be plainly, explicitly and prominently informed of this enormously significant fact, but it is not mentioned in the Notice. This glaring omission of extremely important information renders the Notice constitutionally and statutorily defective.

3. The Notice Is Likely to Deflect Class Members' Attention from the Fact that The Settlement Agreement Sells Their Homes.

Unprecedented in the annals of class action settlements, every member of the proposed class in this case who does not take some affirmative step to exclude themselves from this class will have automatically sold their home. Without any personal contact with a real estate agent (much less an attorney), each class member who fails to respond to the mailed notice within its rigorous time frames will find that his or her home has been sold at a predetermined price and that he or she must be out of that home by a predetermined date.

Unfortunately, the Notice does not set out this fact until page four. The Notice does begin with the statement "This notice may affect your rights," at p. 1, but this is a dramatic understatement for a deal that automatically sells one's home. Ms. Kinsella's expert affidavit states:

The seriousness of the Settlement Terms dictates that the notice take pains to inform the recipient of the dire consequences of a failure to act. Although carefully designed mail notice may be technically adequate to notify a class member or put the class member on inquiry notice, the seriousness of the Settlement Terms militates in favor of a special effort to assure that class members receive actual and complete notice of the terms of the settlement. . . . [T]he fact that a failure to opt-out would cost class members their homes should have been highlighted early on in the Notice.

Kinsella Affidavit, Exhibit 1, at ¶ 10. Further evidence of the inadequacy of this notice comes in the Affidavit of Aaron Irving, attached as Exhibit 5 hereto. Mr.Irving testifies that:

After reading the Notice we did not understand that if we did nothing, we were automatically included in the Class Action Suit, and could/would lose our right to continue our ongoing individual federal litigation against Farmland Industries, Inc.; and that we would be forced to sell our property to Farmland Industries, Inc. for the price it had negotiated with "Strangers" (Plaintiffs and their counsel) without our involvement, rather than at a price negotiated directly with us, the owners.
...
The Notice we received did not make it clear to us, that we were about to lose our property, as well as, control over its sale. We had to get a lawyer to explain the notice to us.

Exhibit 5 at ¶¶ 4,7. See also Moore Affidavit, Exhibit 2, at ¶ 5 (notice is "far from clear" on the question of class members having to sell their homes).

IV. THIS COURT SHOULD NOT APPROVE THE SETTLEMENT BEFORE THE SPRINGERS HAVE HAD A FULL AND FAIR OPPORTUNITY TO CONDUCT DISCOVERY INTO THE PROPOSED SETTLEMENT.

It is very well established that objectors have the right to pursue discovery from the settling parties. See In re General Motors Corp. Engine Interchange Lit., 594 F.2d 1106 (the trial court abused its discretion by preventing objectors from showing through discovery that negotiations prejudiced best interests of the class); A. Conte, Newberg on Class Actions, § 11.57, pp. 11-140 to 11-114 (3d ed. Dec. 1992) (reviewing case law and noting that objectors generally have a right to conduct independent discovery).

The Springers wish to exercise this well-established right, and have served a limited number of narrow and carefully drafted Requests for Production and Interrogatories upon each of the Settling Parties. (A copy of each of these discovery requests is attached here to as
Exhibit 6). The discovery requested goes to the heart of the Springer's objections to the proposed settlement, and this Court should not approve the settlement before the Springers have received the discovery sought and have had an opportunity to file supplemental materials in support of their objections.

In this case, the Springers are entitled to take discovery on a number of different crucial questions:

How did Class Counsel conduct the negotiations relating to this settlement? Class members are entitled to learn the details of the negotiations, in light of the risks that class counsel may compromise the class' interests to obtain a fee. See Ficalora v. Lockheed Calif. Co., 751 F.2d 995, 996 (9th Cir. 1985) ("The attorney also can be forced into a situation in which his or her own fee can be enlarged or reduced by concessions made by the class or by members of the class in order to achieve settlement.")

What negotiations have taken place, and arrangements been reached, toward a "separate and independent" deal for the Named Class Reprsentatives? The Springers believe that the mere existence of the provision of the Settlement Agreement permitting a separate and independent deal for the Named Class Representatives disqualifies those persons from representing the class. If this Court decides not to disapprove the settlement because of the mere existence of this provision, the Springers should at least be permitted to take discovery into the topic. It might prove, for example, that the Named Class Representatives have reached a deal for themselves that is far more generous than the deal provided to other class members.

Have the Settling Parties conducted serious discovery in the course of litigating this case? A number of courts have disapproved of class action settlements which were reached with the benefit of very little (or no) discovery. In In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 814 (3d Cir.), cert. denied, 116 S. Ct. 88 (1995), the Court noted the "incipient stage of the proceedings," and held that the failure to conduct significant discovery posed "large[] obstacle[s] to settlement approval," since it gave the court no basis on which to conclude that counsel adequately developed the claims before deciding to settle. Similarly, in In re Ford Motor Co. Bronco II Prods. Liab. Litig., 1995 U.S. Dist. LEXIS 3507 (March 15, 1995), the Court rejected the proposed settlement in part because there was insufficient discovery to evaluate the strength of the plaintiffs' case and, thus, the fairness of the proposed settlement.

Has Named Class Representative Thomas previously released all of his claims against Farmland? As noted above, Farmland previously introduced evidence suggesting that Mr. Thomas's claims were not typical of those of other class members. The Settling Parties should provide firm factual answers about the truth of this allegation.

How did the Settling Parties reach the class definition? Are the borders of the class based upon some air pollution modeling study or health data, or did the Settling Parties just craft the settlement so that Farmland could snap up land that it had been previously planning on buying?

Have the Settling Parties evaluated the fair market value of the class members' properties? This is "obviously critical information that the court would need in evaluating the fairness and adequacy of the settlement," Moore Affidavit, Exhibit 2, at ¶ 7, but it has not yet been provided. If the Settling Parties have not undertaken any evaluation of the class members' homes' fair market value, that would raise grave questions as to the adequacy of class counsel's representation of its clients and of the Settling Parties efforts to meet their burden of proof.

CONCLUSION

If Farmland wants to obtain the property of these class members so it can expand its refinery, it should individually negotiate to buy the homes of each resident. It is unconstitutional, illegal and inappropriate to use the class action device to effect an automatic back-door mass sale of these homes. No previous court in the entire United States has ever approved such a deal; indeed, we know of no instance where such an approach was even attempted. Even if this case did not involve the unprecedented use of the class action device to effect a land grab, this class cannot be certified and this deal cannot be approved because (a) the Settlement Agreement releases present and future personal injury claims; (b) the Named Class Representatives have reserved the right to reach "separate and independent" side deals with Farmland; (c) the Settling Parties have offered no evidence to show that the Settlement Agreement is fair, adequate and reasonable; (d) the Class Notice leaves out several crucial facts and buries others; and (e) crucial questions about the facts have not yet been answered.

Respectfully submitted,

Jo Elaine Heaven
122 E. North Street
Coffeyville, KS 67337
Kansas Bar No. 09433

___________________________________
Jerry R. Palmer
Palmer, Lowry, Leatherman & White, L.L.P.
112 Southwest Sixth
Suite 102
Topeka, KS 66603-3810
Kansas Bar No. 6362

____________________________________
TRIAL LAWYERS FOR PUBLIC JUSTICE
F. Paul Bland, Jr. (petition for admission pro haec vice pending)
Arthur H. Bryant
Leslie A. Brueckner
Victoria Nugent
Trial Lawyers for Public Justice, P.C.
1717 Massachusetts Avenue, N.W.
Suite 800
Washington, D.C. 20036

EXHIBITS

1. Affidavit of Kathy Kinsella

2. Affidavit of Beverly C. Moore

3. Glenn Craven, "Farmland takes its expansion to the people," Coffeyville Sunday Journal, July 16, 1995, p. 1A.

4. Affidavit of Mrs. Levoter Johnson

5. Affidavit of Aaron Irving

6. Discovery Requests from Edward L. Springer to Farmland Industries, Inc., and Nikki Cash and James Thompson

CERTIFICATE OF SERVICE

I hereby certify that copies of the foregoing Objections of Edward L. Springer to Proposed Class Action Settlement were served this of March, 1999, via hand delivery (where marked with an *) or via U.S. Mail, postage prepaid, upon the parties below:
Kenneth B. McClain
Ralph K. Phalen
James M. Ziegler
Duane A. Martin
Humphrey, Farrington & McClain, P.C.
221 W. Lexington
Suite 400
P.O. Box 900
Independence, MO 64501

Larry Markle *
205 W. 8th Street
Coffeyville, KS 67337

ATTORNEY FOR PLAINTIFFS

Michael F. Saunders
Terry W. Schackmann
Barry L. Pickens
Tracy McFerrin Foster
Spencer, Fane, Britt & Browne, L.L.P.
1000 Walnut Street
Suite 1400
Kansas City, MO 64106
(816) 474-8100
(816)474-3216 (FAX)

Douglas G. Ott *
Hall, Levy, DeVore, Bell, Ott & Kritz, P.A.
815 Union
P.O. Box 9
Coffeyville, KS 67337
(316) 251-1300
(316) 251-9411 (FAX)

ATTORNEYS FOR DEFENDANT

_____________________________
JoElaine Heaven