TLPJ Challenges Class Action Settlement That Would Force Class Members to Sell Homes to Defendant

Class Representatives Reserved Right to Separate Side Deal

For Immediate Release:
For More Information Contact: Theresa Henige, TLPJ, 202-797-8600
Objections
*Exhibits are available by fax.

Trial Lawyers for Public Justice (TLPJ) filed objections today to a proposed class action settlement that would force the class members to sell their homes to defendant Farmland Industries and release all of their present and future personal injury claims against the company. While imposing these terms upon the class members, the settlement reserves the right for the named class representatives to negotiate a separate side deal with Farmland. A hearing on the proposed deal in Cash v. Farmland Industries will be held Friday, March 5th, in Kansas state court.

"This is an outrageous abuse of the class action device," said TLPJ lead counsel Jerry Palmer of Topeka's Palmer, Lowry & Leatherman. "Farmland Industries is essentially using this class action to purchase neighboring properties for below-market prices and eliminate the class members' present and future claims against it."

Farmland Industries owns and operates an oil refinery in Coffeyville, Kansas. A number of toxic tort lawsuits have been filed against it over the operation of the refinery. In March 1998, a proposed class action was filed against the company, demanding damages for nuisance, for threats to "the health, safety and welfare of the plaintiffs," and for interference with the use and enjoyment of the plaintiffs' property. The company insisted that these claims could not properly be pursued via a class action, but, on January 15, 1999, it entered into a proposed settlement.

The settlement narrows the class so it encompasses approximately 65 homes nearby and requires all class members who do not opt out to sell their homes to Farmland for two times their tax-appraised value. Farmland is seeking to expand its operations and had previously bought homes near the plant for as much as ten times their tax-appraised value.

In addition to forcibly selling the class members' homes for less than they are arguably worth, the settlement releases the class members' present and future personal injury claims, while allowing the class representatives to make their own deal separate from the class. The formal notice sent to the class members, which is written in legalese, does not mention until page four that class members will be forced to sell their homes for a predetermined amount. Numerous class members have informed TLPJ that they did not realize from the notice that their homes would be automatically sold unless they took action.

"This is simply unconscionable. Prior to this proposed settlement, Farmland was buying up individual properties to accommodate its expansion," said TLPJ Staff Attorney F. Paul Bland, Jr., co-counsel in the case. "Now, Farmland is attempting to force people to sell their homes for lesser amounts, without even adequately notifying them they have agreed to sell their homes. This isn't a proper class action; it's a back-door mass real estate sale."

The inadequate notice also failed to inform class members that the class representatives, who supposedly represent the interests of the class, had reserved the right to make a separate deal for themselves. It also failed to mention that class members would be forced to release their personal injury claims.

"It is absolutely outrageous that the named class representatives would reach a settlement of everyone else's case for one amount, while reserving the right to settle their cases for a different amount," said TLPJ co-counsel JoElaine Heaven of Coffeyville.

The challenge to the proposed settlement in Cash v. Farmland Industries is being filed as part of TLPJ's Class Action Abuse Prevention Project, which is dedicated to exposing and preventing class action abuse nationwide.

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