A federal judge on Nov. 20 ordered the Tennessee Valley Authority and hundreds of citizen plaintiffs into mediation related to a series of lawsuits, combined into one action, over the environmental and societal impacts of a December 2008 coal ash spill at TVA’s Kingston power plant in Tennessee.
The Nov. 20 order came from Judge Thomas Varlan out of the US. District Court for the Eastern District of Tennessee. The entire TVA ash spill litigation currently encompasses more than 60 cases pending before the judge, involving more than 800 plaintiffs.
The judge had previously granted motions to consolidate and bifurcate the trials in this litigation into two separate phases. The court ordered that Phase I would involve a single trial on issues and evidence relating to duty, breach, and dike-failure causation, and that the issues determined in Phase I would be binding on all parties to the litigation.
Depending on the disposition of issues reached in Phase I, the ourt ordered that Phase II would include individualized evidentiary hearings or proceedings to determine issues such as tract-specific causation and whether, and to what extent, each plaintiff is entitled to damages. Because of the individualized nature of the issues to be resolved in Phase II, the court ordered that no Phase II proceeding would be binding on all parties and that the method of conducing the Phase II proceedings would be determined after the court’s disposition of the issues involved in Phase I.
The court entered a memorandum opinion and order on Aug. 23 disposing of the issues involved in Phase I. The court found that specific nondiscretionary conduct on the part of TVA caused the failure of the coal ash containment dike at TVA’s Kingston plant, and that, but for the nondiscretionary conduct, the dike failure would not have occurred. The court determined that TVA will therefore be liable for damages to each plaintiff, provided each plaintiff is able to demonstrate, in the Phase II proceedings, entitlement to relief under claims of negligence, trespass, and/or private nuisance.
While all of plaintiffs’ proposals after that addressed referring the cases to mediation, certain plaintiffs formally moved the court to refer their cases to mediation. TVA filed a response in opposition to this motion. The court held a hearing concerning Phase II and mediation on Nov. 19. At the conclusion of the hearing, the court orally granted plaintiffs’ motion for mediation and referred this litigation to mediation. The Nov. 20 memorandum opinion and order memorializes the court’s reasoning for doing so.
Judge offers various reasons to put these cases into mediation
“After careful consideration of the parties’ briefs and oral arguments, the Court determines that this litigation is one that could benefit from mediation and that it is appropriate to order mediation at this time,” Judge Varlan wrote in the Nov. 20 order. “In making this determination, the Court has considered several factors, including TVA’s opposition to mediation at this time as well as the parties’ recognition of the benefits of mediation.”
- “First, the parties are in disagreement as to how Phase II should proceed. TVA wants to try the nine Chesney plaintiffs first and then allow for an appeal before proceeding with any other cases. Some of the plaintiffs want to choose among the plaintiffs who will proceed to trial first and then use the proof from those trials in later proceedings, if possible. Other plaintiffs want to try the cases of those plaintiffs closest to the epicenter of the spill or have a bifurcated proceeding in which the Court would first hear expert testimony and determine the method for determining what properties could recover and then use a Special Master for individualized damage determinations. The Court finds there are positive and negative aspects of each Phase II proposal, but given the varied approaches, it would be beneficial toattempt mediation before one, or some combination, of these approaches is implemented.
- “Second, each of the Phase II proposals would take a significant amount of both the Court’s and the parties’ time and resources. The parties disclosed at the hearing that they envision the initial Phase II trial will take four to five weeks, which is longer than the Phase I trial. Even if not completely successful, mediation could have the effect of limiting the claims, issues, or plaintiffs involved in Phase II, and consequently contribute to a more efficient Phase II proceeding. Mediation at this time, therefore, would be in the interest of judicial economy and efficiency.”
- “Third, mediation will not necessarily prolong this litigation. The Court is ordering that mediation be conducted within a relatively short time frame, which is set forth below. Thus, to the extent mediation is unsuccessful, Phase II would still commence within a reasonable time after the conclusion of Phase I, or at least not significantly later than it would absent a mediation effort.”
- “Finally, while TVA argues that mediation is premature at this time for several reasons, the Court is cognizant that mediation can occur successfully at all stages of litigation, even complex litigation. Given the Court’s many rulings on dispositive and non-dispositive issues and its Phase I ruling, the parties have a framework at this particular junction to undertake a meaningful mediation process. Also, it appears that the statute of limitations issue that TVA states would hinder mediation would exist regardless of whether the litigation proceeds to mediation or litigation. Moreover, although discovery has yet to commence or be completed for some of the cases, the parties can address this issue in the course of mediation.”
TVA’s latest Kingston cost estimate is up to $1.2bn
In December 2008, one of the dredge cells at Kingston failed, and about 5 million cubic yards of water and coal fly ash flowed out of the cell. TVA said in its Nov. 16 annual Form 10-K report that it is continuing cleanup and recovery efforts in conjunction with federal and state agencies. TVA completed the removal of time-critical ash from the river during the third quarter of 2010, and removal of the remaining ash is considered to be non-time-critical. In November 2012, the EPA and Tennessee regulators approved a plan to allow the Emory River’s natural processes to remediate the remaining ash in the river, and to conduct a long-term monitoring program. TVA estimates that the physical cleanup work (final removal) will be completed in the first quarter of 2015. A final assessment, issuance of a completion report, and approval by the state of Tennessee and the U.S. Environmental Protection Agency are expected to occur by the third quarter of 2015.
“Because of the uncertainty at this time of the final costs to complete the work prescribed by the ash disposal plan, a range of reasonable estimates has been developed by cost category,” TVA noted in the Form 10-K. “Known amounts, most likely scenarios, or the low end of the range for each category have been accumulated and evaluated to determine the total estimate. The range of costs varies from approximately $1.1 billion to approximately $1.2 billion.”
The Form 10-K said about the lawsuits: “Seventy-eight lawsuits based on the Kingston ash spill have been filed in the United States District Court for the Eastern District of Tennessee. Fifteen of these lawsuits have been dismissed, and 63 lawsuits are active and in various stages of litigation. Plaintiffs are residents, businesses, and property owners in the Kingston area and allege tort claims for damage to property (for example, nuisance, strict liability, trespass, and negligence), with some plaintiffs also alleging claims for personal injury, business loss, and inverse condemnation. Plaintiffs seek unspecified compensatory and punitive damages, court orders to clean up properties and other relief. TVA is the only active defendant in these actions.”
A bench trial on the issue of dike failure causation in the seven earliest cases was held in September and October 2011 (called the Phase I trial), TVA noted. Plaintiffs in the 56 remaining cases have agreed to be bound by the Phase I trial record and decision. “In August 2012, the court issued its Phase I decision, finding that certain actions by TVA contributed to the ash spill,” TVA wrote. “The case will now proceed to the damages phase (‘Phase II’) trial, during which the individual plaintiffs must prove both that they incurred damages and that the ash spill was the cause of the damages. The date for the Phase II trial has not yet been set. TVA has received several notices of intent to sue under various environmental statutes from both individuals and environmental groups, but no such suits have been filed.”