Gas Leak Yields Windfall of Work

With the gas leak in Aliso Canyon plugged, a geyser of lawsuits has erupted to provide work for local law firms – and perhaps rewrite the rules for complex litigation going forward. R. Rex Parris Law Firm in Lancaster has the biggest caseload among the Porter Ranch residents with more than 8,200 plaintiffs. Owen Patterson & Owen in Valencia has more than 4,000. And numerous smaller firms have entered the fray by recruiting residents and businesses. About 10 miles from Aliso Canyon, David Shapiro, an attorney and city councilman in Calabasas, has about 200 Porter Ranch clients. He spends between 60 and 75 percent of his time on the matter, even though it’s not generating any income, at least not yet. All the cases are contingency, so he won’t get paid unless his clients get money from San Diego-based Sempra Energy Corp., owner of the leaky well. “I’ve been meeting with each client and family one-on-one, going through their potential claims,” he said. “Those discussions range from three to six hours. It’s a significant investment in cost and time.” He also has helped clients file claims for reimbursement of relocation expenses, which have a July 15 deadline. The natural gas leak was first detected in October and capped in February, but the gas took months more to dissipate. About 4,000 families evacuated their homes. To pay for temporary housing and other expenses for the displaced residents, Sempra has set aside $665 million, and has received $660 million from insurance policies, according to the company’s most recent quarterly report. The Aliso Canyon facility is owned by Southern California Gas Co., a Sempra subsidiary. Rex Parris, mayor of Lancaster and owner of his namesake law firm, said his company has about seven attorneys on Porter Ranch, but at this point most of the work is information-gathering, not lawyering. The firm has former insurance adjusters on staff to interview residents and document their claims – an investment Parris is making based on the strength of each case. “The real issue is how many hundreds of millions over $1 billion is this case worth,” he said. “You can’t poison a whole community and not be held accountable.” Case overload Parris explained that a class action model doesn’t really fit the Porter Ranch scenario. A class action lawsuit requires that everyone in the class has the same or similar claims. In Porter Ranch, some residents are seeking damages for health problems that range from headaches to respiratory conditions, while others feel fine but cite economic losses to their home value or business caused by the leak. Instead of a class action, this is a mass tort with 86 plaintiff law firms filing 157 different lawsuits so far. The firms have joined together to create a central committee to organize the flow of individual cases. Various attorneys will be assigned to investigate and develop evidence, and the resulting information will be shared. Each case will consider the specific circumstances, and any compensation will be awarded to plaintiffs and firms individually. Paul Kiesel, owner of Kiesel Law in Beverly Hills, is the elected liaison counsel, or head of the central organization. He is working with L.A. Superior Court Judge John Wiley Jr., who will handle the cases. Kiesel estimates the cost to develop environmental science research, expert testimony and other evidence will total $5 million to $10 million. “With thousands and in this case, potentially tens of thousands of lawsuits, there has to be organization,” Kiesel said. “I can’t put a dollar figure on it, but I anticipate there will be substantial claims out there.” One method for processing mass cases is to hold a few so-called bellwether trials in which the court explains how to put a dollar value on damages, and then use those decisions as a template for settling the remaining claims. The other common method is for the opposing parties to negotiate a system for calculating damages and then apply it to all the cases, an approach Kiesel believes will work in Porter Ranch. “I would say it’s highly unlikely to proceed with bellwether trials,” he said. “A bellwether is needed when there’s a dispute on the value of claims. … If the issue is a loss of home value, it may require an expert discussion and negotiation, but you may be able to reach agreement without a trial of fact.” Adam Zimmerman, a professor at Loyola Law School in Los Angeles and an expert on complex litigation, said a large disaster such as Porter Ranch involves several risks for law firms. First, since the lawyers are working without compensation until there’s a settlement, they may run out of money or feel hurried to settle if they need fast cash. Second, there are political risks; with so many firms working the case, some firms may get stuck doing a disproportionate amount of work while other firms reap the benefits. “Some attorneys may do a lot of work that benefits the whole group,” he said. “But if they are not in a leadership position on the committee, they don’t have as much control as how their cases are resolved.” Regarding the defense of Southern California Gas, Zimmerman said that in cases where the liability is obvious, such as the Porter Ranch leak or BP oil spill, the attorneys focus on how to calculate damages so it doesn’t overwhelm the company responsible. For example, arguments could involve the economic assumptions in figuring home values or the probability of future health problems. “The principle question is the way damages are calculated so it’s fair and predictable,” Zimmerman said. Sempra Energy did not make an executive or attorney available for an interview, but provided a statement to the Business Journal that the company “will allow the judicial process to take its course.” Although most of the Porter Ranch claims deal with medical issues or residential real estate valuations, Shapiro, the Calabasas attorney, also has business clients that claim to have suffered economic loss from the leak. They range from retailers and restaurants to a religious institution and include companies in the general vicinity of Porter Ranch with a clientele that was evacuated. “When people leave and go out of the area, it’s hard to get them back,” Shapiro explained. “We have a couple of large businesses, huge restaurants, that had a big loss for those months.” National impact The roster of firms working the Porter Ranch case includes local names as well as national giants that handled the 2010 BP Deepwater Horizon oil spill in the Gulf of Mexico. Kiesel, the liaison attorney, estimated that among the 86 firms involved, more than two dozen are in the Valley. That number includes the local offices of large national firms. Parris, who owns the largest Valley-region firm on the list, notes that at age 64, Porter Ranch could represent the “last hurrah” for his legal career. And he has big plans for it. “I want this to be the template for how to do one of these cases which are extremely complex with a lot of avenues for recovery,” he said. In particular, Parris noted that many other mass cases affected poor populations. They filed mass tort lawsuits, but in Parris’ opinion, they ended up settling relatively cheaply because they needed the money fast. Not so with Porter Ranch. “It was an upscale community that’s now diminished. What should the gas company do to recover that?” he asked. “I’ve told my clients, ‘Don’t even think about settling this case quickly. This company can pay.’”