This story started out with a possible insurance connection. New Jersey’s reported settlement with Exxon of an environmental contamination lawsuit over two sites was addressed on Insurance Claims and Issues Blog on March 2, 2015, “NEW JERSEY, CHRIS CHRISTIE, EXXON AND ... INSURANCE?”.
The story of New Jersey’s settlement moved here because frankly the possible insurance connection has been overtaken by events. What started out as a reported $250 Million settlement began changing shape as soon as it was pulled into daylight.
First, the amount involved began shrinking. The amount Exxon would pay – in a case in which its liability was already determined and all that remained was for the Court to assess damages after another trial, this one on damages – went south, as they say, from $250 Million to $225 Million. To put that amount in perspective, New Jersey argued at the damages trial for $8.9 Billion. New Jersey supported its $8.9 Billion damages argument with the evidence including expert testimony. See Benjamin Weiser, “Top Officials in New Jersey Praise a Deal With Exxon” p. A23, col. 6 (New York Times Nat’l ed., Friday, March 6, 2015).
Then the amount shrank even further. It went from a reported $225 Million to about $180 Million because New Jersey owes its outside lawyers in the case about $45 Million on a $225 Million settlement. See Benjamin Weiser, "Chunk of New Jersey's Money From Exxon Settlement is to go to Legal Fees" (New York Times Online, posted March 9, 2015). Still, this was good for New Jersey said people appointed to their jobs by Governor Christie, see Weiser, New York Times March 6, 2015, supra, and so said Governor Christie himself. See Kate Zernike and Benjamin Weiser, "Christie, Defending Exxon Deal, Says Damage Will be Repaired" p. A21, col. 5 (New York Times Nat'l ed., Wednesday, March 11, 2015)(this reporting repeats the previous description, before deducting attorney's fees, of "the $225 million deal").
Governor Christie offered the explanation that Exxon had already agreed to pay for the cleanup in 1991. In 2014, New Jersey asked for $2.5 Billion or $2.6 Billion to be awarded in its suit against Exxon for damages to clean up the two sites involved in the lawsuit. (Different reporting yields different numbers. Let's use the $2.5 Billion figure for talking purposes.)
It does not seem probable that lawyers who now reportedly have an attorney’s fees claim for $45 Million could forget the previous deal in 1991, even as they appeared before the Court to argue for $2.5 Billion instead. Even if New Jersey’s lawyers in 2014 somehow overlooked an agreement in 1991 to supposedly pay for cleaning up those two same sites, that would still leave some $6.4 Billion in “loss of use” damages for lost use of the polluted lands unaccounted for, an amount which New Jersey also requested in the 2014 damages trial against Exxon.
So what does the $2.5 Billion include? So where did the $6.4 Billion go? Time will tell.
In the meantime, it has come to light that the settlement was arranged with the involvement of Governor Christie’s office. There is no reporting of which I am aware, that tells what if anything New Jersey’s $45 Million outside lawyers had to say about the deal. Once again, their absolute lack of anything to say is improbable.
It has also come to light that the settlement also includes additional Exxon sites in New Jersey that were not involved in New Jersey’s contamination lawsuit. These claims are described by New Jersey officials as “relatively minor”. See Kate Zernike and Benjamin Weiser, New York Times, supra.
In sum, New Jersey is facing a deal to give up more for less money. Lawyers charged with negotiating a settlement, indeed anyone tasked to negotiate a deal involving liability and damages, will appreciate the enormity of the circumstances confronting Governor Christie’s administration in this case: Liability was determined in your client’s favor, damages were already tried, and your client was asking for $8.9 Billion for damaged property at two locations. If you settled that case so that your client would release the defendant from liability for more damage and less money, what would you report about why you did it?
Perhaps we will get an opportunity to see what the people who arranged this deal will say about why they did it. As previously reported, this may not be a “done deal.” Reportedly, two things remain: (1) comments on the State’s settlement (comments by whom, exactly, is still unclear) and (2) approval by the Court in the case in which the contamination lawsuit is still pending before Judge Michael J. Hogan.
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