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Search for Deep Pockets Pays Off

If it sometimes seems that plaintiffs lawyers are overzealous in their pursuit of potential defendants, here is an object lesson in why that strategy often makes sense. In a piece published yesterday, "The Cost of Tragedy," Boston Globe reporter Jonathan Saltzman provides a breakdown of the roughly $175 million in settlements following from the tragic 2003 fire at the Station nightclub in Rhode Island that killed 100 people and injured more than 200 others. Notably, the nightclub's owners, Jeffrey and Michael Derderian, the two defendants at the center of the litigation, have reached a tentative settlement under which they will pay just over $800,000. That is far less than the millions of dollars to be paid by several other defendants -- less even than the amount to be paid by the company that made the amplifiers used at the club.

The Derderians filed bankruptcy in the wake of the tragedy and the amount they have offered to pay reflects the balance of their liability insurance policy. That amount pales in comparison to tentative settlements reached with other defendants, notes the Globe's Saltzman. A local TV news outlet whose cameraman allegedly hindered fleeing patrons will pay $30 million. Beermaker Anheuser-Busch and a beer distributor who promoted the night's concert by the band Great White will pay a combined $21 million. Manufacturers and sellers of polyurethane and polyethylene foam used in the club will pay a total of more than $66 million.

As this Boston Globe chart shows, other defendants who have tentatively agreed to settle include the local radio station (and owner Clear Channel Broadcasting) that promoted the concert for $22 million, the bus company that drove the band to the nightclub for $500,000, state and local government officials for a combined $20 million, the company that installed the fire-alarm system for $1 million, and even the club's previous owner for a token $3,000.

The tentative settlements await approval of a federal judge. Split evenly, the $176 million settlement would mean $587,000 for each of the victims. Actual payouts are expected to vary widely. The court has appointed Francis E. McGovern, a Duke University Law School professor and specialist in mass-tort litigation, to devise a formula for dividing the money. But the settlements show why plaintiffs lawyers sometimes need to be diligent in exploring liability, suggests Carl T. Bogus, a law professor at Roger Williams University School of Law. "Regrettably, some of the most culpable defendants had the shortest pockets," he told the Boston Globe. "So plaintiffs' lawyers ... do what good plaintiffs' lawyers do, and that is they try to creatively find other defendants with some culpability and more money."

Posted by Robert J. Ambrogi on September 22, 2008 at 11:56 AM | Permalink | Comments (0)

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