Low-octane litigation

They began noticing the symptoms only days after the explosion. Bronchitis. Asthma. Sleeplessness. Nausea. Trouble breathing. Surely, they thought, it must be the gas. Bill Smith has no doubt he can prove that the butane gas leak and pipeline explosion near his home in rural Kaufman County three years ago killed his fruit trees, cracked his house's brick walls, and rendered his property all but worthless. But the physical and emotional scars that he says have lingered have been much harder for his "big Dallas lawyers" to demonstrate.

In Kaufman last week, a civil trial got under way in a multimillion-dollar wrongful-death suit brought by Danny Smalley against the pipeline's operator, Koch Industries Inc. of Wichita, Kansas. His daughter, 17-year-old Denielle Smalley, was killed in the August 24, 1996, explosion when she and a neighbor, Jason Stone, drove their pickup truck through a low-lying area where the gas had collected. The truck ignited the fumes, causing an explosion and fire that rocked several nearby subdivisions.

With considerably less publicity, last week was also a deadline for several dozen people living near the explosion who sued Koch Industries, an oil and gas and agricultural concern that ranks second on the Forbes 500 list of the nation's privately held corporations. The plaintiffs -- mostly blue-collar, working people like Bill Smith -- had until Friday to take or leave an offer of $2,300 each. This would supposedly compensate them for whatever physical injuries and mental or emotional distress they might have sustained during the blast -- and in the months before the accident, when many say they smelled and breathed the leaking gas.

"It's pretty much a lost cause," says Smith, whose granddaughter and two great-grandchildren accepted the offer. "For them, it's take it or you don't get anything." Smith, however, refused the company's offer, claiming that his property damages amounted to far more than $2,300. He says that he was in his house on the sofa and that his granddaughter was in the front yard with one of her children when the blast occurred about 1,700 feet away. The family evacuated for several days while the fire raged.

Smith and his family were among 64 plaintiffs who filed a $300 million negligence suit against Koch. They allege that the company failed to maintain and inspect the corroded pipeline, which runs from Oklahoma to South Texas; did not have a system in place to detect leaks; did not adequately train its employees; and failed to heed the warnings of residents who smelled leaking gas as many as six months prior to the explosion. Smith says he didn't even know there was a pipeline in the vicinity. He says that now "it's marked better than a landing strip for an airport."

The residents' claims were bolstered considerably last year by a National Transportation Safety Board ruling that blamed the company for failing to protect the pipeline from corrosion. The board said that the company knew of the corrosion problem.

Still, several lawyers for the residents say, a series of recent rulings in the federal courts and the Texas Supreme Court have made it far more difficult, if not impossible, for their clients to collect damages for their complaints of physical and emotional illness.

"The Texas Supreme Court has become notoriously conservative, coming full circle from 10 years ago," says Andrew Bergman, one of the attorneys representing the Kaufman County residents. "I'm not saying we can't meet the standard, but the standard of proof [needed to connect the residents' health claims to the gas and the explosion] has changed." Now, not only do the plaintiffs need to call an expert witness -- a doctor or medical researcher, for instance -- but that expert's opinions must also be backed up by a body of scientific research, Bergman explains.

"You have to have scientific evidence, and we don't have scientific evidence to say butane causes the types of injuries -- the aches and the respiratory ailments -- that people are complaining about," says Michael Minor, the residents' Kaufman-based attorney.

And to collect damages for emotional distress, one must prove some sort of physical harm first, Bergman adds. In a case decided in April, the Texas high court ruled that victims cannot collect damages for emotional distress even if they can prove that they were exposed to substances that increase their risk of getting sick in the future. "It's an outrageous opinion," Bergman says. First, they have to prove that they are currently ill and that the illness is, in fact, due to the gas leak.

Smith, a 76-year-old retired truck driver, says his home, which had been appraised at $83,000, was appraised at "zero" after the explosion. "We tried to get a home-equity loan on it, and we couldn't even get $15,000," he says. Because of those damages, Smith says, he's continuing to pursue his case against Koch, which at one point offered him $400 to settle all his claims.

A company spokesman did not return calls seeking comment on Smith's concerns.

The way in which the company went about dealing with people in the aftermath of the deadly explosion makes up yet another part of the residents' pending suit against Koch.

"Koch [was] aware of the public relations debacle this explosion had caused and [was] mindful of the potential profit loss if the pipeline would be forever shut down," the suit states. "Accordingly...Koch began to take immediate actions designed to quell any potential citizen-related legal and political actions by setting into motion the most unconscionable, fraudulent, and sinister plan one could imagine a $25 billion company could perpetrate against hard-working-class citizens," the suit alleges.

Specifically, Bergman says, the company hired several local residents to inform other residents that they should settle with the company without contacting attorneys. Residents were told that if they did not participate, they would not receive a penny from Koch and they would put their neighbors' settlements at risk.

"A lot of these people have a 10th-grade education, and they took what they could get," says Smith's daughter, Barbara Kelly, who lives in Mesquite. "This has affected our family and other families in so many ways. There has been so much emotional stress and turmoil in that neighborhood, the police set up a substation at the end of the street so they could handle all the disturbances. The subdivision my father's in is called Beautiful Acres. He now calls it Pitiful Acres. It's been hard on him, but he has always had a sense of humor."


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