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<xTITLE>Directive Mediation In Race-Linked Environmental Disputes</xTITLE>

Directive Mediation In Race-Linked Environmental Disputes

by Kelly Davenport

This article originally appeared in the April 1999 issue of Consensus, a newspaper published jointly by the Consensus Building Institute and the MIT-Harvard Public Disputes Program."

The very term, "environmental racism," strikes fear and anger into many low-income and minority groups. It also evokes dancing dollar signs in the eyes of many lawyers specializing in environmental law. Environmental racism is difficult to prove, even in egregious cases, because of the associated factors of poverty, socio-economic status, land values and more.

While a growing number of court cases in the last few years have claimed environmental racism on the part of a government agency or private corporations, a recent case deep in the heart of Texas has shown the potential benefits of using mediation to resolve these factually complex and emotionally sensitive disputes.

The mediator was M.A. "Mickey" Mills, a partner in Schlanger, Mills, Mayer & Grossberg. Mills has a "can-do" attitude that's striking, even for a Texan.

"Any case involving allegations of racism is very emotionally charged," said Mills, a lawyer for 21 years who was certified as a mediator by the state of Texas after completing a 40-hour mediation training course. "You really need a mediator with the ability to work with the people in the right way," said Mills, who claims to have successfully mediated 3,000 cases.

Mills isn't shy about claiming to be just that kind of mediator.

"I think I could successfully mediate any criminal case," he said. "I think I could have mediated the reparations from Swiss banks to Holocaust survivors."

Mills' recent mediation involved a high-profile, half billion dollar lawsuit against Chevron USA, one of the country's largest private oil companies.

In their lawsuit, 1,900 primarily African-American residents of Kennedy Heights, a residential subdivision outside of Houston, claimed that remnants of crude oil storage had leached into their drinking water, increasing the rates at which they suffered from lupus, cancer, and other ailments. Gulf Oil, whose assets and liabilities were purchased by Chevron in 1985, had used the pits in the 1920's.

In 1968, Gulf sold the land to a housing developer who intended to build low- to mid-priced housing. The plaintiffs claimed that Gulf intentionally did nothing to remediate the site at the time. The residents of Kennedy Heights claim they were targeted by both Gulf and the developer who bought the land and built the houses; they sought at least $500 million for property damages and medical injuries from Chevron.

Chevron, which in assuming all of Gulf's liabilities also assumed responsibility for the former oil pits, maintained that any toxins found in the drinking water and soil were well under state and federal thresholds, and that the residents were at no increased risk of harm. When the lawsuit was filed, Chevron as well as local and state agencies conducted numerous tests on every aspect of the water, air, and soil. No significant levels of anything dangerous were found.

That did not satisfy the residents. They remained convinced not only that the health risks were real, but they were victims of environmental racism. The case drew the attention of the Rev. Jesse Jackson of the PUSH/Rainbow Coalition, who held two press conferences in Kennedy Heights over the course of the trial and called for a national boycott of Chevron until the firm agreed to pay to relocate each of the residents.

Making matters more complicated, the first judge assigned to the case was forced to excuse himself because his wife had been an employee of Chevron (then Gulf Oil).

So here was a complicated and emotionally charged case involving such huge damage claims that reaching a settlement through mediation may have seemed an impossible task.

Yet Mills believed from the beginning that mediation was probably the only way to resolve this dispute. An certainly the best way.

Sustained relationship key to mediation

"This case was ideally settled through mediation," said Mills. He believes that the sustained relationship he maintained with the residents through the 20-month process empowered them to learn both the details of the scientific data that was presented and the fundamentals of tort law. Personal interaction with Mills enabled the residents to learn concepts such as "breach of duty" and how damages can be awarded to compensate the cost of the breach.

"I was able to go over and over the material until they understood it completely," said Mills. "I met with the groups every night during the entire process, and they were really learning if they had any right to claim damages or not."

Given that all the known tests on the water revealed nothing dangerous, why did these plaintiffs remain so determined? First of all, the original judge assigned to the case, US District Judge Kenneth Hoyt, did not encourage settlement or mediation in any way.

The two sides actually offer conflicting accounts about who, if anyone, offered to accept mediation and when. Attorney Robert Petersen, senior counsel for Chevron USA, said Chevron offered to go into arbitration about 18 months into the suit, but the plaintiffs refused. Mills said the plaintiffs and their attorney, John O'Quinn, requested that Mills mediate the case at the beginning, but that Chevron refused.

O'Quinn believed $500 million was a reasonable sum for damages, and he encouraged his Kennedy Heights clients to hire three public relations firms in different parts of the country to gain support for their case. Chevron, meanwhile kept adamantly denying any wrongdoing and any negative health effects.

It was thus easy to imagine legal heels digging in deeper and deeper. But after Judge Hoyt recused himself, his successor, US District Judge David Hittner, ordered the Kennedy Heights suit to mediation in September, 1997. Mills was named as the mediator, a role that changed to a special master in April 1998.

Hittner appointed Mills as a special master to the case. The judge and both the parties to the lawsuit believed Mills to be the only mediator qualified and experienced enough to work through the whole story and reach a mutually acceptable resolution. Mills, who had experience mediating other cases involving large communities of people, was eager to get involved.

"My style of mediation, what I call pro-active or transactional mediation, is what settled the case," said Mills. "I had a vision of what the settlement might be and a rational understanding of the steps needed to get there." HE pursues an action-oriented methodology as opposed to a traditional "facilitator" role, he said.

Mills said he had no trouble maintaining his neutrality throughout the case. Yes, he had a vision - but that did not mean he prematurely assigning blame, Mills said. Indeed, technical tests and results ultimately vindicated Chevron in its claim that there was nothing dangerous in the soil or water.

Chevron "felt bad"

Why, then, did Chevron agree to a final settlement in which the firm paid the plaintiffs a total of $7.6 million, which Mills plans to distribute to each resident based on an allocation formula he is developing under the supervision of Judge Hittner. Why would Chevron pay anything if it was so sure of its innocence?

"Well, we felt bad for (the residents)," said Chevron public affairs manager Mickey Driver. "We paid a lot more than that in our own attorneys' fees plus all the testing, but ultimately, having the case mediated reminded us that there were real people involved, and we believed they were being used in an attempt to get a big payoff for the lawyers involved."

Driver insisted that the settlement had nothing to do with the "racism" part of the charge or the fact that the plaintiffs were African-American. "If it had been some other ethnic group, living in the same houses, with the exact same circumstances, we (Chevron) would have done the same thing," Driver said. "I mean, they were literally told they were dying every day - by their lawyers, activists, and media people. We felt bad for them."

Mills concurs. "Chevron really cooperated. Their agreement to settle was over and above the call of duty. their participation meant limited litigation costs and they made a great contribution to the community," he said.

Despite the company's claims that they would be vindicated at trial - a view supported by Mills - Chevron still could have lost the lawsuit. And in any case, it would have faced continued legal and other costs if the case went to trial. According to published reports, litigation in this case had already cost Chevron $20 million.

Mills believes that even O'Quinn, the plaintiff's lawyer, did the right thing. "He (O'Quinn) voluntarily waived his fee and limited his recoverable expenses, and really showed responsive and respectful treatment to the people of the community."

But Mills himself received a significant fee for his work in the case - over $500,000. When Hittner assigned Mills as special master, the defendant and plaintiffs agreed to split Mills' fee down the middle. Beyond that $500,000 payment, Hittner has authorized further fees to Mills out of the settlement to cover expenses during the post-settlement period.

News reports and most plaintiffs will receive settlements ranging from $2,000 to $50,000. Exact amounts will be based on how long they have lived in Kennedy Heights and the proximity of their property to the location of the old oil tanks.

Mills defends fees

"I was in community meetings virtually every night for 20 months - those residents could only meet at night because they had jobs during the day. The case was a lot of work," he said. The amount of technical work Mills put into the case and the complex database he built to organize all the resident's claims and provide for equitable disbursement of the settlement further justified the amount he was paid, Mills said.

Chevron senior counsel Petersen also felt the sum was appropriate. Chevron was prepared to go to court to prove its innocence, in which case the plaintiffs stood to win nothing at all except legal bills, Petersen claimed.

Mills agreed: "At the end of the day, the facts (of the case) would not have merited any damages to the plaintiffs," he said.

Mills' strong statements have angered some plaintiffs, who feel that Mills was in essence defending Chevron. Mills denied that he is defending Chevron's position.

"I just think it's out of place for a master to say what (Mills) said," O'Quinn's law partner, Benjamin Hall III told Texas Lawyer. He was not selected to be judge, jury and prosecutor," Hall says. "I don't ever recall his being assigned to make any type of adjucation of the case."

And according to the Houston Chronicle, some residents of Kennedy Heights felt that the settlement was forced upon them by Chevron, the court, - and Mills.

"When they tell you over and over , 'We suggest you take (the settlement), you begin to get the message," one resident told the paper. "The bottom line is we don't have any choice."

Benefits of mediation

Beyond this particular situation, are cases of environmental racism - actual or alleged - particularly suited to a mediated resolution?

"Absolutely," said Mills. "You cannot resolve a case like this in a board room" or even a courtroom. "You have to be respectful of the people involved, where they're living, what their lives are like. A lawsuit can't address those qualitative issues, and the differences in lifestyle."

Mills added that the small-group forums through which he met regularly with the plaintiffs offered a venue for an underlying dialogue on race relations. "In a court of law, it would have been just the facts, and the facts showed that there was no wrongdoing on the part of Chevron," Mills said. But because of the mediation, the plaintiffs were able to bring some of the more subjective and emotional issues to the table, which helped them agree on the ultimate settlement.

Chevron officials agreed that mediation was the key to this resolution. Although Chevron has an internal policy of using alternative dispute resolution (ADR) internally, Chevron has never mediated in a case with charges of environmental racism before, and never in such a large class action lawsuit before.

One of the key points to the settlement was a press release absolving Chevron of any wrongdoing, plus a stipulation that no money would go to the plaintiff's lawyers for fees. "If it had been another business or corporation suing us, we may have not been so amenable to mediation," said Chevron attorney Robert Petersen. Chevron agreed to mediate "because these were people, and we had learned to care about the plaintiffs."

Kelly Davenport will receive her Masters in City Planning from MIT in June. She is currently working with the US Department of Housing and Urban Development on Section 8 housing regulations.