U.S. Class Action Suits for Bhopal Victims

Federal class action lawsuits for Bhopal victims
Priti Patnaik
New York, July 2010

Far away from the heat and dust of Bhopal, two federal class action lawsuits are under way here in New York City.

The Bhopal cases filed in the U.S. have had a circuitous history, not unlike in India.

The cases, Sahu Vs. Union Carbide et al, are civil cases filed in the United States District Court for the Southern District of New York. Plaintiffs are seeking remediation to address personal injury and damage to property. They are also fighting for medical monitoring. They claim that UCIL’s Bhopal plant produced hazardous wastes during its normal operations that contaminated the soil and drinking water of local communities. These cases are different from the claims arising soon after the 1984 disaster. Those initial claims were thrown out on grounds of forum non conveniens – a doctrine where the district court refused to take jurisdiction over the matter citing a more appropriate forum available to the parties.

In their complaint filed in 2004, plaintiffs Janki Bai Sahu et al, have said that UCC and its former CEO, Warren Anderson, should be held liable for their injuries on the grounds that they were “direct participants and joint tortfeasors in the activities that resulted in the pollution, that UCC worked in concert with UCIL to cause, exacerbate, or conceal the pollution and that UCIL acted as UCC’s alter ego, justifying piercing the corporate veil”.

Richard L Herz, Earth Rights International, co-counsel in the Sahu case, said, “The aim is to establish that UCC and Warren Anderson are liable for the pollution that has contaminated the plaintiffs' drinking water and that of thousands of their neighbors.”

At present, UCC maintains that the company cannot be held liable for the actions of the Indian subsidiary. “By requirement of the Government of India, the Bhopal plant was detail designed, owned, operated and managed on a day-to-day basis by Union Carbide India Limited (UCIL) and its employees,” Tomm F. Sprick, Director, Union Carbide Information Center said in an email. The company has chosen to “recharacterize 20 years of its association with UCIL, as a period of minimum involvement,” H. Rajan Sharma and lead counsel in the Sahu litigation said.

Plaintiff lawyer, Mr Herz cited company documents dating back to 1973 demonstrating UCC’s involvement with the Indian subsidiary. “UCC was intimately involved in all aspects of the Indian operation that caused the pollution that continues to contaminate drinking water in Bhopal. It transferred technology that was inadequate, approved plans for design of the plant and participated in the creation of the toxic landfill that ultimately failed,” he said.

The journey of these cases through U.S. legal system has gone on for the better part of this decade, but it is imperative for the Indian government to act immediately. On June 24th 2008, the Indian government communicated to the district court that they would cooperate with any clean up by the UCC. “But that has not proven to be sufficient,” Mr Sharma said.

In the past, the District Court which is the lower court, was of the opinion that a US court may have trouble issuing a binding enforcement for an environmental clean up in another country, because the court believed this could interfere with the sovereignty. “Although the Plaintiffs do not believe that such concern is warranted, for this reason, the Union of India’s participation has been sought in the action,” Matthew K. Handley, Attorney, Cohen Milstein Sellers & Toll PLLC said.

In light of the recent judgment in India, the government must take concrete steps to address the issue. There are fundamental reasons for doing so. “For example, the government should intervene in the New York litigation based on the fact that it owns the land on which the Bhopal plant is located and which is now badly polluted,” Mr Sharma added.

Notwithstanding yet another attempt by the reconstituted Group of Ministers (GoM) on Bhopal, the Government of India should now be a “party” to the cases currently in litigation in the U.S. to push for faster resolution. Not holding UCC liable would mean that the Indian government will have to pay up to clean the site. And that essentially means the Indian taxpayer. Further, it would amount to giving a public subsidy to a company that allegedly perpetrated one of the worst industrial disasters in the world.

Further, UCC, now a wholly owned subsidiary of The Dow Chemical Company, may be held liable under a principle known as piercing the corporate veil. In the past, the district court has said that there was no evidence that UCC was directly responsible for the actions occurring in Bhopal. Usually a corporation is solely responsible for its liabilities. But under exceptional circumstances, the corporation may be held responsible for the liabilities of its shareholders and directors and in this case a subsidiary, thus piercing the corporate veil.

So how critical is it to pierce the corporate veil in this case? “While piercing UCIL’s corporate veil is one of our claims, it is only an alternate approach. We believe that UCC was directly involved in the operations of UCIL and had oversight over implementation, cleanup and training at UCIL. Even if this were not the case, however, UCC’s domination of UCIL should give rise to a piercing of the corporate veil claim and will make UCC liable for its Indian operations,” Handley said.

Besides, unlike before, ‘forum non conveniens’ can no longer be an escape route. Actions of the company are under the jurisdiction of the District Court since UCC was incorporated in the state of New York. Also, UCC has been criminally indicted in India and will never suggest that the case be moved to India. United States District judge J.F. Keenan presided over the case in the 1980s when the case was sent to India on the grounds of forum non conveniens. He said that the court was convinced that the Indian legal system was in a far better position than the American courts to determine the cause of the tragic event and thereby fix liability. He continues to preside over the on-going cases at the District Court now. This district court is an influential one, under its jurisdiction are the major financial centers of New York. Usually, a publicly traded company whose shares are traded on NYSE falls under the jurisdiction of this district court.

When asked to comment on the cases that are in progress, Sprick of UCC said, “Neither Union Carbide nor it attorneys will discuss matters currently in litigation. This was in response to an email query sent to defendant lawyer William A Krohley, partner at Kelley Drye & Warren LLP.

At present, plaintiff lawyers have been allowed limited discovery but have not been allowed to conduct depositions or interrogations. Reaching the jury trial stage in the case is at least two years away at the earliest. This is assuming plaintiffs are successful. (See time-line). If the verdict of the jury trial at the District Court is in favor of the plaintiffs, UCC can choose to appeal against the verdict at the appellate court. But UCC will then have one final opportunity.

Appeals from the Southern District of New York are taken to the United States Court of Appeals for the Second Circuit, an appellate court. The United States Court of Appeals for the Second Circuit is one of the thirteen United States Courts of Appeals. It appears the appellate court has, in the past, largely agreed with the stance of the plaintiffs and believes they have a valid claim. The final word will be of the appellate court. Amen.

EoM

A version of this story was carried in the Financial Express, India.

This was originally filed in July this year in New York. I loved the fact that I could access all court documents simply by showing my NYU student card. This is impossible in India.

Here is an update in late September 2010 from Law.com: Court was unconvinced about the principle of piercing the corporate veil. The New York Law Journal also reported that papers revealing UCC's general knowledge of UCIL's operations were too insufficient to show that UCC worked in concert with UCIL.