Great White Fire Victims May Get Settlements By Year’s End


August 3, 2008

Tracy Breton of the Rhode Island Prvidence reports that lawyers for the victims of The Station nightclub fire are hoping to distribute the large pool of settlement money that has been offered to their clients by the end of this year, according to letters some of the victims have received in recent weeks.

Although some of the parties that lawyers consider most culpable have yet to enter into settlements, attorneys for those killed and injured as a result of the fire are anticipating that the civil lawsuits pending in U.S. District Court can be wrapped up during the next several months, without a trial. They’ve told clients that their “goal” is to distribute the proceeds by the end of December.

There are still claims against the State of Rhode Island and the Town of West Warwick that would need to be resolved before the victims’ lawsuits can be terminated — claims that, if settled, might require General Assembly and/or voter approval.

The state and the town were sued because no one delegated to inspect The Station ever cited its owners, Michael and Jeffrey Derderian, for the highly flammable polyurethane foam they installed as soundproofing in their club. The West Warwick fire marshal, Denis P. Larocque, who recently retired with a disability pension from the town, said he never noticed the foam during his inspections.

The Derderians each pleaded no-contest to 100 counts of involuntary manslaughter in connection with the 2003 fire that killed 100 people and injured more than 200 others. They, too, remain as defendants in the civil lawsuits. But there isn’t much money to be had from the brothers. After the fire, they filed for bankruptcy protection and their debts have been discharged. Therefore, they would be immune from paying any judgment that could be rendered against them if the case went to trial. The only payments that the victims might be able to recoup from the Derderians in a settlement are the proceeds of a property insurance policy on the building, which would yield less than $1 million if the bankruptcy court approves its release.

To date, close to $155 million has been tentatively offered to settle the fire victims’ claims. This includes $1 million that the court is holding from the rock band Great White — whose pyrotechnics sparked the deadly fire — and many millions offered by other parties, including corporations that allegedly made the foam that lined the walls as well as sponsors of the Great White show, among them, the beer manufacturer Anheuser-Busch.

Lawyers for the fire victims say that Duke University Law Prof. Francis E. McGovern, the court-appointed special master who is devising a formula to determine how much each plaintiff will get from the settlement proceeds, is almost done with the grid. Exactly what he will propose remains a secret because McGovern has denied requests for interviews.

But the fire victims, in letters from their lawyers, have been told that for the victims who died, McGovern’s grid will consist of “a point system” which will factor in such things as the victim’s age, marital status, education, number and ages of children and annual income. As for the victims who suffered physical and/or psychological injuries, the amounts will probably vary, based on severity of injury, days of hospitalization and amount of unreimbursed medical bills, predicted Kenneth R. Feinberg, a Washington, D.C., lawyer who served as special master in the taxpayer-financed 9/11 Compensation Fund and more recently for the compensation fund set up for the Virginia Tech shootings.

In a federal court hearing last November, Providence lawyer Mark Mandell, who represents more than 100 of the fire victims, told U.S. District Court Judge Ronald R. Lagueux that McGovern planned to meet with every plaintiff who is part of the lawsuit, either individually or in small groups. He will review each person’s medical records and treatment received for both the living and the dead, consider the number of surgeries, percentage of body burns, length of hospitalization and whether he or she suffered first-, second- or third-degree burns. He’ll develop “categories of injuries” and “severity differentials,” Mandell told the court.

In a lengthy interview a week ago, Feinberg spoke about his experiences as a special master in several high-profile mass tort cases, including his work for the victims of Sept. 11 and as overseer of the distribution of about $7.5 million donated to Virginia Tech in the aftermath of the April 2007 campus shootings. As part of his work on these and other cases, his task was to assign a value to victims’ lives.

Feinberg, who grew up in Brockton, Mass., worked without pay for 33 months investigating claims and deciding benefits for victims of the terrorist attacks. He and members of his firm donated more than 19,000 hours to the task. Feinberg personally conducted most of the 1,500 hearings with the families of the deceased and those who suffered physical injuries on 9/11.

Appointed by then Attorney General John Ashcroft, he was given an open checkbook from which to award compensation. Altogether, Feinberg authorized a little over $7 billion to be paid to 5,560 dead and physically injured victims. The average award for families of victims killed exceeded $2 million and for injured victims, nearly $400,000. Based on federal statute, Feinberg did not give each death victim’s family the same amount. The same will hold for victims of The Station fire. While most of those who died in the nightclub fire were from blue-collar backgrounds, there was a huge disparity in education and income levels among the 9/11 families. There were stockbrokers, lawyers, doctors, dishwashers and janitors. The highest award given by Feinberg to a Sept. 11 death victim was $8,597,732, the lowest, $250,000.

Feinberg said the disparity in awards made victims angry and that in retrospect, “if I had my druthers, as I did in Virginia Tech, I’d give every death claim the same amount. … That’s my personal view but it’s also based on practical considerations,” he said. “You want to discourage people you’re trying to help from being angered that their next-door neighbor got more for a death than they got for the death of a loved one. … The minute you try to value different lives and give different amounts to each victim, you’ll anger and divide the very people you’re trying to help.”

When Feinberg was meeting with the 9/11 victims, he said the widow of a firefighter told him, “‘My husband died a hero at the World Trade Center. Why are you giving me less money than the banker who represented Enron? Why are you demeaning the memory of my husband?’ “

So when it came time to decide how to award money to the families of the victims at Virginia Tech last year, he decided that each of the 32 people who died would get $212,000 “whether they were a first-year student or a faculty wage earner.”

But Feinberg says you really can’t compare what happened with settlements for 9/11 or Virginia Tech to what will unfold in The Station fire case because the funds are entirely different. The fire victims each hired lawyers and decided to use the court system to sue dozens of parties they believed to be responsible for injuries and deaths.

With a court case, “it doesn’t make any sense to expect all plaintiffs to get the same” award for a death, said Feinberg, “because each of the people, the next of kin, will have to release their right to continue to sue” to get the case settled and “the higher-paid wage-earner families won’t agree to take what the blue-collar workers do.” Unless the settlements are based in part on actual earnings, he said, not all of the plaintiffs will accept the settlements.

Feinberg said he has not spoken with McGovern but predicted that since “there is a limited amount of money for everyone, the bulk will go to the death claims,” with lesser amounts to those who suffered injuries.

Feinberg said he cannot envision how McGovern could come up with different values for each category of physical injury — respiratory versus burn injuries, for example. “For the physically injured, a pretty good indicator is hospitalization — the number of days a person was in the hospital is a good objective variable for determining pain and suffering and seriousness of physical injury…. You need to come up with some objective variables for physical injuries….

“For mental suffering, I’d pretty much have a geographical distribution: Were you actually in the club when the fire broke out and did you suffer mental trauma as a result of that? Or were you outside the club and watched it burn? My own view is that — with a limited pot of money — you’d have to limit it to mental anguish suffered by those who were inside the club when the fire broke out.”

McGovern’s proposed formula must be approved by Judge Lagueux as well as the victims. But there are several others things that have to be done before the victims are asked to OK the plan and any proceeds are distributed.

First, a guardian ad litem must be appointed by the court to represent 181 minor children who are parties to the lawsuits. The guardian ad litem must determine that the formula for distribution is fair to the minors.

Once that happens, the victims will receive a copy of McGovern’s proposed grid, along with an explanation from their lawyers as to how it would work. Once the distribution plan is approved, individual claim forms submitted by the victims will be calculated into precise dollar amounts.

Lawyers for the victims are hoping that the settlement checks will bring not only debt relief but some amount of closure for the fire victims and their survivors. But based on his experience in talking with families who lost loved ones, Feinberg doesn’t expect there to be much healing.

“Francis McGovern is a first-rate special master who will be extraordinarily fair and compassionate in figuring out the best way to do this. He has tremendous experience, great knowledge … [but] whatever he tries to do, it won’t be easy. He should not expect any thanks or any claimant to be grateful or happy about this. Money in any amount is a pretty poor substitute for the loss of a loved one.”

One thing the court can do that may help the victims, said Feinberg, is to give every person who wants to make a public statement the chance to do so “on the record, under oath. The hearings are very important…. Giving people the opportunity to be heard is very important in helping them cope and move on as best they can.”

“Forty percent of the people [who got money from the 9/11 Fund] never wanted to talk. But I think you want to give everyone who is eligible the opportunity to be heard.”

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