A potential contract with an outside law firm which could lead to steep fines against Whirlpool Corp. for its admitted contamination of a large area on and around its former south Fort Smith manufacturing facility has been made public and will be voted on at Tuesday's (Feb. 18) meeting of the city's Board of Directors.
The contract, first discussed by the Fort Smith Board Feb. 11, would give the Sims Law Office of Princeton, Ill., and the office of Baron and Budd PC "the right to review and investigate possible environmental claims on behalf of the City of Fort Smith, Arkansas," according to a letter labeled "Confidential Communication" from attorney Melissa Sims to City Administrator Ray Gosack.
The letter clearly spells out the terms of the contract to be voted on Tuesday, where the Sims Law Office would seek to use municipal code, namely anti-littering ordinances, to fine Whirlpool not only for the initial pollution it caused when it admittedly spilled potentially cancer-causing trichloroethylene (TCE) at its facility in the early 1980s, but also for all the off-site locations it can be proven the pollution has migrated to since the spill.
“As the agreement explains, if we determine that there exists a viable claim, we would represent your city for a one-third contingent fee of amount recovered pursuant to said claim (40% if the matter is appealed). If we do not determine that a viable claim exists, we would not be in the position to represent the city."
The 10-page document also explains that the city will not front any costs associated with the lawsuits and will not owe any money should the attorneys from both firms lose a potential case or determine that pursuit of legal action would be unwarranted. The contract also spells out details on settlement proceedings, should the city and Whirlpool choose to engage in such discussions in the course of the city's potential legal proceedings against the Benton Harbor, Mich.-based corporation.
"The Client authorizes attorneys to enter into settlement negotiations, and to disclose the amount of its proposed settlement, the nature of its damages, and other factors relevant to the evaluation of settlement values to other clients in the Related Cases whose cases are included in the large number of cases," the contract reads, though failing to disclose if any other related cases are associated with a potential case by the city of Fort Smith.
In preparation for Tuesday's meeting and expected vote on the contract in question, Vice Mayor Kevin Settle asked Gosack in an e-mail whether the city would have to abide by state law by asking for requests for proposals, or RFPs.
"There’s 2 methods for selecting a professional service provider such as an attorney," Gosack replied. "The first method is to prepare a request for statements of qualifications, solicit interest from the legal community, and then select the best-qualified firm. This approach typically takes 6-8 weeks to complete. The second approach is to review the statements of qualifications already on file in the city clerk’s office and select the best-qualified firm. Ms. Sims’ statement of qualification is on file in the city clerk’s office. Hers is the only SOQ for environmental litigation on file. Under this second approach, a firm can be selected very quickly."
Settle also asked whether the case would delay existing homeowner lawsuits against Whirlpool? Gosack said he was unable "to answer this question. I believe the attorneys representing the homeowners would have to address this question."
Rick Woods, an attorney with Taylor Law Partners in Fayetteville who is representing residents in a lawsuit against Whirlpool, said in a telephone interview with The City Wire that he was worried any action by the city could impact settlement negotiations between his clients and Whirlpool.
"There is a worry that it will profoundly effect settlement negotiations. If you look at our lawsuit, one of the things we're asking for is the cost of cleanup," he said. "If you look at case law, landowners have a right to seek that out. If they start pursuing Whirlpool for this, we and some of our clients think it will profoundly effect any settlement."
Woods, whose federal lawsuit includes about 40 land parcels owned by more than 30 individuals, said even discussions about pursuing Whirlpool for municipal fines could impact cleanup, lawsuits and any number of other items associated with the Whirlpool contamination.
"This is the case of unintended consequences. No one knows how Whirlpool will react to this," he said. "It could really effect Fort Smith citizens, or it might not. No one can really predict. That's the basis of why we want this thing to wind its way through the courts."
Settle, who asked several question of Gosack, also asked whether pursuit of fines by the city of Fort Smith would slow down or speed up the cleanup process and why the Arkansas Department of Environmental Quality has yet to impose a fine on the company.
In an e-mailed response, Tammie Hynum of ADEQ said potential action by the city should have no bearing on cleanup efforts. She also explained the lack of fines, saying Whirlpool notified ADEQ of the TCE contamination voluntarily.
"Whirlpool approached ADEQ and self-disclosed the environmental conditions stating a voluntary willingness to clean up the environment. Under the current Consent Administrative Order (CAO) with Whirlpool ADEQ has the authority to fine Whirlpool for any non-compliance of the CAO."