Shadow Over Texas City

Petrochemical plants and refineries are the lifeblood of Texas City's economy. But for Hester Joiner and her neighbors, all they've provided are foul odors, property damage and mysterious ailments.

Goodwill was almost entirely absent at one of those meetings, though. The day after the Mother's Day ammonia release by Sterling, Jolly and a large contingent of neighborhood residents gathered at the Sanders Community Center to discuss the accident. Also attending were several lawyers Jolly had invited.

That meeting evolved into a series of lawsuits handled by a number of different lawyers. To conserve resources, the lawyers opened a joint satellite office in Texas City and hired Jolly to be the community liaison. The office, located in a mostly abandoned retail zone in a once-thriving part of downtown, has a bare-bones feel that underscores the plaintiffs' tenuous financial condition.

The lawyers, of course, are working on contingency, meaning that they'll collect only if they win. It also means they must bear the tremendous up-front costs of trying the case, already a three-year process that could take years longer if the verdict is appealed.

In contrast, Sterling has plenty of financial muscle and has shown a willingness to flex it. Within hours of the ammonia release, the company hired Benchmark Communications to manage its PR strategy and coach company executives through media interviews. The company has retained the firm of Mills, Shirley, Eckel & Bassett, which handles insurance cases and defends personal injury suits. And, perhaps in case things go badly with a jury, Sterling has hired pricey Galveston appellate specialist George Vie, who's already lent his expertise to the company's pretrial defense.

Sterling's deep pockets give the company a tremendous advantage. "Their strategy is to try and draw you out as long as possible to get it to a financial standpoint that you can't afford to go further," says Nebout, whose 165 clients are waiting their turn.

To a great extent, the outcome of the first trial may depend on what evidence Judge William Bell allows the jury to hear, and what he excludes. That's been the primary battleground to date, with both sides suffering setbacks: Bell recently excluded low-income housing specialist John Spear from the witness list at Sterling's request, but the judge had quashed earlier motions to severely limit the scope of the trial. Many of the fights over the evidence will be won or lost during the trial.

Bell's rulings on the evidence might well prove the difference. The defense attorneys don't want the jurors to hear about other toxic releases by Sterling or any other plant, nor do they want them to know about the many environmental violations and fines the company has racked up over the years. Mention of serious long-term health problems from living next to the plant is irrelevant and should also be banned, they argue.

And Sterling desperately wants no mention of Allan Bolen, one of two plant operators on duty in the acrylonitrile unit when the incident occurred, and his history of substance abuse problems and treatment, or his lengthy absences from work before and after the ammonia release. The company also seeks to exclude testimony alleging that the peculiar design of the unit and lack of proper training meant that such an accident was inevitable.

And while Sterling doesn't want Phase Engineering's report entered into evidence at the trial, it apparently respects the firm's work enough that it recently asked Phase if it would be interested in working for Sterling on future projects.

Finally, in a move that may be strictly coincidental, Sterling executed a series of deft financial transactions in August 1996 that had the effect of reducing the company's paper value from $239.3 million to negative $272.4 million. Sterling may argue that this means the company can't afford to pay any damages if the ammonia suits are lost, though the current net worth does not reflect reality, according to accountant Irving Murmel, who analyzed Sterling's public financial records for the plaintiffs. By piecing together the available information, Murmel pegs the actual value of the company at about $600 million. "They have proven what their net worth is," Murmel states. "I'd say it's worth at least that."

The maneuver may have been legitimate, but Sterling is concerned enough about the matter to have asked Judge Bell to prohibit any testimony or evidence "that defendants fraudulently conveyed their assets to another entity because such evidence is not relevant to plaintiffs' alleged injuries."

In its defense, Sterling will likely attack the plaintiffs as trying to take advantage of an honest mistake, exaggerating their claims in order to extort cash from the company. "The way they defend these [suits], as always, is to say 'You represent a bunch of people who are habitual money-makers off us,' " says Nebout.

Selaine Jolly disagrees that the $50 or $100 that residents have collected from Sterling on occasion to clean chemicals off their cars or houses relates to the bigger issue of whether people should live near the plant in the first place. She wants to see Sterling cough up enough in damages to fix the problem once and for all. "I know everybody thinks, 'All they're after is money, they want something for nothing,' " Jolly says. "All I would really like is for my community to have the opportunity to leave."

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