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Shell, Hoechst Agree to Pay $850 Million

October 04, 1995|From Reuters

WASHINGTON — Shell Oil Co. and Hoechst Celanese Corp. have agreed to commit $850 million to pay for the replacement of plastic plumbing systems that have leaked, according to a settlement announced Tuesday, representing the biggest property damage settlement in U.S. history.

The plumbing involved in the settlement is polybutylene pipe with metal or acetal insert fittings. The pipe is a flexible, plastic pipe that is usually gray, black or silver when used indoors and blue when used in a yard service line.

Polybutylene plumbing was used in the construction of mobile homes as well as in housing, hotels and motels and other structures, particularly in the South and West.

The settlement was reached July 31 and has been preliminarily approved by a Tennessee court, according to the companies, which are subsidiaries of Hoechst and the Royal Dutch/Shell Group.

Shell and Hoechst Celanese supplied raw materials used by other companies to manufacture certain types of polybutylene plumbing components. However, they both deny any liability related to polybutylene plumbing.

Lawyers representing owners of homes fitted with deficient polybutylene plumbing said Tuesday they had won the biggest property damage settlement in U.S. history.

Under the class-action settlement, pending final approval by the Tennessee court, Shell and Hoechst Celanese will pay 100% of repair, damage and re-plumbing costs, the lawyers said at a briefing.

Shell and Celanese agreed in the July 31 preliminary settlement to commit an initial $850 million toward payment.

But, unlike class-action lawsuits such as the one against makers of breast implants, the plaintiffs can sue again if the figure is insufficient and the companies refuse to pay more.

"This changes the entire structure of the way class-action suits are settled," said Arthur Bryant, executive director of the national public-interest law firm Trial Lawyers for Public Justice.

"The history of class-action litigation shows that those guesses [of damages], however well-educated, were way off," Bryant said.

About 50% of mobile homes and 5% of other homes are fitted with polybutylene piping, for an estimated total of about 6 million structures, Bryant and other lawyers said at a briefing.

Oxygen in water tends to deteriorate the pipes from the inside, leading to pinhole-sized leaks, especially with hot or chlorinated water, the lawyers said.

A spokeswoman for Hoechst Celanese said the polymer itself was not responsible for any defect.

"We agreed to participate in the settlement to reduce our litigation costs and provide relief to people who have faulty plumbing. We stand behind our product," spokeswoman Andrea Stine said.

Consumers seeking to contact the class counsel regarding the settlement should write:

In re Cox v. Shell

P.O. Box 175

Minneapolis, MN 55440-0175

Or call (800) 876-4698.

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