Lawyers on Trial

An interview with Robert Hager

Robert Hager, director of litigation at the Christic Institute, a public interest law and policy center in Washington, D.C., recently returned from Bhopal where he met with victims' rights, labor and public interest groups.
Hager, who is currently involved in litigation concerning the nuclear accident at Three Mile Island worked on the Karen Silkwood case in which the Supreme Court upheld the $10 million punitive damage award against the Kerr-McGee Corporation for recklessly causing the plutonium contamination of Silkwood.

Hager spoke with Russell Mokhiber earlier this month about Union Carbide's liability and the role of American lawyers in the New York Litigation.

Monitor: It appears that the plaintiffs' attorneys are heading toward a quick settlement with Union Carbide and they're defending it as a good idea because they think that it's best to get money into the pockets of the victims quickly. What problems could a quick payoff lead to in the long run'?
Hager: The victims are entitled to relief independent of retribution and that relief should certainly be made available immediately. There is a need for nutritional relief, medical relief and training schemes for people who can no longer do heavy labor. But ii the government of lndia wants to, it has and can get the resources to get relief to the victims. It's a huge country with a huge budget and the amount of money necessary to bring relief is not that great. They have the means, in fact, to get the assets of Union Carbide India Ltd. (UCIL) which are worth about $100 million. But there just doesn't seem to be the political will right now.
The problem with a quick settlement is that it comes at the expense of a just settlement. The levels of dollars that have been talked about so far are $200 million up to S600 million and the lower figure is the more likely one. It is possible that the government has decided to up the anti even further. but it's my feeling that there is a structural problem that Union Carbide has in seeking a certain level of settlement. The problem is that the present management is unable to exceed the amount they'd be able to raise through insurance and bank loans. If they were to exceed that level they would begin to erode the assets of the corporation. As the assets of the corporation are eroded their ability to make profits is damaged and the value of the shares would decline.
The management would then expose themselves to shareholder derivative suits against them personally for negligent activity by the subsidiary in India, and that means the personal assets of the directors and managers would be in jeopardy. So when the present managers and directors oversee the settlement, there is a natural structural limit of around 5800 million, whereas activists in Bhopal who have done medical surveys, estimate the number of dead at around 3,000 and the number of people affected at 100,000.
Monitor: Has Union Carbide come up with an estimate on how much damage there was?
Hager: No, what Union Carbide did was accept the lowest figure available on the number of deaths, which was somewhere near 1,500 - the figure based on the number of people who died in hospitals and whose deaths were officially recorded. That's clearly inaccurate because there is so much evidence that people died outside of hospitals.
Monitor: If it is proven that more than 3,000 people died and more than 100,000 were affected, what does that mean in terms of dollar damages?
Hager: I came up with a' 5 to $10 billion figure. which is more than the market value of Union Carbide S10 billion is roughly the book value of Union Carbide. So we l-c talking about a settlement that would in fact transfer the ownership of Union Carbide to the people of Bhopal.
Monitor: So the damages could exceed the corporate assets?
Hager: Given these types of injuries, damages could exceed assets if this were to go before a jury in the United States. The award that I would expect is between 55 and $ 10 billion, and we're not even talking about community damages or punitive damages. When you look at how the accident happened, how really egregious the wrong was, how man v different problems are attributable to the accident and how slack the safety enforcement was at that plant - it looks like the kind of case where you would expect to get punitive damages. It you compare it, for example, to the Karen Silkwood case where we got $10 million in damages and then compare how poorly KerrMcGee ran their plant with how poorly Union Carbide ran this plant, the Bhopal incident is more egregious.
Monitor: Flow is this going to affect tile relationship between the government of India and multinational corporations?
Hager: I think the Indian government is worried about its investment climate. The government of Rajiv Gandhi has announced a policy that encourages industry to come into the country - a reversal of India's former policy where tile government had tight control over industry and in particular foreign business. The new policy is much more laissez faire and open to multinational corporations. That's a really important shift in policy, and I think that the government of India believes that if they're too strict with Union Carbide they will damage the investment climate. I'm not sure that the world multinational community really cares if Union Carbide has to pay the price for its errors in India. I( there are profits to be made they'll still go to India to make the profits, but they may have to get more insurance than they did before.
Monitor: What are the pressures facing the plaintiff s' attorneys for an out-of-court settlement?
Hager: It seems that the judge is encouraging the parties to sit down and settle the case before he rules on the forum non conveniens doctrine.
If, in fact, the judge wasn't going to dismiss the case and if it were to remain in the U.S. courts I think the picture would change. The lawyers would know they have a case in the U.S. courts and they could decide whether it might not be better to litigate. If the case is not heard in the United States the American lawyers would be entirely cut out. Even if they were to be involved in litigation or did still have some claim to fees for what they'd done so far it would be almost impossible for them to collect those fees. If they don't settle the case there is a possibility that it could be dismissed and they'll get nothing at all. With a settlement at least they get something.
Monitor: Where would the victims do better, the U.S. courts or the Indian Courts?
Hager: Well, again it's a matter of political will. Given the present situation it seems that they'd do better in the American courts. American courts give jury trials. Indian courts don't. American courts have experience with personal injury claims. Indian courts don't. In American courts we can predict fairly accurately what kind of damages we can expect juries to award, in India it's impossible to predict. However, with the political will, the Indian courts could overcome all of these problems.
There's no reason why they couldn't appoint a qualified judge to hear the case and (lien award damages at the level as would be the case in the United States. Once the _v= re awarded, that judgement should be enforceable in the United States against Carbide's assets. So. it's conceivable that the Indian government and the Indian courts could in fact conduct the case in India even more efficiently than would 1>e done here.
Monitor: How has the Indian public interest law community responded to the Bhopal crisis:'
Hager: There's a very, very small public interest law communits in India. There was an organizing commit tee of public interest groups in Bombay and that meeting included lawyers. They really should form a legal support committee. That way, if the victims decided not to settle the case cheaply but to litigate, Indian lawyers could be on the scene collecting medical information and preparing to bring the case in Indian courts if necessary.
Monitor: The victims don't have much of a say here. F. Lee Bailey, Stanley Cheslcy and Melvin Bells are going to decide this without really going back to the victims, aren't they'?
Hager: That's the way it's structured with this kind of mass tort litigation, the control often shuts from the victims, it they are unorganized, to the lawyers. Essentially a take-it-or-leaveit otter will be made to the victims. What would be required to change that picture would be to organize the victims in Bhopal but there are some real obstacles to organizing these victims, the government of India seems to be hostile to public unrest groups in India doing organizing. The one group was there known as Morcha is no longer there. Just a few weeks ago their leadership was arrested for holding a demonstration and they were put in jail.
It the public interest committee got involved they could overcome many obstacles. If the case became truly international with a consortium of American and Indian lawyers working together, they could get justice on the case whether it's in America or in India.
There's still a problem about where the expense money is going to come from. The most likely source of cash is the government of India, but it's a political issue.
Monitor: Do you think the judicial system here, specifically Judge Keenan, is sensitive to public pressure?
Hager: I think we're really talking about public pressure in India on the government of India but I also think it is important to keep the pressure on here. It is important not to forget Bhopal.
If we fail to organize here and in India the safety standards that do exist will probably decline because the ability of a corporation like Union Carbide to weather an incident of this magnitude will set a precedent - a bench mark - for quantifying the risk that companies undertaking these kinds of enterprises are exposed to.
If they're able to cut a deal-say $1 billion-and if they're able to raise the money from banks and insurance and if it's a settlement that they can live with-where they can still make profits - it's likely that the whole community of businesses that deal with these kinds of toxic materials will be encouraged to spend less money on safety because they will be able to quantify their exposure. They will see that they really don't have to guard against the worst because this was the worst, and if Union Carbide is able to survive intact then companies don't have much to worry about.
But, if justice is done in this case it will amount to the demise of Union Carbide - the transfer of ownership to the victims. If that were to happen it would send a real message to all the companies that are working with these kinds of toxic materials. If something goes wrong they stand to lose their corporation and likely the personal fortunes of their managers and directors. That will send a real message and encourage an historic change in the way business is done.
Monitor: If justice is done and the assets are transferred, won't the victims sell their shares, putting the company into the hands of other companies and given that bigger companies in hazardous industries such as chemicals tend to have better safety records than smaller companies aren't we looking at just more of a disaster when these plants are in smaller hands?
Hager: That assumes that the assets would be sold off and that there would be a liquidation of Union Carbide. I don't assume that at all. What would more likely happen is that the company would have a debt of $10 billion which it can't cover so it would be technically bankrupt and it would depend on the reorganization negotiations, but I would think that it would be more profitable for the victims if Union Carbide would remain intact as a corporation. Present bond holders and shareholders would lose what they have and new shares would be issued to the victims for their debt. The victims would be the new owners and could sell their shares on the market if they chose to do so.
That really doesn't require the liquidation of Union Carbide at all. I think it is really important for workers to understand this because Union Carbide is pitting its workers against the victims by saying that if the shareholders lose their shares the workers lose their jobs, which won't necessarily be the case at all.
Monitor: In terms of public policy in the United States, what can we do to prevent this kind of thing in the future? Should health and safety standards in effect here in the United States be applied to U.S. based multinational corporations in their operations throughout the world?
Hager: I think that is good policy for America and for American industry because otherwise jobs will flee the United States and go to those countries with lower safety standards. We don't want jobs leaving this country because governments elsewhere are less concerned about the lives of their people; human life should have the same value around the world.

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