Polybutylene Class Action Settlement Approved

The courts of Ontario, B.C. and Quebec approved a class action settlement between E.I. du Pont de Nemours and Company and a class consisting of owners of properties containing polybutylene plumbing and/or heating systems. Justice Ian Nordheimer of the Ontario Superior Court of Justice had previously declined to certify the class proceeding, as against the other defendants, a decision currently under appeal. In approving the settlement, the judge rejected attempts by a non-settling defendant to object to the settlement and held that a non-settling defendant has no general right to involve itself in the approval of a settlement to which it is not a party.

Justice Nordheimer approved the settlement on November 4, 2002. Thereafter, hearings were held in B.C. and Quebec, at which further objections were made by the non-settling defendant and rejected. Justice Donald Brenner of the B.C. Supreme Court approved the settlement on November 12, and Justice Rita Bédard of the Quebec Superior Court of Justice approved the settlement on March 27, 2003. The fees component of the settlement was not determined however, and remains to be determined.

The litigation began in B.C. in 1996 and in Ontario in 1999, when representative plaintiffs initiated proposed class proceedings against E.I. du Pont, Shell Oil Company and Hoechst Celanese Corporation in connection with losses allegedly incurred as a result of defective polybutylene in plumbing and heating systems. In 2002, while admitting no liability, E.I. du Pont voluntarily entered into a settlement agreement pursuant to which a national class of members could make claims for compensation in accordance with the terms of the settlement. Pursuant to the settlement, which was subject to court approval, E.I. du Pont agreed to pay compensation of up to $30 million to qualifying class members, with provision for the amount to possibly increase if claims should exceed that sum.

The settlement was approved despite opposition by E.I. du Pont’s co-defendant, Hoechst Celanese Corporation, which attempted to assert that as a non-settling defendant it had the right to make submissions regarding the adequacy of the settlement. Justice Nordheimer rejected these submissions, holding that non-settling defendants have “no general right to involve themselves in the approval of a settlement to which they are not parties”. The judge further noted that the court “ought to be wary of allowing parties, who are clearly adverse in interest to the plaintiffs, to weigh in on matters such as the settlement of claims involving other parties in the guise of “protecting” the plaintiff class”. Hoescht Celanese’s attempts to oppose the settlement were rejected and Hoescht Celanese and Shell, as E.I. du Pont’s co-defendants, were permitted only to make submissions with respect to the scope of the bar order.

Justice Nordheimer found the settlement to be fair and reasonable, and approved a national class of plaintiffs. The judge also approved a bar order prohibiting cross-claims, third-party claims and claims for contribution or indemnity against E.I. du Pont relating to polybutylene plumbing and heating systems, which were or could have been brought in the class actions.

E.I. du Pont was represented in-house by Jack Kane, senior counsel; by Fasken Martineau DuMoulin LLP with a team that included Jeffrey Leon, Laura Cooper and Sophie Vlahakis in Ontario and André Durocher in Quebec; by Ward Branch and Don Lebans of Branch McMaster in B.C.; and by Kathleen Sooy of Crowell Moring LLP in the U.S.

The plaintiffs were represented by Scott Ritchie, Q.C., Michael Eizenga and Dawn Sullivan of Siskind, Cromarty, Ivey & Dowler LLP in Ontario; by James Poyner, Kenneth Baxter and Patrick Poyner of Poyner, Baxter in B.C.; and by Claude Desmeules of Siskinds, Desmeules in Quebec.

Shell Oil was represented by David Kent and Jennifer Dent of McMillan Binch LLP in Ontario; Elliott Myers, Q.C., and Shane Nossal of Bull, Housser & Tupper in B.C.; and Luc Giroux and Louis-Martin Richer of Fraser Milner Casgrain LLP in Quebec. Hoechst Celanese was represented by Tim Pinos and Glenn Zakaib of Cassels Brock & Blackwell LLP in Ontario; by Derek Mullan, Q.C., of Clark, Wilson in B.C.; and by Guy Lemay and Jean Saint-Onge of Lavery, de Billy in Quebec.