After ACSH s Dr. Josh Bloom was inspired to coin the phrase Wheel of Extortion just last week, in reference to Syngenta s disappointing class-action settlement in a suit against its herbicide atrazine, we have, unfortunately, come across another example to add to the wheel. A class-action settlement has been reached, following allegations that trailers housing residents displaced by Hurricane Katrina contained heightened levels of formaldehyde responsible for adverse health effects. The settlement will require companies that manufactured the trailers to pay $14.8 million. Yet, with about 60,000 plaintiffs, this sum works out to be a mere $250 or less per person. As ACSH s Jody Manley points out, The lawyers are the only ones making money here.
The concerns about formaldehyde exposure first arose in 2006, when some trailer occupants began complaining of nosebleeds, headaches, and trouble breathing. When FEMA (Federal Emergency Management Agency) tested some trailers in Louisiana and Mississippi, they found levels of formaldehyde that were about five times higher than in the average home. Residents became concerned that, in the haste to build trailers or mobile homes for over 144,000 families, manufacturers used substandard building materials with higher formaldehyde levels. These concerns were likely exacerbated by the fact that, since formaldehyde was recently officially classified as a carcinogen, lawyers were on high alert for residents who might be inspired to join a class-action lawsuit. Never mind, notes ACSH's Dr. Gilbert Ross, that the levels detected were still too low to pose a real health threat.
As Dr. Ross explains, Aside from the case of highly-exposed workers, there are no data to support a link between low levels of formaldehyde exposure and disease. Sniffles, headaches, or a raspy throat, are the most that these residents would have experienced as a result of the low levels of formaldehyde in their trailers. He points out that smoking or other conditions were likely to be the true causes of most residents health complaints.
Nevertheless, other similar claims have also ended in settlements: A group of mobile home companies paid $2.6 million to resolve allegations by residents living in homes built specifically for Katrina survivors. Yet in the three individual trials that were decided by jury, the juries sided with the construction companies. It s the lawyers who benefit from the settlements, not the residents displaced by the hurricane, says Dr. Ross. A settlement, where the lawyers receive money without having to continue the costly litigation process and risk losing the case is exactly what these lawyers are looking for.
Dr. Bloom adds, It disgusts me that these classless action lawsuits are allowed to proceed. People are recruited by lawyers to join, but individual plaintiffs get very little when the suit is settled. And the consequences aren t negligible: they can range from obstetricians leaving their professions to companies being sued when people hit themselves in the head with a hammer that isn t labeled do not hit yourself in the head with this hammer.' A loser pays policy, which is used in other countries, would take care of this nonsense fast. If lawyers had their own money at stake, they d think twice before instituting frivolous suits.