Dow Chemical Co., et al. v. Stephenson, Daniel (06/09/2003)

Questions presented: (1) Whether absent class members are precluded from relitigating the issue of adequacy of representation through a collateral attack on a class settlement, after class members had a full opportunity to opt out, object, and appeal, and after both the trial court and the court of appeals, in the course of approving the settlement, expressly determined that the clas representatives adequately represented the entire class. (2) Whether, if collateral attack is permissible, the "adequacy of representation" is an issue that is to be properly determined as of the time of the original litigation or in light of events and changes in the law occurring years after the settlement has becomes final and all of the settlement proceeds have been disbursed."

BY HERMAN WANG, MEDILL NEWS SERVICE

When Dow Chemical Co. negotiated a $180 million settlement in 1984 with Vietnam War veterans alleging injuries due to exposure to Agent Orange, the company figured it had washed its hands of the chemical toxin for good. Thousands of veterans had reported severe illnesses and diseases, including cancer and respiratory problems, after their tours of duty, and scientists and officials had determined Agent Orange was responsible.

Almost 20 years after the settlement was negotiated, Dow found itself waging another heated battle over the controversial toxin and its effects on human lives. Dow Chemical Co., et al, v. Stephenson, et al. is a clash over the applicability of the original class settlement, which provided for the money to be distributed to victims over a 10-year period ending in 1994. The settlement also included provisions for those who had not yet manifested injuries but would develop them in the future up until there was no money left in the fund. In all, about 52,000 class members were compensated.

However, Daniel Stephenson and Joe Isaacson, two Vietnam War veterans who developed cancer in 1998 and 1996, respectively, filed suit in federal court, arguing that they are not members of that prior class and thus are entitled to additional compensation from Dow and other chemical companies.Stephenson, a helicopter pilot who served in Vietnam from 1965 to 1970, was diagnosed with bone marrow cancer in 1998. Isaacson, in Vietnam from 1968 to 1969 while working at a base for airplanes that sprayed the chemical, was diagnosed with non-Hodgkins lymphoma in 1996.

Because all the settlement funds had been already disbursed and there were no more funds available by the time they got cancer, which they attributed to their regular contact with Agent Orange during the war, Stephenson and Isaacson claimed they were not adequately represented in the original settlement.

"If you get nothing, are you represented?" said Greg Smoger, an attorney for the two veterans. "To just 'say that you included everybody but gave no money to certain people, thats not fair."' Stephenson and Isaacson didnt know there had been a class settlement until it was too late to collect any money. "They found out that they get no compensation and that other people had been paid," Smoger said. "So how can they have been properly represented?"

The U.S. District Court for the Eastern District of New York disagreed with Stephenson and Isaacson, saying that their claims were barred by the settlement and that their suit was an "impermissible collateral attack" on the settlement.

"A class was certified following enormously elaborate procedures, and the settlement did contemplate and include all veterans exposed to Agent Orange, whether or not they had symptoms," said Seth Waxman, head counsel for the chemical companies. "Stephenson is a member of that class. There was a final judgment dismissing his claim, and the court determined that the class classification was fair."

However, the 2nd Circuit Court of Appeals unanimously reversed, saying that because no provisions were made for post-1994 claimants, Stephenson and Isaacson were insufficiently represented and are not bound by the settlement.

"Because the prior litigation purported to settle all future claims, but only provided for recovery for those whose death or disability was discovered prior to 1994, the conflict between Stephenson and Isaacson and the class representatives becomes apparent," the court said in its decision. "A class which purports to represent both present and future claimants may encounter internal conflicts."

On Nov. 4, 2002, the U.S. Supreme Court granted certiorari in the case. On June 9, 2003, the Court issued a brief, yet cryptic, two-paragraph per curiam opinion, vacating the appeals court judgment as to Isaacson, and remanding the case for further consideration in light of the Court's 2002 opinion in Syngenta Crop Protection, Inc. v. Henson. The judgment relating to Stephenson was affirmed by an equally divided Court.

Justice John Paul Stevens did not participate in the case.