JAMS ADR Blog by Chris Poole
This article discusses early cooperation between parties and insurers in resolving complex environmental disputes. It summarizes strategies that recently succeeded in a six-way dispute over the costs of investigating and remediating an extended plume of PCP groundwater contamination. It moved rapidly from a traditional lawsuit to a voluntary mediation process aimed at identifying the most economical and reliable remedial approach to cleaning up the contamination, and allocating the costs of doing so among all parties. Although the parties agreed to refrain from traditional court-mandated procedures, they retained the right to try the case if the cooperative process was unsuccessful in resolving all disputed issues. Ultimately the process was successful and the need for trial was eliminated.
The parties agreed to the following goals: (1) share their independent, on-site investigation results; (2) jointly share the costs of investigating the off-site “regional” groundwater contamination plume; (3) agree on the most effective and least costly remedial approach; and then (4) prepare a joint remedial action plan for agency approval.
In the mediation, as the parties shared investigation results, they bid out the remedial work to a single contractor who would perform the work specified in the approved work plan on behalf of all parties. With that “all in” price in hand, the parties could reliably allocate future remediation costs. Accordingly, the settlement was not based on a “battle of the experts.” This facilitated the parties’ agreements to final, “cash out” settlements with full releases and maximum contractual protection against future litigation among the settling parties.
What did this alternative dispute resolution process achieve?
It resulted in an informed settlement based on the true costs cleanup and a fair division of those costs among the parties. It facilitated agreement on reliable and final payments with full releases and maximum contractual protection.
In deferring discovery and other unnecessary litigation procedures, the parties avoided fees and costs associated with trial. By jointly investigating off-site contamination and sharing their independently obtained on-site data, the parties and their insurers avoided duplicative and expensive environmental investigation costs, which otherwise would have been separately performed by each party’s own environmental consultant in preparation for trial.
This approach enabled the parties to present a unified and cooperative face to the regulatory agency and the court, which led to regulatory approval of a remediation plan consistent with the interests of, and agreeable to, all parties. There was a further benefit to all in the minimization of unproductive partisanship and the stresses litigation brings – and in the fostering of a professionally collegial environment where valuable services were delivered to all clients. The problem was jointly solved.
This case demonstrates that a cooperative approach, begun early in the life of an environmental dispute, can achieve a near-perfect outcome at a significantly lesser cost. And it can be done without prejudicing anyone’s right or ability to actively litigate the case if a negotiated settlement cannot be reached.
So why not try it?
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