The Boston Globe details the $175 million settlement of the 200 injured or killed persons who filed civil suits against 75 defendants:
An analysis of the tentative settlements in US District Court in Rhode Island reveals a stark fact: Several defendants whom plaintiffs blamed most for the disaster will likely pay relatively little because of negligible assets; other defendants with more tenuous links to the tragedy – but deeper pockets – will pay more.
"I don’t think there’s any logic to it at all," said SuS Longiaru, whose disabled 23-year-old son, John, was killed in the fire, which erupted moments after the band took the stage.
Still the 51-year-old Johnston, R.I., woman said she is eager for the settlements to be accepted so she and her family can begin to heal. Corporations and local governments linked to the disaster, even loosely, she said, must take responsibility.
They even have a proportional graph. Of course, we’re all supposed to look at that breakdown, where the defendants with the closest causal link to the harm apparently pay the lowest amounts, and conclude that the companies were scared into settlement to avoid a runaway jury abandoning all reason and common sense to throw a jackpot justice verdict at the bereaved, as they always do in wrongful death or catastrophic injury cases.
And so the article dutifully quotes a law professor with no apparent experience in torts practice (whose CV reveals a stint at the insurance-company funded American Enterprise Institute):
Peter H. Schuck, who specializes in tort law at Yale Law School, said some well-heeled companies likely settled to avoid bad publicity and the possibility of huge jury awards.
"The prospect of a jury verdict with punitive damages is one that casts a shadow over these negotiations, even if the defendants feel they have a strong case and aren’t liable," he said.
But let’s backup. Polyurethane foam has been known since its widespread use to be extraordinarily flammable, and the industry has operated since the early 1970s under a consent decree banning them from the previously-widespread practice of describing their materials in misleading ways to conceal their flammability. I do not know what the specific allegations were against the polyurethane foam manufacturers and distributors, but it’s not crazy talk to say that for decades they have been making a profit off of an extraordinarily dangerous material, the risks of which they have not always been candid about. Would it be surprising if, say, they had not been candid about the risks when selling this foam or that they had manufactured it in a way known to increase the risk of fire deaths? That’s over $60 million of the settlement.
Then there’s over $40 million from the radio station and beer distributors who paid money to attach their name to and to promote a traveling nightclub pyrotechnic show which apparently possessed none of the required licenses and training to conduct such an event.
Then there’s $30 million from the TV station that employed a cameraman who allegedly hindered people from escaping, and $10 million each from the town and state which repeatedly inspected the nightclub and found nothing wrong with its blatant fire code violations.
The balance then comes largely from the more obvious defendants, like the club owners.
Tellingly, there’s no indication whatsoever if any of these defendants with "tenuous links to the tragedy" are paying any of the settlement out of pocket, or if it’s all insurance coverage. Based on that, I’d assume it’s all or nearly-all insurance coverage.
At the end of the day, there is a simple lesson to this settlement: if you have a history of intentionally or recklessly wrongful conduct (like the polyurethane manufacturers), or you are profiting from the intentional or reckless wrongful conduct of others (like the promoters), you should expect to foot the bill for any tragedy relating to that wrongful conduct.
Want to avoid liability in the future? Don’t intentionally mislead consumers about matters of life-and-death. Pay attention to what your ostensible agents are doing, particularly with regard to the safety of the public.
Most of the big settlements and verdicts I’ve seen arise from one problem: the failure to give a second’s thought about one’s fellow citizen. That’s all it would have taken here.