Litigation doused by settlement in an ‘unprecedented’ time

A $4 billion agreement Friday to settle every loss claim over Maui’s wildfire disaster of nearly a year ago is a monumental deal, but much work lies ahead to wrap up Hawai‘i’s biggest incidence ever of mass tort litigation.

The total number of claimants remains to be seen, and how proceeds get divided will be another complicated task.

The settlement itself remains subject to approval by a state judge, and the biggest contributor to the proposed settlement fund, Hawaiian Electric, will pay its $1.99 billion share in four equal annual installments.

Gov. Josh Green said Friday that about 2,200 plaintiffs have lawsuits pending over the Aug. 8 fire in Lahaina, which killed 102 people and destroyed most of the town, including about 3,500 homes and numerous businesses.

However, about 10,000 entities, mostly people but also companies that suffered Maui wildfire losses, are represented by law firms, and only a fraction have filed lawsuits to date, according to Jesse Creed, an attorney with California-based law firm Panish Shea Ravipudi LLP representing plaintiffs in more than a dozen cases.

“It’s enormously complex and the magnitude is huge,” he said, noting that many people suffered harm ranging from death and injury to losses of homes, businesses, jobs and personal property.

The settlement agreement is a “global” one intended to cover all claims made for Maui fire losses, including claims in lawsuits expected to be filed in the days and months ahead.

About 615 lawsuits have been filed to date in state court, including more than 20 filed the same day the settlement agreement notice was filed.

Litany of litigation

The first two cases were filed four days after the fire, and the swelling litigation pipeline since then has taken several pivotal twists and turns that included a diversion in federal court, a special efficiency proceeding, a coin flip and months of work by three mediators.

Most cases were filed in Hawai‘i’s 2nd Circuit Court district on Maui, and generally make similar allegations as to the cause and contributors of what became the deadliest U.S. wildfire in a century.

Plaintiffs pretty universally allege that the Lahaina fire was started by Hawaiian Electric power lines that blew down in gale-force winds. Many cases also allege that the fast-moving inferno was fueled by dry vegetation on land owned by the state, county, Kamehameha Schools and West Maui Land Co. Additionally, Spectrum Oceanic LLC and Hawaiian Telcom, which share infrastructure with Hawaiian Electric, are defendants in many cases.

The litigation has led to some defendants filing cross claims against other defendants, and one case was even filed by Maui County against Hawaiian Electric.

Some plaintiffs also blame Maui County and the state for insufficiently warning residents as the fire spread.

In December the expanding number of cases got detoured to federal court in Honolulu by defendants that claimed state court wasn’t the proper place for the litigation because some plaintiffs and defendants are from different states.

A federal judge decided in March that state court on Maui was the correct venue. All these cases have been assigned to 2nd Circuit Chief Judge Peter Cahill.

In May, Cahill picked four cases to proceed to trial first.

These bellwether cases involve three homeowners, three renters, a business owner, a person who was burned, and two relatives of someone who died.

Trials for these cases were scheduled for Nov. 18, and they stand to greatly influence how all claims get resolved for fire victims.

Bellwethers

A coin flip in court determined which of two cases would go first.

The first bellwether case was filed on behalf of five plaintiffs who suffered different losses, including Darlene Gomes, who lost her home in the fire, and Doris Daniela White, who lost her business Maui Memories. The other plaintiffs — Paula Jelsma, Anderson Byrne and Saif Shaban — were tenants in residential rentals that were damaged or destroyed, and lost personal property.

The second bellwether case has three plaintiffs, including two nieces of Terri Thomas, who died in the fire.

Thomas, 62, was a longtime Lahaina resident who family members said died in her vehicle while attempting to escape with an elderly neighbor, a male friend and her dogs.

According to the lawsuit, Thomas raised two nieces, Terra and Debra Thomas, who suffered losses that include the support and love of their aunt as well as mental anguish.

The third plaintiff in the case with the surviving relatives of Thomas is Galen Hashimura, whose Lahaina home burned down.

Jan Apo, a Maui attorney whose immediate and extended family lost about a dozen residences and rental homes to the fire, is the plaintiff along with two Apo family trusts in the third case scheduled for trial. Apo also represents plaintiffs in 30 or more other Lahaina wildfire cases.

The last bellwether case was filed on behalf of Donnie “Roxx” McIntire, who, according to the complaint, suffered burns to his skin and lungs while fleeing the fire with no warning. Mc­Intire also lost his house along with income, had livestock and pets that were injured, and has endured pain and suffering, according to his lawsuit.

Between all four cases, claimed damages more or less represent elements of what is involved with all the litigation.

Special proceeding

To more efficiently manage the swelling pipeline of lawsuits over the Lahaina fire, as well as an Upcountry fire on the same day that destroyed about 20 homes, Cahill approved a special proceeding where a handful of plaintiffs’ attorneys coordinate certain procedures that are shared by all cases, such as document discovery and depositions.

This special proceeding includes joint hearings on issues involving questions of law or fact that are common to all the cases but does not merge individual cases into one. Individual cases, including new ones filed, essentially join the special proceeding.

Currently, the special proceeding is in a discovery phase that includes producing documents and taking depositions. On Friday, attorneys representing trustees of Kamehameha Schools were scheduled to take a cross-deposition of representatives of the state on topics that include not activating sirens to warn residents of the fire.

Now, because of the settlement agreement, attorneys representing plaintiffs and defendants have asked Cahill to pause activity in the litigation while terms of the settlement are detailed and considered for court approval.

Settlement effort

Cahill appointed three mediators — Keith Hunter of Honolulu-based Dispute Prevention & Resolution Inc. and retired Los Angeles Judges Louis Meisinger and Daniel Buckley — who worked to help the parties reach a settlement over several months.

According to a Friday court filing, the mediators made a proposal that “reflected their informed view of the maximum amount that the Paying Parties could fairly and practicably contribute based on the facts and circumstances of the case, including potential exposure, availability of insurance, and limitations on ability to pay.”

The exact sum is $4.037 billion.

In mass tort litigation, it is typical for most cases to be settled, often after one case is decided at trial, but also sometimes before a first case is decided in court.

Green said Friday in a statement that settling such a matter within a year is unprecedented.

“My priority as governor was to expedite the agreement and to avoid protracted and painful lawsuits so as many resources as possible would go to those affected by the wildfires as quickly as possible,” he said.

One challenge recently to settling the Maui wildfire litigation was an effort by insurance companies to offset claim payments they made to victims.

More than 140 insurance companies are plaintiffs in one lawsuit filed in January claiming that Hawaiian Electric and some other defendants were responsible for the losses and therefore should reimburse the insurers for claims paid.

Under the tentative settlement agreement, the insurance companies are expected to be totally or largely excluded from proceeds.

Also under the settlement deal, contributions by the defendants to an existing victim compensation fund led by the state will be credited to their share of settlement funding.

This $175 million One ‘Ohana Fund offers to pay surviving family members who lost loved ones $1.5 million, and less than that amount to people who suffered severe injuries if recipients forgo litigation.

Forty-seven claims — 35 for death and 12 for personal injuries — were received by the fund’s July 15 deadline. However, accepting One ‘Ohana claim payments could be affected by the pending settlement.

Creed said that in mass tort litigation an independent administrator typically determines how much each plaintiff receives depending on their circumstances.

“It remains to be seen how the total amount of money will be divided up,” he said with regard to the Maui fire cases.

As for how much attorneys representing plaintiffs will receive, that depends on arrangements each plaintiff has with their counsel.

Both Green and Hawaiian Electric said once the settlement agreement is finalized with all necessary approvals, payouts would be made no earlier than mid-2025.