"Managing this case is like suddenly flying a Boeing 747 after a lifetime of piloting single engine planes," said U.S. District Court Judge Raymond L. Acosta. "It differs from my other cases by pure force of numbers."
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In a cramped office complex at the San Juan federal courthouse Judge Raymond L. Acosta, standing left and his "DuPont team" are managing the largest, disaster litigation in U.S. history.
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Easygoing, softspoken Acosta is orchestrating, albeit with iron hand, the largest disaster trial in the U.S.: the tragic DuPont Plaza Hotel fire.
Numbers alone tell part of the story: 2,300 plaintiffs are suing 226 defer to narrow the number of issues and cut time otherwise lost in arguing the same point over and over again.
Nonetheless, the sheer number of plaintiffs, defendants and the paperwork involved has created headaches and remedies. It also has made Acosta set his own rules, including designing a special form to keep track of the disposition of motions at a glance. The so called "minute order form" turned out to be so popular among other federal judges here that it's now standard.
Yet, as the discovery process went on, Acosta has kept his regular judicial case load. But he had to beef up his staff which now includes three law clerks: Richard Graffam, Vilrna Vilâ and Pedro Malavet.
Also, Suzanne Foulds, a veteran of the Las Vegas' MGM Hotel fire litigation, was brought in to run the Joint Document Depository, where the tons of documents generated by the case are available to all parties.
Another MGM fire veteran was recruited as settlement coordinator: Pennsylvania Judge Louis C. Becthle, who presided over the Nevada trial. The MGM fire, which cost 85 lives, was finally settled for $250 million.
But Acosta's real aide-de-camp is ensconced in a tiny sixth-floor office in the San Juan federal courthouse. Magistrate Justo Arenas, who is a part of the "DuPont team," rules upon most discovery questions and nondispositive matters in the litigation.
"The functions of the magistrate are extremely time-consuming as he wrestles daily with discovery disputes from all over the country," Acosta said. He explained that with Arenas' help he has been free "to concentrate on overall planning, implementation methods and dispositive matters."
Controlling chaos
How to keep order in what could easily become judicial chaos has been Acosta's main concern from day one.
"It was obvious from the start that the only way to spell judicial relief in this case was c-o-n-t-r-o-l," Acosta said. "Specifically, the court immediately had to institute a management plan that presented solutions to anticipated problems rather than fall into the trap of reacting to piecemeal issues presented by the parties.
"Control means not only holding tight reins on attorneys, observing strict deadlines and maintaining organizational prerogatives, but also establishing a theme, in addition to the fair, speedy and efficient resolution of the matter," he added.
To try to anticipate whatever problem might crop up, Acosta explained, the DuPont team role-plays situations exploring the various strategies litigants will pursue and their ramifications.
And it works, said plaintiffs' attorney Harvey B. Nachman.
"It's better managed by the court and more efficiently kept on track" than smaller, routine cases, Nachman said of the DuPont case.
However, not everyone is happy with the handling of the case so far.
"I'm not very pleased," said Salvador Antonetti, local counsel for the hotel. "Some rulings have been made to facilitate a settlement and not to bring to light all the facts in a logical order.
"It doesn't seem to be very logical to try to pierce the corporate veil before addressing the issues," he said.
The DuPont family defendants' are reportedly upset because Acosta has decided that the first of five trials should look at the hotel's corporate structure. Tie other subtrials will be to determine liability of the hotel, the products manufacturers and the service companies anti, if necessary, any other damages.
In a November motion, the hotel told the court that the plaintiffs' requests for early and separate trials were a form of coercion to force them to "capitulate and settle, thus setting the stage, domino-fashion, for a global settlement."
Despite the opposition by the DuPont family defendants, the judge is also scheduled to later look at the suit filed by the hotel against the Teamsters under the Racketeer Influenced Corrupt Organizations (RICO) Act.
Meanwhile, Nachman describes the pace of the proceedings imposed by Acosta as "brutal."
"When you take the number of defendants and the number of issues involved, to keep' on his [Acosta's] schedule has been in some cases oppressive," Nachman said. "We've taken more than 5,000 depositions, that's more than most people take in a lifetime."
Acosta agrees he is keeping a very tight schedule, but he won't relent.
"We've had as many as 30 depositions a day," Acosta confirmed.
The process has taken litigants all over the Western world.
"Most of our lawyers live out of suitcases for months on end," said Nachman. "I recently went to two places I've never been before — Vienna and Zurich — and I don't know what those cities look like. We worked for eight days."
Nachman's eight-day European trip also included a stop in Madrid, where eight depositions had to be taken.
Similar pressure is felt across town, where the DuPont Plaza's local counsel, Fiddler, Gonzalez & Rodriguez, has deployed a whole team of lawyers to work around the clock on the depositions and other discovery issues.
"There were days when we had to take 14, 15 depositions in and out of Puerto Rico," attorney Salvador Antonetti said.
So far, both Nachman and Antonetti have devoted "most" of their time to work in the DuPont case. From now on, both agree, the litigation will take "100 percent" of their time.
Acosta has not only kept everybody working at a hectic pace. He has also laid down very strict rules. His ire already has been felt by some lawyers.
For example last January, Nachman and plaintiffs' steering committee chairman Wendell H. Gauthier, of the Louisiana law firm of Gauthier, Murphy, Sherman, McCabe and Chehardy, were fined $500 each for some comments they made to a San Juan business publication.
Acosta said that in their remarks the lawyers described their case against the hotel.
More recently, legal celebrity Melvin Belli and Richard E. Brown were fined $5,000 each for filing suit on behalf of a man who had been dead for 12 years before the fire.
If Acosta has been tough with plaintiffs' lawyers, with defendants' he has not been soft, either.
Last month, Acosta fined hotel attorney James Fetterly $7,500 after it was discovered that despite a prior agreement, some relevant evidence had been "squirreled away" to be secretly tested in California.
In a 16-page pre-trial order, Acosta angrily left the door open for taking further sanctions against the hotel if he found that expert witnesses had been tainted by the hidden evidence. He has yet to decide how much of the DuPont evidence will be eventually eliminated because of the secret California warehouse incident.
Also, he has adamantly refused to grant a gag order requested by defendants, and turned down motions that could have left unpierced the corporate veil that surrounds the DuPont Plaza Hotel ownership.
The judge also has defeated, according to Nachman, every attempt to delay the trial.
The Corporate Web
Contrary to many other mass disaster litigations, where the defendants are clearly known, the DuPont case is made more complex by the shroud of secrecy that appears to surround the San Juan DuPont Plaza Corporation, owners of the hotel.
Who is ultimately liable is a major issue in dispute and Acosta has pushed forward his original June trial date to March 15 to find out. At that time, he will decide if the DuPont related corporations have abused their corporate privilege to avoid liability.
If so, the plaintiffs could have access to the personal fortunes of major stockholders.
One of the reputed owners of the San Juan DuPont Plaza Corp. — Theodore Smythe — reportedly reached last year an $8.5 million settlement with plaintiffs. The Smythe money is to be kept in trust until the end of the trial.
But from the beginning, the plaintiffs' attorneys have zeroed in on a group of California investors, who operated under an umbrella corporation called Holders Capital Corp., which they claim is the parent company of Hotel Systems International, which in turn owns the San Juan DuPont Plaza Corporation.
So far, the plaintiffs' main target has appeared to be Brian Corbell, who is said to own 58 percent of Holders Capital.
According to the plaintiffs', Corbell is also the chief executive of Hotel Systems, Grand Hotel Inc., Madison Wholesale, Dallas Asset Management Inc., IMS International, BTH Hotels Reservation, San Juan DuPont Corp., San Juan DuPont Plaza, HCC Asset Management Inc. and several other companies.
But sources familiar with the case have told the STAR that the plaintiffs' apparent interest in Corbell is just a smokescreen to eventually reach a third Holders Capital's shareowner: William Lyon.
"The plaintiffs' real target is a man called William Lyon," legal sources said. "If they squeeze Corbell they might be able to get $3 million or $4 million out of him. Lyon is the man with the money. He owns half of southern California."
Lyon, who owns a 21 percent share in Holders Capital, is also a limited partner in Hotel Equipment Leasing Associates, which leased the building to the San Juan DuPont Plaza Corp.
"Their problem is that his link [to the DuPont hotel] is very tenuous," sources added. "He has not even set foot in Puerto Rico since 1942 when he was in the Army."
Whether the ultimate target is Corbell's or Lyon's money makes no difference to the plaintiffs. Either way they have had to follow a byzantine paper trail in their effort to try to pierce their corporate veil.
"There have been inquiries into finances, examination of tax returns, books. . ." Nachman said. "All sides have had to employ experts because everything has to be sifted through ar.d made into a cohesive whole."
All the paperwork eventually reaches Acosta's office complex where the DuPont team meets twice a week to review at least 800 new documents.
In turn, the hotel's lawyers have used every possible argument to ward off inquiries into the corporate chain.
In a Dec. 9 motion to dismiss claims against Lyon at the San Juan Superior Court case, the corporate veil issue was again a sensitive point.
To assume jurisdiction in Lyon's case, warned his local counsel Etienne Totti del Valle, "would be sending a warning to thousand of foreign investors to reexamine their investment and the investments of those corporations where they might have an interest and determine if they should withdraw the money invested in Puerto Rico when the investor has no control over .the local operation." •
"The practical consequences for Puerto Rico for assuming jurisdiction in Lyon's case could be disastrous," Totti del Valle added.
Money
The bottom line is money — money to be spent, money to be paid and money already spent.
"This well-oiled machine runs on hard work by everyone concerned, tight control from the court, and, of course, money," Acosta said.
Before the trial begins next March, the court will incur an unprecedented expense: refurbishing a large space to hold the crowds of lawyers that will daily attend the trial.
"At least 100 lawyers will take part in the first trial," Acosta said. "There will be hundreds of witnesses, hundreds of lawyers."
Defendants alone have retained 135 lawyers.
To find room for everybody, the court is considering leasing one of two shutdown movie theaters — the Cinerama and the Cortes — or an 11,000-foot office space in the Hato Rey banking district.
Acosta jokingly describes the Roberto Clemente Coliseum as the ideal location but, tongue in cheek, laments that it would not be available for the lengthy series of trials.
Whatever the decision on the eventual site for the courtroom, local carpenters apparently are in for a boom.
"We'll have to build a bench, a witness box, a jury box," Acosta said. "Everything has to be in wood so a lot of carpentry is going to he involved."
Still, Acosta is trying to keep litigation expenses down.
From the first day, the court set up a system of monetary assessments. Each member of the plaintiffs' steering committee was required to make an initial $50,000 contribution to fund the operation, and the plaintiffs' counsels had to pay $800 for each deceased victim and $300 for each injured named. Defendants are also required to contribute to periodic assessments.
In addition, the costs of running the document depository have to be shared by the plaintiffs and defendants, who, respectively, pay for 15 and 85 percent of the expenses.
The two biggest out-of-pocket expenses appear to be the taking of depositions and the hiring of experts. Attorneys' fees are expected to surpass $50 million.
"It's a big business kind of operation," Nachman said.
Expenses incurred by the plaintiffs' steering committee run into "several million dollars," said Nachman, who could not give an exact figure.
For the defendants the case has been much more expensive.
Antonetti said that up to now the litigation has cost the hotel alone some $20 million.
If you add all the parties, several sources agreed, the tab for the trial has already gone over $70 million.
Besides the joint document depository in Old San Juan, both sides have had to set up independent offices to handle the case work. In addition, many of the U.S. lawyers have begun to rent local offices for the duration of the trial.
The forthcoming trial and, particularly, the discovery process is also a windfall for other San Juan businesses, including law firms.
"Whenever a status conference was called, 100 attorneys would show up, 50 or 60 from outside Puerto Rico," Antonetti said. "Ten of them would talk, the rest were there just as observers and charging by the hour."