NEW ORLEANS, Sept. 12 - For three hours on Monday, 12 angry black jurors argued over how much corporate America should pay for what they saw as sheer callousness.
Their focus was a leaky, unattended rail car that caught fire 10 years ago and burned for a day and a half in a mostly black neighborhood here. Two interstate highways were closed, and people were evacuated over 200 city blocks in the middle of the night. The railroad refused to take responsibility for the fire and initially declined the mayor's frantic request for help. It did nothing to help those evacuated, reasoning that it would be improper because residents were already filing suits against the company.
But a jury decided 11 to 1 that the railroad had to be held accountable. After hearing arguments from one of the nation's most prominent plaintiffs' lawyers, a man who hunts alligators in his spare time and who asked for $4.6 billion in damages, the jury awarded nearly $3.4 billion - $2.5 billion of that from the railroad owned by the CSX Corporation.
A lawyer for CSX blamed the award on a runaway jury. But in talking to jurors, it becomes clear they opted for a huge award to spur change.
"We just wanted to send them a message that you just can't ignore people," said McKinley Day, a 58-year-old retired chief petty officer for the Navy. "We felt if we hit them a good, big whop, they'll do something - they'll stop parking those toxic chemical cars in the residential areas."
About half the jurors suspected racism had put the tank car in the area in the first place, Mr. Day said. "I would think it was racial," said Alvin Parker, a juror and 56year-old taxi driver, "because it was a black neighborhood."
Emotions stirred by that belief pushed the punitive awards higher, said Mr. Day, who said he did not agree with the racism argument.
The verdict made headlines nationally and stunned CSX, which had been cleared by a Federal investigation into the accident. To corporate defense lawyers, the New Orleans case was another example of a runaway jury doling out an award way out of proportion to the damage that in this case was hard to identify. There was no proof of deaths or serious injury. Even the plaintiffs' lawyers acknowledged that there was no medical proof any of the symptoms described by the victims - ranging from watery eyes to lung damage - were caused by the fire.
But corporate carelessness in the minds of jurors can be costly. A Federal jury in 1994 ordered Exxon to pay $5 billion in damages to 34,000 fishermen and other Alaskans who said they had been harmed by the Exxon Valdez oil spill. Exxon is appealing the judgment. Union Carbide settled with the Indian Government for damages of $470 million for the chemical disaster in 1984 that killed thousands of people.
More recently, a hot cup of McDonald's coffee that spilled on a customer resulted in a jury award of $2.7 million. The amount was later reduced to $640,000, but it highlighted a pattern of stiff penalties for corporate disregard of potential hazards.
Ironically, corporate America opened the door for many of the huge awards, said Gregory Joseph, chairman of the litigation section of the American Bar Association. The biggest punitive damages tend to come in class-action suits, he said, and until the mid 1980's, it was thought that personal injury suits did not qualify as class actions. But A. H. Robins, maker of the Dalkon Shield, argued that a class action was the most efficient way to deal with the thousands of suits brought by women injured by its contraceptive. It did not take long for plaintiffs' lawyers to realize class actions could benefit them as well.
In this case, the railroad and other companies say they did nothing illegal. But jurors said the railroad should have been more attentive. "They were following the policies and procedures of their companies," said Terrie Collins, a juror and 33year-old hospital worker. But, she added, "From the testimony that I heard, the job was a little bit careless."
Ms. Collins said she thought that Federal laws that govern the handling of rail cars containing hazardous materials should be tightened and that railroad employees should receive more training for handling them.
Wendell Gauthier, a nationally known plaintiffs' lawyer in the case, said, "They were playing with disaster. They knew it could happen, and they didn't do anything to improve their system."
The fire started at 1:50 A.M. in Gentilly, a quiet neighborhood of tidy, lower-middle-class homes northeast of the French Quarter. The area is shadowed by Interstates 10 and 610, which converge overhead. The CSX Transportation rail yard where the rail car was parked is almost directly under Interstate 10.
A tank car filled with about 30,000 gallons of butadiene, a petroleum product used to make the rubber backing on carpet, had been moved there at 7:35 P.M. by the Alabama Great Southern Railway, another defendant in the case. At some point, the rail car began leaking its hazardous cargo through an improper gasket that had been installed by the Phillips Petroleum Company, which had owned the rail car until 1986.
A fog of butadiene rolled out across neighborhood lawns until it reached the pilot light of an outdoor gas water heater, which ignited the chemical.
During the trial, Sidney Barthelemy, the Mayor of New Orleans at the time of the fire, testified that the railroad used to park tanker cars in the city's historic French Quarter, a fashionable residential and tourist area, but city officials persuaded it to move the cars elsewhere, thinking they would be moved to a nonresidential area.
The former Mayor also testified that he was reduced to screaming and cursing in dealing with CSX after the fire broke out because the company at first refused to take responsibility for the burning tanker and assist in bringing in experts to fight the fire.
Kathy Ragas, who was four months pregnant at the time, was asleep in her home 50 feet away from the rail car the night the fire started. "We heard this big loud noise. It was like a bomb," she said in an interview. "It shook the whole house. I was knocked off the bed."
Mrs. Ragas, one of the residents who later joined the class-action suit, said she thought injuries from the fall and from the black smoke she breathed as she and her husband fled were the reasons her son was born two months prematurely and has dyslexia and a speech impairment.
She also attributes her chronic cough and vomiting and her husband's scarred lungs to the smoke.Last month, in the first phase of the New Orleans trial, the same jury awarded a total of almost $2 million in compensatory damages to Mrs. Ragas and 19 other plaintiffs. She received the highest single compensatory award, $300,000.
At a press conference last Thursday, another plaintiff, Judith Bell, complained of being nervous since the fire and of the disappearance of her two dogs during the evacuation. She has allergies now, she said, and does not enjoy living in her Gentilly home as much as before. The jury awarded almost $212,000 in compensatory damages to her. If the $3.4 billion in punitive damages stands, she will share in that as well.
While the compensatory damages raised eyebrows, it was the huge punitive award that drew criticism from lawyers, lawmakers and the railroad.
"People should be fairly compensated for injuries," said Ron Gomez, a former Louisiana lawmaker who is now executive director of Citizens Against Lawsuit Abuse. "But awards like these are an indication that the civil courts in Louisiana have become a lottery for plaintiffs and their attorneys."
Marty Fiorentino, a spokesman for CSX Transportation, a subsidiary of CSX, said, "We're disappointed obviously with this verdict because there were huge awards where there was little harm." Also, he argues, CSX did not make the problem tank car, did not own it, did not install the gasket, did not load the butadiene and did not move the car after Alabama Great Southern dropped it off at CSX's interchange yard. CSX merely owned the track where the tank car sat and was scheduled to take it to Chattanooga, Tenn.
Among the other defendants, the Illinois Central Railroad Company and the Alabama Great Southern, part of the Norfolk Southern Corporation, moved the car toward the New Orleans neighborhood. GATX Terminals loaded the car with butadiene, and Mitsui & Company arranged the shipment of the chemical. The jury assessed those levies ranging from $125 million to $375 million.
Meanwhile, Phillips Petroleum, which installed a rubber gasket instead of the appropriate asbestos one, was not liable for punitive damages because of a quirk in a Louisiana law, which was later repealed. With hazardous materials suits, only, those companies who actually handled, stored or transported the chemicals could be assessed punitive damages.
Jurors used the companies' financial statements to determine how: much each defendant could afford' without bankrupting them, Ms. Collins said. CSX Transportation is by: far the largest of the defendants; with $5 billion in annual revenue.
There was intense disagreement among jurors over how much in punitive damages to give, Mr. Day and Ms. Collins said. Lula Ladmirault, a 60-year-old day-care worker, opposed any. She was the lone holdout in the verdict. "None of the people were sick - had any long-term illness," she explained. "Most of them, the biggest thing was fear and fright" - but they had not gone to a psychiatrist, she said.
"The punishment should fit the crime, that's the way I feel," Mrs. Ladmirault said. "To me, it was just a bunch of people being greedy - a bunch of lawyers and people being greedy."
Mrs. Ladmirault may be right about the need for punishment to fit the crime. Sherman Joyce, president of the American Tort Reform Association, said the United States Supreme Court, in a case involving a doctor in Birmingham, Ala., who bought a BMW, had ruled last year that punitive damages must bear a relationship to compensatory damages. A lower court jury gave the doctor $4 million because the auto maker did not tell him it had partly repainted his sedan to touch up damage. The Supreme Court sent the case back to an Alabama court, which cut the award to $50,000.
In the CSX case, even some jurors expect the award to be reduced. The reason for the oversized award is simple, Mr. Day said. If jurors had assessed only a few million, he said, "They'd just say, 'We got that. We can pay that out of petty cash and forget about it.' " With this award, he said, "I think corporate America's going to get the message."