Lead-Exposed Kids Lose Much of Damages Award

ST. LOUIS (CN) - Reining in a $358 million lead-poisoning verdict against the former owners of a smelter in Herculaneum, Mo., an appeals court struck punitive damages against Fluor Corp.

A jury had had awarded the verdict to Patrick Blanks and 15 other plaintiffs who growing up beside the smelter in late 1980s and early 1990s. The youngest plaintiff turns 14 next month, while the oldest is 30.

The IQ loss and other health problems that these children suffered because of exposure to lead is recounted in a 166-page opinion, followed by 14 more pages of appendices, published Tuesday by the Eastern District of the Missouri Court of Appeals.

Their $358 million award from a St. Louis jury in July 2011 included $320 million in punitive damages. Fluor, a former owner of the smelter, was left on the hook for $240 million of that verdict, with the rest falling to A.T. Massey Coal and Doe Run Investment Holdings (DRIC).

On appeal, the former owners claimed that jurors received improper instructions and relied on flawed expert testimony.

Though the appellate panel struck the $240 million punitive award against Fluor on Tuesday, it upheld the award of $48 million in punitive damages against A.T. Massey and the award of $32 million in punitive damages against DRIC.

"The children here sought to hold Fluor liable under traditional agency principles merely because of its domination of and control of its subsidiaries," Judge Lawrence Mooney wrote for the court. "This is insufficient. Therefore, we hold that a principal-agent relationship was not established, and thus the parent company, Fluor, cannot be held liable for the actions of its subsidiaries under an agency theory purely on the basis of domination and control."

Another flaw in the plaintiffs' theory is that they seek to hold Fluor liable based on its own acts rather than based on the acts of its subsidiaries.

"Given the conjunctive submission and a singular award dependent on Fluor's conduct, we cannot determine what portion of the award the jury assessed to punish Fluor's conduct as a partner, and what portion of the award the jury assessed to punish Fluor's conduct as a dominating principal," Mooney wrote.

In upholding the findings against Massey and DRIC, the panel noted that those punitive-damages awards "are based on the partnership's knowledge and conduct."

"At this point, little else needs to be said in that regard," Mooney wrote. "We find the partnership's conduct highly reprehensible. The harm suffered by the children was both physical and economic. Defendants' conduct was deceitful, involved repeated actions, and evinced an indifference and reckless disregard of the health and safety of the children. Defendants' claim on appeal that any reprehensibility factor is 'minimal' ignores the evidence that the jury obviously accepted."

Judges Roy Richter and Kurt Odenwald concurred.

The matter has been remanded back to state court.

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