A recent Law 360 story by Mike Curley, “Zurich to Pay $1.5M For Sanctions in Fluor Coverage Suit,” reports that a Missouri federal judge ordered Zurich American Insurance Co. to pay $1.5 million in sanctions for disobeying court orders to turn over documents in a coverage dispute stemming from lead poisoning and pollution suits against Fluor Corp. The sum is meant to cover the amount Fluor spent in its efforts to get certain documents relating to a period in 2010 while Fluor was fighting the pollution suits, which it said would have enabled it to settle the suits at a lower cost than the $300 million deal it initially struck.
Though Fluor had requested either $7.1 million or $15.4 million for the sanctions using two different methods of calculations, U.S. District Judge E. Richard Webber found that Fluor had both overstated the amount of work the sanctions should cover and its fees. The order stems from a finding in December, in which Judge Webber sanctioned the insurer over its failures to find and turn over documents illuminating a period in 2010 when Fluor might have been able to settle the numerous suits.
At the time, the judge did not state the amount of the sanctions, but in a February filing ordered Zurich to pay Fluor's attorney fees and costs to obtain the discovery at issue, and Fluor filed a statement of fees, asking for between $7.1 million and $15.4 million. According to the order, Zurich disputed the amounts, saying Fluor improperly included in its calculation fees for work performed unrelated to the discovery dispute, such as expert fees and briefing of unrelated motions.
Judge Webber rejected the $15.4 million sum, as it included all attorney fees Fluor incurred between February 2019, when the court issued its first sanction order, and the December 2020 hearing, and thus went against his order, which directed Fluor to calculate the fees related to the discovery dispute specifically.
While Fluor argued that the entirety of those 21 months of litigation would not have been necessary if Zurich had complied, the judge rejected the argument, saying it would be "excessively punitive," as it includes fees that would've been incurred regardless of Zurich's sanctioned conduct.
For the $7.1 million sum, which comes from a more itemized list of fees, the judge first slashed it by 60% to about $3 million, saying Fluor's proposed attorney fee rates of $840 and $930 per hour are far above the reasonable rates for the St. Louis market, while $350 per hour is more reasonable. The $7.1 million request also includes work unrelated to the discovery dispute, Judge Webber said, and he cut it in half again, resulting in the $1.5 million sanction.
Zurich sued Fluor in March 2016, claiming it doesn't have to indemnify the engineering company after it reached a roughly $300 million settlement in 2014 over lead poisoning and pollution suits encompassing 63 cases — known as "Bronson/Smoger" cases — from residents in Herculaneum, Missouri, which is home to a lead smelter.
Fluor, in turn, countersued, saying Zurich's failure to strike a deal caused the construction and engineering conglomerate to go to trial on the residents' claims, resulting in the hefty verdict, when the insurer could have ended the case with a settlement of under $7 million.
Zurich had previously been sanctioned in February 2019 when Judge Webber found Zurich willfully didn't comply with his orders to turn over documents and eventually awarded $244,000. Later the same year, Fluor requested sanctions again, in response to which the judge ordered Zurich in August 2019 to turn over an extensive list of documents to Fluor.