By DIRK JOHNSON, SPECIAL TO THE NEW YORK TIMES
Published: November 13, 1988
LEAD: The Shell Oil Company and a large Denver law firm have been charged in a suit with conspiring to conceal years of pollution at the Rocky Mountain Arsenal near here.
The Shell Oil Company and a large Denver law firm have been charged in a suit with conspiring to conceal years of pollution at the Rocky Mountain Arsenal near here.
The suit, filed this month in California Superior Court in San Mateo by the Travelers Insurance Company, seeks $66 million in damages from Shell Oil and the law firm that represents it, Holme Roberts & Owen.
Stephen Gillers, a professor at New York University Law School who is a specialist in legal ethics, said suits against law firms that once would have been filed only against their clients are becoming more common. He said several major New York law firms had been sued in similar fashion.
The court case filed against Shell and its law firm stems from the pollution of the 27-square-mile arsenal, next to Denver’s Stapleton Airport, and the area’s water supplies. The arsenal is contaminated by the residues of nerve gas and other chemical weapons the Army made from the early 1940′s until the late 1960′s and by waste from the production of pesticides and herbicides by Shell on land leased at the arsenal from 1952 to 1982. The chemicals have seeped into fresh water and underground water supplies in the area.
The Army sued Shell here in 1983 to force it to help pay for the cleanup. A settlement, which needs court approval, would require Shell to pay at least $500 million toward the cleanup and for the Federal Government to pay at least that much.
But when Shell sought reimbursement from its insurance carriers, with Travelers being one of the primary companies, they refused to pay, contending that Shell willfully and intentionally polluted the area. They maintain that their coverage does not extend to those Shell activities because their general liability policies cover only accidental and chance events.
In response, Shell sued Travelers and 250 other insurance companies for the money in a case still pending in San Mateo, Calif. The suit was filed in California because Shell is also seeking reimbursement for the cleanup of a toxic waste site in the state.
And now Travelers has filed its countersuit. It charges that Shell ”knowingly and intentionally released pollutants into the environment since commencement of its operations.” The suit says Holme Roberts conspired with Shell to mislead Travelers about the the extent of the pollution.
A spokesman for Shell described the suit as ”totally without merit,” and a spokesman for the law firm characterized it as ”baseless.” Edgar Benton, a senior partner with the firm, one of Denver’s most prestigous, charged that the Travelers suit was an attempt to ”divert the vigorous prosecution” by the law firm against the insurance company. Travelers Aided Shell Fight
Travelers had earlier paid $16 million to Shell for its legal efforts in fighting the Government suit. Travelers contends in its suit that the evidence gathered in that effort is now being used in the Shell suit against Travelers and the other insurance companies. In essence, Travelers is contending that Shell and the law firm have used Travelers’ money in legal efforts against the insurance company.
The Travelers suit seeks the return of the $16 million paid to Shell and $50 million more in punitive damages. The suit contends that Holme Roberts first became involved in litigation at the arsenal in 1972, when a farmer accused Shell of polluting his irrigation wells. The suit charges that Holme Roberts learned the extent of Shell’s pollution as the oil company’s counsel.
Speaking of lawsuits against companies and their law firms, Professor Gillers said, ”The trend is for someone to say to the law firm, ‘Your client injured us and you either knew about it, helped them or failed to stop them.’ ”
He said there were two basic reasons for the growing number of such suits. He said that by making a law firm a defendant, it was possible to force the disclosure of more information than might come out in a case involving only the firm’s client, and that a law firm, as a defendant, would rather settle a case than face a court battle.