Exhibit 10.16

Case 2:14-cv-01374Document 1108Filed 10/31/16Page 1 of 6 PagelD #: 37839

 

 

SETTLEMENT TERM SHEET

 

This term sheet sets out the principles, terms and conditions of the agreed upon
settlement between West Virginia-American Water Company (“WVAW”), American Water
Works Service Company, Inc. and American Water Works Company,
Inc.  (collectively, the “American Water Defendants”) and all class members,
putative class members, claimants and potential claimants (collectively,
“Plaintiffs”) as described below. The parties will further document all
necessary detailed terms and criteria that will govern the settlement, the court
approval process and the administration of claims in a final settlement
agreement (“Agreement”). The final Agreement will identify a proposed settlement
class for certification by the Court and the parties will direct notice to the
class members and seek final Court approval of the Agreement consistent with
Rule 23 of the Federal Rules of Civil Procedure.

 

 

1.

By entering into this term sheet and any subsequent settlement agreement, the
American Water Defendants admit no fault or liability for any of the allegations
made in any of the actions to be resolved.

 

 

 

2.

The parties will jointly develop a notice regime, subject to Court approval,
that will seek to maximize participation under this Agreement. In order to
accomplish this, the parties will retain a nationally recognized notice expert.

 

 

 

3.

Structure of Settlement Payments:  The parties intend that the monies made
available by the American Water Defendants under the settlement will be divided
into two tiers, with the first tier comprised of a settlement fund (“Guaranteed
Fund”) for making specified payments to qualifying class members and the second
tier comprised of a mechanism to determine and pay claim amounts (“Claim Based
Payments”) with adequate support for damages sought. The criteria for payment
including a potential cap on claims will be negotiated by the parties. The
American Water Defendants' total contribution under this settlement shall not
under any circumstances exceed $126 million.

 

 

 

a.

Guaranteed Fund:

 

 

i.

Following final approval of  the settlement  by  the  Court, the American Water
Defendants agree to contribute $76 million into a settlement fund to be
administered and distributed in the form  of  direct  payments  to residential
and business class members. In order to be eligible to receive this direct
payment, there will need to be satisfactory proof provided to the claims
administrator that as of January 9, 2014, the class member was a residential or
business customer of WVAW served by the Kanawha Valley Treatment Plant.

 

 

ii.

Each qualifying residential class member may receive a single uniform payment
(in an amount to be negotiated).

 

 

iii.

Each qualifying business customer may receive a single uniform payment (in an
amount to be negotiated) that will be treated as compensation for all claims or
potential claims by that business customer.

 

 

 

 

Active 30088085.5

1

 

 

--------------------------------------------------------------------------------

Case 2:14-cv-01374Document 1108Filed 10/31/16Page 2 of 6 PagelD #: 37840

 

 

 

iv.

Subject to further negotiation, the parties intend that the monies received from
the settlement between the Plaintiffs and Eastman Chemical Company (“Eastman”)
will be considered together with the monies in the Guaranteed Fund in this
settlement in making payments to qualified class members.

 

 

 

v.

Any monies remaining in the Guaranteed Fund after all timely claims have   been
paid shall first be used to pay claims made for Claims Based Payments as
discussed below, and if not exhausted by Claims Based Payments the remaining
monies in the Guaranteed Fund will be distributed as additional pro rata
payments to class members who accepted standard payments from the Guaranteed
Fund.

 

 

 

b.

Claims Based Payments:

 

 

i.

The American Water Defendants will make available up to $50 million for Claims
Based Payments. Class members who do not wish to accept the standard payment
from the Guaranteed Fund may forgo the standard payment and instead pursue a
Claims Based Payment based on submission of claim forms (by a date certain to be
determined) with appropriate objective documentation and a determination by the
settlement administrator of a demonstrated payment amount under criteria to be
negotiated by the parties.

 

 

 

ii.

Wage earners who were not customers of WVAW served by the KVTP on January 9,
2014 and who assert that they lost wages due to the closure of business
customers served by the KVTP may make a claim for a Claims Based Payment with
appropriate objective documentation and a determination by the settlement
administrator of a demonstrated payment amount under criteria to be negotiated
by the parties.

 

 

 

iii.

Claims Based Payments will be paid following determination by the administrator
of the amount to be paid to all claimants under the criteria to be negotiated by
the parties, with funds first depleting the remaining Guaranteed Funds and then
using the American Water Defendants' Claims Based Payment funds up to $50
million.

 

 

 

c.

Attorneys' Fees and Administrative Costs of Settlement

 

 

i.

The amount of attorneys’ fees and costs payable through the settlement are
subject to approval by the Court pursuant to Rule 23 of the Federal Rules of
Civil Procedure.

 

 

 

ii.

All attorneys’ fees and administrative costs of settlement will be paid from the
Guaranteed Fund and/or Claims Based Payment fund expended and/or the Eastman
settlement amount in a manner to be negotiated.

 

 

 

 

Active 30088085.5

2

 

 

--------------------------------------------------------------------------------

Case 2:14-cv-01374Document 1108Filed 10/31/16Page 3 of 6 PagelD #: 37841

 

 

 

iii.

The American Water Defendants shall have no other obligation to pay attorneys'
fees or administrative costs of settlement.

 

 

 

4.

This proposal is intended to accomplish a global resolution of
all  litigation  and  all  potential claims against the American
Water  Defendants  and their  insurers  arising from the January 2014 chemical
spill into the Elk River from the Freedom Industries, Inc. site,  any uptake of
the spilled chemical into Kanawha Valley Distribution System operated by WVAW,
any response to the spill or the introduction of the chemical, and all effects
that resulted and all claimants irrespective of whether they are represented by
the signatories to this claim sheet, including an express release of all related
pending and future matters against any of the American Water Defendants in
either state or federal court, including those matters identified on Exhibit A.
[ADD LIST OF ALL MATTERS PENDING]. Individuals and entities who previously opted
out of the class, whether or not they have filed independent state court
actions, are expected to participate in the settlement and to release and
dismiss any pending or potential future claims against the American Water
Defendants and its insurers consistent with the scope of the release.

 

 

 

5.

The settlement is contingent on achieving participation of all potential
claimants though the parties anticipate that some relatively small number of
claimants may opt out of participation in any future settlement. Counsel who
have negotiated this Term Sheet on behalf of Plaintiffs have represented that
they intend to work within the terms of the settlement. The American Water
Defendants will have the option of terminating obligations under the Class
Settlement if opt outs exceed either 900 individual claimants or 250 business
claimants.

 

 

 

6.

Payment of claims will be made through an agreed upon claims process to be
administered by an agreed upon administrator. Plaintiffs and the American Water
Defendants intend to work with Eastman to develop a mutually acceptable claims
process that will allow distribution of funds from this settlement and the
Eastman settlement in a coordinated manner through a single administrator. The
administrator of the claims process shall be selected jointly by Class counsel
and counsel for Eastman and the American Water Defendants.

 

 

 

7.

This term sheet is binding in principle and subject to the Court’s approval of a
final settlement agreement, the terms of which will be negotiated to a
reasonable conclusion between Plaintiffs and the American Water Defendants.

 

 

 

8.

Regulatory Issues:

 

 

 

a.

WVAW will not seek rate recovery from the Public Service Commission of    West
Virginia for response costs incurred by WVAW relating to the Freedom spill. The
approximate amount of these potential claims that will not be pursued is $4
million.

 

 

 

b.

WVAW will not seek rate recovery from the Public Service Commission of West
Virginia for amounts paid pursuant to the final Settlement.

 

 

 

 

 

Active 30088085.5

3

 

 

--------------------------------------------------------------------------------

Case 2:14-cv-01374Document 1108Filed 10/31/16Page 4 of 6 PagelD #: 37842

 

 

Revision 10/31/16

 

/s/ Stuart Calwell

Stuart  Calwell,  Esq. (WVSB #0595)

Alex McLaughlin , Esq. (WVSB #9696)

The Calwell Practice, LC

Law and Arts Center West

500 Randolph Street

Charleston, West Virginia 25302

Phone: 304-343-4323

Facsimile: 304-344-3684

scalwell@calwelllaw.com

amclaughlin@calwelllaw.com

 

/s/ Kevin W. Thompson

Kevin W. Thompson, Esq. (WVSB #5062)

Thompson Barney

2030 Kanawha Boulevard, East

Charleston, West Virginia 25311

Phone: 304-343-4401

Facsimile: 304-343-4405

kwthompsonwv@gmail.com

 

/s/ Van Bunch

Van Bunch, Esq. (WVSB  #10608)

Bonnett Fairbourn Friedman & Balint PC

2325 E. Camelback  Road, Suite 300

Phoenix, Arizona  85016

Phone: 602-274-1100

vbunch@bffb.com

 

/s/ Jonathan R. Marshall

Jonathan R. Marshall (WVSB #10580) Bailey & Glasser LLP

209 Capitol Street

Charleston, WV 25301

Phone: 304-345-6555

Facsimile: 304-342-1110

JMarshall@baileyglasser.com

 

 

 

 

 

 

Active 30088085.5

4

 

 

 

 

--------------------------------------------------------------------------------

Case 2:14-cv-01374Document 1108Filed 10/31/16Page 5 of 6 PagelD #: 37843

 

 

 

/s/ Thomas J. Hurney, Jr.

Thomas J. Hurney, Jr. (WV Bar No. 1833)

JACKSON KELLY PLLC

500 Lee Street, East, Suite 1600  (25301)

P. O.  Box 553

Charleston, West Virginia 25322

(304) 340-1000

 

/s/ Kent Mayo

Kent Mayo (admitted Pro Hac Vice)

BAKER BOTTS L.L.P.

1299 Pennsylvania Avenue, NW

Washington, DC 20004

(202) 639-1122

 

 

Counsel for the American Water Defendants

 

 

 

Active 30088085.5

5

 

 

 

 

--------------------------------------------------------------------------------

Case 2:14-cv-01374Document 1108Filed 10/31/16Page 6 of 6 PagelD #: 37844

 

 

 

Revision 10/31/16

 

 

/s/ Anthony J. Majestro

Anthony J. Majestro, Esq. (WVSB #5165)

Powell & Majestro, PLLC

405 Capitol Street , Suite P-1200

Charleston, WV 25301

Phone:  304-346-2889

Facsimile:  304-346-2895

mailto:amajestro@powellmajestro.com

 

 

Active 30088085.5

6