Claimant’s Award In Shell Oil Gasoline Pipeline Class Action Case Reviewed For Abuse Of Discretion

Shell Oil Company’s pipeline leaked thousands of gallons of gasoline onto the Danhausen Farm in Kankakee County, Illinois. The lawsuit against Shell turned into a class action.

After Shell and the class reached a settlement, the trial court appointed a former judge as Settlement Administrator to recommend an allocation of the settlement funds among the class members.

The Administrator awarded the Danhausen Estate $120,489. But the Estate wanted more than $4.6 million. The Estate objected to the award, the trial court accepted the $120,489 recommendation, so the Estate appealed.

The first dispute was the proper standard of review of the order accepting the Administrator’s recommendation. The Estate argued that the order should be treated like an administrative review order, which would require a manifest-weight-of-the-evidence standard. The Third District Illinois Appellate Court disagreed. The appellate court saw a similarity between the order allocating settlement monies and an order approving a class action settlement, and thus chose an abuse-of-discretion standard. This is how the appellate court explained it:

… [T]his was a settlement of a class action, and a class action is a statutory creature .… A court order approving the distribution of funds in a class action settlement is an outgrowth of the final approval of the settlement agreement … Indeed, it appears that a distribution plan is often included in a settlement agreement and approved as a part of it … We conclude, therefore, that the appropriate standard of review in this case is the standard applied to appeals of court orders approving a class action settlement … In Illinois, decisions concerning final approval of class action settlements are reviewed for an abuse of discretion.

The appellate court ultimately affirmed the lower, recommended amount. Click here to get the whole opinion, Quick v. Shell Oil, 3-09-0987 (9/22/10).