Maui Fire Settlement Cases Inch Toward Victim Payout
A proposed settlement could become final by early 2025.
Parties to a proposed Maui wildfire settlement have agreed to dismiss a federal class action lawsuit, inching the process toward relief for victims of the August 2023 fires.
It remains to be seen whether U.S. District Court Judge Jill Otake will allow the suit to end.
The fire victims want the federal case dismissed. So do Hawaiian Electric Industries, Kamehameha Schools and others who are being sued in the Maui fires case. A document filed Tuesday makes their position clear.
On Wednesday, Otake issued an order saying that not all of the parties in the litigation had signed the dismissal document as required by rules governing civil cases. She gave the parties a day to fix the technical error and refile.
In the meantime, the global insurance industry wants to keep the federal case open, and Otake hasn’t ruled out the insurers’ request.
The outcome could have a significant impact on a final settlement and payment for victims.
Why Is The Federal Case Important?
The important action related to the fires is happening in state court, but a prolonged federal class action could delay and possibly kill the proposed settlement.
After a string of defeats in state court, insurers want to use the federal courts to pursue lawsuits against HECO and others found to have caused the fire, which killed 102 people and destroyed much of Lahaina.
The insurers, including some 140 companies from across the globe, have argued that the federal courts provide a more impartial forum for them than Hawaii state court. In response, lawyers for the settling parties have accused the insurers of “blatant forum shopping,” seeking help from Otake after their losses before state judges.
By early 2025, the Hawaii Supreme Court is expected to decide a question that could help the parties finalize the proposed settlement.
But the federal case is a wild card. Federal rules of civil procedure recognize that state courts sometimes provide a home court advantage for local parties. For that reason, the rules over a variety of cases that normally are the purview of state courts, including .
Who Benefits From A Home Court Advantage?
In this case, the potential for a home-court advantage for the Hawaii parties is apparent.
Giant corporations, including insurers from as far away as London and Zurich, are fighting individual Maui fire victims and some of Hawaii’s oldest institutions, including HECO, Hawaiian Telcom and Kamehameha Schools, which are trying to get money to the victims. Hawaii Gov. Josh Green helped negotiate the proposed settlement and has criticized the insurers.
The insurers have essentially argued that they should have a say in whether the federal case is dismissed. And Otake has yet to reject that argument.
As a practical matter, a continuing federal case could mean more than a supposedly fairer venue for the insurers. It also could mean a quagmire of federal court proceedings and appeals that could cause the proposed settlement to fall apart.
Why Are The Insurers Holding Out?
The insurers have paid out more than $2.3 billion in claims to Maui fire victims so far, and they want to be able to sue the parties responsible for the fire to recoup their losses. Such so-called subrogation suits are customary in mass disaster litigation.
But the settling parties want Hawaii courts to stop the subrogation suits.
If that happens, instead of being able to sue those responsible for starting and fueling the fires, the insurers would have to go after the fire victims 鈥 essentially sue their own customers 鈥 to recoup the insurance losses.
What Happened To The Proposed ‘Global Settlement’ Of $4.04 Billion?
Reports of a global settlement were greatly exaggerated. It’s true that Hawaiian Electric Industries and its subsidiaries have agreed to pay $1.99 billion and Kamehameha Schools $872.5 million. The state of Hawaii is expected to contribute approximately $800 million. And the rest of the $4.04 billion will be covered by parties such as Spectrum and Hawaiian Telecom.
The victims and their lawyers have agreed that’s enough.
But that plan is tentative. It specifically requires 鈥渆ach and every Subrogation Plaintiff鈥 to give up their claims before the proposal can become a final settlement. And the insurers won’t give up those claims.
Still, the proposed settlement gives the settling parties another option: They can get an order from a trial court requiring the insurers to recoup their losses from the fire victims rather than the parties responsible for starting the fire.
That’s what’s happening now. HECO, Kamehameha Schools, the state of Hawaii, the victims and other settling parties have asked Maui Circuit Court Judge Peter Cahill for such an order. The insurers argue that order would be contrary to Hawaii law. And those are the key questions that Cahill has punted to the Hawaii Supreme Court.
When Will Victims Be Paid 鈥 And How Much Is The Settlement Amount?
The Hawaii Supreme Court is expected to make a decision in early 2025.
If Otake dismisses the federal case and the Supreme Court rules for the settling victims and defendants, that will allow the proposed settlement to become final, and the process of allocating settlement proceeds can start.
There are still questions to answer. How to address victims who opt out of the settlement isn’t clear, for example. Also not known is how much each victim will get and when. Another issue is legal fees for the victims’ lawyers, which could eat up $1 billion of the $4.04 billion settlement.
If the Supreme Court rules in favor of the insurers, however, then the current proposed settlement would likely fail, putting the victims back in limbo unless the insurers agree to settle.
Civil Beat鈥檚 coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.
