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A legal battle playing out behind the scenes in Maui state court could mean the difference of $1 billion for victims of the 2023 Lahaina fires.

On one side is a small army of attorneys who have already filed lawsuits for what they say are 18,000 individual plaintiffs. These lawyers, who largely drove the post-Lahaina wildfire litigation, say they represent the bulk of victims and therefore should control most of the money. If they prevail, they could make $1 billion or more in legal fees.

On the other side are class action lawyers representing an amorphous group including victims who haven’t filed. They want more money steered to the class action and away from the plaintiffʻs lawyers, who they say want an undue share at the expense of victims. 

At stake for both sides is the enormous $4 billion proposed settlement for Lahaina victims, paid for by public and private institutions that played a role in the fireʻs devastation. About $800 million has been pledged by the state of Hawaii; $872.54 million by Kamehameha Schools, one of the state’s largest public charities; and $1.99 billion by Hawaiian Electric Co., the power monopoly for all of the main Hawaiian Islands except Kauai. Communications utilities and large landowners have pledged the remainder.

The battle is set to culminate in a trial on January 29, where Maui Circuit Court Judge Peter Cahill will decide how to divide the pot between the two teams of lawyers to share with clients.

The individual plaintiffs’ lawyers say they should prevail because they represent the vast majority of victims, including people who suffered the most. But the class lawyers say some victims haven’t filed suit yet, which makes them part of the class, and they should be guaranteed there’s some money left.

“These guys know they can make a ton of money for doing very little work,” class action lawyer Terry Revere, said of the individual plaintiffs’ lawyers.

Class Is A Key To $4 Billion Settlement

Litigation from the Maui wildfires has played out on parallel tracks. Soon after the fires, attorneys descended on Maui, taking out advertisements in the airport and dashing to the courts. 

Several class action lawsuits were filed in federal court in Honolulu. And scores of individual personal injury or property loss lawsuits were filed in state court on Maui, many by out-of-state mass-disaster lawyers teaming with lawyers licensed in Hawaii. 

As the number of individual suits mushroomed, Cahill created a special proceeding to manage the cases, with four individual plaintiffs’ lawyers as liaisons.

Cahill eventually appointed mediators to help negotiate a settlement of all the wildfire lawsuits. With trials scheduled to begin in the fall of 2024 in Maui, the defendants and plaintiffs in August agreed to the proposed $4.04 billion settlement, with Gov. Josh Greenʻs office prodding the negotiations.

As part of the proposed deal, the class lawyers agreed to move their cases to state court before Cahill and into the settlement. That move addressed a lingering issue: how to deal with potential holdouts or people who hadn’t yet filed claims?

The answer was to have the class action serve as a catch-all for stray victims: those who didn’t sue would be part of the class and bound by the settlement among �Ჹ�ɲ���ʻ��, Kamehameha Schools, HECO and some smaller parties.

The global insurance industry — which has paid out $2.3 billion in claims to home and business owners — remains the lone holdout to the agreement. It still wants to sue the parties at fault for the wildfires to recoup the claims it has paid. The Hawaii Supreme Court must decide whether the settlement can be final without the insurers on board.

While the court prepares for oral arguments in that case in February, Cahill has been hashing out how the class action and individual plaintiffs’ lawyers will divide the settlement money if the high court blesses the deal. 

“It’s taxpayer money, it’s ratepayer money, and it’s charity money. Once this goes into the carpetbaggers’ magic box, the court’s not going to have any control over it.”

Hawaii class-action lawyer Terry Revere

Class-action lawyers accuse the individual plaintiffs’s lawyers of being “carpetbaggers” trying to take an undue share of the pot. They say it’s better to distribute money to the class-action lawyers because distributions are subject to court oversight and must be fair, adequate and equitable, according to .

Legal fees must also be approved by the court. And the class action lawyers handling the case say their fees will likely amount to less than 10% of the damages awarded, although Cahill will have the final say.

In contrast, the plaintiffs’ lawyers want to put the money into a “black box,” in which everything is private among the parties, says Revere. Individual plaintiffs’ lawyers typically charge contingency fees of 25%-40% of their damages they recover, which could be a payday of $1 billion or more, and could include substantial fees from clients signed up even after the proposed settlement was reached.

“It’s taxpayer money, it’s ratepayer money, and it’s charity money,” he added. “And once this goes into the carpetbaggers’ magic box, the court’s not going to have any control over it.”

By their estimates, at least a third of the property damage victims fall into the class, not represented by the individual plaintiffs’ lawyers, said Kyle Smith, a Kailua-based class-action lawyer. The percentages of those suffering business losses could be higher, he said.

“The evidence will show that the class should get very, very little of this settlement.”

Individual Plaintiffs’ Liaison Counsel Cynthia Wong

Cynthia Wong, a Maui lawyer who serves as liaison for the individual plaintiffs, says it makes sense for them to control the lion’s share of the settlement because they did enormous amounts of work initiating lawsuits and signing up victims, assuring the most-harmed victims are compensated. 

An administrator will oversee equitable distribution of money to individual victims, she said.

There shouldn’t even be a class to begin with, Wong said, because the damages suffered by victims are too varied. For example, Wong said, one category includes people who planned to travel to Lahaina between August and October of 2023 but had to cancel their trips. Itʻs unclear if Cahill would approve payment to them.

“How can you take money from the true victims and allot it to that kind of class category?” she said.

The bottom line: “The evidence will show that the class should get very, very little of this settlement.”

One thing not in dispute is that the class action is a key to the settlement. 

Without the assurance that victims who have yet to file suit canʻt do so, defendants would likely be unwilling to put billions into a settlement. As Revere puts it, the class is necessary for the defendants to “buy their peace.”

Still, itʻs the individual plaintiffs’ cases that drove the litigation – and the proposed settlement – in Cahill’s court.

Judge: Trial Will Be Unique

Cahill has acknowledged the allocation trial beginning later this month will be unique. The usual rules of evidence won’t apply, the judge isn’t accepting some types of pre-trial motions, and his decision will be unappealable.

In addition, the trial will provide something often missing when cases settle before trial: a chance for victims to testify about their ordeal. Wong said the purpose is to show how different victims are from each other, and thus “demonstrate why the class itself shouldn’t exist.”

In the end, Cahill will have to decide whether Wong and her colleagues are correct when they say the class should get very little.

Plaintiffs lawyers submitted reports showing the scope of loss for victims who have individually sued. There are an astonishing 18,543 plaintiffs associated with 8,725 addresses, among them, according to plaintiffs expert Philip Strunk. The individual plaintiffs’ lawyers represent more than 1,000 wrongful death and injury claims, another expert reported. 

A construction expert estimating the costs of rebuilding at $2.3 billion.

Together the reports estimate the claims from individual plaintiffs at $6.8 billion on the low end – much more than the $4.04 billion the defendants have agreed to pay.

Expert Witness Admits Report Might Be Flawed

Revere and Smith, the class action lawyers, question some of these numbers. For example, the number of people filing suit — 18,543 — is 50% more than the total population of Lahaina before the fires, which the 2020 census had at about 12,702.

Wong defends the number, saying it makes sense that the tally of individual victims exceeds the entire population of Lahaina. For instance, she points out, a Lahaina business destroyed by the fire might have had multiple owners living outside of Lahaina.

But even Strunk admits his reported number of 18,000-some victims might be wrong because it contains “potential duplicate entries.” Multiple individual plaintiffs’ law firms apparently reported representing the same plaintiff, Strunk said in his declaration. His firm plans to implement a process to resolve the issue.

Revere said it’s not surprising that multiple firms are claiming to represent the same victims. He likened the individual plaintiffs’ lawyers to piranhas in a feeding frenzy over clients.

“As you can imagine, when you have a bunch of piranhas going after something, some of them are stealing each others’ clients,” he said.

“I hate those reports.”

Maui Circuit Court Judge Peter Cahill, discussing documents filed by individual plaintiffs’ lawyers for a trial to allocate $4.04 billion in wildfire settlement money

Cahill also has expressed skepticism about the reports by experts for the individual plaintiffs. 

A pre-trial conference on Friday, Wong suggested that the experts should not be called to the trial, letting the reports speak for themselves.

Cahill declined. “I hate those reports,” he said. “You bring the people here.”

In an interview, Revere noted that some law firms keep advertising for more Lahaina clients. That suggests there are victims who havenʻt been represented — one key reason the class action group needs to be included in the payout structure.

Smith said the best route would be for Cahill to create one fund against which all parties could make claims, so the judge could make sure attorneys fees could be kept as low as possible, based on work done. 

Wong dismissed that idea.

“It’s very frustrating,” she said of having to battle the class lawyers, when the individual plaintiffs’ lawyers did so much of the work. “It’s unfortunate that we even have to be in a position to do this.”