HEPATITIS OUTBREAK Legal analysts question Chi-Chi's ability to pay

PITTSBURGH (AP) -- How more than 600 people came to eat hepatitis A-tainted green onions at a Chi-Chi's restaurant, killing three of them, may be the question driving the handful of lawsuits already filed against the restaurant chain and the scores likely to follow.
Legal experts, however, said the real question is this: Does Chi-Chi's have enough insurance to pay fair settlements to victims without attorneys from both sides frittering away the damages?
"In situations where the link between an event and an injury is as strong as it is here and large numbers of people have been affected, it's typically the case that people settle ... in a fashion that fairly compensates those who were made sick and puts the thing behind them," said Patricia Refo, an Arizona attorney who is chairwoman of the American Bar Association's litigation section.
The Centers for Disease Control and Prevention said green onions traced to Mexico spread the virus, though the Food and Drug Administration has not determined how the onions became tainted. But that is largely beside the point, legal experts said.
Legally liable
That's because in a strict liability state like Pennsylvania, a restaurant that serves tainted food is liable even if it did not cause the contamination -- much like an auto dealership that sells a car with a defective part.
That does not mean the farm that grew the onions, or the middlemen that shipped or sold them, can't also be sued successfully -- but Chi-Chi's is the top target because it likely has the deepest pockets, said William Marler, a Seattle attorney who has filed three of the five Chi-Chi's lawsuits so far.
"Chi-Chi's is always on the hook -- regardless of whether it's green onions or not" that caused the virus, he said. "Generally speaking, the upstream supplier of tainted products is not going to have much in the way of assets or insurance."
Marler represents some 80 people who contracted hepatitis A or received shots to prevent it after eating at the Beaver County restaurant, about 25 miles northwest of Pittsburgh. The three lawsuits Marler filed have been put on hold by a judge to protect creditors of the bankrupt Louisville, Ky.-based Mexican restaurant chain.
Chi-Chi's filed for Chapter 11 on Oct. 8, citing cash-flow problems, a month before the hepatitis outbreak was confirmed. As a result, a judge must approve whether the chain may spend money to settle any cases, and whether new claims can go forward against Chi-Chi's assets. None of the lawsuits filed so far is on behalf of those who died.
Precedent
Marler was involved in the case when hundreds of people sued the Jack in the Box fast-food chain after it served hamburger tainted with E. coli in 1993, killing three children and sickening hundreds.
That case is "probably the best analogy" of what is likely to happen with the Chi-Chi's litigation, Chicago attorney Robert Clifford said. He led a group of Illinois plaintiffs who settled multimillion-dollar claims after a USAir flight from Chicago crashed near Pittsburgh in 1994.
Experts say the Chi-Chi's lawsuits will almost certainly be consolidated, with plaintiffs divided into groups: those with wrongful death claims, those who required organ transplants or serious hospital care, and those sickened for days or weeks who have medical bills and lost wages.
Pittsburgh attorney Robert Peirce, who has filed two suits, said his clients want more than reimbursement for doctor bills and missed work.
"Pain and suffering and loss of enjoyment of life are important," Peirce said. "But I don't want clients looking for some big payday, because that's not what I'm here to do."
What's unclear is whether Chi-Chi's has enough insurance to settle the cases in that fashion. Chi-Chi's has stated in bankruptcy documents that it has $51 million -- about half as much as Marler thinks the company will need.
Chi-Chi's attorney David Ernst of Portland, Ore., refused to discuss liability issues or the likelihood of settlement amounts. But he said that the company is seeking permission from bankruptcy court to spend $500,000 on deductible to free up the liability insurance.
If Chi-Chi's does not emerge from Chapter 11, some hepatitis plaintiffs might find themselves waiting in line for pennies on the dollar behind the chain's other creditors, Clifford said.