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An Unprecedented Lawsuit
Instead of accepting the small settlements the Pittston Company was offering through its claims office, some 600 survivors banded together to sue the company for negligence and recklessness in building the dam and to demand payment for all their losses, mental suffering as well as property damages. In April 1972, the Washington law firm of Arnold and Porter agreed to handle the $64 million case on a contingency-fee basis.
On June 26, 1974, the case was settled out of court. Tacitly accepting that the flood had caused "psychic impairment" as well as deaths and property damage, the Pittston Company agreed to an overall settlement of $13.5 million. Approximately $5.5 million was provided for property and wrongful-death damages, with approximately $8 million for the psychic impairment claims. Out of the total settlement, Arnold and Porter took a legal fee of $3 million. Each of the plaintiffs ended up with about $13,000.
Although there is little evidence to suggest that the Pittston Company was hurt financially by the settlement, this case did force Pittston to accept responsibility for the disaster and set a legal precedent by forcing the company to pay for mental anguish caused by its negligence.
