Wal-Mart-backed $161 mln deal to end gas can suits clears hurdle

Thu Dec 19, 2013 4:30pm EST

Dec 19 (Reuters) - A final group of claimants has dropped its opposition to a $161 million proposed settlement of personal injury lawsuits tied to plastic gas containers, increasing the likelihood it will receive court approval next month.

Wal-Mart Stores Inc, which sold the red plastic gas containers once made by Blitz USA, would contribute part of the settlement.

More than 80 personal injury, wrongful death and negligence lawsuits have been filed by consumers and their families alleging that the gas containers once made by Blitz USA were dangerously defective and causing explosions.

Blitz once dominated the market for such containers, but in the face of a flood of litigation it filed for bankruptcy in the U.S. Bankruptcy Court in Wilmington, Delaware, in November 2011.

In August, Blitz proposed a settlement in which a trust would be established with $161 million for the benefit of those harmed by using the gas cans. Wal-Mart would contribute about $23.8 million, and insurers the remainder.

On Wednesday, a final group of personal injury claimants dropped their opposition to the proposed settlement, according to court documents.

The opponents of the settlement had argued that being forced to bring their claims to the trust would prevent them from collecting the larger judgment they could have gotten against the retailer in a jury trial. They alleged the retailer should have known it was selling defective gas cans.

Wal-Mart has denied wrongdoing and has said it holds its suppliers to high safety standards. "The well-being of our customers is a top priority," the company said in an October statement regarding the Blitz cases.

Among those injured in gas can incidents were siblings Dalan and Leiya Jones, who made a small fire in 2011 in a dog kennel in their Texas backyard, according to court documents. They added fuel from a red plastic gas can, touching off an explosion that led to the death of 5-year-old Leiya.

The cases have also become a lightning rod for advocates of tort reform.

Many of the lawsuits involved people who were injured while using the gas cans to pour fuel onto a fire, leading to charges that the cases were frivolous. The Wall Street Journal blamed trial lawyers for driving the company into bankruptcy and destroying U.S. manufacturing jobs.

Two Republican lawmakers from Blitz's home state of Oklahoma introduced a bill this year in Congress that would protect makers of gas cans from frivolous lawsuits. A Republican lawmaker in Florida has introduced a similar bill in the state's legislature.

The deal and Blitz's plan for repaying creditors still needs court approval. A hearing has been scheduled for Jan. 27.

The case is In re Blitz USA, U.S. Bankruptcy Court, District of Delaware, No. 11-13603.

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