(CN) - A U.S. Fifth Circuit Court of Appeals panel appeared skeptical Wednesday of an attempt by hundreds of Texas property owners to resurrect a lawsuit over a series of explosions at a Houston-area chemical plant during Hurricane Harvey after a federal judge ruled the lawsuit was barred by the Texas statute of limitations.

The property owners argue the two-year statute of limitations was tolled by a federal class action over the incident, in which the court ultimately declined to certify a class for monetary damages. In both cases, neighboring property owners sued the plant owner, Arkema Inc., claiming the explosions contaminated their property with toxic chemicals.

In 2017, flooding from Hurricane Harvey disabled the refrigeration system at an Arkema chemical plant in Crosby, Texas, that manufactured organic peroxides, causing the unrefrigerated organic peroxides to decompose and self-ignite. This resulted in a series of explosions that forced 200 residents in the nearby area to evacuate their homes.

Neighboring residents filed a putative class action against Arkema, claiming the company failed to take appropriate precautions despite knowing the plant was located in a flood-prone area. In 2022, the court in that case certified a class for the plaintiffs' claims for injunctive relief, but it declined to certify a class for monetary damages. Ultimately, the parties reached a settlement agreement in 2024 whereby Arkema agreed to pay $24 million for property owners within seven miles of the plant to have their properties tested for chemicals and to decontaminate the properties if chemicals are found.

Following the settlement agreement, nearly 800 property owners and lessees filed suit against Arkema in Texas state court, seeking monetary damages. Arkema removed the case to federal court.

Although the U.S. Supreme Court has said a federal class action can toll federal claims, Senior U.S. District Judge Andrew Hanen of the Southern District of Texas found in his decision that the Fifth Circuit has ruled in prior cases that Texas law doesn't allow federal class actions to toll state law claims like the ones in this case. The George W. Bush appointee said he was "sympathetic" to the plaintiffs' arguments that "the denial of tolling to putative class members would induce them to file redundant suits before the statute of limitations runs, adding to courts' already-heavy caseloads" and that class-action tolling protects potential class members from "losing their right to litigate due to delays in the certification process." But he found the prior cases create binding precedent.

The plaintiffs argue this case is distinct from the prior cases because it deals with claims based on property damage in a certain geographic area, meaning the defendant had fair notice of the type and number of potential claims against it.

"I think a review of both of those decisions does show that this door does remain slightly open in very limited circumstances," the plaintiffs' attorney, Victor Cobb, told the panel.

Chief U.S. Circuit Judge Jennifer Walker Elrod asked Cobb whether he had any authority he could point to, other than a single scholar the plaintiffs cite in their brief, to support such a distinction. She said federal judges in Texas have been "extremely consistent" that cross-jurisdictional tolling isn't viable under Texas law.

"All of these really smart judges in Texas have all looked at those cases and said this is the rule," Elrod, also a Bush appointee, said. "They made the blanket statement, not 'except in this narrow area.'"

Cobb replied that those judges were following Fifth Circuit precedent, and he said the Fifth Circuit hasn't dealt with a case like this before.

But Arkema's attorney, Andrew Pincus, said "no court has drawn" the distinction the plaintiffs seek to make. He said there are "pretty strong reasons" not to make such a rule, as a distinction based on the kind of claim would create uncertainty.

"We're talking about statute of limitations and tolling, an area where the law should be clear, so that people know the rules," Pincus said.

He said Fifth Circuit precedent put the plaintiffs on notice that they needed to file their claims in state court before the statute of limitations expired in order to preserve them.

"There's no unfairness here," Pincus said. "People knew the rules, and they could have moved ahead and filed."

Senior U.S. Circuit Judge Edith Brown Clement and U.S. Circuit Judge Catharina Haynes, also Bush appointees, joined Elrod on the panel.

Attorneys for the plaintiffs and Arkema did not immediately respond to requests for comment.

Source: Courthouse News Service