Preliminary approval has been given for a $2.45 million settlement in a four-year-old class-action lawsuit brought by elderly and disabled bedbug-bitten residents of two downtown Des Moines apartment buildings.
Payments to the estimated 300 current and former residents of Elsie Mason Manor and Ligutti Tower could range from $200 to $6,000, said Jeffrey Lipman, one of the attorneys who represented the residents who filed the lawsuit in March 2010 seeking money for back rent, lost property and other hardships. Problems with bedbugs began in 2007.
The lawsuit ended up at the Iowa Supreme Court, which had been asked to decertify the class-action status. The court deadlocked, which meant a lower court's ruling allowing the class-action status stood. The case was settled before it went to trial.
The settlement could have implications for similar cases, officials said.
"I think this puts landlords on notice that they cannot ignore bedbug issues," said Lipman, who anticipates filing another similar case in Iowa. "If they don't take care of it, if they don't warn consumers, they're going to be held accountable."
Residents of the two downtown towers have said they have been stigmatized by the bedbug infestation, which is now under control.
"I've never had bedbugs in my life, you know — one night, I had to go to the emergency room because my leg was all swollen up," said Randy Rohlf, 58, recalling how the microscopic critters dug into his body.
Rohlf said a stigma has been cast upon him since bedbugs struck his residence several years ago.
Resident Jo Ann Meyer agreed. "You go in anywhere, a grocery store, a doctor's office, anywhere. Everybody just backs off when they hear you live at Elsie Mason Manor," Meyer said.
She said delivery crews sometimes refuse to carry mattresses and other furniture items up to tenants' rooms.
Residents of the two towers have said building managers were slow to react to the infestation that left scars on their legs, arms and necks from the wounds caused by the bedbugs. Residents of the two buildings met earlier this week with attorneys about the settlement.
"It's very significant in that it's finally coming to a conclusion where in the near future we can get our clients compensation for what happened," Lipman said.
Settlement money will come from three sources: $2 million will be paid by the insurer of American Baptist Homes of the Midwest, which previously owned the two buildings; $350,000 will come from the development group that bought the properties in May 2013; and $100,000 will come from the insurer of ABC Pest Control, Inc., which formerly serviced the buildings and is listed as a third-party defendant.
In the preliminary settlement, the buildings' former owners make no admissions related to negligent conduct, Lipman said. However, "we've maintained our position that they were negligent," Lipman said.
David Zwickey, CEO and president of American Baptist Homes of the Midwest, said his organization is satisfied with the terms of the preliminary approval.
Zwickey said his group was focused on providing services at the other facilities it continues to operate across the region. "This was a very unfortunate incident," Zwickey said.
He declined to comment on steps management could have taken to prevent infestation, saying "re-litigating at this point in time would be pointless."
"Certainly we learned about remediation of bedbugs," Zwickey said.
Developer Frank Levy took control of the property last year and has started working on a laundry list of improvements, including a new elevator and staff assigned to help reduce the presence of bedbugs.
About 200 class members have completed claim forms since the preliminary agreement was filed, Lipman said.
In the next few weeks, he and his colleagues will seek out others who may be entitled to payment.
A judge has scheduled a three-day hearing to hear objections to the proposed settlement. If the judge approves a final settlement, Lipman and his colleagues will move toward distributing residents money from a fund set up by the court. "Claims are being based on a matrix that we've developed," Lipman said.
He and representatives of two other Des Moines firms plan to ask the judge for about $816,000, or one-third of the settlement.
"By the time that this is over and done with, we will have been working on it five years," Lipman said.
Bill Battey, a resident of Ligutti Tower, said he's satisfied with the proposed settlement. "It's good, especially for the people that have been here the longest," said Battey, who spent money on supplies to prevent bedbugs.
The bedbug lawsuit was one of the first brought under Iowa's consumer protection law, which went into effect in 2009.
Bill Brauch, consumer protection division director at the Iowa attorney general's office, said consumer and business operators should take note if a settlement is signed off on.
"Certainly the fact the action was filed and if there is a settlement, that in and of itself should have some effect across the state regarding anyone who operates a similar facility," he said.
Brauch, who hadn't reviewed the preliminary settlement, said the group used a 2009 state law called the "Private Right of Action" law to make its case. Iowa was the last state in the U.S. to enact such a law, which allows consumers to sue businesses that engage in deceptive practices, unfair practices, or misrepresentation or that fail to disclose material facts.
The Iowa attorney general's office filed a brief in support of the group's class certification during the legal battle.
"It very clearly was the first bedbug class-action (lawsuit) under that law," Brauch said.
Rohlf, the building resident, said he wants to continue to stay in the downtown community. He said he enjoys the skywalk access and attending shows at the Des Moines Civic Center.
"I'm going to use my money to pay bills, maybe buy a new bed," Rohlf said.
"Down the road, I think people will forget about the bedbugs. It's too early to tell," he said.
Are you part of the settlement?
Past and current residents of Elsie Mason Manor and Ligutti Tower and those authorized to act on behalf of them can contact lawyer Jeff Lipman if they have questions about their status in the class-action lawsuit. The Lipman Law Firm is located at 8450 Hickman Road, Suite 16, Clive, Iowa 50325 or the phone number is 515-276-3411.