Judge Completely Clears Dema Firm; Discredits IG Report As ‘Wrong,’ ‘Contrary To Reality’ And ‘Without Basis’

ST. CROIX — Arbitrator James T. Giles, a former federal district court judge, rejected all claims asserted by the Mapp Administration and Inspector General Steven van Beverhoudt against the Law Offices of John K. Dema in a dispute over the law firm’s past representation of the Virgin Islands Government.

The decision, which came after a week of arbitration hearings in September, is a resounding victory for Attorney Dema and the firm, and provides vindication after the Mapp Administration repeatedly made public statements criticizing the law firm and published a now discredited inspector general report about the law firm earlier this year.

The Government has confirmed that it accepts Judge Giles’ decision and award to the Dema law firm. And in an embarrassing turn that may affect senators’ decision once his nomination is taken up in the full Senate, Mr. van Beverhoudt removed the report from the I.G.’s website.

In 2004, the government hired the law firm to attempt to force owners of the former oil and alumina refineries on the South Shore of St. Croix to clean up environmental pollution. Under the direction of Attorney General Vincent Frazer, the firm successfully obtained settlements valued between $126.16 and $144.16 million for the Virgin Islands. The settlements forced the defendants to finally clean up the “red mud” contamination on St. Croix.

The judge found that the actions of inspector general van Beverhoudt, Mr. Walker’s office, and Governor Kenneth Mapp, “may have undercut, in public regard, the desired appearance of independence and objective investigation.

In 2015, the Mapp Administration, represented by Attorney General Claude Walker, disavowed the contract between the government and the law firm. A federal court order forced the administration to arbitrate after it initially refused. The government and the law firm both picked Judge Giles to serve as arbitrator.

According to the release, Judge Giles rejected all of the Government’s claims and the findings of the inspector general report. He described various of the government’s claims as, “wrong, contrary to reality, erroneously asserted, without basis, advanced without evidence, unreasonable, without justification.”  

The Mapp administraiton doesn’t care about facts. – Attorney John Dema.

Judge Giles determined that the inspection by the inspector general and resulting report violated applicable professional standards and reached unsupportable conclusions.  He found that the actions of inspector general van Beverhoudt, Mr. Walker’s office, and Governor Kenneth Mapp, “may have undercut, in public regard, the desired appearance of independence and objective investigation.”

Reiterating that “working with the prior administrations to force the cleanup of the red mud contamination after 10 years of fighting is one of the proudest moments of my career,” Attorney Dema emphasized, “this administration had nothing to do with that success.  This administration doesn’t care about facts.  It abuses the power of its office to chase headlines in an attempt to score political points. That abuse cannot be rewarded.”

Attorney Dema continued: “This administration published lies about me and attempted to extort me.  After being ordered to arbitrate by a federal judge, Attorney General Walker’s office threatened to arrest me if I did not drop the arbitration and pay millions of dollars.  I have spent my career representing people and communities that have been beaten up by people who abuse their power.  I refused to give in to their threats.”

Recognizing the firm’s “national reputation of being the best lawyers in the environmental litigation field,” and Attorney Dema’s “national reputation for being a pioneer of successful sovereign resource recovery litigation,” the arbitrator described the environmental settlements as “a major victory for the GVI.”  Judge Giles confirmed that such a victory could not have “happened without the GVI’s exhaustive use of the legal talents and resources of the Dema Firm and [Richard, Patrick, Westbrook & Brickman, LLC, the law firm’s co-counsel].”  Judge Giles noted that the environmental litigation “did not cost the GVI anything in appropriations.” He concluded that, “but for the risk that the Dema Firm and RPWB took, and the tenacity of Attorney General Frazer and the involved governors, the South Shore Litigation efforts likely would have failed completely and the major source of St. Croix fresh water and the other environments sought to be protected could today be contaminated beyond remediation and recovery.”

Rejecting the government’s argument that the law firm claimed improper attorneys’ fees, Judge Giles wrote, “the contract cannot be read to create absurd results.”  Based on the cleanup costs to date, Judge Giles found it likely that the ultimate settlements will actually “exceed $144.16 million,” resulting in a contingency fee of less than 14% – not the over 60% reported after the publication of the inspector general’s flawed report.

Judge Giles said the government “provided no evidence that the Dema Firm’s fees are unreasonable for this kind of litigation.” The two law firms will split a total contingency fee of $21.3 million for the 10 years of work and approximately 45,000 hours spent on the 4 cases. They would have been paid nothing if they lost. Judge Giles found the fees to be considerably below the standard contingency fee for complex environmental litigation. Judge Giles determined that a reasonable fee would have been $30 million based on the time spent on the cases, skill of the attorneys, difficulty of the litigation, and ultimate success.

The clean-up of the red mud contamination is well underway.  Phase 1 of the cleanup concluded earlier this year. The work included the stabilization, contouring and closure of the red mud mound that was for years visible from the Melvin H. Evans Highway; rehabilitation/restoration of the storm water settling basin; the closing of the upper cooling pond that received discharged water from the desalination plant, the coal-fired power plant, and the run-off from the red mud pile; implementation of storm water management facilities and continuing monitoring of the remediated sites.  Phase 2 of the clean-up – which addresses the original dumping site that holds similar wastes—is in progress.

Feature Image: From left to right: before and after images of the red mud cleanup on the South Shore of St. Croix. (Credit: Dema Law Firm)