Federal judge OKs $3M Freedom spill settlement

By Chris Dickerson | Sep 18, 2014

CHARLESTON – A federal bankruptcy judge has approved a nearly $3 million class-action settlement between Freedom Industries and thousands of victims of January’s chemical spill that left more than 300,000 residents in nine counties without water for days.

U.S. Bankruptcy Judge Ronald Pearson approved the settlement Tuesday, rejecting West Virginia-American Water Company’s attempt to block it.

The $3 million settlement will be used for water testing, health studies and other projects to benefit those affected by the spill. It would not include direct payments to individuals.

“The court has no intention to stand in the way of any reasonable efforts to recognize, compromise, equalize or treat those claims,” Pearson wrote in the settlement order.

Lawsuits against WVAWC, whose water system was contaminated, and Eastman Chemical, who is the manufacturer of the chemical that was leaked into the water system, will go forward in federal court, as well as lawsuits against individual Freedom employees.

Eastman is the exclusive U.S. manufacturer of MCHM and Eastman had a duty to make full disclosure on Material Safety Data Sheets for MCHM under the Emergency Planning Community Right to Know Act and to reflect accurately the state of knowledge of the medical and scientific communities about the toxicity of MCHM.

Eastman placed MCHM into interstate commerce and issued MSDS sheets and other warning data that were inadequate and not protective, the plaintiffs claim.

The plaintiffs claimed Gary Southern, Freedom’s president, knew or should have known about the conditions at the facility and his acts and omissions in ignoring obvious threats to the environment and failure to take appropriate steps to mitigate them directly contributed to the plaintiff’s damages.

The chemical spill tainted more than 300,000 WVAWC customers’ water in parts of nine counties. The Center for Disease Control advised pregnant women to not drink tap water until the chemical was completely gone from the water.

Freedom filed for bankruptcy protection in January. On Jan. 29, Freedom’s suggestion of bankruptcy was filed in the U.S. District Court for the Southern District of West Virginia at Charleston.

Southern signed a bankruptcy petition, estimating Freedom’s debts at $10 million or less, but the cost of the water contamination disaster is likely to run much higher.

WVAWC had argued against the settlement because it would keep Freedom’s creditors, such as itself, from recovering money from claims filed in bankruptcy court.

The water company wants $1.1 million from Freedom to pay for replacing the filters at its Elk River treatment plant.

On Jan. 9, an estimated 10,000 gallons of crude MCHM leaked from Freedom Industries’ Etowah River Terminal along the Elk River. More than 300,000 residents in parts of nine counties who use West Virginia American Water Company were without tap water for days, and many still are wary of using the water. WVAWC’s intake facility along the Elk River is just more than a mile downstream from the leak site.

The week after the leak, Freedom Industries filed for bankruptcy, effectively halting lawsuits filed against the company. As a result, many plaintiffs have since removed Freedom as a defendant in the lawsuits.

Court documents show there have been more than 70 lawsuits filed over the leak. Of those, about 40 seek class-action status. And all of the complaints have claims similar claims such as bodily injury, emotional distress, annoyance, loss of enjoyment, nuisance, inconvenience, requests for medical monitoring, lost income and loss of business revenue.

Of the complaints filed in various state and federal courts, some list Freedom and WVAWC as defendants and others list just Freedom or just WVAWC. Some also list Eastman Chemical. Freedom Industries filed for bankruptcy Jan. 17.

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