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Textile firm, railroad settle Graniteville train wreck lawsuit

By: S.C. Lawyers Weekly staff//April 14, 2008

Textile firm, railroad settle Graniteville train wreck lawsuit

By: S.C. Lawyers Weekly staff//April 14, 2008

GRANITEVILLE — A textile company that closed after a train wreck and toxic chemical spill in 2005 has agreed to settle a lawsuit with a railroad company, ending a trial that began a month ago.
Avondale Mills, Norfolk Southern and the mill’s insurance company reached a deal early this month, Avondale attorney Terry Richardson said. He said the agreement, which doesn’t need a judge’s approval, did not allow him to release the details of the settlement.
Avondale Mills sued Norfolk Southern for $420 million in damages, claiming equipment at the firm’s Graniteville facilities was covered with corrosive chemicals, and it would have cost more than the business was worth to clean the buildings and replace the machinery.
Early on Jan. 6, 2005, a Norfolk Southern train veered off the main track onto a spur, rear-ending a parked train whose crew had failed to switch the tracks back to the main rail. The wreck ruptured a car carrying chlorine and released a poisonous cloud over the mill town of Graniteville.
Nine people died and 250 were injured. Some 5,400 people were evacuated.
Richardson said Norfolk Southern should be held accountable because the railroad knew members of the crew operating the Graniteville tracks the night before the crash had been working long hours in violation of company rules.
He said Avondale’s chief executive, Steven Felker Jr., was pleased.
“The company wouldn’t have accepted the deal had he not been satisfied,” Richardson said.
Robin Chapman, a spokesman for the Virginia-based railroad, also would not give the amount of the settlement but said a portion would not be reimbursed by insurance and would be recorded as a $13 million expense in Norfolk Southern’s first-quarter earnings, which will be announced April 23. The agreement will reduce the company’s quarterly earnings by $0.02 a share, Chapman said.
During opening arguments last month, attorneys for the railroad argued that foreign competition, not damage from the crash, caused Avondale to close its doors. The company made fabric used in clothing and specialty products such as boat covers.
Norfolk Southern attorney Joe Hollingsworth said Felker knew the textile industry was failing and was using the crash as an economic opportunity. While the railroad was to blame for the crash, a payout of $110 million should be acceptable, Hollingsworth argued then.
In the years before the accident, Avondale’s sales had dropped 35 percent, leading Felker to close seven of 22 plants across the Southeast, with plans to shutter more. Avondale Mills shareholders cut losses and got out of the failing business once the company’s insurer had paid out $215 million in crash-related claims, Hollingsworth said last month.
Attorneys for the insurance company, Factory Mutual, had argued that Norfolk Southern should reimburse their company for money it paid to Avondale Mills.

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