Lawsuits Over West Virginia Chemical Spill Moved to District Court

April 22, 2014

Lawsuits against Freedom Industries Inc., whose leaky chemical tank polluted drinking water in West Virginia, were transferred from bankruptcy court to federal district court in Charleston last week to “assure efficient case administration.”

On Jan. 9, eight days before the Chapter 11 filing in Charleston, West Virginia, officials found a tank leaking 4- methylcyclohexane methanol, a chemical used in coal processing. The leak was just upstream from an intake for municipal water.

Before bankruptcy, lawsuits were started against Freedom and the water company. After bankruptcy, lawsuits continued to be filed against the water company.

Freedom exercised powers under bankruptcy law and had the lawsuits transferred to bankruptcy court. The water company moved lawsuits to bankruptcy court even when Freedom wasn’t a defendant.

U.S. District Judge John T. Copenhaver Jr. decided last week that all 62 civil suits should be transferred immediately to federal district court.

Copenhaver said that the plaintiffs in every suit are entitled to a jury trial and none consents to having a jury trial in bankruptcy court. In Copenhaver’s opinion, the demands for jury trials constitute “good reason” for removing the suits from bankruptcy court immediately.

The judge acknowledged that lawsuits are sometimes allowed to remain in bankruptcy court for pretrial proceedings, and then transferred to district court when the time comes for a jury trial.

It’s a “pragmatic question of efficient case administration,” Copenhaver said, whether pretrial proceedings should be in bankruptcy court. To avoid duplication of effort, Copenhaver decided to take the cases away from the bankruptcy court immediately.

Before the cause of the leak was discovered, more than 100 people went to the hospital. Water wasn’t potable for a time for 300,000 citizens.

Freedom Industries listed assets of $16.1 million against debt totaling $6.8 million, not including claims resulting from the chemical spill.

The case is In re Freedom Industries Inc., 14-bk-20017, U.S. Bankruptcy Court, Southern District of West Virginia (Charleston).

 

 

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