South Carolina Company Closed by Train Wreck Wants $420M

By | March 12, 2008

A South Carolina textile company that closed after a train wreck and toxic chemical spill in 2005 wants the railroad to pay $420 million in damages, an attorney said Monday in opening arguments.

The Norfolk Southern wreck ruptured a car carrying chlorine and released a poisonous cloud over the mill town of Graniteville, S.C., killing nine people and injuring 250. Some 5,400 people were evacuated.

Equipment at Avondale Mills’ Graniteville facilities was covered with corrosive chemicals after the crash, and the company’s flagship canvas plant was locked down for safety reasons for eight days, attorney Michael Russ said.

Avondale chief executive Steven Felker Jr. closed the company for good in May 2006 after experts determined it would have cost more than the business was worth to clean the buildings and replace the machinery, Russ said.

Attorneys for Norfolk Southern said Felker had already seen the writing on the wall in the failing American textile business when the crash – and economic opportunity it could provide in the form of damages and insurance money – fell into his lap. While the railroad is to blame for the crash, a payout of $110 million should be acceptable to Avondale Mills.

“We have not tried to evade responsibility,” attorney Joe Hollingsworth said. “We are not willing to pay fantastic amounts that are not supported by the evidence.”

Hollingsworth argued that increasing foreign competition in the textile industry, not damage and expenses related to the crash, caused Avondale Mills – which made fabric used in clothing and specialty products such as boat covers – to close its doors for good.

“It was a decaying, decrepit business,” Hollingsworth said. “Hundreds of textile plants in the United States like Avondale have been closed.”

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.

“Avondale had no strategy that it could successfully put in place to prevent this onslaught of foreign competition,” he said. “A small band of shareholders in a small private company have decided to take advantage of a tragic situation.”

The insurance company is also part of the lawsuit. An attorney for Factory Mutual argued Monday that Norfolk Southern should give his company the $215 million to cover what it paid out to Avondale Mills.

U.S. District Judge Margaret Seymour said the civil trial could last three months.

The crash occurred when 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.

Avondale attorney Terry 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.

“Crews must be alert and on top of their game,” Richardson said. A Norfolk Southern supervisor “could have avoided this tragedy” by mandating that employees adhere to federal regulations requiring that they work no longer than 12-hour shifts.

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