A West Virginia federal judge has given preliminary approval to the $151 million settlement reached by West Virginia American Water Co. (WVAW) and Eastman Chemical Co. The settlement resolves class claims resulting from a 2014 coal-processing chemical spill that deprived 300,000 people of drinking water for days.
West Virginia American Water Co., a subsidiary of American Water Works, will pay $126 million while Eastman will pay $25 million. West Virginia American Water will waive a $4 million rate recovery from the state’s Public Service Commission for costs incurred in responding to the spill. According to the settlement term sheet, $50 million of the $126 million from WVAW has been set aside for claims-based payments.
The trial was scheduled to begin, but was continued to Dec. 1 by U.S. District Judge John Copenhaver pending, finalization of the settlement. The class action was prompted by a January 2014 incident in which a Freedom Industries coal-cleaning mixture containing primarily 4-methylcyclohexane methanol (MCHM) leaked from one of its storage tanks on the banks of the Elk River, just upstream from a municipal drinking water intake. The spill left West Virginia residents and businesses in a nine-county area without a potable water source from which to drink, bathe or wash their dishes for at least five days. We wrote about this incident previously.
Eastman failed to sufficiently warn residents about the danger of the MCHM it produced and sold to Freedom Industries, American Water Works Co. Inc. and subsidiaries West Virginia American Water Co. and American Water Works Service Co. Inc. failed to take necessary precautions to protect a water source in the area.
Freedom Industries had been named as a Defendant, but was dismissed as a party after the company filed for bankruptcy. It should be noted that Freedom Industries executives Dennis Farrell and Gary Southern pled guilty to criminal charges related to the spill and each contributed to the settlement. Southern will pay $350,000 and Farrell $50,000.
In October 2015, Judge Copenhaver certified a class of residents – individuals, businesses and hourly workers – on the issue of liability, but denied their request to collect damages on a classwide basis. The Judge had previously dismissed parent American Water Works Co. Inc. and unit American Water Works Service Co. Inc. from the case and reduced Toxic Substances Control Act claims against Eastman.
The Plaintiffs are represented by Kevin W. Thompson and David R. Barney of Thompson Barney; by Van Bunch of Bonnett Fairbourn Friedman & Balint; and Stuart Calwell, Alex McLaughlin and D. Christopher Hedges of the Calwell Practice. The case is Good et al. v. American Water Works Co. Inc. et al. in the U.S. District Court for the Southern District of West Virginia.
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