Avondale, railroad reach settlement

File/Staff
In 2005, a chemical-laden Norfolk Southern Corp. train ran into a parked locomotive and two cars in Graniteville.

AIKEN --- Norfolk Southern and Avondale Mills have settled a lawsuit over the 2005 train derailment that plant officials blame for the closure of their business.

Avondale Mills was suing the railroad company for $420 million in damages, but the settlement ends the trial that had been going on in federal court in Columbia for the past four weeks and was expected to stretch into June.

Avondale Mills' attorney, Terry Richardson, of Barnwell, S.C., said Norfolk Southern required that the settlement remain confidential.

Steven Felker Jr., Avondale's chief executive, did not return a message left for him on Monday. However, Mr. Felker and other mill officials are "satisfied with the terms," Mr. Richardson said.

Mr. Richardson said the settlement will pay Avondale Mills owners and the company's insurance company, Factory Mutual, which had footed some bills after the deadly wreck.

Robin Chapman, a spokesman for the Virginia-based railroad, also would not give the amount of the settlement but said a portion not reimbursed by insurance would be recorded as a $13 million expense in Norfolk Southern's first-quarter earnings, which will be announced April 23.

Early on the morning of Jan. 6, 2005, Norfolk Southern workers left a track switch in the wrong position, and a locomotive slammed into a parked train. The wreck ruptured a tanker filled with deadly chlorine gas, and residents had to be evacuated from the town for two weeks to escape the poisonous cloud.

Nine people died, and hundreds more were injured.

The railroad company has since settled class-action lawsuits filed by people who were injured and by those whose property was damaged by the corrosive chemicals. At least a dozen or so personal injury lawsuits are pending.

The wreck happened in front of the Avondale Mills plant facing Canal Street in Graniteville. The company argued in its lawsuit that corrosive gas damaged its equipment and that repairs would have cost more than the business was worth.

Avondale Mills closed its plants in South Carolina, Alabama, Georgia and North Carolina in 2006. Seven of those plants were in Graniteville. When the plant closed, Mr. Felker told The Augusta Chronicle that he had spent $40 million in 18 months for repairs and could not afford any more. He said then that 40 percent of his company's business was processed at the Gregg Plant, which was near the crash site.

But not everyone believes that the railroad company was completely to blame for Avondale Mills' closing its doors.

Minnie Ferguson, who said she worked at the plant for 40 years, said the train wreck was just the last straw for a business that was faltering well before the wreck.

"It was going before that happened," she said. "They (Norfolk Southern) should settle in a way, but I believe Avondale is pushing it more than they should."

Others think the plant should share their winnings with the 1,600 area workers who were laid off by the plants' shutdown.

Phil Napier, who owns a store across the street from one of Avondale's plants, said he doesn't believe the company was doing well before the wreck and questioned why plants in other states were closed if the wreck was to blame.

The settlement money should be "split in half with the employees who were displaced, who lost everything," he said.

Attorneys for Norfolk Southern argued in court last month that foreign competition, not crash damage, was the death knell for Avondale.

Joe Hollingsworth argued that the company owner was using the wreck as an economic opportunity and noted that Avondale's sales had dropped 35 percent in the years before the collision. Avondale Mills had closed 22 plants before then, he said.

Mill owners should accept a $110 million payout, Mr. Hollingsworth argued in court.

But Avondale attorneys argued that the railroad company was accountable because it knew its employees had worked long hours in violation of safety rules.

The Associated Press contributed to this story.

Reach Sandi Martin at (803) 648-1395, ext. 111, or sandi.martin@augustachronicle.com.