Textile company, railroad spar in court

A textile company that closed in May 2006 has settled a lawsuit with the Norfolk Southern Railroad over damages it claimed it suffered as a result of a 2005 train wreck and toxic spill that killed nine persons.

In 2006, Avondale Mills said it would close 18 manufacturing plants in South Carolina, Georgia and Alabama, resulting in the loss of 4,000 jobs.

The company said it was going out of business for two reasons: foreign competition and a train accident that had shut down one of its factories in Graniteville, S.C.

On Jan. 6, 2005, a Norfolk Southern train plowed into parked train on a siding after workers failed to switch tracks back onto the main track.

The wreck ruptured a car carrying chlorine and nine people died and 250 were injured by fumes. Some 5,400 people were evacuated.

Avondale sued Norfolk Southern for $420 million in damages, claiming equipment in the mill was ruined by the chemical spill. It said the railroad should be held accountable because workers had been working long hours in violation of company rules.

During opening arguments last month, attorneys for the railroad argued that foreign competition, not damage from the crash, caused Avondale to close its doors.

Norfolk Southern said terms of the settlement were confidential and that a portion of the settlement will not be reimbursed by insurance and will be recorded in the first quarter as an expense. This expense combined with other favorable claims-related adjustments will increase year-over-year operating expenses by $13 million, the railroad said. 

Source: American Shipper