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Proposed settlement would use $2.9 million in insurance money from Freedom Industries for projects benefiting the public

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A proposed settlement filed Friday, July 18 in the Freedom Industries class action lawsuit would use $2.9 million in insurance proceeds to fund projects for the public good, like assessing the long-term consequences of the Jan. 9 chemical spill that contaminated drinking water in a nine-county region of southern West Virginia.

Thousands of gallons of a chemical known as MCHM escaped a storage tank at Freedom Industries’ Eltowah terminal Jan. 9 and spilled into the Elk River, contaminating drinking water for roughly 300,000 area residents.

Powell & Majestro's Anthony Majestro, lead counsel for the class, said the proposed settlement addresses 24 pending complaints against Freedom Industries. It does not impact claims against other companies, including Eastman Chemicals and West Virginia American Water Company, he said.

“We started with 300,000 people who suffered some sort of injury as a result of the spill – maybe they bought water, they had medical claims or lost wages, or businesses that lost income,” Majestro said. “(But) Freedom Industries is in bankruptcy with extremely limited assets.”

The $3 million in insurance money divided among 300,000 class members would have amounted to less than $10 each, after administrative fees were deducted.

“We had discussions with our clients and we talked to a lot of people in the community, nobody was interested in a check (that small)... so we looked for something better to do with the money,” Majestro said. “We also found out people have a lot of unanswered questions – what is chemical, what can it do to the body, what has it done to the water pipes. Individually, people don’t have the resources (to get those answers).

“We figured by taking this $2.9 million we could provide money to get answers to questions, and that would benefit the entire community much more than a very small check would.”

He said individuals who choose to opt out of the settlement can still receive their share of the proceeds, which would be about 1 percent minus administrative expenses.

The agreement also stipulates that the attorneys will not receive any of the insurance money, he added.

“That’s how strongly we feel this is a good deal,” he said. “We’re asking people to take their share and put it to use for the community benefit and we feel strongly enough about this settlement that we’re willing to do the same thing, and not ask for any fees. Part of it is that it's just the right thing to do and the other part is that the lawyers involved in prosecuting this case lived through it, too. We have a personal interest in making sure the right thing is done, in addition to a professional interest in doing what’s best for the class.”

The agreement must be approved by the district court as well as bankruptcy court. Majestro said they’ll also have to get the bankruptcy court to lift a stay on new civil suit filings so a settlement class complaint can be filed.

“In this case, the only entity getting released ... is Freedom Industries itself. No other person or company is being released. All those other companies potentially responsible for the class losses will still remain,” he said.

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