Packaging Corporation of America plans to appeal an April 24 jury verdict to award $91.8 million in compensatory damages plus prejudgment interest to nine survivors of a deadly February 2017 explosion at the company’s pulp mill in DeRidder, Louisiana, according to the company’s updated quarterly report filed with the U.S. Securities and Exchange Commission on Tuesday.
Chief Judge Shelly Dick of the United States District Court for the Middle District of Louisiana filed a judgment on April 30 reflecting the jury’s decision in the civil lawsuit that favored the nine plaintiffs, who were employees at the time and injured by the explosion.
“We and our insurers are currently reviewing all aspects of this verdict and evaluating our further options,” a PCA spokesperson said via email Wednesday.
Three contractors were killed in the 2017 explosion and several other workers were injured. The U.S. Chemical Safety & Hazard Investigation Board determined in 2018 that welders doing hot work near a leaking waste tank — which was believed to hold water but actually held flammable components, including turpentine — likely sparked the explosion. The explosion propelled the 100,000-gallon tank into the air and over a six-story structure. The investigation concluded the incident was caused by “confusion” and a lack of company attention to safety procedures and management.
The U.S. EPA conducted an inspection at the DeRidder mill after the explosion and said it found additional Clean Air Act violations. PCA said it “performed several voluntary activities” to address the EPA’s areas of concern.
PCA agreed in 2022 to pay a $2.5 million fine to settle a case brought by the U.S. Department of Justice and the Louisiana Department of Environmental Quality, alleging the company committed several Clean Air Act violations related to the DeRidder explosion. PCA says it paid the penalty last year, but the company “did not admit liability for violation of the Clean Air Act in connection with the settlement,” according to its quarterly filing.
PCA noted in the SEC filing that it had been served with numerous lawsuits over the DeRidder incident, most of which were settled by the company and its insurers, and it “believes that these suits are covered by its liability insurance policies,” subject to an aggregate $1 million deductible. The document also stated that the company “has not paid any losses in excess of its insurance deductible in connection with these settlements, and its insurance deductible has been satisfied in full. To date, all settlements in excess of the deductible have been paid out by one of the company’s insurers.”
The company said in the filing that it is “vigorously defending the remaining lawsuit” and that the “matter is in the post-trial stage, and the company intends to appeal the decision.” Noting that it cannot predict the outcome of the appeal, PCA said that it believes it has “sufficient insurance to cover the verdict and prejudgment interest.”
The SEC document provides an update due to “unscheduled material events or corporate event” to PCA’s first-quarter 2024 financial results, released April 22, noting an additional $123.7 million cost and insurance recovery during that quarter related to judgment plus interest for the DeRidder litigation.
