Dive Brief:

• Pactiv Evergreen will pay $6.25 million to settle a lawsuit with the state of North Carolina over the May 2023 closure of its plant in Canton.
• That amount is about 52% of the $12 million in economic development grant funding Pactiv received in 2014 from the state’s Department of Commerce, which included an agreement to keep the site open and retain at least 800 jobs through Dec. 31, 2024. 
• Pactiv also agreed to drop its legal attempts to get refunds for its 2023 and 2024 property tax payments, which could have resulted in the company receiving $4.5 million. Plus, Pactiv will not bill the city of Canton for any wastewater treatment services it provided from 1964 through last month, when it sold the shuttered mill to demolition and environmental remediation company Spirtas Worldwide.

Dive Insight:

The paper mill in Canton had been in operation for more than 100 years prior to then-owner Pactiv shutting it down in 2023, according to the state of North Carolina. Blue Ridge Paper Products operated the facility since 1999, and in 2007 that company became Evergreen Packaging through a merger. Pactiv Evergreen formed in 2020 through the combination of Evergreen Packaging and Pactiv, both of which were previously acquired by Reynolds Group Holdings.

At the time of the Canton mill’s closure, many people expressed surprise at Pactiv Evergreen’s decision. The company made the announcement in March 2023 along with other closure and restructuring disclosures, and CEO Mike King noted a “challenging market environment” for Pactiv’s beverage merchandising business. North Carolina Gov. Roy Cooper said in a statement last week that the Canton closure came as a “gut punch" to the local and state economies.

Upon introducing the lawsuit in May 2024, then-Attorney General Josh Stein noted that taxpayers “invested in Pactiv Evergreen to bolster our state’s economy,” but Pactiv didn’t hold up its end of the bargain. He said at the time that his office had tried working with Pactiv for a year to address the company’s obligations, but it had “become clear that legal action was necessary to hold Pactiv accountable.” The initial lawsuit sought repayment of the full $12 million in economic incentives that Pactiv had received. 

The settlement should not be viewed as an admission to wrongdoing, North Carolina’s Department of Justice stated.

“Pactiv broke its promise to the state and the people of Canton, and today’s settlement holds it accountable for violating its agreement,” Attorney General Jeff Jackson, who was elected in November and took office last month, said last week of the new settlement. “This settlement will allow the people of Canton and Haywood County to immediately put millions back into rebuilding their economy after the mill’s closure, and it will shield them from future litigation from Pactiv.”

The candidates for state attorney general repeatedly brought up the mill issues on the campaign trail prior to November’s election. Both candidates expressed a desire to hold Pactiv accountable.

Pactiv had filed a motion to dismiss the complaint in July 2024. But a judge denied that motion in October, allowing the lawsuit to proceed. 

“We are pleased to have resolved with the State of North Carolina all outstanding matters relating to the closure and sale of our former Canton mill site. We thank our employees for their contributions to our company and wish the Canton community well in this next chapter for the Town,” said Pactiv Evergreen Tuesday in an emailed statement.

This wasn’t Pactiv’s first legal battle over the Canton site.

In autumn 2023, the company reached a settlement worth more than $2 million with the U.S. EPA over Clean Air Act violations at Canton. Earlier that year, the North Carolina Department of Environmental Quality said the site violated water quality requirements; the company denied the allegations. In 2021 and 2022, the mill faced state air quality violations. 

Novolex is in the process of acquiring Pactiv Evergreen for $6.7 billion. The deal, which would take Pactiv private, is expected to close during the first half of this year.