First Circuit Closes Wrongful Death Suit Over Train Disaster

The 2013 train crash destroyed a large swath of a Canadian town and left 47 people dead.

Lac-Mégantic, Quebec, on July 6, 2013, after a train derailed and caused a fatal oil spill. (Photo by a Sûreté du Québec helicopter via Courthouse News)

BOSTON (CN) — Victims of the Lac-Mégantic train explosion are too late to swap corporate defendants in their bid to get justice from railways it says are responsible for the carnage, the First Circuit ruled Wednesday.

The tangled and complex litigation stems from a horrific accident that took place on July 6, 2013, after a train carrying 7.7 million liters of crude oil from North Dakota derailed en route to a refinery. As established months later by the Canadian government’s investigation, the train had been parked with the engine running for an overnight crew change when a fire broke out in the first locomotive.

Firefighters quickly managed to put out the flames, but in doing so shut down the train’s fuel supply. This in turn caused the air compressor to stop supplying air to the air brake system. The train started to roll downhill. By the time it reached a sharp curve in Lac-Mégantic, a town in Quebec, it was going 65 miles per hour and derailed.  

Most of the fuel that the train had been carrying spilled out immediately and quickly caught fire, destroying much of the downtown core. The tragedy spawned a number of lawsuits against the train’s owner, Montreal, Maine and Atlantic Railway, which filed for bankruptcy in Maine.

In addition to the MMA Railway, however, the victims also sought to hold Canadian Pacific liable as a connecting carrier. Canadian Pacific remained the last defendant standing following MMA’s liquidation and a settlement. It was only after the railway moved to dismiss that the plaintiffs then sought to add Canadian Pacific’s American subsidiaries as defendants.

In the same ruling that dismissed the case, the District Court declined to let the plaintiffs amend their lawsuit. Twenty-eight days after that dismissal, the plaintiffs appealed and attempted to substitute Soo Line Railroad for Canadian Pacific as the correct defendant — a move that the First Circuit found untimely based on bankruptcy court rules that give a shorter window to appeal.

At oral arguments in Boston last March, the survivors pushed the theory that Canadian Pacific was benefitting from its own prolonged coverup of which of its subsidiaries was involved. Wednesday’s ruling does not get into this theory, however, with the three-judge panel finding that bankruptcy rules do control.

“This conclusion has a domino effect and, when put into context, determines the outcome of this appeal,” U.S. Circuit Judge Bruce Selya wrote for a three-judge panel. “Under Bankruptcy Rule 9023, the plaintiffs’ motion for reconsideration was late and, thus, did not stop the accrual of the appeal period. In the absence of tolling, the plaintiffs’ ensuing notice of appeal was untimely and, therefore, their appeal must be dismissed for want of appellate jurisdiction.”

Lawyers for the families failed to sway the court with arguments that the lower court had alluded to the civil rules during proceedings.

“Plaintiffs have not pointed to any occasion when the court below purposed to address the question of which set of rules applied to the matters before it,” the the Reagan-appointed Selya wrote. “And while greater clarity on the part of district courts is always to be applauded, a lack of clarity on the district court’s part does not vitiate our obligation to determine which set of rules applies in this case.”

The ruling goes on to say that the plaintiffs should have been aware that the bankruptcy rules would “likely” apply to the claims.

Selya was joined by U.S. Circuit Judge Sandra Lynch, a Clinton appointee, and by Judge Gary Katzmann, an Obama appointee to the U.S. Court of International Trade who joined the panel by designation.

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