Lac-Megantic Victims|Blame Rail Industry

DALLAS (CN) - The explosion that destroyed Lac-Megantic, Quebec stemmed from crude oil with a "dangerously low flash point" carried on defective railcars, a new class action against the rail and oil industries claims.

Samuel Audet and 83 other named plaintiffs sued 57 oil producers, suppliers, transporters, rail operators, railcar companies and executives in Dallas County Court on June 4.

Forty-seven people died on July 6, 2013, when 72 railcars loaded with crude oil rolled 7 miles downhill, derailed and exploded, destroying downtown Lac-Megantic.

The plaintiffs estimate the class has 3,000 members.

Defendants include Edward A. Burkhardt, chairman of Montreal, Maine and Atlantic Inc., the operator of the derailed train; ConocoPhillips and Shell Oil; General Electric and Trinity Industries.

The plaintiffs say MM&A was wholly owned and managed by a company controlled by Burkhardt, who "had a reputation in the railway transportation industry for cutting costs at the expense of safety."

"Among defendant Burkhardt's characteristic successes that preceded and presaged the Lac-Megantic disaster was the formation of the Wisconsin Central Transportation Corporation and the purchase of assets of a division of the struggling Soo Line operations," the 58-page complaint states.

"Defendant Burkhardt designed a business plan to reduce costs from the Soo Line operations by disbanding the union and union work rules and reducing crew sizes on freight trains from an average of 4.8 employees per train to 2.2 employees per train."

The plaintiffs say the National Transportation Safety Board concluded that the probable cause of a similar oil and gas derailment of a Wisconsin Central train in 1996 that forced 1,700 residents to flee their homes was caused by "improper maintenance" because management "did not ensure that two employees responsible for inspecting the track structure" were correctly trained.

They claim the defendants were "well aware" that the NTSB had criticized the use of DOT-111 tanker cars for hazardous, flammable materials "due to the threat of catastrophic injury they posed to the general public" if they derailed.

They claim the defendants should have known DOT-111 lessees were not implementing enough safety precautions to minimize the risk of "catastrophic consequences" if they were to derail in urban areas.

"Upon information and belief, the DOT-111 tank cars used to transport the [co-defendant] Irving [Oil Company's] shipment had been manufactured prior to 2011 and had not been retrofitted with reinforced shells, head shields, valves or other exposed fittings and were, therefore, subject to a high risk of rupture in the event of a collision or derailment," the complaint states.

Problems with the tankers have been well-documented "for more than 20 years" by government regulators and the news media, according to the complaint.

Plaintiffs say the shipment was filled by defendants World Fuel Services Corp. and Dakota Plains Holdings, originating from New Town, N.D., and headed for Irving's refinery in Saint John, New Brunswick, Canada.

"All of the defendants were aware or should have been aware that the transport of misclassified highly volatile crude oil in unsuitable tanker cars through densely populated urban areas, such as Chicago, Illinois, puts the public at unreasonable risk of catastrophic injury and death," the complaint states.

The plaintiffs seek actual and punitive damages for negligence, strict liability and personal injury. They are represented by Jason Webster in Houston.

Dakota Plains said Monday that co-defendant World Fuel would settle certain claims against Dakota Plains with MM&A's U.S. bankruptcy trustee and Canadian bankruptcy monitor.

Dakota Plains said it was indemnified by World Fuel under the dissolution of their partnerships in December.

Trustee Robert Keach told the Bangor Daily News in Maine that the $110 million settlement will go to a victims' fund that now totals $345 million. Keach sued World Fuel in January, claiming it misidentified the crude oil as "low danger."

"We applaud [World Fuel Services] for its good corporate citizenship in reaching this settlement to the benefit of all of the victims of the Lac-Megantic derailment," Keach told the newspaper on Monday.

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