EXIDE VERNON BREAKING NEWS: Exide asks bankruptcy court to halt $115 million putative class action suit over environmental hazards at Vernon lead smelter
The class alleged in its April 25 complaint that the company was discharging toxic lead, hazardous waste, arsenic and other chemicals into the air and soil at its Vernon, Calif., plant. It claimed damages to the plaintiff and others living in Los Angeles County.
The suit came the day after the company was forced to shutter the plant in question, but a Los Angeles Superior Court judge in July ruled that the plant could stay open. The company said in July it was working with the South Coast Air Quality Management District to schedule testing to confirm it had reduced air emissions.
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Exide Asks Bankruptcy Court To Halt $115M Calif. Plant Suit
HEARING DATE SET FOR SEPTEMBER 17, 10 A.M. (See links to copies of motions below)
By Kat Greene
Law360, Los Angeles (September 03, 2013, 6:56 PM ET) — Exide Technologies Inc. on Friday asked a bankruptcy judge to throw out a $115 million putative class action over environmental hazards at its Vernon, Calif., battery recycling facility, saying the suit would unnecessarily drain the pool of funds for unsecured creditors in its Chapter 11 bankruptcy negotiations.
The Milton, Ga.-based battery maker said in Tuesday’s filing that there’s no reason to move forward with the class action while it is in negotiations with its creditors.
“There is no doubt if the stay were lifted so that the litigation could proceed, it would be a major distraction to [Exide’s] overall restructuring efforts, and [Exide] would have to devote significant resources to its defense given the magnitude of the alleged damages and potential dilutive effect the litigation could have on the unsecured claims pool,†the battery maker wrote in its objection Friday.
The class is asking for $115 million in damages but said it would limit the damages it collects to what Exide’s insurance will cover, subsequently pursuing separate litigation for the difference. But insurance will only cover about $8 million, depending on how the policies are negotiated, the company claimed.
The class alleged in its April 25 complaint that the company was discharging toxic lead, hazardous waste, arsenic and other chemicals into the air and soil at its Vernon, Calif., plant. It claimed damages to the plaintiff and others living in Los Angeles County.
The suit came the day after the company was forced to shutter the plant in question, but a Los Angeles Superior Court judge in July ruled that the plant could stay open. The company said in July it was working with the South Coast Air Quality Management District to schedule testing to confirm it had reduced air emissions.
Allowing the class action to proceed would cause a landslide of litigation that would erase any value for the creditors in Exide’s unsecured pool, the company said in Friday’s objection. Its creditor committee agreed, filing a joinder that supported Exide’s objection to the class action.
“Granting [Hernandez’s] requested relief will do nothing more than invite other litigants to seek similar relief, which could seriously hamper, if not render moot, the Chapter 11 claims resolution process,†the committee wrote in Friday’s joinder.
Representatives for the parties did not immediately respond to requests for comment Tuesday.
Hernandez is represented by Carl D. Neff and L. Jason Cornell of Fox Rothschild LLP, as well as by Dana B. Taschner.
Exide is represented by Richard W. Brunette, Carren Shulman, Randolph Visser and Shawn K. Watts of Sheppard Mullin Richter & Hampton LLP and Anthony W. Clark, J. Eric Ivester, Christine W. Kim, Kristhy M. Peguero and Kenneth S. Ziman of Skadden Arps Slate Meagher & Flom LLP.
Exide’s creditor committee is represented by Robert J. Dehney, Erin R. Fey and Eric D. Schwartz of Morris Nichols Arscht & Tunnell LLP and Gerald C. Bender, Paul Kizel, Sharon L. Levine and Kenneth A. Rosen of Lowenstein Sandler LLP.
The case is In Re: Exide Technologies, case number 1:13-bk-11482, in the U.S. Bankruptcy Court for the District of Delaware.
–Editing by Philip Shea.
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