Lac-Mégantic rail disaster: $200M proposed settlement reached

Victims of the 2013 rail disaster in Lac-Mégantic, Quebec have reached a major financial settlement with the railway involved.

If compensation package is approved, money could be distributed to victims' families by the summer

An unattended freight train carrying crude oil derailed, resulting in the fire and deadly explosion that killed 47 people in Lac-Mégantic, Quebec, in July 2013. (CBC)

Victims of the 2013 rail disaster in Lac-Mégantic, Quebec have reached a major financial settlement with the railway involved.

A U.S. lawyer who worked on the wrongful-death lawsuits says $200 million dollars will be distributed in settlement funds to families of those who died as well as other parties involved in the legal battle.

Peter Flowers told The Canadian Press he expects the money to start flowing this summer, although the compensation package must still be approved by courts on both sides of the border.

The settlement involves the Montreal Maine and Atlantic Canada Co., its insurance carrier, rail-car manufacturers and some oil producers.

"This fund applies essentially to everyone who's been affected as a result of the disaster," Flowers said in an interview from Chicago.

"It applies to the wrongful-death victims, it applies to the government's lawsuit against these companies. It applies to the class-action lawsuit filed in Canada against these companies.

"All three of those main classes are being covered by this."

Flowers, a wrongful-death lawyer with the Meyers & Flowers law firm, said Illinois litigation regulations played a "dramatic role" in increasing the funds to be distributed.

Total compensation expected to climb

Parties involved in the proposed $200 million settlement fund for victims asked a Canadian judge Friday to give them until September to pin down the details.

The court filing in Sherbrooke, Que., described for the first time how money from the settlement fund could be distributed to victims' families. A similar filing of a draft settlement plan will be made later in a companion case in U.S. courts.

"This is the first step in implementing the settlement fund," said Robert Keach, court-appointed trustee in the defunct railroad's bankruptcy case in Maine.

Keach said he's received commitments of about $200 million but hopes it will grow to $500 million. Several of the largest corporations with potential legal liability have not yet agreed to participate, he said.

Three other companies — World Fuel Services, Canadian Pacific Railway and Irving Oil — have yet to contribute.

"We will turn over every stone on earth before we give up on them and intend on pursuing them in Illinois and any other state to ensure they're brought to justice and held responsible for this disaster," Flowers said.

The derailment in the town of 6,000 on July 6, 2013, set off several massive blasts, wiped out part of the downtown core and killed 47 people.

The family of one man killed in the crash was the first to file a lawsuit in a U.S. court against rail and petroleum firms connected to the oil-filled tankers that slammed into the town.

It was initiated by the family of Jean-Guy Veilleux, who died in the runaway-train disaster, in the weeks following the derailment.

Plaintiff Annick Roy was seeking damages from 10 defendants, including the now-defunct Montreal, Maine and Atlantic Railway, its major stockholder Rail World Inc., top rail executive Edward Burkhardt and several American petroleum companies.

The suit alleged the railway and petroleum companies named had a duty to operate their businesses in a "safe manner and to take reasonable measures to avoid exposing the public to the dangers associated with the transport of crude oil to refineries."

Roy also alleged in the suit the defendants were negligent for transporting crude oil in the flawed DOT-111 tanker cars, which have been known to rupture during derailments. The document highlights how there has been a considerable increase in oil-by-rail transport in recent years.

Flaws in the DOT-111 tanker have been noted as far back as a 1991 safety study.

Other defendants named in the lawsuit include firms in the U.S. petroleum industry: World Fuel Services Corp., Western Petroleum Company, Petroleum Transport Solutions, Dakota Plains Transloading, Dakota Petroleum Transport Solutions, Dakota Plains Marketing and DPSTS.

Burkhardt, who was president of Illinois-based Rail World and chairman of MMA at the time of the tragedy, was the only individual listed in the suit.

When contacted by The Canadian Press on Friday, Burkhardt said in an email, "I'm afraid I cannot comment at this time."

      1 of 0


      To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

      By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.