Attorney says corporate members could be held liable in leak lawsuit

Attorney says corporate members could be held liable in leak lawsuit

Source: Charleston Daily Mail (WV), February 26, 2014
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A Charleston attorney seeking to hold Freedom Industries’ shareholders and members legally liable for last month’s chemical leak thinks Tuesday’s testimony could have strengthened his claim.

However, there still are several remaining questions that attorneys hope to be resolved in upcoming depositions.

As previously reported, there’s a strict set of tests to determine whether a company’s individual shareholders, members or parent companies can be held liable.

This is called “piercing the corporate veil” in the case of shareholders and “enterprise liability” in the parent company realm.

And these tests aren’t easy to pass.

In fact, West Virginia courts have listed 19 factors to consider in determining a unity of interest and ownership between the corporation and shareholders.

Some experts have previously said evidence in Freedom’s case didn’t support either enterprise liability or veil piercing.

Kevin Thompson, an attorney with Charleston firm Barney Thompson PLLC, said he thinks veil-piercing claims were strengthened by recent testimony.

In Tuesday’s creditor meeting, Freedom president Gary Southern testified he served as a consultant for Blackwater and Enviromine before the December 2013 acquisition of the company.

Southern testified he has worked as a consultant to Freedom since 2009 while he was employed by Blackwater.

Enviromine, Southern said, is owned by Chemstream, which is the sole owner of Freedom Industries. He said Enviromine makes environmental solutions for water resulting from the mining process. In particular, he mentioned removing metals from water.

Southern testified he was an employee of these companies and not an owner.

“In today’s testimony, we learned that Mr. Southern is an employee of Enviromine and has been working with Freedom for some time now,” Thompson said. “If J. Clifford Forrest (the owner of Chemstream) is exercising control over Freedom for years or some period of time where the problems that caused this pollution could have been corrected, then our lawsuit seeks to hold Forrest and companies responsible.”

However, Thompson noted the hearing has raised several questions that will be answered in depositions taking place over the next several years.

Thompson noted the biggest question he wants to find out is the role Blackwater played since 2009 and who owns the company.

“Since that wasn’t relevant for today’s hearing, that will only be answered through the discovery process and litigation,” Thompson said.

However, Thompson said he thinks his veil-piercing claim has been strengthened. Thompson said the main question U.S. District Judge John Copenhaver must resolve is whether Forrest or other entities exercised significant control over Freedom.

“There’s a strong possibility that Judge Copenhaver will allow us to pierce the veil,” Thompson said, noting his firm is investigating the roles Forrest and his companies have played.

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