A unit of CSX Corp. said yesterday that a jury had ordered it to pay $2.5 billion in punitive damages stemming from a railroad-car fire in New Orleans 10 years ago.
But A. R. "Pete" Carpenter, the president and chief executive of the unit, CSX Transportation, said that the decision by the jury was "clearly inconsistent with the facts" and that the company would appeal.
The case involved an incident that began Sept. 9, 1987, when a tank car containing butadiene, a volatile compound used in making synthetic rubber, began to leak and then burst into flames at an interchange rail yard, on tracks that belonged to CSX Transportation.
New Orleans fire officials decided it was best to let the fire burn itself out. The fire lasted about 36 hours. Thousands of residents near the yard were evacuated.
A year later, the National Transportation Safety Board, a federal agency that investigates accidents involving airlines and other transportation companies, found that CSX had not caused the accident and that no serious injuries had resulted.
The board, however, also found that the accident was caused by a misalignment and tearing of a gasket in the rail car, that a cover was improperly closed, that there were no established procedures for using a hinge in the cover and that there had been insufficient training of the carman who performed the work. The board made numerous recommendations to the city of New Orleans and the Federal Railroad Administration on improving the handling of hazardous material in tank cars.
A group of law firms brought a class-action suit against CSX and other companies on the day the fire occurred. They contended that nearby residents had suffered physical and mental anguish as a result of the fire and evacuation. About 8,000 people filed claims and became part of the suit.
A state jury in New Orleans was asked by the judge to assess punitive damages for the 8,000 residents. It decided yesterday on $2.5 billion against CSX and about $1 billion more against other companies involved with the tank car.
Among those are Mitsui & Co., the shipper of the chemical; GATX Terminals, a GATX Corp. unit, which loaded the car, and the other railroads that handled the car -- Illinois Central and Alabama Great Southern, part of Norfolk Southern Corp.
Marty Fiorentino, a spokesman for CSX Transportation, based in Jacksonville, Fla., said: "We are very disappointed with a legal process that offers rewards where there has been little harm."
He said that CSX involvement was based solely on its ownership of the interchange track. CSX, he added, "did not own the tank car, repair the tank car, transport the tank car or load the tank car."
He said the company would appeal as far as the U.S. Supreme Court, if necessary.
CSX shares were suspended from trading on the New York Stock Exchange yesterday after the jury award became public.
GATX, which is based in Chicago, said it would seek relief from the verdict, and, if necessary, appeal what it considers "unwarranted punitive damages."