Papermaker Appleton has protections from financial ruin in lawsuit over Fox River cleanup

APPLETON — APPLETON — Papermaker Appleton has protections to spare the company from financial ruin despite a judge's ruling in a massive lawsuit over cleanup of the Fox River, a company spokesman said Friday.

"We feel the future of the company is secure," said Bill Van Den Brandt, manager, corporate communications for the firm (formerly known as Appleton Papers). "We're disappointed with the decision and are considering our options for appeal."

In a sweeping decision Wednesday, U.S. District Judge William Griesbach threw out the suit in which Appleton was seeking to spread the estimated $1 billion cost of cleaning PCB contamination to more than 20 other parties. A trial had been scheduled to begin Jan. 4 in Milwaukee. The secondary parties included paper mill owners, municipal wastewater treatment plants and municipalities.

When employees bought the firm in 2001 from former owner Arjo Wiggins Appleton, of London, the paper firm entered into indemnification agreements — secure legal protections — that capped its liability for the cleanup of the river at $25 million, Van Den Brandt said. Appleton fulfilled its financial obligation by paying $25 million last year, he said.

"We have appropriate indemnification and insurance coverage and we're still comfortable with that," he said.

Appleton employs about 1,300 at its Fox Cities facilities.

The company was indemnified for the first $75 million of Fox River liabilities and for amounts in excess of $100 million, Van Den Brandt said.

He said the federal court's decision does not change the status of the six remaining principal parties responsible for dumping PCBs into the river.

"What the decision does is prevent Appleton and NCR from recovering money from entities named in that lawsuit," Van Den Brandt said.

Appleton Papers and NCR produced a carbonless paper beginning in the 1950s that used polychlorinated biphenyls, a chemical later found to be toxic and taken off the market.

Scott Hansen of Milwaukee, one of the defense attorneys affiliated with the Reinhart, Boerner Van Deuren law firm, said the judge's decision settles many issues but far from all in the complex litigation.

"This decision goes a long way toward resolving the issues of the lawsuit," he said. "It does not resolve every issue in the lawsuit. It suggests that at the end of the day NCR and Appleton parties are apt to end up bearing the large majority of the cleanup costs."

But Van Den Brandt took issue with the contention that Appleton and NCR will be saddled with the lion's share of the cleanup tab, which has been estimated at $1 billion between Appleton and Green Bay.

"That's just speculation we'd be held for the majority of the cost," he said.

Appleton's former parent company, Arjo Wiggins Appleton, took out an insurance policy designed to provide up to $250 million worth of coverage for liabilities associated with clearing PCBs from the river, including costs associated with extensive dredging activities the past few years.

AWA paid $88.2 million through 2008 in connection with the liabilities. As of Jan. 3 this year, the total indemnification receivable from AWA was $152 million of which $37.7 is recorded in other current assets on Appleton's books, Van Den Brandt said. A total of $114.3 million is recorded as an environmental indemnification receivable.