Wisconsin Court: Insurers Must Help With Fox River Paper Mill Cleanup

Two companies that once insured Appleton Papers Inc. are liable for $10 million toward the cleanup of the Fox River after a court decision on June 8, the firm’s lawyer said.

The 2-1 ruling by the Wisconsin Court of Appeals means Munich Re AG and Westport Insurance Corp., which is owned by Swiss Re, are each now liable for $5 million under decades-old policies, Madison attorney Ron Ragatz said.

“We’re very pleased with the decision,” he said.

Ragatz said several other firms that insured Appleton between 1978 and 1986 have reached confidential settlements for their portion of the cleanup, which is expected to cost between $600 million and $700 million.

Munich spokeswoman Terese Rosenthal declined to comment, and a Westport lawyer did not return a phone message.

The cleanup overseen by the U.S. Environmental Protection Agency involves a 13-mile span of the river in northeastern Wisconsin, the largest environmental remediation project of its kind, said Scott Stein of the Fox River Cleanup Group. The project started last year and is expected to last until 2018.

Appleton’s corporate predecessor, the National Cash Register Co., dumped PCBs into the river between 1954 and 1971 as a byproduct of carbonless paper production. Production of PCBs was banned in 1979 after they were shown to cause cancer in wildlife and be a likely carcinogen for humans.

The project involves dredging the PCB-contaminated sediment on the bottom of the river, shipping it to a processing facility for treatment and then to a landfill. Water is cleaned and returned to the river. In other areas, sediment will be capped and covered on the bottom of the river to hold PCBs in place.

The goal is to lower the level of the pollutants, protecting boaters and others exposed to the water, humans who eat fish, and fishing-eating birds and mammals from health risks.

For years, Appleton has clashed with its insurers over whether their policies required them to cover the costs of the cleanup in what became one of the largest, most complex civil cases in Brown County history.

After a five-week trial in 2008, a jury ruled that nine insurance companies were responsible. That verdict was upheld in January 2009 by Brown County Circuit Judge Donald Zuidmulder.

The insurers filed an appeal, arguing they were not liable because Appleton had assumed responsibility for the costs under a 1998 settlement with its predecessor. They claimed the company did not provide them with timely notice of the claim.

While the appeal was pending, all but Munich Re and Westport reached settlements, Ragatz said. Westport’s attorneys, with the backing of insurance trade associations, carried on their arguments in the appeal. Munich has not participated in the legal proceedings.

Appeals Court Judges Patricia Curley and Joan Kessler rejected the insurers’ arguments, upholding the jury’s verdict and decisions by Circuit Court Judge Donald Zuidmulder.

Dissenting Judge Ralph Adam Fine said the insurers should have been allowed to show that Appleton forfeited its right to collect under the policies by reaching the 1998 settlement.

“A fundamental tenet of American law is that folks have a right to be heard ‘at a meaningful time and in a meaningful manner,”‘ he wrote, citing earlier cases. “The insurance companies in this appeal (all of whom but one have, sadly in my view, settled) did not have that chance.”

Appleton calls itself the world’s largest producer of carbonless paper, which is widely used for business forms such as invoices and purchase orders. The employee-owned company is headquartered in Appleton and has manufacturing operations in Wisconsin, Ohio, Pennsylvania and Massachusetts.