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POSITION PAPER ON BEHALF OF
MCWANE, INC. AND KENNEDY VALVE Respectfully submitted by
Hodgson, Russ, Andrews,
Woods & Goodyear, LLP
Attorneys for McWane, Inc. and
Kennedy Valve
1800 One M & T Plaza
Buffalo, NY 14203 Dated: July 8, 1996
POSITION OF KENNEDY VALVE FOR DISPOSITION OF
ISSUES ARISING OUT OF INDUSTRIAL ACCIDENT IN
ELMIRA ON JANUARY 13, 1995 INTRODUCTION
We believe that the Attorney General has received a distorted view from the unions of Kennedy Valve and the events preceding and surrounding the accident of January 13, 1995. During the Attorney General's investigation, the unions and management were engaged in contentious negotiations that ultimately led to a strike in May of 1995. As a result, the unions in the plant became very vocal about alleged problems in an effort to further their own agenda. Because of legal concerns, the Company was not in a position to respond and correct these distortions. Now, in the context of settlement discussions, the Company will first begin the presentation of an accurate depiction of Kennedy Valve and McWane as well as the events relating to the accident.
The death of Frank Wagner is a tragedy that has haunted all of the employees and management of Kennedy Valve. The Company has already responded in a positive and vigorous manner without any commitment from the state not to prosecute.
We understand the Attorney General has responsibilities that he must discharge, but criminal penalties are not warranted and in the end would hurt, not help the Company's ability to survive and promote the interests of more than 320 employees at the plant.
As you would expect, Kennedy Valve has given this matter its full attention and has taken affirmative steps to ensure that such incidents do not recur. The company has also made a proposal for the resolution of this matter that will address everyone's concerns and interests and the company's responsibilities and allow the Attorney General to send a positive message to both the workers and the business community in this state. The details of that proposal, together with an analysis of why criminal sanctions are unjustified in this case, are set forth below.
II. THIS MATTER SHOULD BE RESOLVED CIVILLY
Kennedy Valve, a division of McWane, Inc., is an ethical, responsible corporate citizen. The company does not intent to avoid its responsibilities in this or any other situation, and in fact, the company's actions since January 1995 bear this out. Since that time, the company has reacted to the tragedy of Frank Wagner's death in a positive and forthright fashion, in the following ways:
1. The company cooperated fully with the New York Department of Environmental Conservation ("DEC") and OSHA during their investigations of the accident;
2. With respect to the on-site storage of various regulated wastes, the company implemented corrective action at a cost of more than $325,000.00. DEC recently has acknowledged Kennedy Valve's full RCRA compliance, and has extended the company's air permits for the year 2000 based on its air quality compliance.
3. The company has hired a new safety director and an environmental engineer, and has made other significant personnel changes.
4. The company has re-energized its corporate safety program, a program that OSHA has characterized and acknowledged as the "Cadillac" of the industry.
5. The pole barn has been brought into compliance and a new storage building has been constructed at an additional cost of $25,000.00.
6. The sand from the foundry has received beneficiary use status by DEC and is now being used as landfill lining.
7. The Company has tentatively agreed to pay a $420,000.00 fine to OSHA in satisfaction of various issues, including $52,000 that is related to the accident that is the subject of the Attorney General's investigation. In addition, the company has agreed to perform certain enhanced abatements at the plant, substantially all of which already have been implemented.
Kennedy Valve took all of these steps without any assurances from the Attorney General's about future enforcement activity. These measures were all implemented unilaterally, and demonstrate the company's commitment to deal with problems in an immediate and forthright fashion. The company recognizes, however, that additional measures may be necessary to resolve all of the issues arising from this situation.
At our meeting on June 13, 1996, the Attorney General's staff suggested that the State was considering homicide or manslaughter charges against Kennedy Valve and certain of its employees, and also charges for violations of various environmental statutes. Kennedy Valve understands that the Attorney General has an obligation to the people of the State of New York to enforce the state's laws and, where appropriate, take action to punish those who violate those laws. Kennedy Valve, and its employees, however, did not commit manslaughter, homicide, nor did they endanger the environment.
As more fully explained later in this white paper, Mr. Wagner's death was the result of an unfortunate and unforeseeable industrial accident. Contrary to the impression that may have been fostered by the tense atmosphere at the plant during the spring of 1995, the company was, and remains committed, to safety in the workplace. Moreover, the company did not place Mr. Wagner at risk of serious injury nor did it have any knowledge of such a risk; elements that must be proven in order to establish the homicide charges under consideration. Thus, there is no basis or need for the pursuit of criminal charges.
Because the company is not guilty of these crimes, it will not plead guilty to such charges. In addition, there are also very real and practical reasons why the company, in the absence of guilt, cannot plead guilty to the charges proposed by the Attorney General's staff. A plea to any of the proposed charges could result in the closure of Kennedy Valve that would cost the Elmira area more than 320 jobs, and would have other ripple effects throughout the local economy. Kennedy Valve manufactures fire hydrants, valves, and other waterworks products that are purchased and used by various governmental agencies. A plea to any of these charges might result in debarment from future jobs, thereby depriving Kennedy of most of its business. Likewise, and just as damaging to the company, a plea to any of these charges would be used by the company's competitors to convince customers not to do business with the company. The financial impact of the scenarios outlined above would be much too severe for the conduct at issue and could have an adverse impact on the long term viability of the plant.
That said, the company nevertheless wants to work with the Attorney General toward a resolution that will provide more than adequate relief for what occurred, but does not place the viability of the company and the livelihood of its employees in jeopardy. A criminal prosecution for manslaughter, homicide, or reckless endangerment carries a maximum penalty of $10,000.00. A charge for endangering the environment only allows the imposition of a $100,000.00 to $150,000.00 fine, depending upon whether the charge is characterized as a Class E or Class D felony. Thus, the penalty in the event of a conviction would range from $10,000.00 to a maximum of $160,000.00. In order to attain that result, however, the State will spend a substantial amount of money, with a significant risk of a not guilty verdict, and even in the event of a guilty verdict, the possible closure of Kennedy Valve's plant with the loss of more than 320 jobs in an economically depressed area. Such a prosecution would also send an anti-business message to the business community in New York by expanding the scope of criminal enforcement into industrial and commercial settings, and ruin the lives of the three individual targets. Thus, a criminal prosecution carries with it great risks, with limited possible gain.
In contrast, Kennedy Valve has proposed a resolution that addresses the State's concerns more appropriately than a criminal prosecution, but with no risk and minimal cost to the State. Specifically, the company has offered to pay a substantial civil, environmental fine of $200,000.00, and to enter into a civil consent decree that would require the company to perform specific abatements and enhancements in the area of safety and environmental compliance. Because this resolution would be consensual, it carries no risk of failure, no cost of prosecution, and no possibility of adverse publicity for the State of New York. The plant would remain open and could continue to employ 320 employees, all with the added safeguards and safety measures set forth in the consent decree. Perhaps more important, such a resolution would allow the State of New York to send the right message to its citizens and the business community. This resolution would be a signal that violations of environmental regulations will be punished, but that responsible, constructive reactions to mistakes will be taken into account in resolving the problem. Such a message would be a pro-worker, pro-business message that accomplishes all of the government's goals of punishment, deterrence, and encouraging corporate responsibility.
SUMMARY COMPARISON OF RESOLUTION OPTIONS
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I. Criminal Prosecution
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II. Civil Settlement
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Maximum penalty: $10,000 for manslaughter/homicide/endangerment
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Substantial fine of $200,000, together with civil consent decree, considerably more than maximum criminal sanction
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Substantial Risk of Not Guilty verdict, with adverse publicity
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No risk of failure and associated adverse publicity
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Substantial cost of prosecution and expenditure of limited resources
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No cost of prosecution
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Possible closure of Kennedy Valve plant with loss of 320+ jobs in an economically depressed area
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Kennedy Valve plant remains open, continuing to employ 320+ employees, all with added safeguards and safety measures pursuant to consent decree
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Anti-business message and adverse press. Even a successful prosecution would expand the criminal law into new areas, a development that would certainly be contrary to the business friendly policy of the present administration
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Permits the Governor and Attorney General to promote the outcome as an example of how regulatory requirements will be enforced, taking into account responsible, constructive reactions to mistakes -- a pro-public, pro-worker, pro-business message
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Ruination of lives of three individuals
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Individuals, each of whom have suffered severe emotional toll, can put this tragic chapter behind them
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Kennedy Valve Company is also willing to work with the Attorney General's office in structuring the monetary payment in a manner that will put the money to the best use possible. There may be certain not-for-profit organizations or public funds that will allow the company to designate the use for funds such that they would benefit environmental, safety, or other causes in the State of New York. McWane will be happy to cooperate with the Attorney General in this effort.
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