Fairfax, Krispy Kreme settle in lawsuit over sewage system
Tuesday, December 8, 2009
Krispy Kreme and Fairfax County have settled a years-long dispute over whether grease flowing from the doughnut maker's Lorton factory clogged the county's artery-like sewage system.
Seven months after Fairfax sued the North Carolina-based Krispy Kreme Doughnuts, saying that county-owned sewer lines had been damaged by corrosive grease from the company's production plant, the two parties settled out of court for $750,000, officials said.
County officials said the settlement also included an additional $200,000 from a third-party insurance company.
The settlement, reached last week, was made public Monday when Krispy Kreme's third-quarter earnings showed the debt. The company also agreed to pay $900,000 in legal expenses but admitted no wrongdoing.
Fairfax officials sued the company in May, saying that "excessive amounts of fats, oils and grease" flowing from the plant since it opened five years ago had destroyed iron pipes, mechanical pumps and other parts of the county's sewage system.
In a dispute that began in 2006, Fairfax said the grease -- described as hotter than 150 degrees, as acidic as vinegar and composing about 8 percent of the factory's wastewater -- kept gumming up sewer lines, according to civil court filings.
But Krispy Kreme said the sewage system wasn't damaged by its factory but from the county's "faulty design and construction." The company said that corrosion-resistant PVC pipes should have been used instead of iron and that the sewage system operates at only a fraction of its capacity.
The Lorton factory, in an isolated industrial park in southern Fairfax, is open all but two days a year and produces about 83 million doughnuts annually.
Earlier this year, Fairfax had forwarded a $1.95 million bill for repairs to Krispy Kreme, but the company refused to pay it. In its lawsuit, the county asked for the $1.95 million plus $18 million in civil penalties.
Since then, in filings in county circuit court and federal court, Fairfax and Krispy Kreme had waged a sometimes bitter war of words over who was at fault for the county's clogged arteries.
In court documents, Fairfax said the company would rank high in the federal Clean Air Act's "hall of shame." Krispy Kreme said the county was "shameful" and accused its attorneys of raising "every conceivable legal issue -- regardless of merit -- to avoid reaching the actual facts."
But on Monday, all was sugar and spice. A company spokesman, Brian K. Little, said that the case's "unique circumstances" had been "amicably resolved."
"The county values Krispy Kreme, which has been a corporate citizen of the county for 42 years, and Krispy Kreme values the county as a great place to do business," Little said.