NORTH CAROLINA (From news reports) -- Pactiv Evergreen argued this week that it should not have to repay North Carolina the full $12 million in economic incentives it received for employing workers at its now-shuttered paper mill in Canton.
In a Wake County Superior Court filing, the company asked a judge to partially dismiss state Attorney General Josh Stein's lawsuit over the subsidies, which were awarded in 2014 under a Job Maintenance and Capital Development (JMAC) Agreement.
"It is apparent on the face of the JMAC Agreement that the full repayment remedy bears no relation to the actual damages that the Department suffered and serves only to punish Pactiv," the company's lawyers said in the filing.
The agreement required Pactiv Evergreen to employ a minimum of 800 full-time employees for the duration of the 10-year contract.
Pactiv Evergreen closed the Canton paper mill and terminated its staff in May 2023. The site now has a prospective new owner, St. Louis-based company Spirtas Worldwide.
The lawsuit by Stein, who is the Democratic nominee for governor, alleged that Pactiv Evergreen violated several sections of the JMAC Agreement. One section, for instance, calls for the repayment of all funds "if the Company fails to maintain operations at the Facility for the Agreement Term."
A second states that "the Company shall repay the Department a proportionate share of Grant payments previously received" if it fails to meet the contract's requirements in any year after it has received the full $12 million.
And a third section states that a failure to meet the contract's performance criteria "shall constitute a Default by the Company."
The attorney general's office cited all three sections of the contract in its lawsuit. Yet Pactiv Evergreen argues that only the "proportionate share" section of the contract applies.
Pactiv blasts the state government's demand for repayment, calling it an "illogical reading of the JMAC Agreement." The company argues Stein's lawsuit, if successful, would require Pactiv Evergreen "to repay simultaneously both the full Grant funds as well as a proportionate share of the same Grant funds."
Nazneen Ahmed, a spokeswoman for Stein, said Pactiv's legal filing "fails to offer any compelling reason why it should not have to repay the state the $12 million it owes for closing the paper mill last year."
"We look forward to responding and will keep fighting on behalf of the residents of Canton and North Carolina's taxpayers," Ahmed said in a statement.
While the legal battle over the $12 million plays out, the future of the mill site remains uncertain.
"We are continuing to work closely with Spirtas to negotiate a sale and ensure a smooth transition," Pactiv Evergreen spokeswoman Beth Kelly told BPR in an email last month.
Eric Spirtas, President of Spirtas Worldwide, did not respond to multiple requests for comment. In a June interview, he said his company was engaged in due diligence.
The mill site's wastewater treatment plant, which also serves Canton residents and businesses, will remain in operation "until the town doesn't want it," he said.
"The town and community come first. We are for and with the town," Spirtas said.
Pactiv Evergreen announced the prospective new owner in May. The following month, it announced the sale of a separate factory - a Waynesville extrusion facility - to Brazilian company Suzano.
Last month, the Canton mill site was rezoned - a move that town leaders say gives them a greater voice in future redevelopment.
Canton Mayor Zeb Smathers told BPR in an interview last month that he remains "cautiously optimistic" and that there was "no reason at this point for me to believe (the Spirtas) deal is not going to happen."
"A lot of conversations happening, obviously, between the two companies," he said. "But we are working with Spirtas and our local and state partners - still finding answers to questions, but preparing that Spirtas will be our new neighbors."
