Pactiv doesn’t want to pay back grant

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Pactiv doesn’t want to pay back grant

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Since unceremoniously announcing its exit from Canton early in 2023, Pactiv Evergreen, owner of the now-shuttered 115-year-old paper mill, has had very little to say — except which bills it refuses to pay. On July 29, the $6 billion multinational company did it again.

“ … despite Pactiv having satisfied nearly all of its obligations under the JMAC agreement, there is no legal or factual basis to sustain the relief the Department seeks,” wrote Pactiv’s lawyers in their motion to partially dismiss a lawsuit filed by North Carolina Attorney General Josh Stein on behalf of the Department of Commerce on May 23.

Stein’s suit arose after The Smoky Mountain News first reported that by announcing it would close the venerable old paper mill at the heart of Canton, Pactiv would appear to violate the terms of a Job Maintenance and Capital Development Agreement signed by then-Gov. Pat McCrory in 2014.

The agreement sent Pactiv $12 million in taxpayer money in exchange for the company promising to spend $51 million of its own money to convert coal-fired boilers to natural gas. Pactiv actually spent $56 million, but apparently missed or ignored another condition of the agreement — maintain at least 800 jobs through Dec. 31, 2024.

The bulk of the layoffs at Pactiv’s Canton mill took place in June 2023, bringing employment numbers well below that threshold, well before that deadline.

Gov. Roy Cooper and Stein, currently the Democratic nominee for governor, pounced on Pactiv’s presumptions, demanding the company pay back the $12 million. Since then, both Cooper and Stein have reiterated their commitment to holding Pactiv accountable — as have the current candidates for attorney general, Rep. Dan Bishop (R-Mecklenburg) and Rep. Jeff Jackson (D-Mecklenburg).

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“Pactiv Evergreen accepted millions from the state but did not fulfill their commitments, abandoning the people of Canton,” Jackson told The Smoky Mountain News Aug. 5. “This is completely unacceptable. I back Attorney General Stein’s lawsuit, and if elected attorney general, I will ensure Pactiv is held accountable.”

Stein’s Republican opponent for governor, Lt. Gov. Mark Robinson, likewise, told The Smoky Mountain News back in April that the state should use “everything at our disposal to hold companies accountable for bad performance that really costs our folks in our communities.”

Canton Mayor Zeb Smathers said on Aug. 4 that he has “full faith and trust” that Stein and his staff will prevail not only on Pactiv’s motion but also with the suit itself.

“Pactiv simply broke the promise they made to the taxpayers of North Carolina. They broke it in full, and they should repay in full,” said Smathers. “I’ve said it before and I’ll say it again, when you give your word, you stand by it. They broke their word it and they should repay the grant in full.”

Despite Pactiv’s stunning admission that it hadn’t fulfilled all of its obligations, the company maintains it shouldn’t have to pay the full amount, due to what it says are conflicting provisions in the JMAC agreement.

According to Pactiv’s response, one paragraph of the agreement states that in the case of a breach of contract the company would have to repay the full amount of the grant, but another paragraph states that the company would only have to repay a proportionate share of the grant.

Pactiv alleges the agreement is inconsistent with contract law and state precedent because only one theory of breach can survive. Since the paragraph requiring proportional repayment contains a triggering condition, Pactiv’s receipt of the grant funds, the clause requiring full repayment should be dismissed.

The motion further states that the clause requiring full repayment is unenforceable because it “bears no relation to the actual damages the Department suffered and serves only to punish Pactiv.”

Nazneen Ahmed, a spokesperson for Stein’s office, said the response by Pactiv doesn’t really change anything.

“Pactiv’s motion 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,” Ahmed said. “We look forward to responding and will keep fighting on behalf of the residents of Canton and North Carolina’s taxpayers.”

Pactiv’s response to the lawsuit continues the company’s pattern of appearing to shirk its obligations — both legal, and moral — to the state, the region, the workers of Haywood County and the people of Canton.

During a March 6, 2023, employee meeting, Pactiv officials told workers out of the blue that within three months, their high-paying union jobs would be gone but didn’t bother notify local elected officials and didn’t notify their health insurance carrier, resulting in some workers having to ration prescription medications or do without.

Meanwhile, Pactiv executives including CEO Michael King dumped more than $660,000 in stock less just a few days before the announcement and then asked the county for a multimillion-dollar property tax break on the 185-acre mill site. The county said no, but Pactiv is appealing the ruling.

Canton recently managed to dodge a property tax increase despite a budget hole topping $1 million — thanks to Pactiv — but it can’t run forever. Taxpayers from Murphy to Manteo are now on the hook for the substantial direct allocations made by the General Assembly to keep Canton solvent.

Rep. Dan Bishop, Republican candidate for North Carolina Attorney General did not return an email request for comment.

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