Chemours Co. claims its former parent DuPont Inc.’s estimates on liabilities the spun-off company should cover were “spectacularly wrong” and wants a judge to block the chemical maker’s requests for “unlimited indemnity.”
A Delaware judge on Friday unsealed a lawsuit Chemours filed last month, taking issue with the amount of liability it assumed for clean-up demands tied to DuPont products such as PFOA, a cancer-linked chemical formerly used to make Teflon nonstick coatings and other products.
DuPont said in a statement the companies’ responsibilities were clearly laid out in a 2015 spinoff agreement and asked the judge to dismiss the case and send it to an arbitrator for consideration.
“We find it regrettable that our former colleagues at Chemours have taken this action in an attempt to limit responsibility for their litigation and environmental liabilities” to which they agreed, DuPont said. DuPont merged with Dow Chemical Inc. in 2015, prompting the Chemours spinoff.
Chemours said it filed suit in the interests of its shareholders, but didn’t respond to DuPont’s call to have the case transferred to arbitration.
“From its inception, Chemours moved quickly and with urgency to transform the company and take action to address historic issues,” David Rosen, a company spokesman, said in an email.
The suit was unsealed by Chancery Court Judge Sam Glasscock III after the Delaware Supreme Court rejected DuPont’s attempt to keep it secret. The higher court said DuPont’s lawyers bungled a chance to have the complaint partially redacted by appealing Glasscock’s order.
DuPont and Chemours face a flood of injury claims tied to the PFOA chemical in states such as Ohio and West Virginia. The companies in 2017 agreed to split a $671 million settlement related to about 3,550 health claims, but they have disputed who is responsible for others. Under the separation agreement, Chemours is supposed to indemnify DuPont for any liability.
The accord came after at least three juries found DuPont liable for injuries, including cancers, blamed on PFOA. The company was facing almost 40 more trials over the chemical when it signed the deal.
Last year, U.S. regulators asked Chemours to test public and private drinking water supplies in West Virginia and Ohio for GenX, a successor to PFOA. The U.S. Environmental Protection Agency said in a letter it was concerned about GenX discharges into public waterways.
In the Delaware suit, Chemours executives argue DuPont misled them about the amount of liabilities the spinoff would be taking and that it forced it to accept responsibility for what could total billions of dollars.
“The separation agreement was the product of a one-sided process that lacked any of the hallmarks of arm’s-length bargaining,” Chemours’ lawyers said. “DuPont unilaterally dictated the terms of the separation agreement and imposed them on Chemours.”
For example, DuPont officials estimated Chemours would have to pay about $2 million for an environmental clean-up of chemical discharges into waterways near Cape Fear, North Carolina. Chemours officials later learned the total cost of the clean-up is likely to be $200 million, according to the suit.
“DuPont has demanded indemnification for, and disclaimed any obligation to contribute to, all these liabilities, without regard” to its flawed estimate, Chemours said in the complaint.
DowDuPont underwent other spinoffs this year as its Corteva agriculture division broke off this month, leaving DuPont as a stand alone company with businesses ranging from specialty plastics to nutrition. Dow Inc. was spun off earlier this year.
The case is Chemours Co. v. DowDupont Inc., 2019-0531, Delaware Chancery Court (Wilmington).
–With assistance from Tiffany Kary and Jack Kaskey.
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