DuPont Ducks Suit From Entity Spun Off to Handle Chemical Liabilities

DOVER, Del. (CN) — A Delaware judge said Monday he has no jurisdiction to hear a case alleging that DuPont massively lowballed litigation costs related to the manufacturing giant’s production of toxic chemicals.

The lawsuit was brought by The Chemours Company, which was a wholly owned DuPont subsidiary spun off as an independent entity in 2015. DuPont assigned certain historical environmental liabilities to Chemours as part of that separation agreement. One of those terms was a duty to indemnify DuPont for any damage it may incur relating to those liabilities, but Chemours said it soon became apparent that DuPont had underestimated the costs of the maneuver.

The Cape Fear River in Fayetteville, N.C., continues to rise in the aftermath of Hurricane Florence on Sept. 17, 2018. (AP Photo/David Goldman)

Under the contract, Chemours was assigned liability for several ongoing litigation cases. In an Ohio-brought suit, 3,500 plaintiffs sought damages for cancer and other diseases they claimed DuPont released into the environment when it manufactured what are commonly known as PFOA chemicals, short for perfluorooctanoic acids. Although DuPont estimated that the suit would cost Chemours around $128 million, actual costs exceeded $670 million.

Chemours also saw higher settlement numbers than expected in a case alleging DuPont’s Fayetteville Works operation in North Carolina discharged PFAS chemicals, short for perfluoroalkyl or polyfluoroalkyl substances, into a river that serves as a source of drinking water for thousands of people for at least 30 years. Rather than the $2.09 million, DuPont estimated in the agreement, Chemours saw costs of $200 million.

In another case, a New Jersey suit seeking $1 billion for environmental cleanup costs had been given an estimate by DuPont of $620 million.

Monday’s ruling from Vice Chancellor Sam Glasscock III says the agreement clearly states that all disputes regarding the spinoff are subject to binding arbitration.
“I may not override the contract, and lack jurisdiction to decide arbitrability,” Glasscock wrote. The 38-page ruling was filed in the Delaware Court of Chancery.

A DuPont spokesman said Tuesday that the company was pleased with the Court’s ruling. 

“Chemours’ indemnification obligations are clear,” he said in a statement. “We will take appropriate steps to enforce our rights under the separation agreement.”

Chemours plans to appeal the ruling to the Delaware Supreme Court.

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