Fate of DuPont Chemical Lawsuits Rests on Wording in 2004 Pact

By | December 13, 2016

For DuPont Co. and its Chemours Co. spinoff, hundreds of millions of dollars hinge on the interpretation of the word “among.”

A Cincinnati appeals court heard arguments Friday that will affect the fate of thousands of lawsuits by people who drank water contaminated with a Teflon ingredient called C-8, or PFOA, from DuPont’s Parkersburg, West Virginia, plant.

Other companies exposed to consumer lawsuits also have millions riding on the verdict, industry groups say.

The appeal could be a critical turning point in a legal battle that has already stretched on for 15 years. DuPont is seeking to re-open a dispute that both sides thought was resolved by a 2004 settlement. The pact created a science panel to study 80,000 residents and set parameters for who could sue DuPont and for what ailments — kidney cancer, testicular cancer, ulcerative colitis, thyroid disease, hypercholesterolemia, and pregnancy-induced hypertension.

But the agreement was where “among” became contentious. The pact allowed those diseases because it found a “probable link” with C-8. It defined probable link as “it is more likely than not that there is a link between exposure to C-8 and a particular human disease among class members.” That wording has become the focus of the current appeal, in which DuPont says a lower court’s “idiosyncratic” interpretation of the “among” in that phrase improperly barred it from making arguments to a jury about the dosage levels of some individuals allowed to sue under the settlement.

As a result, DuPont says the appeals court should overturn a jury’s $1.6 million verdict in favor of a woman with kidney cancer, the first of 3,500 similar suits to go to trial.

Plain English

Lawyers for the woman, Carla Marie Bartlett, say the agreement was written in plain English, which the judge properly enforced, and that if DuPont succeeds, it will render the 2004 settlement meaningless, setting the clock back to 2001 for Bartlett and the thousands of others suing.

“DuPont hasn’t conceded that C-8 at any level causes disease,” John Nalbandian, a lawyer for Bartlett, told the court Friday. “They don’t believe it causes anything. They don’t want to say C-8 is capable of causing these diseases, even though that is what they agreed to in the settlement.”

DuPont countered that Bartlett’s lawyers characterized the study in a way that confused the jury.

“The science panel report became the Wizard of Oz,” said Pierre Bergeron, an attorney for DuPont. “All powerful but no one can peek behind the curtain.”

At Stake

At stake is whether DuPont is likely to settle the 3,500 cases, and for how much, with hundreds of millions of dollars in the balance, said Bloomberg Intelligence analyst Brandon Barnes. DuPont spun off Chemours in 2015 and assigned the new chemical company responsibility for covering damages from such lawsuits. Chemours has since indicated it might not.

Chemours shares fell 3.6 percent at 1:50 p.m. in New York.

Thomas Claps, a litigation analyst at Susquehanna Financial Group, said in a research note just after the hearing that he expects DuPont will lose given the appeals judges’ skepticism. “Further, we believe that the parties will reach a global settlement” of the remaining cases in the next six to eight months for a “base case” of $550 million, with Chemours ultimately paying less than that.

Also at issue is the fate of other companies subjected to similar lawsuits. Three trade groups — the U.S. Chamber of Commerce, American Chemistry Council and American Tort Reform Association — argued in court filings that more companies would like to use the novel structure in the 2004 settlement, but won’t if the precedent set in the Bartlett case is allowed to stand.

“The district court’s error has severe consequences for businesses that find themselves frequent litigants in toxic-tort cases,” the groups said, citing estimates that Merck & Co. spent $1 million a day litigating Vioxx suits, and that 61 cents of every dollar in asbestos litigation goes to costs other than payouts to plaintiffs.

Leach Agreement

The science panel’s finding meant that DuPont was permanently freed from all suits but the 3,500. The judge Friday said the company may lose that benefit if it won the appeal. “What is to keep the other 75,000 people who were excluded from the class as a result of the science panel from suing you based on another epidemiological study?” the judge asked.

The 2004 settlement, called the “Leach Agreement” after a plaintiff in the original 2001 lawsuit, spurred eight years of studies of blood samples and health records of 70,000 people in West Virginia and Ohio exposed to C-8.

Unlike most toxic tort cases, where epidemiologists try to determine how much of a chemical it might take to cause diseases, the science panel looked at which diseases were prevalent in an already defined group. Their study would establish whether there was a “probable link” between the chemical and about 40 health problems.

If one was found, people with the disease could sue DuPont, which agreed that it wouldn’t contest whether C-8 was capable of causing the linked disease. Its only defense at trial would be whether exposure had caused a disease in a specific individual.

Six Ailments

In November 2012, the panel announced the six ailments that would make sufferers eligible for litigation with DuPont.

Three years later, Bartlett’s case went to trial. Dupont argued that her obesity had caused her cancer, not C-8, because her exposure was too low. Her lawyers said that DuPont’s promise in the Leach Agreement meant it shouldn’t be able to argue that amount of C-8 exposure matter.

DuPont says that “among” means it should be allowed to argue that some of the plaintiffs didn’t have enough exposure to the chemical to cause disease. If the plaintiffs had wanted it otherwise, they should have used the words “in every individual class member,” DuPont said.

Dosage Levels

Bartlett’s lawyers argued that the entire point of the agreement was to exclude arguments about dosage levels by setting a baseline exposure as a prerequisite.

The judge sided with Bartlett. Now DuPont seeks to make the argument again at the appeals level.

DuPont is also asking the appeals court to find that the lower court erred in finding that Ohio’s 2004 tort reform law that capped damages at $250,000 didn’t apply. The lower court found it didn’t because plaintiffs had incurred the alleged injuries before then. But DuPont said it should apply because they didn’t file their actual claims until later.

The appeal is Carla Marie Bartlett et al v. Du Pont de Nemours and Company, 16-3310, United States Court of Appeals for the Sixth Circuit.The case on appeal is In re Du Pont de Nemours and Company C-8 Personal Injury Litigation, 13-md-2433, U.S. District Court, Southern District of Ohio (Columbus).

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