C8 victims, DuPont fight over merger documents

A legal battle between DuPont Co. and attorneys representing alleged victims of C8 exposure has descended into name-calling in recent court documents.

Plaintiffs lawyers filed another motion seeking information about who would pay the more than $1 billion in potential damages after DuPont merges with The Dow Chemical Co. and splits into three companies.

DuPont responded that it is premature to know which spin-off will be responsible for the liability before the merger is completed. The merger is awaiting a series of regulatory approvals.

Neither party held back in the dueling court documents.

Plaintiffs' attorneys claimed DuPont's post-merger plans may be a fraudulent transfer of the C8 liability and implied the company violated a confidential agreement in a recent case. DuPont called the plaintiffs' concerns "reckless assertions" based on "sinister motivations and deceit." The Wilmington-based chemical company also called the plaintiffs' motion a "fishing expedition."

The plaintiffs' attorneys represent more than 3,500 individuals who have filed lawsuits against DuPont claiming the company improperly released the toxic chemical C8, also known as PFOA, at its Washington Works plant near Parkersburg, West Virginia. Used in Teflon manufacturing, C8 has been linked to kidney and testicular cancers, heart disease, high cholesterol and other illnesses. The plaintiffs opted out of a 2005 class-action settlement to pursue their own claims.

In a series of stories last month, The News Journal detailed the history of C8 contamination in Parkersburg.

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All of the cases are pending before the U.S. District Court for the Southern District of Ohio. Judge Edmund Sargus has scheduled 40 trials a year starting next year in an effort to clear the C8 docket.

DuPont, in court filings, has said it is the responsible party even after the Dow merger should any damages be awarded to plaintiffs. It has also estimated in regulatory documents the liability could exceed $1 billion.

DuPont and Dow have proposed splitting the combined company into three separate businesses. Two will be based in Delaware while a third will be headquartered in Dow's hometown of Midland, Michigan. Once the spin-offs occur, the liability issue becomes muddied.

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In an early May filing, DuPont's attorney, Damond Mace of the firm Squire Patton Boggs, said it's not certain the post-merger separation will occur much less know how the liability will be assigned.

"[T]here has been no determination as to how the obligations of DuPont to the other parties ... would be allocated as part of any post-merger separations," Mace wrote in the Ohio federal court filing. "In short, the current discovery requests by plaintiffs are, in this court's own words, 'premature.'"

Plaintiffs' attorneys shot back accusing DuPont of attempting to avoid the liability by transferring it to a spin-off that could sink under the weight of the court judgments.

"DuPont''s opposition is more telling for what it does not say than for what it does say," wrote Michael A. London of the New York firm, Douglas & London. "DuPont does not deny that it may be involved in a fraudulent transfer."

Chemours, a DuPont spin-off that launched last July, is required to indemnify DuPont for any costs associated with the C8 litigation as part of its separation agreement. Chemours now oversees Teflon and the Washington Works plant.

Wilmington-based Chemours may fight DuPont's attempts to pursue indemnification for C8 damages, according to company spokeswoman Janet Smith.

"These are DuPont liabilities," Smith told The News Journal last month. "That means it would be DuPont's responsibility to pay any settlement or judgment in these cases. Under the separation agreement, DuPont may be entitled to indemnity from Chemours."

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That could set up a legal battle between the two companies over legal costs. A war that could become more complicated by Chemours' recent financial struggles. After three straight quarters of losing money, Chemours recorded a profitable quarter this year. Chemours' total capitalization is $1.26 billion, just above the expected cost of the damages.

London said in court filings the Chemours' indemnification agreement is among the plaintiff's concerns.

"It is certainly not 'mere speculation' that Chemours' ability to indemnify DuPont is questionable considering that its capitalization barely exceeds the estimated liability for C8 damages," London wrote.

Mace countered that plaintiffs' allegations about Chemours' financial situation is "hearsay" and irrelevant because DuPont can only seek indemnification from Chemours after it pays the damages.

"Such speculative indemnification issues lie between DuPont and Chemours, not between Chemours and plaintiffs," Mace wrote.

Lawrence Hamermesh, a professor of corporate law at Delaware Law School, said plaintiffs have little recourse if DuPont is still mapping out where the post-merger liability will land.

"If DuPont says 'we don't know,' I don't know how to second guess that," he said. "I understand why people are concerned about that, but as far as I can tell there isn't much to say or do."

London told The News Journal he hopes DuPont will provide financial information to "put to rest the concerns of the plaintiffs and beliefs of many in the financial media that this is a straight-forward merger and 3,500 claimants have nothing to fear."

DuPont spokesman Dan Turner said the company is committed to fulfilling all of its environmental and legal obligation and Chemours' recent financial issues will not impact potential damages.

"The indemnification provision we agreed to with Chemours does not take away any valid legal claims the plaintiffs' have against DuPont for pre-spin operations or the right to collect from DuPont if DuPont is found liable in any related action," Turner said.

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or jmordock@delawareonline.com.