DuPont, Chemours Reach Pact Over Liability for ‘Forever Chemicals’ PFAs Pollution

DuPont, Chemours Reach Pact Over Liability for ‘Forever Chemicals’ PFAs Pollution

2021-01-25 15:40:23

The Dupont Co. and its spin-off company Chemours have agreed to resolve legal disputes over environmental liability for pollution related to man-made chemicals associated with an increased risk of cancer and other health problems.

The binding memorandum of understanding announced Friday comes just over a month after the Delaware Supreme Court upheld the dismissal of a lawsuit alleging that DuPont vastly downplayed the cost of environmental liabilities imposed on Chemours when DuPont's former division was in 2015. chemical products.

The chemicals in question are known as per- and polyfluoroalkyls, or PFAS. They include perfluorooctanoic acid, or PFOA, which was used in the production of Teflon, and has also been used in fire-fighting foams, water-resistant clothing, and many other household and personal items. They are sometimes referred to as "forever chemicals" because of their long life in the environment.

The memorandum resolves legal disputes arising from the spin-off and establishes a cost-sharing arrangement and an escrow account for possible future legacy PFAS liabilities arising from the conduct before July 1, 2015.

DuPont, Chemours and Corteva, an independent publicly traded company that was formerly the agriculture division of DowDuPont, have also agreed to resolve approximately 95 pending cases, as well as other unfiled cases, in multi-district PFOA litigation in Ohio. The $ 83 million settlement will be split roughly equally among the three companies. It doesn't include a case that resulted in a $ 50 million jury verdict in March that DuPont is appealing.

The Ohio verdict stemmed from a class action lawsuit involving approximately 80,000 Ohio and West Virginia residents who drank water contaminated by chemical spills from DuPont's Washington Works facility near Parkersburg, West Virginia.

More than 3,500 individual classmates who suffered from one of six illnesses associated with PFOA filed individual personal injury lawsuits against DuPont. Those cases are centralized in Ohio federal court.

After three trials in which juries ruled in favor of plaintiffs, DuPont agreed in 2017 to settle the remaining 3,500 cases.

Since that time, more than 100 post-settlement cases have been filed. The initial lawsuit in those cases resulted in a $ 50 million sentence for a man who developed testicular cancer, and a mistrial in a consolidated case involving a woman with kidney cancer.

"The agreement will provide each company and our respective shareholders with a level of safety and assurance through a transparent process to address and resolve potential future PFAS issues," said the CEOs of the three companies in a joint statement.

Under the cost-sharing arrangement, DuPont and Corteva, on the one hand, and Chemours, on the other, agree that certain expenditures will be split between 50 and 50 euros, or a total of $ 4 billion in qualified expenditures, over a period of up to 20 years. and escrow contributions.

Under an existing 2019 agreement, DuPont and Corteva will each contribute 50% of the first $ 300 million. After that, DuPont would be responsible for 71% and Corteva for the remaining 29%. That would bring DuPont's share of DuPont and Corteva's potential $ 2 billion contribution to approximately $ 1.36 billion. Corteva & # 39; s share is said to be approximately $ 640 million.

The companies also agreed to establish a maximum $ 1 billion escrow account to address potential future PFAS liabilities, with annual contributions for eight years.

After the expiry of the agreement, Chemours' indemnification obligations under the divorce agreement would remain unchanged, subject to certain exceptions. Chemours is waiving any legal claims related to the 2015 spin-off and pending arbitration in respect of those claims will be dismissed.

Chemours took DuPont to court in 2019, arguing that DuPont intentionally lowered the cost of environmental liabilities that Chemours would face when reimbursing DuPont for pollution related to PFAS.

But a Delaware judge ruled that he had no jurisdiction to hear the case because the divorce agreement between the companies clearly states that any disputes arising from the spin-off are subject to binding arbitration.

Chemours argued on appeal that the arbitration clause was unenforceable because Chemours' designated management team had not given its consent but was instead forced to follow DuPont's dictates as parent company.

When it split off Chemours in 2015, DuPont had set the maximum liability in the multi-district litigation related to the 3,500-plus PFOA cases at $ 128 million. The company settled for $ 671 million 19 months later and agreed to pay half of the settlement amount, and up to $ 125 million more for costs from other PFOA-related lawsuits. Chemours paid the other half.

Chemours argued in its lawsuit that DuPont had "a strong incentive" to downplay environmental commitments, while Chemours collected a billion-dollar dividend that would help fund a share buyback.

For example, a Chemours attorney told the judge that Chemours had to pay more than $ 200 million in costs to address environmental issues at a manufacturing facility in North Carolina – 100 times more than DuPont's estimated maximum liability of $ 2 million. Chemours also said the potential environmental liability in New Jersey far exceeds the $ 337 million previously cited by DuPont.

Chemours asked the judge to limit DuPont's indemnification rights to the maximum liabilities it had certified, or to issue a $ 3.9 billion dividend return order.

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