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Chemical Giants Face $90B Suit

Wednesday, September 21, 2016

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Four major chemical manufacturers are facing a $90 billion lawsuit in which a large U.S. law firm claims they concealed information about dangerous substances from the American government.

In the suit, Kasowitz, Benson, Torres & Friedman LLP claims that for years, chemical giants BASF, Covestro (formerly Bayer MaterialScience), The Dow Chemical Company and Huntsman Corporation withheld information about the toxicity of the isocyanate chemicals from the U.S. Environmental Protection Agency.

MDI chemical structure
By Fvasconcellos, Public Domain, via Wikimedia Commons

The suit deals with chemicals including methylene diphenyl diisocyanate (MDI), used in making polyurethanes.

The suit was filed under seal in the Northern District of California, and was recently unsealed, according to reports.

Qui Tam Complaint

The law firm filed the suit on behalf of itself and the U.S. government in what it known as a qui tam complaint, or a whistleblower suit. Filed under the False Claims Act, a qui tam suit, if successful, brings benefits both to the government on whose behalf it is filed and to the whistleblower, in this case the Kasowitz firm.

A qui tam suit is filed under seal at first, giving the U.S. Justice Department time to examine the suit and decide whether to "intervene," or join the plaintiff in the suit. In this case, the government opted not to intervene, so the firm is pursuing the case on its own. The suit was unsealed and the defendants were notified on Sept. 14, according to a representative from Covestro.

The Chemicals

The suit, according to media reports, deals with methylene diphenyl diisocyanate (MDI), polymeric MDI (PMDI) and toluene diisocyanate (TDI). These chemicals are used in manufacturing coatings, adhesives and other products, including polyurethane foams.

These chemicals are known to be hazardous, but the suit claims that the companies have downplayed the hazards in some situations. According to the suit, small amounts of exposure to the substances, either via breathing them in or by skin exposure, can cause permanent respiratory harm.

1970s Studies

The suit reportedly cites research done at the University of Pittsburgh in the late 1970s, indicating that exposure to TDI on the skin of guinea pigs at a level of just one drop seemed to trigger respiratory hypersensitivity. That evidence was allegedly presented to representatives of BASF, Bayer and Dow in 1980.

Polyurethane foam on pipeline
Video still via BASF

The chemicals in question are used in manufacturing coatings, adhesives and other products, including polyurethane foams.

The suit claims that from 1979 through 2003, the companies worked both alone and in concert to suppress evidence that such small amounts of the chemicals could cause respiratory damage. Nondisclosure of the information, the suit says, constitutes a breach of both the Toxic Substances Control Act and the False Claims Act.

Kasowitz reportedly began to pursue the case after finding evidence of a cover-up while researching another case the firm handled, in which it represented coal miners in Alabama who allegedly suffered respiratory damage from isocyanate materials.

Companies Respond

A Covestro spokesperson sent PaintSquare News a statement reading in part, "The lawsuit, originally filed under seal in May 2015 in federal court in Oakland, Calif., was filed by a law firm which sought the U.S. Government’s support and intervention to recover purported regulatory fines and damages. The U.S. Government declined to intervene, and the law firm alone is now proceeding with the lawsuit. Covestro LLC strongly disputes the allegations of the lawsuit, considers them to be without merit, and intends to vigorously defend itself. As a leader in the American Chemistry Council’s Responsible Care initiative, Covestro LLC remains committed to the highest standards of safe and responsible product stewardship."

BASF representatives told PaintSquare News, "The allegations in the complaint are baseless. BASF has fully complied with its reporting obligations under federal law."

While Dow did not respond to a request for comment, a representative of that company told legal website, “This qui tam complaint is meritless. Dow has complied with all the federal laws and requirements referenced in the complaint. It is noteworthy that the law firm provided these allegations to the United States Department of Justice, which declined to intervene or take any action in support of the lawsuit. Moreover, the False Claims Act does not allow a claim for unassessed civil penalties.”

PaintSquare News reached out to Huntsman for comment as well; but did not receive a reply from the company before deadline on Tuesday (Sept. 20).


Tagged categories: Asia Pacific; BASF; Coating chemistry; Coating Materials; Construction chemicals; Covestro; Dow Chemical Company; EMEA (Europe, Middle East and Africa); Environmental Protection Agency (EPA); hazardous materials; Health and safety; Huntsman; Latin America; Lawsuits; North America; Polyurethane

Comment from Steve Johnson, (9/21/2016, 8:25 AM)

Geez. A 90 billion dollar lawsuit from a company that has not been damaged by said chemicals. These hazards have been well known for decades. I guess their lawyers are really bored.

Comment from Mark Anater, (9/22/2016, 8:31 AM)

The allegation is that isocyanate manufacturers knew that their products are more toxic in low exposure levels than they acknowledged. The federal government declined to participate, which is a bad sign for the lawyers bringing the suit. I doubt they will win in court or ever collect anything like $90 billion, but if they can get some settlement, it's worth their while.

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