In one of the largest contract verdicts of the year, a New Jersey state jury awarded German chemical producer BASF AG nearly $170 million in compensatory damages August 13 in an overpricing suit against Lyondell Chemical Company. On October 3, the court upped the award by nearly $36.5 million in prejudgment interest.
At issue was a 1998 sales contract for propylene oxide, a chemical that BASF uses in products ranging from foam and adhesives to gym floors. The contract stipulated that Lyondell would sell BASF the chemical for 13 years at an agreed-upon price. It also said that if Lyondell charged another company in the same industry less for the chemical, then BASF would also get the lower price. (Lyondell announced that it was being acquired by Dutch company Basell Holdings B.V. in July.)
In 2004, after an audit showed irregularities in the administration of the contract, BASF contacted Lyondell to complain that it had been overcharged. Houston-based Lyondell then filed suit against BASF's U.S. arm, Florham Park, New Jersey-based BASF Corporation, in state court in Pennsylvania seeking a declaratory judgment that its pricing complied with the contract.
BASF Corporation countersued in New Jersey state court, claiming that Lyondell had breached the contract. BASF obtained dismissal of Lyondell's suit in 2005, and the New Jersey litigation moved forward.
Trial began June 18, 2007, and ran for seven weeks. BASF argued that Lyondell had charged other customers less for the substance. Through internal documents and testimony from seven witnesses, the BASF legal team attempted to show that Lyondell had tried to cover up its contract violations. BASF claimed at trial that it was owed somewhere between $110 million and $287 million.
Lyondell's lawyers acknowledged that the company owed BASF a refund but argued that it amounted to no more than $22.5 million. The alleged cover-up was beside the point, they claimed; the only thing that mattered was what the contract said. BASF's allegations, they asserted, were merely a way to persuade a jury to inflate the refund.
The jury took three days to find for BASF. While Lyondell's lawyers did not comment on its plans, BASF lawyers said they expected Lyondell to appeal.
FOR PLAINTIFF BASF CORPORATION (FLORHAM PARK, NEW JERSEY)
In-House: Senior vice president and general counsel David Stryker.
Kirkland & Ellis: Rebecca Anzidei, Eugene Assaf, Daniel Donovan, Jennifer Hardy, Gregg LoCascio, and associates Bridget O'Connor, B. Michael Ortwein III, and Christopher Posteraro. (All are in Washington, D.C.) BASF general counsel David Stryker had previously tapped Assaf to handle litigation when Stryker was at a different company.
Tompkins, McGuire, Wachenfeld & Barry: William McGuire. (He is in Newark.) McGuire was local counsel.
FOR DEFENDANT LYONDELL CHEMICAL COMPANY (HOUSTON)
In-House: Senior vice president and general counsel Kerry Galvin.
Susman Godfrey: Vineet Bhatia, H. Lee Godfrey, Drew Hansen, William Merrill, and associate Alexander Kaplan. (Hansen is in Seattle; the rest are in Houston.) The firm, which has long handled litigation and arbitration matters for Lyondell, declined to provide a complete list of lawyers on the case.
Porzio, Bromberg & Newman: Steven Benenson. (He is in Morristown, New Jersey.) Benenson came on mid-trial as appellate counsel.
Blank Rome: Stephen Orlofsky. (He is in Cherry Hill, New Jersey.) Orlofsky was local counsel.
REPRINTED WITH PERMISSION FROM THE NOVEMBER 2007 EDITION OF THE AMERICAN LAWYER © 2007 ALM PROPERTIES, INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED