DuPont Jury Awards Limited Punitive Damages

DuPont Jury Awards Limited Punitive Damages

The company was ordered to pay $500,000 in punitive damages to a man who developed testicular cancer after drinking water polluted with the company’s Teflon chemical.

DuPont Co. should pay $500,000 in punitive damages to a man who developed testicular cancer after drinking water polluted with the company’s Teflon chemical, a jury decided on July 8. 

Shares of DuPont and its spinoff Chemours Co., rose. The decision softens the blow against DuPont and Chemours, whose stocks declined July 6 after the same jury awarded $5.1 million for negligence.

Lawyers argued during a hearing whether DuPont should be ordered to pay as much as $1.2 billion in additional punitive damages. DuPont shares rose 2.5% after the punitive damages verdict, or 21% from July 6's low. Chemours shares rose 14%.

“The jury saw that DuPont acted with pure conscious disregard and now DuPont knows they have to face this,” plaintiff attorney Mike Papantonio said on July 8. 

Lawyers for DuPont had no comment and referred questions to the company’s corporate office.

The verdict comes in the second of 3,500 lawsuits to go to trial over the chemical’s presence in Ohio and West Virginia drinking water. Chemours, which had agreed to bear the cost when it was spun off from DuPont in 2015, now says it may have defenses against its former parent’s claims.

The damages will go to 56-year-old David Freeman who has lived near the company’s Washington Works plant in Parkersburg, West Virginia, since 1993. Freeman claimed DuPont, which used toxic C-8 to formulate Teflon at the plant, knowingly dumped it into local waterways, exposing him and thousands of others through their drinking water.

The federal court jury in Columbus, Ohio, returned its finding on punitive damages after hearing testimony about DuPont’s ability to pay sums ranging from $100 million to $1.2 billion.

“The $5.1 million verdict is an enormous sum of money to ordinary folks like Mr. Freeman, but it is chump change to DuPont,” Gary Douglas, an attorney for Freeman said in court Thursday. “They can write it off without batting an eye.”

He suggested that the company might be able to pay around $100 million -- or 5% of its $2 billion in planned stock buybacks for 2016 -- or even $1.2 billion.

“These numbers are so astronomical I can hardly get my head around it,” said John Gall, a lawyer for DuPont, adding that such sums would hurt shareholders, including pension funds.

Another DuPont attorney, Craig Woods, asked the jury to consider the steps DuPont has taken to eliminate C-8 when considering whether to punish the company further. He cited $20 million spent on water treatment plants to remove the chemical around the Washington Works facility, and millions spent on health studies.

Brandon Barnes, a litigation analyst at Bloomberg Intelligence, said that Chemours’ agreement to take on damages related to the Teflon line, which it took over in its spinoff, may not extend to punitive damages. He estimates Chemours could face $1.2 billion to $1.9 billion in liability for the estimated 603 cases classified as most serious amongst the 3,542 estimated cases pending.

“This type of litigation typically takes place over many years and interim results do not predict the final outcome of cases,” Cynthia Salitsky, a Chemours spokeswoman said in a statement July 6.

“In the event DuPont claims that it is entitled to indemnification from Chemours as to some or all of the judgment, Chemours retains its defenses to such claims,” Salitsky said.

DuPont spokesman Dan Turner declined to comment and wasn’t immediately available after  the July 8 decision.

Teflon and the Courts

C-8, also known as PFOA or perfluorooctanoic acid, once gave Teflon its nonstick quality. 3M Co. originally made the chemical and sold it to DuPont. When 3M phased the chemical out in 2000, DuPont started making its own. Products such as fabrics, small appliances and components used in food processing have since been reformulated with different but related chemicals.

In October, a jury awarded $1.6 million to a woman with kidney cancer in the first case to go to trial. DuPont is appealing that verdict. A second case settled on undisclosed terms, and Wednesday in a regulatory filing the company announced that two other cases also settled for undisclosed amounts.

During Freeman’s trial, Papantonio said DuPont knew the chemical caused cancer but tried to protect the Teflon brand rather than keep local residents safe.

DuPont knew since at least 1961 that C-8 is toxic and didn’t disclose to regulators or the public the results of an in-house study that found birth defects among its own workers’ children, Freeman said. DuPont was fined $16.5 million in 2005 for failing to report the birth-defect findings and other data to the Environmental Protection Agency.

In 2011 and 2012, a science panel partly funded by DuPont found there were “probable links” between the chemical and six diseases including kidney cancer, thyroid disease and ulcerative colitis. That laid the groundwork for the current 3,500 cases, all of which involve a claim for one of the six diseases.

DuPont lawyer Damond Mace countered that the evidence showed the company wasn’t expecting any injuries.

The company is also facing testing in the Dutch city of Dordrecht where officials are questioning whether past use of the chemical is to blame for local health problems.

By Tiffany Kary and Denise Trowbridge

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