Chemours Lawsuit against DuPont Dismissed

03.04.2020 -

A Delaware chancery court judge has granted DuPont’s request to dismiss a lawsuit brought by 2015 spinoff Chemours alleging it massively downplayed the cost of environmental liabilities imposed on the new chemical producer.

Vice Chancellor Sam Glasscock III ruled that the court has no jurisdiction to hear the case because the companies’ separation agreement “clearly states” that all disputes arising from the spinoff are subject to binding arbitration.

While the former chemical giant said it was pleased with the ruling and would take steps to enforce its rights under the separation agreement, Chemours said it planned to appeal the ruling to the state’s Supreme Court. Both companies are based in Wilmington, Delaware.

In its lawsuit, Chemours’ charged that DuPont deliberately spun off its chemicals business to shift hundreds of millions of dollars in environmental liabilities to the new company. At the time, the former chemical giant was facing multidistrict litigation involving 3,500 personal injury claims related to the fluorochemical PFOA, used in production of the Teflon-branded non-stick coating.

Chemours’ lawyers had asked the court to declare that the spinoff is not responsible for liabilities exceeding the maximums certified by DuPont or any of its historical liabilities exceeding the cap. Alternatively, the company asked that the $3.9 billion dividend it paid DuPont be reimbursed.

While Chemours received some support for its position from former DuPont CEO Ellen Kullman, who said it was never the intention to burden the company with crushing amounts of liability, current management of the former parent maintained that the agreement makes the spinoff solely responsible for liabilities above a certain sum.

Chemours’ position is that the total liability figure of $128 million named in the agreement was inaccurate, especially as DuPont later settled a major case for $671 million, of which Chemours paid half.

The spinoff still faces other legacy lawsuits worth hundreds of thousands of dollars as well as litigation seeking damages for personal injury from the fluorosurfactant GenX that replaced PFOA.