This lawsuit looks pretty serious.. In a bold g

This lawsuit looks pretty serious..

In a bold gamble, Kasowitz, Benson, Torres & Friedman has blown the whistle on four of the country’s largest chemical companies, assuming the role of both plaintiff and counsel in a $90 billion qui tam case.
Citing documents discovered in a prior case, the 350-lawyer New York-based litigation powerhouse says The Dow Chemical Co., Bayer MaterialScience, BASF Corp. and Huntsman International failed to inform the U.S. Environmental Protection Agency of serious health injuries caused by a common chemical.
As the relator, the firm if successful could (in theory) reap up to 30 percent of the damages, or $27 billion. But there are some very steep hurdles to overcome first.
The suit arose from the firm’s prior work representing 1,500 coal miners in a product liability suit in Alabama. During the course of discovery in that case, Bice, et al. v. Micon, Inc., et al., Kasowitz lawyers found a series of reports by an industry trade group that looked a lot like a smoking gun. Even better, the documents weren’t subject to protective orders.
According to the complaint, the reports show that the chemical companies failed to inform the EPA that merely touching or inhaling a minute amount of isocyanate—a ubiquitous chemical used in everything from mattresses to car dashboards to paint—can cause permanent pulmonary injury in humans.
The miners’ suit settled on confidential terms in 2010—and the Kasowitz lawyers saw an opportunity to bring a massive False Claims Act suit. Not on behalf of the miners, who all signed releases and didn’t have knowledge of the reports anyway, but with the firm itself acting as the plaintiff—a rare but not unheard-of step.
“The defendants’ cover-up implicates major human health concerns,” said Kasowitz partner Andrew Davenport, who is taking the lead on the case along with partners Daniel Benson and Lyn Agre. “The whistleblower law allows us to assist the federal government in holding these companies responsible for their actions while we also alert regulators and the public to the serious undisclosed hazards of these chemicals.”
The firm filed a 394-page complaint in U.S. District Court for the Northern District of California last year. It was unsealed in August, after the federal government declined to intervene.
According to a report by the U.S. Chamber Institute for Legal Reform, the Justice Department intervenes in about 23 percent of qui tam cases. When that happens, the feds win a settlement or judgment 95 percent of the time. But when they don’t step in, the plaintiffs prevail only 6 percent of the time.
It’s a stat that’s apparently not lost on the chemical companies, which were served with the suit last week.
“The U.S. government declined to intervene, and the law firm alone is now proceeding with the lawsuit,” a spokeswoman for Covestro LLC (formerly Bayer MaterialScience), said in an email. “Covestro LLC strongly disputes the allegations of the lawsuit, considers them to be without merit, and intends to vigorously defend itself.”
Likewise, a spokeswoman for Dow called the complaint “meritless. Dow has complied with all the federal laws and requirements referenced in the complaint,” said Rachelle Schikorra, associate director of public affairs. “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,” she added, “the False Claims Act does not allow a claim for unassessed civil penalties.”
That question—whether a company can be obliged to pay a fine that hasn’t yet been levied—could stall the suit.
Another central issue in the suit is what exactly the chemical companies were obligated to disclose regarding the safety risks of isocyanate, given that federal guidelines require people who work with isocyanates to wear protective gear.
According to the complaint, though, the chemical companies have concealed just how bad isocyanates really are. As little as one drop on the skin could cause permanent respiratory injury in humans, Kasowitz alleges.