DuPont Shares Rise as Jury Awards Limited Punitive Damages

  • New jury decision follows $5.1 million verdict over Teflon
  • Spinoff Chemours agreed to cover damages, may defend claims

Shares of DuPont Co. and its spinoff Chemours Co. rose Friday after a jury decided that they would pay less than expected in punitive damages to a man who developed testicular cancer after drinking water polluted with the company’s Teflon chemical.

The jury awarded $500,000 in punitive damages on top of an earlier $5.1 million award. The decision softens the blow against the companies, which face 3,500 similar cases. DuPont’s stock rose around 3 percent and Chemours soared more than 18 percent on the news Friday.

Both companies’ shares declined Wednesday after the initial award, and punitive damages figures of as high as $1.2 billion were discussed at a hearing Thursday.

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

DuPont and Chemours both said they will appeal the verdict.

Second Verdict

The finding marks the resolution of a sixth test case for the thousands of similar lawsuits over the chemical’s presence in Ohio and West Virginia drinking water. It’s the second ruling against DuPont after one case wasn’t tried and three others were settled for undisclosed amounts. Chemours, which had agreed to bear the cost when it was spun off from DuPont in 2015 and took over the Teflon business, said Wednesday and again Friday that it may have defenses against its former parent’s claims.

The damages were awarded 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 the chemical into local waterways, exposing him and countless others through their drinking water.

Susquehanna Financial Group litigation analyst Thomas Claps said the verdict was a “positive signal” for Chemours, adding that the figure removed the possibility of a “potential layer of punitive damages.”

The federal court jury in Columbus, Ohio, returned with the damages figure after hearing testimony about DuPont’s ability to pay sums ranging from $100 million to $1.2 billion. It also found DuPont should pay plaintiffs’ legal fees.

‘Chump Change’

“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 percent 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 already taken to eliminate C-8, citing the $20 million it spent on water treatment plants to remove the chemical around the Washington Works facility and millions more it contributed to health studies.

Shares Rise

Chemours shares reversed their 22 percent decline on Wednesday following the verdict, their biggest drop in more than a year. DuPont’s stock also gained from its July 6 low.

Brandon Barnes, a litigation analyst at Bloomberg Intelligence, said Chemours’ responsibility may not extend to the punitive damages. He estimates the company could face $1.2 billion to $1.9 billion in liabilities for about 603 cases classified as the most serious.

Now that six test cases have been resolved, 40 more suits will proceed to trial in April 2017 unless DuPont reaches a settlement, Barnes said.

Verdict Challenged

DuPont will appeal based on its belief that, like a previous verdict against it, the jury’s decision “was the result of trial rulings that misrepresented the findings of an independent science panel and misled jurors about the risks of C-8 exposure,” spokesman Dan Turner said in a statement Friday.

“The Freeman verdict will be appealed, and there are substantial legal grounds to challenge the result,” Chemours spokeswoman Cynthia Salitsky said in a statement. She added that interim results don’t predict the final outcome of such lengthy litigation, and that if DuPont asks Chemours to pay, “Chemours retains its defenses.”

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 out the chemical 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.

Teflon Brand

In October, a jury awarded $1.6 million to a woman with kidney cancer in the first case to go to trial. DuPont is also appealing that verdict.

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

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 that there were “probable links” between the chemical and six diseases, including kidney cancer, thyroid disease and ulcerative colitis, laying the groundwork for the current 3,500 cases.

DuPont and Chemours also face testing in the Dutch city of Dordrecht, where officials are questioning whether past use of the chemical is to blame for local health problems.

The case is In re DuPont de Nemours and Co. C-8 Personal Injury Litigation, 13-md-2433, U.S. District Court, Southern District of Ohio (Columbus).

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