A New Orleans jury Friday awarded $94 million to The Woodlands-based Huntsman Corp. in a long-running contract dispute against Praxair and Linde involving Huntsman’s chemical plant in Geismar, Louisiana.
After a three-week trial in New Orleans state court, the 12-person jury found that Praxair repeatedly breached its promises to Huntsman and that those breaches directly caused Huntsman substantial financial damages. The jury returned its unanimous verdict after less than three hours’ deliberation.
After their 2018 merger, Linde and Praxair (now operating together under the Linde name) became the largest industrial gas provider in the world. Praxair began working with Huntsman in 2004 as one of the industrial gas suppliers to Huntsman’s Geismar MDI manufacturing site. “MDI” stands for methylene diphenyl diisocyanate, which is found in products ranging from car seats to tennis shoe soles to Gorilla Glue. Huntsman’s Geismar facility is its largest MDI plant and a key component of its polyurethanes business.
Vinson & Elkins partner Jim Thompson, one of Huntsman’s lead lawyers at trial, said the verdict “underscores the importance of living up to your obligations” and “making good on the promises you make.”
Linde and its lawyers did not respond to messages left Monday seeking comment.
Huntsman and Praxair’s Geismar facilities are across from each other and a pipeline connects them. Thompson said Praxair agreed to provide carbon monoxide and hydrogen, which he described as “the lifeblood of the MDI process,” to Huntsman “every day, 24/7, 365 days a year” and also promised to maintain its facility in a manner that would ensure it delivered to Huntsman’s needs.
But in its 2014 lawsuit, Huntsman alleged Praxair failed to properly maintain its own facility and repeatedly failed to supply Huntsman’s requirements for industrial gas needed to manufacture MDI under long-term supply contacts that expired in 2013.
Thompson said Huntsman essentially tried the case under a lost-profits legal theory. The jury’s award did not include punitive damages, he said.
“When somebody else disrupts business in a supply-chain scenario like this, Huntsman has to scramble to meet its own contractual obligations and then has to explain to some of its customers … why the MDI is not available,” Thompson said. “It costs you your reputation and costs you the opportunity to sell the product, which is a lost product. The list goes on and on, and lost profits was just a piece of it.”
Among the most important evidence at trial included internal documents by Praxair executives that reflected their attitude toward addressing Huntsman’s concerns, Thompson said.
“Huntsman … [was] routinely advising Praxair that they were failing to perform and the harm being visited upon Huntsman as a result of Praxair’s multiple breaches of the contract,” Thompson said, “and what you saw coming back from Praxair were acknowledgements of their shortcomings [and] their failures to perform and even promises to do better.
“But internally what you saw was a very different story of no real intention to spend the money needed to keep the plant in good condition,” he added. “I think that became crystal clear to the jury.”
Also important to Huntsman’s win, Thompson said, was the juxtaposition between the “consistent” testimony by Huntsman’s witnesses with what they said internally and externally and Praxair’s witnesses, who were “bouncing” around “to explain themselves” and “offering testimony inconsistent with their own internal communications.”
One of the key witnesses was Peter Huntsman, the company’s chief executive officer and board chairman, who testified along with other high management executives at the company. Although Huntsman did not attend every day of the three-week trial, Thompson said, he was there “every day and hour” that he could be.
“I will be happy to testify whenever necessary in the future to make sure our shareholders get the full value of their stock ownership,” Huntsman said in a press release issued Monday morning.
In his statement, Huntsman commended the company’s employees and litigation team, including General Counsel David Stryker.
“They displayed the integrity, professionalism, perseverance and ingenuity — hallmarks of Huntsman associates around the world — needed to take on and defeat an irresponsible and better-funded adversary on the ground at Geismar and in the courts in New Orleans,” Huntsman said.
Huntsman’s courtroom win comes on the heels of an arbitration trial win against Albemarle Corp. last year, which resulted in a $665 million post-trial settlement, as well as a successful proxy battle that Huntsman endured against activist hedge fund Starboard Value LP this spring.
At trial, Thompson characterized Praxair’s main arguments as “excuses,” including “we did our best, life’s not perfect” and two of the legal world’s biggest pandemic-era buzzwords: “force majeure.”
In addition to Thompson, Huntsman’s trial team was led by New Orleans attorney James Williams of Chehardy, Sherman & Williams. The remainder of the V&E trial team included Chris Popov, Quentin Smith, Page Robinson, Aurra Fellows and Carly Goodson. Marie Yeates, Mike Heidler and Parker Cragg provided appellate support.
Lawyers for the defense included New York lawyer David Crichlow of Katten and New Orleans lawyer Craig Isenberg of Barrasso Usdin Kupperman Freeman & Sarver.