Law Firm Files Suit on Behalf of Government Against Giant Chemical Firms; Government Declines to Join

Victims blinded by a methyl isocyanate gas leak from a chemical factory in Bhopal, India, 1984 (source).

by Gaius Publius

This news brought to you by the hashtag #CultureOfCorruption.

There's a fair amount to digest in the news story below, so I'll try to give you the short strokes first:

• Four huge chemical companies have been lying to the federal government about how dangerous some of its chemicals in consumer products are. These products include mattress foam.

• A whistleblower apparently went, not to the government, but to a law firm, Kasowitz, Benson, Torres & Friedman — or at least came to the attention of the law firm, then didn't go to the government.

• The law firm is bringing a lawsuit against these companies, on behalf of the federal government, which has decline to join.

• The damages sought — $90 billion.

I know there are questions around the way this is playing out. For example, why didn't the whistleblower(s) go to the government? Why isn't the government suing on its own behalf? And so on.

About the first question, I think there's an obvious explanation. The Obama administration treats whistleblowers with disdain, and it also tends to give corporations, especially those with a lot of money to spread around, a considerable pass. After all, today's sued company could be tomorrow's campaign contributor, or employer. For example, Eric Holder came from and went back to a law firm that lobbies for Wall Street banks he himself failed to prosecute as Attorney General.

About the second question, we'll have to see, as this story develops, what the Obama administration will do. But if they do decline to act, it may be time to look again at our hashtag.

Now the story, from Lorainne Chow at EcoWatch (my emphasis):

$90 Billion Whistleblower Suit Filed Against Four of the Nation's Largest Chemical Companies

Four of the country's largest chemical companies have been accused of selling billions of dollars worth of harmful isocyanate chemicals but intentionally concealing their dangers to consumers and the U.S. Environmental Protection Agency (EPA) over the past several decades.

BASF Corporation, Bayer Material Science LLC, Dow Chemical Company and Huntsman International LLC have been named in a False Claims Act (FCA) lawsuit brought by New York law firm Kasowitz, Benson, Torres & Friedman LLP on behalf of the U.S. government.

EcoWatch learned that the recently unsealed whistleblower lawsuit was served on the chemical companies on Wednesday. The lawsuit was originally filed under seal in federal court in Northern California.

Kasowitz brought this action on behalf of itself and the federal government to recover more than $90 billion in damages and penalties under the FCA, which imposes penalties for concealing obligations to the government.

According to a copy of the lawsuit seen by EcoWatch, "Each of these companies is separately liable to the United States Government for billions of dollars in civil reporting penalties, which continue to accumulate by tens of thousands of dollars daily, and for billions of dollars in similarly increasing breach of contract damages."

In the suit, the law firm said that the defendants manufacture and sell isocyanate chemicals such as methylene diphenyl diisocyanate (MDI), polymeric MDI (PMDI) and toluene diisocyanate (TDI). These raw materials make up polyurethane products such as liquid coatings, paints and adhesives; flexible foam used in mattresses and cushions; rigid foam used as insulation; and elastomers used to make automotive interiors.

Occupational Safety and Health Administration (OSHA) states that exposure to isocyanate can irritate the skin and mucous membranes, cause chest tightness and difficult breathing. Isocyanates also include compounds classified as potential human carcinogens and is known to cause cancer in animals.

The piece concludes with this:

According to Andy Davenport of Kasowitz, "The defendants' cover-up implicates major human health concerns. Thankfully, the whistleblower law allows us to assist the federal government in holding these companies responsible for their actions while we alert regulators and the public to the serious undisclosed hazards of these chemicals."

Assisting a government that may not want assisting creates an interesting situation. Because the lawsuit was brought privately, it's (a) civil, not criminal; (b) a potential generator of large fees for the firm (I've seen estimates as high as $27 billion); (c) a suit that may go nowhere.

About (a) — According to one of the links in the above piece, the federal government "has declined to intervene" in this suit, meaning, that it is not joining as a plaintiff. The site LawNewz.com states: "The firm brought the action as a qui tam complaint, which is when a whistleblower brings legal action on behalf of the U.S. government. These complaints typically remain under seal while the government reviews them and decides whether to join."

The government has declined the opportunity to join the suit, which means that the law firm is on its own.

About (c) — It may be difficult to sue for unpaid penalties if those penalties were never assessed. LawNewz.com reached out to an industry spokesperson and received this reply:

"This qui tam complaint is meritless. Dow has complied with all the federal laws and requirements referenced in the complaint. 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, the False Claims Act does not allow a claim for unassessed civil penalties."

It may well be that the strategy of the suit is to publicize this, if true, horrendous action and shame the government into acting, either by joining the suit or by suing on its own.

Culture of Corruption

I think it's fair to ask why the government declined to sue, either with the law firm or on its own — or more to the point, is failing to pursue criminal charges for the companies' failing to meet reporting requirements that keep the public from harm. If the allegations are true, and it seems pretty clear they could be, not only were the companies derelict in their duty to the public — in other words, corrupt — but so is the government in its response to this new information.

I don't know if this will go anywhere without greater publicity, but do stay tuned. I think being poisoned by isocyanates in your brand new foam mattress might be something the American consumer may care about.

Bayer and Monsanto

Oh, and if you weren't aware, Bayer, mentioned above, wants to buy Monsanto. Here's why that's a terrible idea. Bayer is also one of the companies whose pesticides are killing bees. None of the people running these companies has your health, or that of our species, at heart.

GP