LUBE REPORT

Wednesday, November 12, 2008 VOLUME 8 ISSUE 46  


HOME









Subscribe or Unsubscribe

ISSUE ARCHIVE
November 5, 2008
Vol. 8 Issue 45

[MORE]
Chevron Loses $11 Million Grease Lawsuit
By George Gill
 
Although “change” was a buzzword on election day, a jury last week voted that a change in grease brands hurt an Iowa fire hydrant manufacturer, whose lawsuit contended corrosion occurred because of a switch from Citgo’s Mystic brand food grade grease to a Chevron food machinery grease that contains calcium acetate.
 
McWane Inc., which does business as Clow Valve Co. – it manufactures, assembles and distributes fire hydrants throughout the United States – in June 2006 filed a civil conspiracy and fraud suit against Chevron U.S.A, Diamond Oil Co. and Oskaloosa Gas and Oil in the Iowa District Court for Mahaska County.
 
A jury Nov. 5 found in favor of Clow Valve on six of eight counts, awarding $10.7 million in damages against Chevron. Their verdict stated Clow had spent $5.8 million in the past relating to the hydrant corrosion, and anticipated about $4.9 million in future expenses dealing with the problem. Oskaloosa, Iowa-based Clow had sought as much as $12.6 million total to cover past and future expenses to cover the costs of repair and replacement of hydrant components, and damage to the company’s reputation and goodwill.
 
Chevron defense attorney Jason Palmer – of Bradshaw, Fowler, Proctor and Fairgrave P.C. in Des Moines – did not respond to multiple calls from Lube Report for comment.
 
According to a verdict form document, the jury found Chevron at fault for a design defect, and inadequate instruction or warning concerning the grease. It didn’t find the company at fault for an alleged manufacturing defect or for breach of implied warranties of merchantability. The jury also didn’t find that Chevron USA or Diamond Oil had committed fraudulent misrepresentations, as Clow’s lawsuit had claimed.
 
Last week the jury also absolved Diamond Oil Co. and Oskaloosa Gas and Oil of any fault in the lawsuit. Clow had obtained both the Citgo Mystik and Chevron FM greases from Oskaloosa Gas and Oil, which purchased them from Diamond Oil.
 
Dennis Johnson, an attorney with Dorsey and Whitney LLP in Des Moines, represented Clow Valve in the lawsuit. Johnson said the company was pleased with the verdict, adding that Clow still has a lot of work to do in replacing the grease in the fire hydrants.
 
“They’ve already spent $6.8 million and could spend all the way up to $12.6 million replacing the Chevron grease,” Johnson told Lube Report. “Clow said they will try to get all of it replaced, even if takes years to do.”
 
According to Johnson, Chevron’s attorneys took the position during the trial that the grease wasn’t solely responsible for the corrosion in the fire hydrants. “The jury obviously didn’t buy it,” Johnson said.
 
An Oct. 27 report in The Oskaloosa Herald noted testimony on Chevron’s behalf by Richard Klopp, a senior managing engineer with Exponent Failure Analysis in Menlo Park, Calif. Klopp claimed the high degree of corrosion found on valve stems in hydrants was limited to threads in the operating nut hollow and was caused by massive water flooding in the lubrication chamber and lack of sufficient grease coverage. According to the article, Klopp’s solution to Clow’s corrosion problem was a remedial program, involving pumping of fresh grease into the hydrant’s lubrication chamber, to completely coat the operating nut, upper core and large reservoir to lubricate the stem.
 
The Oskaloosa Herald’s Oct. 23 article recounted video testimony for Clow by Carl Ward, who invented Chevron FM grease. According to Johnson, Ward said food-grade greases do not perform as well as conventional greases in terms of resistance to corrosion.
 
“Clow Valve has been making fire hydrants for almost a hundred years, and never had this problem before making the change to Chevron’s grease,” Johnson emphasized to Lube Report. “I think that was probably the most important point to the jury.” He added that Clow in the last half of 2004 returned to using the Mystik brand grease in fire hydrants.
 
Clow purchased Chevron FM Grease from the years 2002 through 2004, for use in fire hydrants manufactured and assembled in Clow’s facility in Oskaloosa, and sold to customers throughout the United States. In its lawsuit, Clow said it purchased and used the grease in reliance upon advertisements, promotional materials, literature and other communications, assuming the FM brand grease would be an acceptable lubricant and sealant for valves in fire hydrants. In the amended petition filed in June 2008, Clow claimed it was falsely told it was necessary to switch to the FM grease in 2002 because of the unavailability of the Mystik food-grade grease.
 
The hydrant manufacturer claimed, “defendants never disclosed in their advertisements or promotional materials or other communications to actual or potential customers that the Chevron FM grease contained calcium acetate which would absorb moisture and cause corrosion in steel.”
 
In court documents, Clow claimed one or more of the defendant companies in 2005 advised the public that the Chevron FM grease contained calcium acetate, that it and the grease absorbed water, and that the grease caused corrosion, thereby attacking and degrading components in fire hydrants.
 
“Upon learning of this defect in the Chevron FM grease, and the danger it posed to the components of its fire hydrants, Clow began inspecting and testing fire hydrants which had utilized Chevron FM grease and confirmed that the grease, had, in fact, attacked, corroded and degraded certain components in the fire hydrants,” Clow said, according to its petition. “The degradation of these components made it impossible to open some fire hydrants, and the corrosion and degradation that continues to occur as a result of the Chevron FM grease will continue to destroy components of the fire hydrants, thereby posing a risk that fire hydrants will not open in times of emergency.”
 
Clow launched a nationwide program in 2006 to repair and replace components of its fire hydrants that it said may have been or might be damaged by the grease. In August 2006 Clow began issuing safety notices alerting its clients that it would replace the lubricant and upper stem assemblies in hydrants. The company said as many as 113,000 fire hydrants might be affected.
 
The program so far has included repair and replacement of components in more than 85,000 fire hydrants located throughout the United States.
 
Attorney Johnson noted that in Beaumont, Texas, American Valve and Hydrant is also planning to bring a lawsuit against Chevron over similar corrosion concerns, with a trial expected to start in fall of 2009. The product alert FAQ at the Web site of the fire hydrant manufacturer’s parent company, American Cast Iron Pipe Co., blames calcium acetate in the grease for corrosion in several models of its fire hydrants cast in 1999 to 2003. The FAQ notes that each “contains an acetate additive which makes corrosion of the hydrant operating rod possible. Once started, this condition worsens over time, making hydrants hard or, in extreme cases, impossible to operate.”
 
The manufacturer is replacing operating rods and grease in each hydrant, specifying replacement with grease not containing calcium acetate. American Cast Iron Pipe cites Citgo’s Clarion food machinery grease no. 2, formerly Citgo Mystic FG-2 food machinery grease, as an approved grease option.

[PRINTER FRIENDLY VERSION]
HOME
 

Published by LNG Publishing Co., Inc.
Copyright 2008 LNG Publishing Co., Inc. All rights reserved.
George Gill, Editor. Lube Report (ISSN 1547-3392), Lubes'n'Greases Magazine and Lubricants Industry Sourcebook are published by LNG Publishing Co., Inc., 6105-G Arlington Blvd., Falls Church, Virginia 22044 USA. Phone: (703) 536-0800. Fax: (703) 536-0803. Website: www.LNGpublishing.com. Email: info@LNGpublishing.com. For sponsor information contact Gloria Steinberg Briskin at (800) 474-8654 or (703) 536-7676 or gloria@LNGpublishing.com.
Forward to a colleague
RSS Feed
Privacy Policy
Powered by IMN