We received a defense decision after a seven-day bench trial in a product liability action in which the exposure in the case exceeded $30 million. Our client designs, sells and services engineered equipment for the energy industry, including natural gas compression apparatuses for use in transmission pipeline systems. In 2015, the client sold the plaintiff two reciprocating compressor systems to replace outdated equipment at a station located near Downingtown, PA. The compressor systems were designed to inject oil into the gas stream for piston lubrication. This lubricating oil needed to be removed from the gas stream using filtration devices supplied by the plaintiff. The plaintiff claimed weld debris contained within certain vessels of the compressors migrated downstream upon commissioning and compromised several gas filtration devices. The plaintiff further contended the damaged filtration devices permitted excess lubricating oil into the pipeline, which fouled multiple turbines owned by its downstream customer at a large natural gas-fired power plant, causing significant economic losses. The applicable contract between the plaintiff and our client contained a forum selection clause requiring litigation to take place in Lake County, Indiana. The plaintiff claimed commercial losses of $18 million, plus attorney fees (per contract) in the neighborhood of $4 million. The plaintiff also maintained it was entitled to pre-judgment interest. If successful in establishing liability, this sum would have added another $5 million to $7 million to the damage award, depending on the interest rate employed by the court. Therefore, the pure exposure in the case exceeded $30 million. In response to the plaintiff’s claims, we successfully established that the weld debris incident was a red herring and did not damage the filtration equipment. Material testing of debris from within the filtration devices revealed very little weld debris compared to pipe scale and other naturally occurring components. Through key expert testimony, we established that the plaintiff could not meet its burden of proof because the oil contamination events may have been caused by several factors directly attributable to the plaintiff’s lack of design engineering, inadequate equipment maintenance, equipment failure and inappropriate response to system alarms.
