After a 10-day jury trial, a team of attorneys from Norton Rose Fulbright in Texas and Mayer Brown in Washington, D.C., on Friday won a $30.95 million verdict for clients in an international dispute between companies that manufacture parts for oil and gas pipelines.
In addition to the actual damages in the false advertising and unfair competition dispute, the verdict for plaintiffs Boltex Manufacturing Co. and Weldbend Corp. included $4 million in exemplary damages and $26 million in profit discouragement from defendants Ulma Piping USA Corp. and Ulma Forja S.Coop.
The dispute began in May 2017 when the plaintiffs alleged the defendants were making misrepresentations and falsely advertising their carbon steel flanges, which is a part used in constructing oil and gas pipelines, according to a Nov. 28, 2018, memorandum and recommendation. According to the plaintiffs, the defendants were falsely claiming their parts were heat-treated or “normalized,” when they are not.
In a counterclaim for false advertising and unfair competition, the defendants alleged the plaintiffs falsely claimed their flanges were made in the U.S. or “American Made” when they were not.
The Sept. 27 jury verdict rejected Ulma Piping’s counterclaims and handed a win to Boltex and Weldbend, finding that Ulma Piping did falsely advertise its flanges and engaged in unfair competition. The harm to the companies resulted from malice or fraud on Ulma Piping’s part, the verdict said.
Boltex won $650,000 in damages, and Weldbend won $300,000. Each of those plaintiffs won a $2 million exemplary damages award. According to the jury verdict, Ulma Piping should be forced to disgorge the profits it gained from its false advertisements and unfair competition in the amount of $26 million.
Mayer Brown partner Carmine Zarlenga of Washington, D.C., said the representation was a true joint effort between his firm and Norton Rose Fulbright. The plaintiffs put on 14 witnesses, including multiple experts, and dozens of trial exhibits were admitted from both sides, he said.
“Figuring out what the defendant had done—they are a foreign company, an overseas company—it makes it hard. They are a long way away,” Zarlenga said.
Norton Rose Fulbright partner Saul Perloff of San Antonio said he thinks the jury cared about the fact that initially, Ulma denied the allegations and “promised to prove us wrong.”Then 22 months later, the company admitted it hadn’t heat-treated its flanges.
"Even when they made that admission, they really didn’t own it. They didn’t apologize for it. They didn’t really acknowledge they had done something wrong,” Perloff said. “I think that combination really was crucial."
Reprinted with permission from the September 30, 2019 edition of Texas Lawyer © 2019 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.