CPVC Pipe Makers Colluded on Illegal Price Hikes, Lawsuit Alleges

Timeline of Events Alleged in the Lawsuit

Late 2006
An in-house chemist at a prominent company examines sections of failed CPVC pipe from a Pennsylvania condo sprinkler system. The analysis reveals that a mystery fatty acid amide oil caused significant internal damage to the pipes.

January 2007
The chemist links a surfactant of unknown origin to the damage after examining failed pipes from another Pennsylvania project.

April 19, 2007
A sales manager highlights chemical incompatibility between steel pipes and CPVC, prompting further sample testing.

May 3, 2007
The chemist concludes that the steel pipe coating is incompatible with CPVC, potentially causing stress cracking when connected.

Email Exchanges on May 3, 2007

• 1:30 PM: Test results showing incompatibility are shared with relevant parties, preparing for website update proposals.
• 1:33 PM: Instructions are given to expedite the website update.
• 1:42 PM – 1:43 PM: Discussions about issuing a special alert due to the incompatible coating arise.
• 2:13 PM: A request is made to identify other manufacturers using similar incompatible coatings.
• 3:38 PM: Confirmation that even minimal exposure to the coating is harmful to CPVC is reiterated.

Evening May 3 or 4, 2007
A meeting occurs where a decision is made not to disclose the findings publicly.

May 5, 2007
Internal communication advises delaying any public warning pending further reviews to substantiate the incompatibility claims.

August 10, 2007
A new report highlights the mobility of the coating in water and its harmful effects on CPVC.

Later in 2007
Questions from contractors lead to informal meetings among manufacturers to address concerns over potential damage to CPVC piping.

December 13, 2007
A summit meeting takes place at the headquarters of the involved CPVC manufacturer, but the crucial test results remain undisclosed.

March 2008
A later test refutes initial findings, concluding no negative effects, prompting a public announcement by Allied.

This timeline tracks alleged events where parties discovered incompatibilities but attempted to withhold or refute the information.

Tyco International Ltd.‘s Role in the Alleged Conspiracy

The lawsuit highlights a series of communications indicating Tyco International Ltd.‘s involvement in a purported scheme to withhold crucial information. The situation unfolded through an email exchange among employees of three corporations—each representing different interests.

• Initial Disclosure Intentions: A manager from one of the involved companies indicated his intent to share lab test results on May 3. These results pointed to an incompatibility between two specific products. This Representatives from the other companies were to review the information before the company made it public on their corporate website.
• Tyco‘s Acknowledgment of Bad News: Shortly after, an employee from Tyco expressed concern in a message to a sales manager, noting that the test results were unfavorable. The email also speculated that the compatibility issues might extend beyond just the direct competitors involved.
• Strategic Planning and Urgency: Following this, the same manager who intended to disclose the information requested a list of manufacturers potentially affected by similar issues. He emphasized the urgency of notifying relevant parties and mentioned upcoming sessions focused on system compatibility.
• Attempted Suppression: Subsequently, in a private meeting that occurred on the evening of May 3 or 4, a representative from one company urged the manager not to disclose the findings publicly. The manager ultimately agreed to this request.

Through these exchanges, the lawsuit suggests that Tyco was complicit in the effort to suppress the dissemination of critical compatibility information, thus participating in the alleged conspiracy.

The alleged incompatibility of hybrid fire suppression systems, which utilized a combination of CPVC and steel pipes, led to failures in multiple locations. From 2003 to 2010, these systems were installed in several condo associations and other buildings. The failures reportedly impacted numerous properties, including four condo associations in Florida, two in Pennsylvania, two in Massachusetts, one in Wisconsin, and several unspecified sites. Additionally, the Creighton University Medical Center in Omaha, Nebraska, experienced similar issues, highlighting the widespread nature of the problem.

Alleged Conspiracy Involving CPVC Pipes and the Lubrizol Lawsuit

The lawsuit filed against Lubrizol Corp centers on allegations of a conspiracy to hide critical information regarding the incompatibility of certain steel pipe coatings with CPVC pipes used in fire sprinkler systems. The controversy reportedly began in late 2006 when a chemist at Lubrizol identified a recurring issue with failed CPVC pipes. People attributed these failures to chemical reactions between the pipes and a coating applied to steel pipes, which allegedly caused leaks and cracks.

Timeline of Key Events:

• Late 2006: The in-house chemist receives failed CPVC pipe samples from a Pennsylvania project. Her analysis indicates that an unknown fatty acid amide oil is the culprit behind significant internal damage.
• January 2007: Similar issues are reported from another condo project, pinpointing a surfactant as a potential cause.
• April 19, 2007: The chemist warns a sales manager that a particular steel pipe coating is highly incompatible with CPVC material.
• May 3, 2007: A formal report confirms the incompatibility, suggesting that using the steel pipe coating with CPVC could result in severe stress cracking.

During a trade association meeting that same day, internal communications among employees of Lubrizol and its partners reflected a shared understanding of the issue. Discussions involved how to manage and possibly release these findings publicly.

Climactic Developments on May 3, 2007:

• Afternoon: A series of emails exchanged schedule the publication of compatibility warnings on Lubrizol’s website. Concerns arise about the scope of the issue affecting not just one but potentially multiple manufacturers.
• Early Evening: They make requests to delay any public statement until further review, indicating internal hesitation.

Following these developments, the lawsuit alleges that Lubrizol, together with its partners, chose to suppress this critical information. By May 5, internal communications at Lubrizol suggest that they decided to withhold warnings pending further research and development insights, which the lawsuit claims they used as a strategic delay tactic.

Continued Secrecy and Further Testing:

• August 2007: Additional reports highlight the chemical instability of the coating with CPVC, but broader industry awareness remains limited.
• Late 2007-2008: While industry professionals question potential damages, organized meetings do not result in public disclosure of test findings. Subsequent testing eventually portrays a more benign interaction, which was shared externally.

In essence, the lawsuit contends that Lubrizol and its associates deliberately worked to conceal the potential hazards until they could prove them definitively, while downplaying or ignoring the significant risks posed by the coating to CPVC systems.

The issue of incompatibility arose because the coating on the steel pipes was not suitable for use with CPVC pipes. Specifically, the two materials could not be safely connected. When the coating from the steel pipes came into contact with the CPVC pipes, it presented a risk of environmental stress cracking in the CPVC material. This meant that joining these two pipe types could result in structural failures or leaks in the CPVC piping system, compromising the integrity of the entire setup.

In response to the lawsuit alleging a cover-up of defects in fire sprinkler piping systems, Lubrizol maintains a firm stance. The lawsuit cites the company alongside several industry peers, but the company emphasizes that it adheres to a policy of withholding comments on ongoing legal issues. As the legal proceedings progress, Lubrizol plans to formally address the claims in due course.

Lubrizol categorically denies any concealment of information and refutes the accusations outlined in the lawsuit. They assert that they have previously raised, thoroughly tested, and resolved the allegations concerning CPVC materials. The firm underscores its commitment to safety and integrity, highlighting its leadership role in ensuring the reliable installation and function of fire sprinkler systems globally. Lubrizol remains dedicated to upholding the quality of its products and intends to maintain this high standard throughout the current legal examination.

The lawsuit presents a detailed narrative of the alleged communications and actions between Lubrizol and Allied Tube concerning the identified incompatibility problems. It paints a dramatic picture of a timeline where parties handled critical findings discreetly and, allegedly, suppressed them.

Initial Findings and Concerns

It began in late 2006 when a chemist at Lubrizol examined failed pipe samples from a sprinkler system in Pennsylvania. The chemist identified a foreign oily substance causing significant damage. In January 2007, another location noted similar issues, raising red flags about the pipes’ chemical compatibility.

In early 2007, after further testing of a specific coating used in the pipes, the chemist issued a report clearly stating the incompatibility with CPVC products. This report warned that the mixture of these materials could lead to severe damage.

Internal Communications and Alerts

On May 3, 2007, internal emails revealed that Lubrizol prepared to update their website with these findings. A manager was actively coordinating the content for public disclosure while others considered sending an urgent alert about the risks. However, Allied halted this critical communication after expressing concerns about releasing the information prematurely.

Requests to Delay Disclosure

Later that day, Allied urged Lubrizol to withhold any public statements until their team could conduct further technical reviews. Consequently, the Lubrizol manager requested internal staff to delay the planned announcements and further emphasized the need for additional research to substantiate the incompatibility claims.

Reconsideration and Continued Testing

In the following months, Lubrizol continued to assess the situation with more tests. Despite conducting a new evaluation in March 2008, which ostensibly showed no negative effects, the lawsuit suggests that the company did not disclose critical information from earlier studies to the industry or at a dedicated CPVC summit.

This recounting of events outlines a pattern of cautious and calculated communication between the companies, as per the lawsuit, which allegedly prioritized further investigation over immediate public warning about the apparent risks of using certain coatings with CPVC pipes.

Handling the Discovery of Incompatibility: A Detailed Timeline

Initial Identification and Communication

On May 3, employees from three companies—an engineering firm, a protective coatings manufacturer, and a conglomerate—found themselves in the midst of an unfolding issue. The engineering firm realized their product was incompatible with a specific coating. At 1:30 p.m., a manager sent lab results to the other parties and discussed updating their website to reflect these findings.

Shortly after, the urgency of the situation became apparent as the manager instructed colleagues to collaborate with a chemist on wording for the website update, emphasizing the need for immediate action.

Growing Concerns and Internal Discussions

By 1:42 p.m., an employee questioned whether they should issue a special notice, pointing out the potential implications given the coating’s application parameters. Just a minute later, another involved party clearly acknowledged that the incompatibility posed significant concerns for their coating and its interaction with the product, potentially impacting more than just one manufacturer.

Determining the Next Steps

At 2:13 p.m., a request was made for a list of manufacturers affected by this issue, indicating a readiness to notify relevant stakeholders promptly. Plans were underway to discuss this during sessions on system compatibility scheduled for the following day.

Later, at 3:38 p.m., an employee sought clarification on whether the problematic coating deteriorated over time, receiving a clear affirmation of its incompatibility from the chemist.

Deliberation Over Public Disclosure

At 5:45 p.m., a protective coatings manager sought to delay any public announcement until their technical team could review the findings. The chemist proposed that the engineering firm add a new category on their website to warn about potential compatibility issues when different materials are used together.

Concealment and Further Investigation

Within 24 hours, discussions shifted. On the evening of May 3 or 4, someone allegedly made an agreement to keep the findings under wraps. By May 5, someone communicated internally that further research was necessary to validate the incompatibility claim. They decided not to issue a public notification until clear evidence emerged, deeming there was currently no problem.

This timeline illustrates the sequence of events and internal deliberations as the company grappled with the ramifications of product incompatibility and faced decisions on public communication.

The chemist’s role was pivotal in pinpointing the compatibility issue between the coating used and CPVC pipes. She authored a report clearly stating that the specific coating was unsuitable for connection with CPVC pipes. Her findings highlighted that using the coating on steel pipes connected to CPVC could lead to environmental stress cracking, a serious material failure.

These results initiated an internal discussion among the companies involved. The Lubrizol team prepared to update their website, ensuring the information regarding incompatibility was properly communicated, prompted by the chemist’s insights. Further dialogue included considerations of issuing a special alert, emphasizing the urgency and significance of the chemist’s findings. Her expertise and observations laid the groundwork for these precautionary actions.

In 2008, new tests revealed that when the ABF II microbial coating was applied directly to CPVC, it was no longer deemed compatible. Researchers began efforts to replicate real-world scenarios to understand the possible migration of the ABF II coating onto CPVC. However, these tests did not uncover a consistent pattern or suggest a widespread issue related to the coating’s interaction with CPVC.

In a series of internal communications, a manager from Lubrizol allegedly planned to update their website with findings about product incompatibility. Here’s a breakdown of the key actions and inactions:

• Initial Findings and Communication: On May 3, a manager shared lab test results with Allied and Tyco representatives. He mentioned he would forward a draft update for the incompatibility section of the website for their review before publishing.
• Urgency to Update: Shortly after, the manager asked a colleague to collaborate with a chemist on the wording for the website update and emphasized the need to post it as soon as possible.
• Request to Delay: Later that day, a manager from Allied requested Lubrizol to delay making any incompatibility statements during training sessions until their technical team could conduct a review.
• Decision Against Public Announcement: An internal email revealed that the company would not make an announcement on the website or in public unless there was concrete evidence of a compatibility issue, indicating the decision to hold off on publicly sharing the initial lab results.
• Further Testing and Meetings: The lawsuit claims that despite conducting additional testing in August 2007 and holding a subsequent meeting at Lubrizol’s headquarters in December, the company did not disclose the test results at the CPVC Summit.
• New Methodology and Results: In March 2008, Allied and Tyco reportedly requested additional tests, which concluded with no observed detrimental effects. The results were then publicized to the construction industry.

Throughout this timeline, Lubrizol’s alleged actions reflect a pattern of internal deliberation and external pressure resulting in delayed public communication regarding the findings on product incompatibility.

If the allegations are proven true, involved companies may face hefty fines and legal consequences. This situation could prompt the industry to adopt ethical practices and encourage healthy competition among manufacturers.

The lawsuit focuses on resin used in fire sprinkler pipes supplied to condo developments nationwide. This broad distribution means many companies could face costly consequences if held liable for defects or failures.

Potential Consequences Include:

• Financial Impacts: Significant monetary penalties could be imposed, affecting the bottom line of each company involved.
• Reputational Damage: Companies may suffer from a loss of trust among consumers and business partners.
• Industry-Wide Changes: This case might push the industry towards more stringent safety standards and ethical manufacturing practices.

Addressing these outcomes could lead to greater industry accountability and innovation, ensuring safer, more reliable products for consumers.