A federal appeals court has agreed to continue a case in which a defunct Iowa block molder is seeking as much as $12 million in damages from Huntsman Chemical Corp. The 10th Circuit Court of Appeals in Salt Lake City supported Holland Plastics Co., which went bankrupt in 1994, in its claim that Huntsman sold expanded polystyrene beads at a lower price to Iowa EPS Products, Holland's main competitor.
Holland claimed that Huntsman, a Salt Lake City-based chemicals and resins maker, began discounting EPS sold to Iowa EPS in 1990. The discount allowed Iowa EPS to take substantial business away from Holland by selling EPS foam board at a much lower price.
Huntsman allegedly shipped the lower-priced material to Iowa EPS after billing Cellofoam North America, a block molder based in the Atlanta area.
The legal battle began in 1994 when Huntsman sued Holland, seeking about $200,000 for an unpaid bill. Holland then countersued for price discrimination, asking for treble damages on the $3 million to $4 million it claims to have lost as a result of Huntsman's actions. The case has been tied up in court ever since.
A U.S. District Court in Salt Lake City ruled in Huntsman's favor in May 1998, but a series of appeals filed by Holland eventually led to the Feb. 29 decision, which throws the case back into the legal system.
"You never get into these things thinking it will take this long," Holland President J.D. Schimmelpfennig said of the extended court battle. "But I really feel we had to get out of business because of what Huntsman did."
Huntsman spokesman Don Olsen countered that company officials "are confident that the 1998 decision of the court in favor of Huntsman Chemical Corp. was correct."
"Although the 10th Circuit Court has sent the matter back to the district court for further proceedings, we fully expect that Huntsman Chemical will ultimately prevail," Olsen said.
Cellofoam North America owner Greg Bontrager declined to comment, saying he was unaware the case had been reopened. Officials at Iowa EPS could not be reached for comment.
At its peak in the mid-1980s, Holland employed 80 and posted annual sales of about $4.5 million. By the time it closed its doors in 1994, those numbers had shrunk to 25 employees and $2.5 million in annual sales.
Schimmelpfennig and a group of investors had purchased Holland in 1977. The business, founded in 1963, primarily served building supply and roofing contractors in Iowa, Minnesota, Illinois and Missouri.
Schimmelpfennig declined to say how much of a discount he believes Huntsman gave Iowa EPS on its EPS beads, but he pointed out it was enough for Iowa EPS to catch and surpass Holland, which had double the sales of Iowa EPS in its heyday.
"[Holland and Iowa EPS] are the only two block molders in the state," Schimmelpfennig said. "EPS is a pretty mature market."
Since closing Holland in 1994, Schimmelpfennig has stayed busy with Lomont Molding Co., an injection molding business he launched in 1983. Lomont, which employs 135 and had sales of $10 million last year, molds polypropylene brush handles and other products for the hardware industry.
Michael Mallaney, Schimmelpfennig's lawyer, hopes the price-discounting case will head to trial in early 2001.
The Huntsman suits seeking payment from Holland as a corporation and Schimmelpfennig as an individual were settled out of court late last year.
Huntsman received no payment, Schimmelpfennig said, because Holland no longer has any assets. Schimmelpfennig sold the plant's equipment after it closed.