Willkie Obtains Victory for Blue Cube Spinco in Delaware Superior Court

September 30, 2021

The Court issued a ruling rejecting Dow Chemical Company’s attempt to dismiss a lawsuit brought against it by Willkie client Blue Cube Spinco LLC, a subsidiary of Olin Corporation.

On September 29, a Delaware Superior Court issued a ruling rejecting Dow Chemical Company’s attempt to dismiss a lawsuit brought against it by Blue Cube Spinco LLC, a subsidiary of Olin Corporation. The lawsuit arises out of a indemnification claim Olin brought under one of the agreements that was part of the parties’ more than $5 billion transaction in 2015, through which Olin acquired certain of Dow’s chemical businesses. Prior to the transaction (and unbeknownst to Olin), Dow had caused a property code violation to occur at a manufacturing site in Stade, Germany, where both Olin and Dow now have chemical manufacturing facilities. The violation was discovered by Olin after the transaction closed, and Olin determined that to cure the violation, at least one structure must be completely demolished and rebuilt in a new location. Olin sought indemnification from Dow in connection with those costs, and when Dow refused to pay, Olin brought suit for breach of contract and declaratory judgment.

Dow moved to dismiss. In holding that Olin’s breach of contract claim can proceed, the Court held that Olin’s costs incurred in connection with remedying the code violation are indemnifiable under the parties’ Agreement, and "Dow must cover 'any and all' of those Losses unless another Separation Agreement provision relieves it of its coverage duties." The Court rejected Dow’s argument that a disclaimer elsewhere in the contract unambiguously excused Dow from any liability as a matter of law, and found that Olin’s competing interpretation of the Agreement was reasonable. The Court also agreed with Olin that the contract’s notice provision requiring “prompt” notice did not bar Olin’s claims because, among other things, the notice provision is not a condition precedent to indemnification.

The Court did dismiss Olin’s separate declaratory judgment claim (Count II), but only because it found it to be moot and fully subsumed within Count I (breach of contract). To that end, the Court confirmed that Olin could seek both past and future damages under its breach of contract claim.

The Willkie team working on this case includes partners Craig Martin, Matthew Thomas and Shaimaa Hussein, and associates Skyler Silvertrust and Chloe Holt.