Published October 14, 2008 07:02 am -
Clow Valve trial after one week
By MICHAEL SCHAFFER
The Oskaloosa Herald
OSKALOOSA
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The first week of a projected four-week civil trial involving a major Oskaloosa manufacturer wrapped up Friday afternoon.
Week two of the civil lawsuit Clow Valve filed against Chevron USA, Diamond Oil Company and Oskaloosa Gas and Oil resumed today at 9 a.m. at the Mahaska County Courthouse with Monroe County Judge Annette Scieszinski presiding.
Clow contends the defendants in the civil suit filed in June of 2006 participated in a pattern of breach of warranties, breach of contracts, strict liability, negligence, and fraudulent and negligent misrepresentation. The heart of the lawsuit is Clow’s contention the defendants provided a product — Chevron FM extreme pressure grease — that caused corrosion of upper stems used in Medallion and F2500 fire hydrants produced between July 2002 and July 2004.
In August 2006, Clow Valve began testing hydrants for corrosion and instituted an upper stem replacement program. According to Clow, the company has spent between $6 and $7 million to change out valve stems in some 55,000 fire hydrants, out of 113,340 fire hydrants sold from 2002 to 2004.
According to a Clow Valve press release dated Oct. 29, 2007, “During its replacement of the upper stem and lubrication in hydrants to date, Clow has found hydrant stems exhibiting corrosion caused by the calcium acetate in the grease. It appears the corrosion is increasing as time passes.”
Ultimately, the 11 member, three alternative jury, based on the preponderance of evidence and court instructions, will decide the outcome of the case. As plaintiff attorney Randy DeGeest on Oct. 7 during opening statements said, it comes down to which slice of the cherry pie is bigger and has that extra piece of fruit in it.
Jim Wakefield, assistant general manager for Clow Valve, testified on Wednesday that prior to 2000, they used a general-purpose grease before switching to a food-grade grease early that year because customers were requesting it. The grease Clow started using was Mystik grease, produced by Citco, based in Tulsa, Okla.
“It was frequent enough that we decided we needed to go to a food-grade grease across the board,” Wakefield said.
Then beginning in July of 2002, Clow switched from Mystik grease to Chevron FM food-grade grease, Wakefield said. That switch lasted until mid-2004. The switch from Mystik grease, Wakefield said, was made because they were told the supply was drying up.
Part of Friday’s testimony brought out the relationships Clow Valve, Diamond Oil Company and Oskaloosa Gas and Oil had formed over the years.
Testimony given by Diamond Oil Company President Jason Chance indicated they went to Chevron in 2001 as primary product marketer, while still selling Mystik grease. According to an exhibit offered by plaintiff attorney Dennis Johnson, Oskaloosa Gas and Oil agreed to purchase Chevron products from Diamond Oil Company and sell them until June 30, 2002.
The agreement included incentives. Because Diamond Oil switched to Chevron, they were looking to turn a “sub-jobber” like Oskaloosa Gas and Oil to Chevron.
If Oskaloosa Gas and Oil went to Chevron, would they receive an incentive payment, Johnson asked.
“A very minimal one, yes,” Chance replied.
While Diamond Oil’s profit margin on Chevron FM grease was 2 percent higher than it was on Mystik grease, Chance said he would not knowingly supply a product to a customer if it would not work for them.