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Lawyers on both sides walked away disappointed after a six-week trial when a federal jury last week awarded more than $12.5 million to an Allentown, Pa., polyurethane manufacturer in its dispute with Bayer Corp. over five allegedly faulty pieces of factory equipment. Court records show that the plaintiff, Polymer Dynamics Inc., was hoping for an award of more than $500 million, and that Bayer’s defense team was urging the jury to be much less generous, arguing that the evidence supported an award under $1 million. In the suit, Polymer Dynamics Inc. v. Bayer Corp., PDI, a manufacturer of polyurethane products that are used in the shoe and furniture industries, claims it hired Bayer to provide machines that would help it to speed up and computerize its production lines. But PDI claimed that after spending millions on Bayer’s machines, they quickly developed problems and that parts often wore out prematurely. Plaintiff’s attorneys Bruce McKissock and Geraldine Zidow of McKissock & Hoffman told the jury that Bayer’s efforts to resolve the problems were unsuccessful, and that PDI’s corporate reputation was harmed due to repeated instances of bad product. But Bayer’s lawyers, Michael M. Mustokoff, Teresa N. Cavenagh and Jonathan L. Swichar of Duane Morris, told the jury that PDI was attempting to use the machines at speeds that had never been tried before and that although Bayer “could have done better,” it had attempted at every step to cure the problems. PDI’s hopes of a huge verdict were dashed when the jury rejected its fraud claim — a finding that foreclosed any possibility of punitive damages. Instead, the jury found Bayer liable on only two claims — breach of contract and negligent misrepresentation — and awarded about $6.25 million on each of those claims. When PDI first filed the suit in 1999, it included a civil RICO claim as well as a claim for breach of fiduciary duty. In August 2000, U.S. District Judge Jay C. Waldman (now deceased) dismissed the fiduciary duty claim. The case was transferred to U.S. District Judge Petrese B. Tucker, who dismissed the RICO claim on summary judgment. Tucker also granted a directed verdict for the defense on a claim of theft of trade secrets before the case went to the jury. Evidence in the trial showed that PDI was founded in 1985 by Bill Peoples, a former owner of several automotive dealerships, to manufacture kneepads and other shock absorbing materials for athletes. As the shock-absorbing capabilities of polyurethane became more apparent, PDI expanded into the production of shoe insoles and outsoles made of polyurethane. Between 1985 and 1995, PDI said it made several attempts to revise its production system to incorporate the building of large molds that could make multiple products, through the use of computerized automation to transfer the molds between the pouring stations and the creation of robotic arms to pour the polyurethane into the mold cavities. By 1995, PDI said it had reached a point where its production capabilities had greatly expanded but it needed to find a better and faster system for mixing the polyurethane ingredients. At that point, PDI began discussions with Bayer about purchasing upgraded mixing equipment and claimed in the suit that Bayer said it could provide mixing systems that would meet PDI’s rapid and repetitive pouring requirements to fill the multiple mold cavities. But within six months, the suit said, Bayer’s machines were plagued with problems as parts began to wear out prematurely. When Bayer’s efforts to repair the systems were unsuccessful, PDI officials said they took on the task themselves. Although the repairs were ultimately successful, PDI said it spent three years on the repair efforts and by then had suffered lost sales and damage to its reputation. But Bayer’s lawyers told the jury that PDI was informed from the beginning of negotiations that Bayer had no data on the life cycle or wear of the various components of its metering machines. Bayer officials testified that they cautioned PDI to “go slow” because its intended high-speed, high-volume use “would be a novel utilization” of Bayer’s equipment. According to court papers, an expert witness who testified for PDI estimated that the chronic problems with the Bayer machines had cost PDI more than $380 million in lost profits, as well as more than $600,000 for the repairs it performed itself. In his closing argument, McKissock argued that PDI was entitled to more than $500 million if the jury found in its favor on all claims. But Mustokoff focused on the fraud claim and urged the jury to reject PDI’s claim that Bayer had engaged in any fraud. In an interview after the verdict, Mustokoff said “both sides left the courtroom disappointed.” But Mustokoff also said he was gratified that the jury rejected the fraud claim, and that he considered the verdict merely “the seventh inning” because two critical rounds of litigation remain — post-trial motions before Tucker and an inevitable appeal to the 3rd U.S. Circuit Court of Appeals. McKissock, in an interview, said he intends to file post-trial motions to challenge some of Tucker’s rulings during the trial, including some of her jury instructions.

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