My law offices are in the Eaton Center Building in downtown Cleveland, Ohio. So a recent headline in The Cleveland Plain Dealer Business Section — stating that Eaton might owe billions in damages in an antitrust case — naturally caught my eye. A jury in federal court in Wilmington, Delaware found that Eaton Corp has monopolized the market for commercial truck transmissions. The company now faces paying billions of dollars in damages to a competitor.
Eaton does not owe anything immediately. There will be a second trial to determine the amount of damages; and there will very likely be appeals. But the case illustrates how one single court judgment can have a catastrophic effect on even a very large company.
While the Eaton case involved an antitrust claim, a catastrophic judgment can result from even a simple contract case. For example, in the 1980s a Texas jury found Texaco liable to Pennzoil for tortiously interfering with a contract between Getty Oil and Pennzoil. The jury verdict was for $7.52 billion; and the jury added another $3 billion in punitive damages. Texaco Inc. v. Pennzoil Co. (1987), 729 S.W. 2d 768 (Tex. Ct. App.). Texaco of course appealed (all the way to the United States Supreme Court), but the ultimate resolution of the case involved Texaco paying $3 billion and filing bankruptcy. Texaco at the time was one of the largest corporations in the United States. This is another classic reminder that a single jury verdict can have an enormous impact on a company — even a very large company.
My post of July 2, 2009 titled “Asset Protection for Your Business” outlines some of the simple strategies that an organization can use to protect at least some of its assets. Unfortunately, many small business owners tend to focus on asset protection only after some huge lawsuit is filed or some court judgment is entered, at which time it is generally too late to do anything.