Air Products and Chemicals Arbitrary Surcharges Class Action

If a contract permits the entry of unspecified “Surcharges,” how must these be assessed? The complaint for this class action alleges that Air Products and Chemicals, Inc. breached its “Product Supply Agreements and its good-faith obligations” by adding surcharges in an arbitrary and discriminatory way.

Air Products sells gases, both atmospheric gases like oxygen, nitrogen, and argon and process gases such as hydrogen, helium, and carbon dioxide. It sells these gases under contracts that usually run for a number of years, where the price of the gas has two components, “Price for Product” and “Other Charges.” The Other Charges may include things like hazmat charges or delivery charges. It also includes “Surcharges.”

The contract says, “Surcharges may be assessed in order for [Air Products] to recover increases in its production or delivery costs (e.g., increases in the cost of diesel fuel, natural gas and/or electric power, or increases arising out of utility deregulation or change in laws).”

That is, if Air Products experiences an increase in something like diesel fuel, which increases its costs in fulfilling its agreements, it can pass those increased costs along to customers. The complaint alleges, “In practice, however, Air Products assessed Surcharges on [the plaintiff in this case and others] without regard to ‘increases in its production and delivery costs.’”

The plaintiff in this case, known as AST Waterjet, had a Microbulk Supply Agreement with Air Products.

During the course of AST’s March 10, 2010 to March 2015 contract with Air Products, the price of liquid nitrogen in the contract increased from $9.50 to $10.45. The Delivery Charge increased from $40 to $50 and the Hazmat Charge increased from $20 to $30.

As to Surcharges, between March 2010 and April 2018, Air Products did not impose any on AST. However, beginning in 2018, it imposed surcharges on every invoice. The Surcharge began at 1% of the Unit Price and increased to over 35% of the Unit Price by November 2019, then stayed at that rate. Air Products provided no explanation for the charges.

The complaint displays a graph showing that, during the time period in question, the pries of diesel fuel, natural gas, and electricity all slightly declined, while the Air Products Surcharges went sharply up.

The complaint alleges that Air Products assessed the surcharges “without regard to any ‘increases in its production or delivery costs.’ Rather, Air Products imposed the Surcharges on AST arbitrarily, discriminately, and solely as a way to increase the Unit Price and enhance revenue.”

The class for this action is all individuals and entities who, between September 22, 2016 and September 22, 2020, paid Surcharges to Air Products as in a Product Supply Agreement, Microbulk Product Supply Agreement, Air Products General Conditions of Sale, or other materially similar agreement containing a provision for surcharges similar to the above-quoted Surcharges paragraph.

Article Type: Lawsuit
Topic: Consumer
Tags: Deceptive Business Practices, Unfair Business Practices, Unfair Charges