Ulma Non-Normalized Flanges Unfair Competition Class Action

Ulma Forja, S.Coop and its US subsidiary, Ulma Piping USA Corp., make carbon steel flanges, which the companies originally sold in the US as being “normalized,” or heat-treated. This class action follows up on an earlier suit against the company, brought by two competitors on Ulma, during which Ulma executives admitted that most of their flanges were not in fact normalized. However, only the two competitors participating in that case and received compensation from Ulma. This class action undertakes to bring compensation to all Ulma’s competitors.

The class for this action is all persons or entities who produced finished carbon steel ASTM A105 flanges sold in the US between May 5, 2013 and May 31, 2019.

Flanges are used in the construction of oil and gas pipelines. The complaint says, “Flange integrity and compliance with stated specification can mean the difference between a well-functioning system and a catastrophic failure.”

The normalization process involves a heat treatment, the complaint says, “that changes the physical composition of carbon steel, making the grains in its crystalline structure smaller and more uniform. This process relieves stresses in the steel, and makes it more machinable and tougher than in its non-normalized state.” Not surprisingly, it’s more expensive to make flanges that are normalized than flanges that are not.

Ulma claimed its ASTM A105 flanges were normalized, the complaint alleges, “and compliant with ASTM heat-treatment standards.” But in 2017, two of the company’s competitors brought suit against Ulma for false advertising and unfair competition, claiming that Ulma’s flanges were not normalized. At the trial, Ulma executives admitted that the flanges were not in fact normalized. The complaint says, “In fact, at least 95% of the flanges Ulma advertised and sold in the U.S. as normalized and ASTM-compliant flanges were not normalized, and not compliant; indeed they were not heat-treated at all.”

The judge in that earlier case agreed that Ulma should disgorge profits it had made on the flanges, but reduced the award to only 22% of the amount the jury had agreed on, because the two companies that had brought the suit were not all of Ulma’s competitors.

This present suit is being brought as a class action by another competitor, Ameriforge Corporation, to rectify the situation. The judge in the earlier suit, in reducing the award, had stated that Ulma’s unfair profits were “gained at the expense of all competitors in the flange marketplace[.]” Therefore, Ameriforge “brings this class action on behalf of itself and other injured competitors to seek disgorgement of the [other] 78% of Ulma’s unjust enrichment—over $20 million in profits—that Ulma retains.”

Article Type: Lawsuit
Topic: Unfair Competition
Tags: Deceptive Advertising, False Claims of Quality, Unfair Competition