Pipsa, a Mexican-based recycling company, was awarded $22 million in Bexar County District Court, from Johnson Controls and two of its subsidiaries. The case was heard in Bexar County because many of the arrangements were brokered in the county.
The decision found that the three companies had defrauded the Mexican battery recycler. On March 16th the court awarded $6.3 million in actual damages. On March 18th, the jury awarded Pipsa an additional $15.5 million in punitive damages.
The three companies and the punitive payments they were assessed, include: Johnson Controls, $6 million; Johnson Control Battery Group, $8 million; and Global Energy Systems, 49 percent owned by Johnson Control, $1.5 million.
Attorneys for Johnson Control plan on appealing the verdict.
In a formal statement, Johnson Controls said, "Johnson Controls strongly disagrees with the jury's decisions in this case. The company plans to challenge the entire verdict in post-trial motions, and, if necessary, on appeal. The company believes it has multiple compelling arguments, including the belief that the case should have been tried under Mexican law.
Plaintiffs claimed that Johnson Controls was responsible for plant investments made by Pipsa even though there were no written supply contracts between the parties."
Ricardo Cedillo, attorney for Pipsa, said that the suit was based on agreements made between Pipsa and the three battery manufacturers. According to Cedillo, Pipsa began a relationship with Johnson Control and the other two companies in 1995 to build a battery recycling facility that could service the Johnson’s Mexican-based battery manufacturing operation.Pipsa supplied lead oxide and lead to a plant owned by the defendants in northern Mexico that made automobile batteries.
While Johnson Controls requested a major investment from Pipsa needed a long-term commitment by Johnson Control to make the investment worthwhile. The cost of building the operation was $6.5 million.
After a two-year period there was a gentleman’s agreement between the two parties as to extending the contract an additional five years.
However, according to Cedillo, Johnson Controls began working without the knowledge of Pipsa with Grupo INSA’s Accumex, the largest battery recycler in Mexico.
The result was that Pipsa’s battery recycling plant saw its business with Johnson Controls’s Global Energy System division drop precipitously, leaving the company with two-thirds excess capacity.
The court case took three weeks.