Tuesday, March 01, 2016

What was Justice Scalia worth? At least $835 million

The recent passing of Supreme Court Justice Antonin Scalia has been commented on heavily elsewhere, and I doubt I have any original thoughts to add. But is quite readily apparent that his replacement will not be appointed quickly, as in it might well drag on into 2017. The court has 9 members and voting on cases is strictly a majority-rules affair, so to have only 8-members means that not a lot of cases will be overturned in the near future. Getting a 5-4 vote for overturning a case is easier than get a 5-3 vote. For someone who's case is unfortunate enough to be on the calendar in the near future, that could seriously change the outcome.

One such case involves Dow Chemical, who almost three years ago was found guilty of price fixing and fined $1.2 billion. After many filings, motions and appeals, their case finally made it to the Supreme Court - and then Justice Scalia dies. To say that Dow thought they stood a chance with Scalia alive-and-well is quite clear, as they have now quickly negotiated a a final settlement for $835 million, still a mighty big chunk of change.

Dow stated in a press release:
"Growing political uncertainties due to recent events within the Supreme Court and increased likelihood for unfavorable outcomes for business involved in class action suits have changed Dow’s risk assessment of the situation."
Looks like Dow should have taken out a life insurance policy on Scalia. Even having a $2- or $3-hundred million would have helped offset this bitter pill.

Or as I suggested long ago, they could have settled early on for peanuts. Bayer (now Covestro), BASF and Huntsman paid a combined fine of only $140 million, but Dow bet on it's legal team and their analysis.

I imagine that the impending merger of Dow with Dupont also played a role. While large corporations will always have some legal actions against them at any point in time, the risk these actions pose is generally small. This case was quite different, and so having it settled - for better or worse - is always preferable to having an unknown quantity hanging over their heads as they enter into a merger.

Previous Years

March 1, 2013 - Giving the Skin Off My Back

March 1, 2011 - A Crack Smoking Poodle

March 1, 2010 - Unusual Recyling Mix

March 1, 2007 - Detox via Intox

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