Contract Packager Sues WD-40


IQ Products sued WD-40 for breach of contract, alleging WD-40 terminated a long-term packaging agreement as retaliation when IQ Products notified it of an aerosol valves safety defect and suggested a safer alternative.

The lawsuit was filed May 31 in Houston in the U.S. District Court of the Southern District of Texas.

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In a statement to Lube Report, San Diego-based WD-40 said it strenuously disputes the allegations being made in the suit, but, due to pending litigation, cannot comment on the details of the case at this time. The company takes great pride in its products and intends to vigorously defend the case.

Tom Kruse, an attorney from Baker Hostetler representing Houston-based IQ Products, told Lube Report the company stood by its allegations but would not comment on them. In addition to breach of contract, the lawsuit alleges negligence, negligent misrepresentation and economic duress/coercion.

IQ Products manufactures, packages and distributes numerous aerosol consumer products. Through its predecessor, CSA Ltd., and then as IQ Products from 1992 through 2012, the company produced, packaged and distributed WD-40 brand lubricants from its Houston plant.

WD-40 caused more than $40 million in damages, IQ Products alleges, including a $5.6 million inventory of finished goods at its Houston facility that cant be transported or put on the market due to U.S. Department of Transportation regulations, and raw materials purchased on WD-40s behalf. The lawsuit also claims unpaid bills of $2.3 million for products shipped to WD-40, and lost profits for the remainder of the long-term agreement. It also cites the parties supply relationship, expenses to re-tool IQ Products facilities or other capital investments to alter production facilities, and other damages.

According to IQ Products, it undertook an engineering audit to determine the cause of irregular products coming off its assembly line when packaged to WD-40s specifications. IQ Products said it noticed a defect in the product composition design – a flat cup valve – and in the packaging specifications involving the products aerosol valve component.

IQ Products also claimed it informed WD-40 that because the weak design flat cup valve was mechanically distorting after the aerosol filling process, it wasnt legal for transport under U.S. Department of Transportation regulations and could lead to civil penalties. IQ Products said it urged WD-40 to adopt a safer, alternative design and as manufacturer of WD-40 to report the matters to the proper federal agencies, including the Department of Transportation and Consumer Product Safety Commission.

The packager is also suing for declaratory relief on WD-40s obligations to comply with reporting requirements, and IQ Products right to indemnity because of WD-40s refusal to utilize a safer, alternate component in its products. WD-40 also threatened IQ Products in an attempt to stop any public disclosure of the design defect and the dangerous packaging specifications to U.S. government regulatory agencies, the lawsuit alleges.

The lawsuit alleges that WD-40 sent multiple letters to IQ Products informing the packager it had no choice but to package and place into the market the products according to WD-40s specifications – which the lawsuit alleges was an attempt to force IQ Products to commit an illegal act – leading up to a May 22 letter from WD-40 terminating the companies business relationship.

IQ Products claimed that the termination was a wrongful act. This act, as well as rebidding the work to third parties, was without legal justification and purely a retaliatory action by WD-40, the lawsuit asserts. These sets of actions or threats were of such a character as to destroy IQ Products free agency, as it was forced to either produce defective products under threat by WD-40 or to lose tens of millions of dollars of future profits as a result of WD-40s repudiation and termination of the long-term agreement.

Related Topics

Packaging    Regulations    Regulations Specs & Testing