Client Alerts & Newsletters

Government Liable for $99 Million in Breach of Contract Damages Under Indemnification Clause

Jul.24.2018

On July 18, 2018, the Federal Circuit affirmed the U.S. Court of Federal Claims’ decision in Shell Oil Co., et al. awarding $99.5M to Shell and other oil companies for the government’s breach of World War II-era contracts for high-octane aviation gasoline production (previously discussed here, and here).

The case began when the U.S. and California sued the oil companies under CERCLA for costs of cleaning up acid sludge caused by the gasoline production. After being found liable under CERCLA, the companies filed claims against the government at the COFC for reimbursement of their CERCLA costs under the theory that the government had breached the “Taxes” clauses in their contracts, which, they argued, required the government to pay “any” charges related to gasoline production. In a decision which may encourage other contractors to pursue recovery under similar contract provisions such as “hold harmless” clauses in facilities contracts, and indemnification clauses authorized under Public Law 85-804, the Federal Circuit ruled that the COFC properly determined that the government breached the Taxes clause, and affirmed the award of $99.5M in damages (including nearly $31 million in interest on the companies’ claims).

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Stephen J. McBrady
Partner – Washington, D.C.
Phone: +1 202.624.2547
Email: smcbrady@crowell.com

Jonathan M. Baker
Partner – Washington, D.C.
Phone: +1 202.624.2641
Email: jbaker@crowell.com

David J. Ginsberg
Partner – Los Angeles
Phone: +1 213.443.5545
Email: dginsberg@crowell.com

Skye Mathieson
Counsel – Washington, D.C.
Phone: +1 202.624.2606
Email: smathieson@crowell.com

Paul Freeman
Senior Counsel – New York
Phone: +1 212.895.4251
Email: pfreeman@crowell.com

Laura J. Mitchell Baker
Associate – Washington, D.C.
Phone: +1 202.624.2581
Email: lbaker@crowell.com

Charles Baek
Associate – Washington, D.C.
Phone: +1 202.624.2894
Email: cbaek@crowell.com

Crowell & Moring LLP is an international law firm with more than 500 lawyers representing clients in litigation and arbitration, regulatory, and transactional matters. The firm is internationally recognized for its representation of Fortune 500 companies in high-stakes litigation, as well as its ongoing commitment to pro bono service and diversity. The firm has offices in Washington, DC, New York, Los Angeles, San Francisco, Orange County, London, and Brussels.

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