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Boc Group v. Lummus Crest

Superior Court of New Jersey, Law Division, Bergen County

August 3, 1990, Decided

Docket No. L-95083-88

Opinion

 [*273]  [**110]   This case is before the court on defendant, Lummus' motion to dismiss the 12th count of plaintiff's complaint alleging violations of the Consumer Fraud Act. N.J.S.A. 56:8-1, et seq.

This case arises from the design, engineering and operation of a plant in Texas intended to manufacture needle coke, which is used to produce graphite electrodes. Needle coke can be produced from [**1110]  various petroleum-derived feedstocks, including decant oil and pyrolysis tar.

Since the late 1960's, defendants, Lummus Co. (Lummus) and Maruzen Petrochemical Co. (Maruzen), had been conducting research and development efforts to produce high-quality needle coke from pyrolysis tars. Decant oil was the [***2]  most often used feedstock at this point in time.

Plaintiff's subsidiary, Airco, after evaluating needle coke samples produced from pyrolysis tars by both Lummus and Maruzen, contacted defendant, Maruzen in 1976 in reference to Maruzen's research. In 1979, plaintiff began looking into the construction of its own needle coke production plant in conjunction with proposed plans to build another graphite electrode manufacturing plant. Plaintiff contacted Lummus and two other engineering companies to investigate the feasibility of constructing a plant which would produce needle coke from pyrolysis tar. Airco then authorized pilot plan tests, using defendants' technology, at each of three competing engineering companies and spent months performing tests to evaluate needle  [*274]  coke samples supplied by the engineering companies to determine if it had the characteristics to produce graphite electrodes.

On May 28, 1980, plaintiff, after reviewing proposals from the three engineering companies, selected Lummus to design a commercial needle coke plant based on a modified "L Process". Between 1980 and 1981, Airco had Lummus perform numerous pilot plant tests using additional feedstocks [***3]  to aid in the design of a commercial scale plant. Airco determined the suitability of each coke sample for the production of its graphite electrodes. In November, 1980, Airco contracted with the engineering company of Foster Wheeler to build a pilot plant in Niagara Falls, New York, to allow it to conduct tests using the modified "L Process".

Airco conducted studies of market demand and anticipated market share for its proposed coke needle plant which included investment and operation cost estimates from Foster Wheeler and Lummus and the retention of independent consultants. Airco also studied the use of decant oil rather than pyrolysis tar in the production of needle coke. In April, 1981, a Lummus feedstock screening study revealed that the plant production would be less than the designated needle coke production with Exxon pyrolysis tar, than if other pyrolysis tar and decant oil were used. Airco then authorized Lummus to redesign the plant using Airco, CCPC and Shell pyrolysis tars.

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251 N.J. Super. 271 *; 597 A.2d 1109 **; 1990 N.J. Super. LEXIS 513 ***

THE BOC GROUP, INC., PLAINTIFF, v. LUMMUS CREST, INC., A CORPORATION, ET AL., DEFENDANTS

Subsequent History:  [***1]  Approved for Publication October 1, 1991. As Corrected October 29, 1991.

CORE TERMS

plant, needle, Consumer, tar, pyrolysis, decant, oil, electrodes, feedstock, merchandise, graphite, yacht, pilot

Antitrust & Trade Law, Consumer Protection, False Advertising, General Overview, Criminal Law & Procedure, Fraud, False Pretenses, Elements, Deceptive & Unfair Trade Practices, Business & Corporate Law, General Partnerships, Management Duties & Liabilities, Civil Procedure, Judgments, Preclusion of Judgments, Law of the Case