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Generators provided to CEP by Caterpillar malfunctioned and often exploded.


New York, New York– August 10, 2015 – Venable attorneys for plaintiff client Companhia Energética Potiguar (CEP), a Brazilian power plant operator, defeated a motion to dismiss by defendants Caterpillar Inc. (CAT), Caterpillar Americas Services Company (CASC), and Caterpillar Americas Company (CAC) on grounds of forum non conveniens. The suit, filed in S.D. Fla (Miami Division) in November 2014 on behalf of CEP, alleges fraud, negligent misrepresentation, promissory estoppel, breach of express and implied warranties, strict product liability, unfair trade practices, and revocation of acceptance arising out of the catastrophic failure, malfunction, and inadequacy of 144 generator sets manufactured by CAT and installed in CEP’s power plants in Brazil. The lawsuit seeks more than $50 million in damages.

According to the Complaint, the generator sets have experienced a series of failures and malfunctions over the past several years. In response to these problems, Defendant CAT sent a large team from the United States to Brazil in an attempt to rectify the situation. However, since August 2012, more than 30 generator sets have exploded, propelling shards of metal, endangering the lives of workers, and creating holes in the generator engines. Additionally, another 20 generator sets have had serious failures and are out of service.

In considering the case, the District court had the discretion to dismiss the case on forum non conveniens grounds, i.e., that the forum is not adequately convenient to the private interests of defendants. CAT argued that the generator sets were located in Brazil and that various factors weighed in favor of dismissal to Brazil. Venable attorneys emphasized the U.S. manufacturing and design of the equipment, as well as approximately 20 U.S.-based engineers and technicians who worked for years to rectify the problems with the CEP generator sets, who CEP argued had the most relevant information about the case. Discovery in the case revealed that there were a total of 119 U.S.-based CAT witnesses.

The Court found that the defendants failed to meet their burden to demonstrate that the private interest factors weighed in favor of the motion to dismiss and denied the motion. Discovery in the case continues, and a trial is currently scheduled for February 2016.

Venable lead attorneys are Patrick Boyle and Jessie Beeber. Mr. Boyle noted, "The Court's Decision was clearly correct, especially given the extensive, years-long, pre-suit connections between Caterpillar and CEP. The Decision was gratifying because it shows that in these sorts of cross-border sales circumstances, a U.S.-based manufacturer cannot simply hide behind the doctrine of forum non conveniens in an effort to defeat a foreign buyer's right to seek compensation in the United States for the foreign damages that can be caused by U.S. manufacturers."

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Companhia Energética Potiguar S.A. engages in the implementation and development of Potiguar and Potiguar III thermal power plants, and energy exploration, and offers electricity transmission and distribution services. Companhia Energética Potiguar S.A. is based in Brazil.

Venable LLP is an American Lawyer 100 law firm headquartered in Washington, DC, with offices in California, Delaware, Maryland, New York, and Virginia. Our lawyers and legislative advisors serve the needs of domestic and international clients in all areas of corporate and business law, complex litigation, intellectual property, regulatory, and government affairs.