Billion-dollar lawsuits are popping up everywhere
Normally, Santa Fe, N. Mex., Judge Edwin Felter spends his days dealing with burglaries, muggings and an occasional divorce case. But this month Felter's courtroom has become center stage for more than 200 top corporate, international and antitrust lawyers. By a quirk of jurisdiction, Felter is presiding over one of the largest and most complex corporate lawsuits ever filed in an American court—a $2 billion-plus action by a New Mexico uranium mining company, United Nuclear Corp., against General Atomic Co., a 50%-owned subsidiary of Gulf Oil Corp., for fraud, coercion and breaches of the nation's antitrust laws.
The case, which has already produced more than 10,000 exhibits, is a key part of the continuing legal fallout from the operations of the now notorious world uranium cartel. The cartel included companies from Canada, Australia, Britain, France and South Africa, as well as the governments of all those countries except Britain. Gulf Oil, the only known American participant, was represented through a Canadian subsidiary. The cartel existed only from 1972 to 1975, but it cashed in on a bonanza that would make an OPEC oil minister jealous: during those three years, world "yellowcake" prices zoomed from less than $6 per Ib. to about $42, where they have since remained.
As prices climbed, United Nuclear found that contracts it had signed with a now defunct Gulf subsidiary and with General Atomic to deliver more than 27 million Ibs. of uranium at set prices ranging from $9 to $14 per Ib. could be filled only at a huge loss. All the time, it now claims, officials of both Gulf and General Atomic, neither of which were formal cartel members, concealed their knowledge that Gulfs Canadian subsidiary was helping to drive prices up by participating in the cartel. United Nuclear now seeks not only to have the contracts voided but to collect damages of $2.27 billion from G.A. In a countersuit, General Atomic denies all allegations and asks that United be forced to fulfill the contracts.
The cartel's operations are being probed in other courtrooms too. In Richmond, Va., federal court, 15 of the nation's largest electric utilities are suing Westinghouse Electric, the nation's largest supplier of uranium to private industry. They seek to compel Westinghouse to honor contracts to deliver 65 million Ibs. of uranium at an average price of $10 per Ib. Doing so could cost Westinghouse as much as $2.6 billion. To avoid that loss, Westinghouse is using the same argument as United Nuclear, that it was victimized by the cartel. Meanwhile, Westinghouse has filed its own suit in Chicago against Gulf and 28 other companies that it says were either cartel members or had ties to the group. Westinghouse is asking for triple damages.