A proposed class action alleges Air Products and Chemicals, Inc. imposes surcharges on the sale of gases used in various industries “simply to generate additional revenue” and without regard to its actual production or delivery costs.
Filed by a former Air Products customer, the 13-page breach-of-contract case relays that the defendant offers several types of multi-year product supply agreements to sell atmospheric gases such as oxygen, nitrogen and argon, and process gases such as hydrogen, helium and carbon dioxide.
The lawsuit argues that although the product supply agreements allow Air Products to assess surcharges “to recover increases in its production or delivery costs,” the defendant imposes the extra costs as an additional revenue stream, regardless of any actual increase in costs.
The plaintiff, a manufacturing company that provides sheet metal fabrication solutions, says it entered into a standard-form microbulk product supply agreement with Air Products in March 2015 for the purchase of liquid nitrogen. Aside from the unit price, delivery charge and hazmat charge, the agreement also provided that Air Products may assess surcharges to pass through increased costs of production or delivery, such as increases in the costs of diesel fuel, natural gas and/or electric power or increases related to utility deregulation or law changes, according to the suit.
Between March 2015 and April 2018, Air Products did not assess any surcharges pursuant to the plaintiff’s supply agreement, the lawsuit says. Beginning in May 2018 and continuing through March 2020, however, Air Products imposed surcharges on “every one of [the plaintiff’s] invoices,” according to the case.
While the surcharge amounted to one percent of the unit price in May 2018, it “steadily increased” to over 35 percent of the unit price by November 2019, the suit alleges.
Per the case, the plaintiff received “no notice or explanation” for the surcharges, claiming they “simply appeared” on the invoices sent to the company.
The plaintiff alleges that despite Air Products’ insistence that surcharges are intended to cover increased production and delivery costs, the company’s diesel fuel, natural gas and/or electric power costs related to its agreement with the company did not increase 35 percent between May 2018 and November 2019. According to the case, the average price for industrial natural gas, industrial electricity and highway diesel in fact decreased during this period.
The lawsuit argues that Air Products has, in breach of its contracts with the plaintiff and other customers, assessed surcharges “arbitrarily, discriminatorily, and without regard to increases in its production or delivery costs.”
“Rather,” the complaint reads, “Air Products arbitrarily assessed Surcharges on a routine basis simply to generate additional revenue.”
Per the complaint, the company was able to assess these charges due to its limited number of competitors and the “substantial expense, disruption, and inconvenience” customers would face if they switched to another supplier.
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