Aluminum Company Of America v. Essex Group, Inc.

499 F.Supp. 53 (W.D of Pa. 1980)

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Nature of the Case

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Facts

Alcoa (P) made a deal with Essex (D) for smelting aluminum. Part of the deal included a price escalator clause keyed to the Wholesale Price Index. P contends that this price barometer did not reflect actual changes in the cost of nonlabor items utilized by P in the production of aluminum. P claims that there was a mutual mistake of fact and that the contract was completely frustrated. The contract was to run from 1967 until 1983 with an option for D to extend until 1988. The goal of the price index was to maintain a net income of $.04 per pound of aluminum converted. The formula was sufficient until the OPEC actions increased oil prices and P's electricity costs which grew much faster than the WPI. P claims that D is reselling some of the product and that if the agreement were to be continued at the present rate of losses. P would stand to lose $75,000,000.