Factory Mutual files lawsuit, accuses iGPS of fraud

Factory Mutual Insurance Company and FM Approvals LLC (FM) has filed suit against Intelligent Global Pooling Systems (iGPS), charging the company with false advertising, deceptive trade practices, fraud and other violations.

The core of the lawsuit is based on the fact that iGPS has at least three kinds of pallets in its pool yet it continues to promote its collection of pallets as identical. FM, a global insurance company and prominent testing lab, warns in its suit that "Customers have relied on iGPS' false statements in purchasing its services, in using its pallets, in establishing their safety measures and in acquiring insurance coverage."

The pallets iGPS first introduced into the market were not certified. A subsequent pool was manufactured and certified by Underwriters Laboratory (UL) at the UL 2335 Standard. These UL-listed pallets contain, according to the iGPS life cycle analysis, 3.4 pounds of the chemical fire retardant decabrominateddiphenyl ether (DecaBDE). Because of the infusion of DecaBDE, the UL-listed pallets were able to meet the NFPA-13 benchmark, equal to wood pallets. A third pool was tested and approved at the FM 4996 Standard.

"How many iGPS customers realized before this lawsuit that the company has this assortment of pallets?" asks Bruce Scholnick, president and CEO of the National Wooden Pallet and Container Association. "My experience with iGPS product marketing is that it is not anchored to facts or wedded to truth."

"In an open letter to customers posted on the iGPS Web site, the company calls FM unreasonable, inconsistent and accuses the international insurance company of 'anti-competitive business practices,'" said Scholnick. "Contrast this with a September 2008 press release in which iGPS chief executive officer Bob Moore was quoted as saying 'FM Global [is] an important authority in the eyes of insurance professionals.' Smearing FM now is an obvious attempt to divert attention away from the devastating charges made by the respected insurance company/testing lab."

In its lawsuit, FM estimates that "less than 50 percent of iGPS' pallet pool are FM Approved." Here are some other charges made in the suit:

• "… a certain number of the pallets in the iGPS pool … have been certified under another standard, called Underwriters' Laboratories UL 2335 Standard. …The UL 2335 Standard is not as rigorous as the FM 4996 Standard."
• "In actuality, customers who lease pallets from iGPS are likely to receive a significant portion that are not FM Approved. Thus, customers who rely on these false and fraudulent claims are exposed to non-approved pallets that do not meet the same safety specification as FM Approved pallets."
• "Customers are likely to believe that all of the pallets in the iGPS pallet pool are FM Approved when in fact only a portion thereof actually are."
• "Aside from the direct harm to [FM's] marks and reputation, iGPS' actions are also causing a safety hazard to iGPS' customers. iGPS' customers rely on the false claim that the entire iGPS pallet pool are FM Approved for safety decisions and for insurance purposes and coverage."
• "[FM] has complained to iGPS on numerous occasions, including in September, 2008, shortly following the first press release regarding 'FM Approval.' iGPS has refused to cease making its false, misleading and fraudulent claims."

"These accusations are sure to raise questions of warehouse safety and insurance risks in the minds of iGPS' customers," said Scholnick.