Nippon/USS file lawsuits against US government, Cliffs, and USW head

“Today’s legal actions demonstrate Nippon Steel’s and U.S. Steel’s continued commitment to completing the transaction – despite political interference with the CFIUS process and the racketeering and monopolistic conspiracies of Cleveland-Cliffs and USW President David McCall,” the companies said in a joint statement on Monday.

The first lawsuit against the US government was filed in the US Court of Appeals for the District of Columbia Circuit. It alleges “violation of the Constitutional guarantee of due process and statutory procedural requirements, as well as unlawful political influence.”

Also, it asks the court to set aside the Committee on Foreign Investment in the United States (CFIUS) review process and President Biden’s order blocking the deal.

Recall that CFIUS had reached a split decision in late December, which put the final determination in the hands of President Biden.

The second lawsuit was filed in the US District Court for the Western District of Pennsylvania. The suit is against Cleveland-Cliffs’ Chairman, President, and CEO Lourenco Goncalves and USW International President David McCall.

It alleges “illegal and coordinated actions aimed at preventing the transaction and attempting to undermine U.S. Steel’s ability to compete and Nippon Steel’s ability to provide American-made steel to American consumers.”

Nippon and U.S. Steel said they “determined that these legal actions are the necessary path toward closing the transaction and delivering shared success for U.S. Steel employees, communities, shareholders, and customers.”

USS/Nippon allege the lawsuits will establish that:

• President Biden “ignored the rule of law to gain favor” with the USW.
• CFIUS “failed to conduct a good faith, national security-focused regulatory review process” because of “President Biden’s undue influence to advance his political agenda.”
• Cliffs, working with USW leadership, “has sought to prevent the transaction from closing and any party other than Cliffs from acquiring U.S. Steel.” As well as “to otherwise injure U.S. Steel’s ability to compete, all as part of a broader illegal campaign to monopolize the domestic steel markets.”

USW fires back

USW International President David McCall dismissed the lawsuits as “baseless.”

“We are reviewing the complaint and will vigorously defend against these baseless allegations,” he said in a statement to SMU.

McCall added that, by blocking the deal, “the Biden administration protected vital US interests, safeguarded our national security, and helped preserve a domestic steel industry that underpins our country’s critical supply chains.”

Cliffs’ Goncalves calls lawsuits ‘shameless’

Cleveland-Cliffs’ chief executive Lourenco Goncalves went even further on Monday following the announcement by USS and Nippon.

“Today’s lawsuits against the US government, the USW, and Cleveland-Cliffs represent a shameless effort to scapegoat others for U.S. Steel’s and Nippon Steel’s self-inflicted disaster,” he said in a statement.

He noted Cliffs and the USW “were not the only ones who recognized the adverse national security implications of this acquisition.”

“This deal drew instant bipartisan opposition, including from President Trump, who has vowed multiple times that he would block the deal,” Goncalves continued.

He also seemed to make a veiled reference to Cliffs’ own failed bid for USS before the Nippon offer.

“U.S. Steel made their bed when they rejected an all-American solution and insisted on pursuing a doomed-to-fail cash out sale to Nippon Steel,” Goncalves said.

Cliffs’ offer of more than $7 billion to buy U.S. Steel was rejected by USS in August 2023, months before Nippon’s offer. Cliffs had the support of the USW for the sale.

Finally, Goncalves vowed to fight the lawsuits.

“We are well prepared to litigate and look forward to exposing the facts in court,” he said.

Trump jumps into fray

President-elect Donald Trump also let his opinion be known regarding Nippon’s (so far) failed deal.

“Why would they want to sell U.S. Steel now when Tariffs will make it a much more profitable and valuable company?” he asked rhetorically in a post on Truth Social.

“Wouldn’t it be nice to have U.S. Steel, once the greatest company in the World, lead the charge toward greatness again? It can all happen very quickly!” he added.

It seems Trump’s talk of tariffs is heating up again just a few weeks before his inauguration.