Alcoa 2009 Annual Report Download - page 39

this matter. In September 2009, MLC notified Alcoa and the Trustees that it would no longer participate in the
cooperative process. Alcoa and the Trustees have agreed to continue to work together cooperatively without MLC to
resolve Alcoa’s and Reynolds’ natural resources damages liability in this matter. The company is unable to reasonably
predict an outcome or to estimate a range of reasonably possible loss.
As previously reported, in September 1998, Hurricane Georges struck the U.S. Virgin Islands, including the St. Croix
Alumina, L.L.C. (SCA) facility on the island of St. Croix. The wind and rain associated with the hurricane caused
material at the location to be blown into neighboring residential areas. Various cleanup and remediation efforts were
undertaken by or on behalf of SCA. A Notice of Violation was issued by the Division of Environmental Protection
(DEP), of the Department of Planning and Natural Resources (DPNR) of the Virgin Islands Government, and has been
contested by the company. A civil suit was commenced in the Territorial Court of the Virgin Islands by certain
residents of St. Croix in February 1999 seeking compensatory and punitive damages and injunctive relief for alleged
personal injuries and property damages associated with “bauxite or red dust” from the SCA facility. The suit, which
has been removed to the District Court of the Virgin Islands (the “Court”), names SCA, Alcoa Inc., and Glencore Ltd.
as defendants, and, in August 2000, was accorded class action treatment. The class is defined to include persons in
various defined neighborhoods who “suffered damages and/or injuries as a result of exposure during and after
Hurricane Georges to red dust and red mud blown during Hurricane Georges.” All of the defendants have denied
liability, and discovery and other pretrial proceedings have been underway since 1999. In October 2003, the defendants
received plaintiffs’ expert reports. These reports also claim that the material blown during Hurricane Georges consisted
of bauxite and red mud, and contained crystalline silica, chromium, and other substances. The reports further claim,
among other things, that the population of the six subject neighborhoods as of the 2000 census (a total of 3,730 people)
has been exposed to toxic substances through the fault of the defendants, and hence will be able to show entitlement to
lifetime medical monitoring as well as other compensatory and punitive relief. These opinions have been contested by
the defendants’ expert reports, that state, among other things, that plaintiffs were not exposed to the substances alleged
and that in any event the level of alleged exposure does not justify lifetime medical monitoring. In August 2005, Alcoa
and SCA moved to decertify the plaintiff class, and in March 2006, the assigned magistrate judge issued a
recommendation that class certification be maintained for liability issues only, and that the class be decertified after
liability issues have been resolved. This recommendation has been adopted by the assigned district judge. Alcoa and
SCA have turned over this matter to their insurance carriers who are providing a defense. Glencore Ltd. is jointly
defending the case with Alcoa and SCA and has a pending motion to dismiss. On June 3, 2008, the Court granted
defendants’ joint motion to decertify the class of plaintiffs, and simultaneously granted in part and denied in part
plaintiffs’ motion for certification of a new class. Under the new certification order, there is no class as to the personal
injury, property damage, or punitive damages claims. (The named plaintiffs had previously dropped their claims for
medical monitoring during the course of the briefing of the certification motions.) The Court did certify a new class as
to the claim of on-going nuisance, insofar as plaintiffs seek cleanup, abatement, or removal of the red mud currently
present at the facility. The Court expressly denied certification of a class as to any claims for remediation or clean up of
any area outside the facility (including plaintiffs’ property). The new class may seek only injunctive relief rather than
monetary damages. Named plaintiffs, however, may continue to prosecute their claims for personal injury, property
damage, and punitive damages. On May 15, 2009, defendants filed a motion for summary judgment on the class
plaintiffs’ sole remaining claim, which sought injunctive relief. On May 22, 2009, defendants filed a motion for
summary judgment on the named plaintiffs’ claims for personal injury, property damage, and punitive damages. On
August 28, 2009, the Court dismissed the named plaintiffs’ claims for personal injury and punitive damages, and
denied the motion with respect to their property damage claims. On September 25, 2009, the Court granted defendants’
motion for summary judgment on the class plaintiffs’ claim for injunctive relief. As of October 29, 2009, plaintiffs
appealed the Court’s summary judgment order dismissing the claim for injunctive relief. On November 24, 2009,
Alcoa and SCA filed a motion to dismiss that appeal at the U.S. Court of Appeals for the Third Circuit. The company is
unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.
On January 14, 2010, Alcoa was served with a complaint involving approximately 2,900 individual persons claimed to
be residents of St. Croix who are alleged to have suffered personal injury or property damage from Hurricane Georges
or winds blowing material from the property since the time of the hurricane. This complaint, Abednego, et al. v. Alcoa,
et al. was filed in the Superior Court of the Virgin Islands, St. Croix Division. The complaint names as defendants the
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