Alcoa 2010 Annual Report Download - page 40

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 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. Plaintiffs’ expert reports 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. Alcoa and SCA moved to decertify the plaintiff class, and the assigned district judge
adopted a recommendation that class certification be maintained for liability issues only, and that the class be
decertified after liability issues have been resolved. 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. In June 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 ongoing 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 could seek only injunctive relief rather than monetary damages. Named plaintiffs, however, could
continue to prosecute their claims for personal injury, property damage, and punitive damages. In August 2009, in
response to defendants’ motions, the Court dismissed the named plaintiffs’ claims for personal injury and punitive
damages, and denied the motion with respect to their property damage claims. In September 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 and Alcoa and SCA
filed a motion to dismiss that appeal at the U.S. Court of Appeals for the Third Circuit. A decision by the Third Circuit
is pending. The company is unable to reasonably predict an outcome or to estimate a range of reasonably possible loss.
On April 23, 2004, St. Croix Renaissance Group, L.L.L.P. (SCRG), Brownfield Recovery Corp., and Energy Answers
Corporation of Puerto Rico (collectively, “Plaintiffs”) filed a suit against St. Croix Alumina L.L.C. and Alcoa World
Alumina LLC (AWA) (collectively, “Alcoa”) in the Territorial Court of the Virgin Islands, Division of St. Croix for
claims related to the sale of Alcoa’s former St. Croix alumina refinery to Plaintiffs. Alcoa thereafter removed the case
to federal court and after a several year period of discovery and motion practice, a jury trial on the matter took place in
St. Croix from January 11, 2011 to January 20, 2011. The jury returned a verdict in favor of Plaintiffs and awarded
damages as described: on a claim of breaches of warranty, the jury awarded $12,617,867; on the same claim, the jury
awarded punitive damages in the amount of $6,142,856; and on a negligence claim for property damage, the jury
awarded $10,000,000. Alcoa believes the verdict is, in whole or in part, not supported by the evidence or otherwise
results from errors of law committed during the trial. As a result, Alcoa will file motions due February 17, 2011,
including for judgment notwithstanding the verdict and, to the extent such post-trial motions are not successful, it
intends to pursue its rights of appeal.Notwithstanding the jury verdict, at this time, management is unable to
reasonably predict the ultimate outcome or to estimate a range of reasonably possible loss.
As previously reported, in May 2005,AWA and SCA were among the defendants listed in a lawsuit brought by the
Commissioner of the DPNR, Dean Plaskett, in his capacity as Trustee for Natural Resources of the Territory of the
United States Virgin Islands in the District Court of the Virgin Islands, Division of St. Croix. The complaint seeks
damages for alleged injuries to natural resources caused by alleged releases from an alumina refinery facility in St.
Croix that was owned by SCA from 1995 to 2002. Also listed in the lawsuit are previous and subsequent owners of the
alumina refinery and the owners of an adjacent oil refinery. Claims are brought under CERCLA, U.S. Virgin Islands
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