Amtrak 2013 Annual Report Download - page 88

National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1411-1359280 49
11. Commitments and Contingencies (continued)
The Company had accrued for retroactive wages for unions with unratified contracts on the basis
that the remaining contracts would ratify with similar wage increases, which is what occurred.
An accrual of approximately $39.3 million and $34.4 million is included in “Accrued expenses
and other current liabilities” in the Consolidated Balance Sheets as of September 30, 2013 and
2012, respectively. Subsequent to September 30, 2013, Amtrak paid the retroactive wages for the
unions with previously unratified contracts.
Legal Proceedings
In May 2008, APU, corporate successor to Penn Central, filed a lawsuit in federal court in
Cincinnati, Ohio, asserting that Amtrak “eroded” the value of its common stock. APU sought
$52.0 million plus 40 years of interest. APU owns 55.8% of Amtrak’ s common stock. Under the
Rail Passenger Service Act of 1970, APU was permitted to have Amtrak assume APU’ s
responsibility to operate intercity passenger rail service in return for paying Amtrak one-half of
APU’ s 1969 passenger service losses. APU took advantage of that opportunity, entered into a
1971 agreement with Amtrak, paid $52.0 million as required, and chose to receive Amtrak
common stock at par value (rather than tax deductions of equal value). APU’ s claims were
litigated in arbitration proceedings and before the federal court. In an order dated June 21, 2011,
the federal court granted Amtrak’ s motion to dismiss APU’ s lawsuit. In a second order dated
September 13, 2011, the court also denied APU’ s motion to alter the court’ s judgment for
Amtrak. APU filed an appeal to the U.S. Court of Appeals for the Sixth Circuit. The Sixth
Circuit affirmed the District Court’ s dismissal of APU’ s complaint except for one procedural due
process claim that was remanded to the District Court. On remand, Amtrak filed a motion to
dismiss the remaining claim. The District Court ordered briefing by the parties, addressing what
further proceedings should occur in the District Court. That briefing was concluded by August 9,
2013. On May 13, 2014, the District Court ordered renewed briefing regarding Amtrak’ s motion
to dismiss. That briefing was concluded on June 20, 2014. The District Court, as yet, has issued
no decision in response to Amtrak’ s motion to dismiss. The Company believes it is reasonably
possible, but not probable, that a loss could be incurred related to this claim. Amtrak has not
recorded a liability related to this claim in the consolidated financial statements.
In July 2010, the City of New York (“NY City”) filed a federal court action against Amtrak in
the Southern District of New York. NY City seeks $25.0 million, alleging under several theories,
all based upon 1906 and 1909 agreements between NY City and other railroads, that Amtrak is
responsible for a major public highway bridge reconstruction project for the Shore Road Circle
Bridge in the Bronx. Amtrak disputes NY City’ s claims and filed a motion to dismiss on