Baker Hughes 2014 Annual Report Download - page 104

Baker Hughes Incorporated
Notes to Consolidated Financial Statements
79
At this time, we are not able to predict whether our products will need to be repaired or replaced and are not able to
reasonably estimate the impact, if any, such repairs or replacements or other damages would have on our financial
position, results of operations or cash flows.
We are a defendant in various labor claims including the following matters. On April 28, 2014, a collective
action lawsuit alleging that we failed to pay class of workers overtime in compliance with the Fair Labor Standards
Act ("FLSA") was filed titled Michael Ciamillo, individually, etc., et al. vs. Baker Hughes Incorporated in the U.S.
District Court for the District of Alaska (“Ciamillo”). During the fourth quarter of 2014, the parties agreed to settle the
Ciamillo lawsuit, including certain state law claims, for $5 million, subject to final court approval. On December 10,
2013, a class and collective action lawsuit alleging that we failed to pay a nationwide class of workers overtime in
compliance with the FLSA and certain state laws was filed titled Lea et al. v. Baker Hughes, Inc. in the U.S. District
Court for the Southern District of Texas, Galveston Division ("Lea"). During the second quarter of 2014, the parties
agreed to settle the Lea lawsuit, subject to final court approval, and we recorded a charge of $62 million, which
includes the Lea settlement amount and associated costs and an amount for settlement of another wage and hour
lawsuit. On October 21, 2013, a collective action lawsuit alleging that we failed to pay a class of workers overtime
in compliance with the FLSA was filed titled Zamora et al. v. Baker Hughes Incorporated in the U.S. District Court for
the Southern District of Texas, Corpus Christi Division (“Zamora”). In October of 2014, the parties agreed to settle
the Zamora lawsuit for an amount that was not material to our financial position, results of operations or cash flows.
On May 30, 2013, we received a Civil Investigative Demand ("CID") from the U.S. Department of Justice
("DOJ") pursuant to the Antitrust Civil Process Act. The CID seeks documents and information from us for the
period from May 29, 2011 through the date of the CID in connection with a DOJ investigation related to pressure
pumping services in the U.S. We are working with the DOJ to provide the requested documents and information.
We are not able to predict what action, if any, might be taken in the future by the DOJ or other governmental
authorities as a result of the investigation.
We were among several unrelated companies who received a subpoena from the Office of the New York
Attorney General, dated June 17, 2011. The subpoena we received sought information and documents relating to,
among other things, natural gas development and hydraulic fracturing, and we have responded.
ENVIRONMENTAL MATTERS
Our past and present operations include activities that are subject to extensive domestic (including U.S. federal,
state and local) and international environmental regulations with regard to air, land and water quality and other
environmental matters. Our environmental procedures, policies and practices are designed to ensure compliance
with existing laws and regulations and to minimize the possibility of significant environmental damage.
We are involved in voluntary remediation projects at some of our present and former manufacturing locations or
other facilities, the majority of which relate to properties no longer actively used in operations. On rare occasions,
remediation activities are conducted as specified by a government agency-issued consent decree or agreed order.
Remediation costs are accrued based on estimates of probable exposure using currently available facts, existing
environmental permits, technology and presently enacted laws and regulations. Remediation cost estimates
include direct costs related to the environmental investigation, external consulting activities, governmental oversight
fees, treatment equipment and costs associated with long-term operation, maintenance and monitoring of a
remediation project.
We have also been identified as a potentially responsible party (“PRP”) in remedial activities related to various
Superfund sites. In these instances, we participate in the process set out in the Joint Participation and Defense
Agreement to negotiate with government agencies, identify other PRPs, and determine each PRP’s allocation and
estimate remediation costs. We have accrued what we believe to be our pro-rata share of the total estimated cost
of remediation and associated management of these Superfund sites. This share is based upon the ratio that the
estimated volume of waste we contributed to the site to the total estimated volume of waste disposed at the site.
Applicable U.S. federal law imposes joint and several liability on each PRP for the cleanup of these sites leaving us
with the uncertainty that we may be responsible for the remediation cost attributable to other PRPs who are unable
to pay their share. No accrual has been made under the joint and several liability concept for those Superfund sites
where our participation is de minimis since we believe that the probability that we will have to pay material costs