Fluor 2013 Annual Report Download - page 137

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FLUOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
St. Joe Minerals Matters
Since 1995, the company has been named as a defendant in a number of lawsuits alleging injuries
resulting from the lead business of St. Joe Minerals Corporation (‘‘St. Joe’’) and The Doe Run Company
(‘‘Doe Run’’) in Herculaneum, Missouri, which are discontinued operations. The company was named as a
defendant in these lawsuits as a result of its ownership or other interests in St. Joe and Doe Run in the
period between 1981 and 1994. In 1994, the company sold its interests in St. Joe and Doe Run, along with
all liabilities associated with the lead business, pursuant to a sale agreement in which the buyer agreed to
indemnify the company for those liabilities. Until December 2010, substantially all the lawsuits were settled
and paid by the buyer; and in all cases the company was fully released.
In December 2010, the buyer settled with certain plaintiffs without obtaining a release for the benefit
of the company, leaving the company to defend its case with these plaintiffs in the City of St. Louis Circuit
Court. In late July 2011, the jury reached an unexpected verdict in this case, ruling in favor of 16 of the
plaintiffs and against the company and certain former subsidiaries for $38.5 million in compensatory and
economic damages and $320 million in punitive damages. In August 2011, the court entered judgments
based on the verdict.
In December 2011, the company appealed the judgments of the court. Briefings and oral arguments
before the Missouri Court of Appeals (Eastern District) have been completed, and the company is
awaiting a decision. The company strongly believes that the judgments are not supported by the facts or the
law and that it is probable that such judgments will be overturned. Therefore, based upon the present
status of this matter, the company does not believe it is probable that a loss will be incurred. Accordingly,
the company has not recorded a charge as a result of the judgments. The company has also taken steps to
enforce its rights to the indemnification described above.
The company, the buyer and other entities are defendants in 21 additional lawsuits relating to the lead
business of St. Joe and Doe Run. The company believes it has strong defenses to these lawsuits and is
vigorously defending its position. The company is unable to estimate a range of possible losses in these
lawsuits. In addition, the company has filed claims for indemnification under the sale agreement and for
other matters raised in these lawsuits. While management believes the company will be ultimately
successful in these various matters, if the company was unsuccessful in its appeal of the ruling referenced
above or in any of the other lawsuits, or in the prosecution of and collection on our indemnity claims, the
company could recognize a material charge to its earnings.
Conex International v. Fluor Enterprises, Inc.
In November 2006, a Jefferson County, Texas, jury reached an unexpected verdict in the case of Conex
International (‘‘Conex’’) v. Fluor Enterprises Inc. (‘‘FEI’’), ruling in favor of Conex and awarding
$99 million in damages related to a 2001 construction project.
In 2001, Atofina (now part of Total Petrochemicals Inc.) hired Conex International to be the
mechanical contractor on a project at Atofina’s refinery in Port Arthur, Texas. FEI was also hired to
provide certain engineering advice to Atofina on the project. There was no contract between Conex and
FEI. Later in 2001 after the project was complete, Conex and Atofina negotiated a final settlement for
extra work on the project. Conex sued FEI in September 2003, alleging damages for interference and
misrepresentation and demanding that FEI should pay Conex the balance of the extra work charges that
Atofina did not pay in the settlement. Conex also asserted that FEI interfered with Conex’s contract and
business relationship with Atofina. The jury verdict awarded damages for the extra work and the alleged
interference.
The company appealed the decision and the judgment against the company was reversed in its entirety
in December 2008. Both parties appealed the decision to the Texas Supreme Court, and the court denied
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