Honeywell 2012 Annual Report Download - page 110

Quick Lube—On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District
Court for the District of Connecticut alleging that twelve filter manufacturers, including Honeywell,
engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket automotive
filters. This suit is a purported class action on behalf of direct purchasers of filters from the defendants.
Parallel purported class actions, including on behalf of indirect purchasers of filters, have been filed by
other plaintiffs in a variety of jurisdictions in the United States and Canada. The U.S cases have been
consolidated into a single multi-district litigation in the Northern District of Illinois. In June 2011,
plaintiff’s principal witness pled guilty to a felony count of having made false statements to federal
investigators. On March 8, 2012, Honeywell entered into a settlement agreement to resolve the multi-
district litigation class action as to all plaintiffs. On October 10, 2012 and November 28, 2012, the
District Court for the Northern District of Illinois issued orders granting final approval of the U.S. multi-
district litigation settlement as to all plaintiffs. As previously reported, the Antitrust Division of the
Department of Justice notified Honeywell in January 2010 that it had officially closed its investigation
into possible collusion in the replacement auto filters industry. The class action in Canada is still
pending but we do not expect the resolution to have a material impact on our results of operations or
operating cash flows in the periods recognized or paid.
Honeywell v. United Auto Workers (“UAW”) et. al—In July 2011, Honeywell filed an action in
federal court (District of New Jersey) against the UAW and all former employees who retired under a
series of Master Collective Bargaining Agreements (“MCBAs”) between Honeywell and the UAW. The
Company is seeking a declaratory judgment that certain express limitations on its obligation to
contribute toward the healthcare coverage of such retirees (the “CAPS”) set forth in the MCBAs may
be implemented, effective January 1, 2012. In September 2011, the UAW and certain retiree
defendants filed a motion to dismiss the New Jersey action and filed suit in the Eastern District of
Michigan alleging that the MCBAs do not provide for CAPS on the Company’s liability for healthcare
coverage. The UAW and retiree plaintiffs subsequently filed a motion for class certification and a
motion for partial summary judgment in the Michigan action, seeking a ruling that retirees who retired
prior to the initial inclusion of the CAPS in the 2003 MCBA are not covered by the CAPS as a matter of
law. In December 2011, the New Jersey action was dismissed on forum grounds. Honeywell appealed
the New Jersey court’s dismissal to the United States Court of Appeals for the Third Circuit. The Third
Circuit denied the appeal. Honeywell has now answered the UAW’s complaint in Michigan and has
asserted a counterclaim for fraudulent inducement. Honeywell is confident that the CAPS will be
upheld and that its liability for healthcare coverage premiums with respect to the putative class will be
limited as negotiated and expressly set forth in the applicable MCBAs. In the event of an adverse
ruling, however, Honeywell’s other postretirement benefits for pre-2003 retirees would increase by
approximately $175 million, reflecting the estimated value of these CAPS.
Given the uncertainty inherent in litigation and investigations (including the specific matters
referenced above), we do not believe it is possible to develop estimates of reasonably possible loss in
excess of current accruals for these matters (other than as specifically set forth above). Considering
our past experience and existing accruals, we do not expect the outcome of these matters, either
individually or in the aggregate, to have a material adverse effect on our consolidated financial position.
Because most contingencies are resolved over long periods of time, potential liabilities are subject to
change due to new developments, changes in settlement strategy or the impact of evidentiary
requirements, which could cause us to pay damage awards or settlements (or become subject to
equitable remedies) that could have a material adverse effect on our results of operations or operating
cash flows in the periods recognized or paid.
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HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)