Lockheed Martin 2004 Annual Report Download - page 65

Lockheed Martin Corporation
63
On February 6, 2004, the Corporation submitted a certified
contract claim to the United States seeking contractual indem-
nity for remediation and litigation costs (past and future) asso-
ciated with its former facility in Redlands, California. The
claim was submitted pursuant to a claim sponsorship agreement
with The Boeing Company, executed in 2001, in Boeing’s
capacity as the prime contractor on the Short Range Attack
Missile (SRAM) program. The SRAM program, which formed
a significant portion of the Corporation’s work at the Redlands
facility, contained special contractual indemnities from the U.S.
Air Force, as authorized by Public Law 85-804. On August 31,
2004, the United States denied the claim. The Corporation’s
appeal of that decision is pending before the Armed Services
Board of Contract Appeals.
On August 28, 2003, the Department of Justice filed com-
plaints in partial intervention in two previously reported law-
suits filed under the qui tam provisions of the Civil False
Claims Act in the United States District Court for the Western
District of Kentucky, United States ex rel Natural Resources
Defense Council, et al v. Lockheed Martin Corporation, et al,
and United States ex rel John D. Tillson v. Lockheed Martin
Energy Systems, Inc., et al. The Department alleges that
the Corporation committed violations of the Resource
Conservation and Recovery Act at the Paducah Gaseous
Diffusion Plant by failing properly to handle, store, and trans-
port hazardous waste and that it violated the False Claims Act
by purportedly misleading DoE officials and state regulators
regarding the nature and extent of environmental noncompli-
ance at the plant. The Corporation believes the allegations are
without merit and is defending against them.
On June 10, 2003, Lockheed Martin filed a civil complaint
in the United States District Court for the Middle District of
Florida in Orlando against The Boeing Company and various
individuals. On May 24, 2004, the Corporation filed an
amended and supplemental complaint, which presently alleges
that the defendants solicited, acquired and used its proprietary
information during the competition for awards under the U.S.
Air Force’s EELV programs and others in violation of Federal
and state laws. On August 9, 2004, Boeing filed a six-count
counterclaim. The counterclaim alleges tortious interference
with business and contract, unfair and deceptive trade practices
under Florida law, and false advertising under the Lanham Act,
based on the Corporation’s purported disclosure to the U.S. Air
Force and the government of Boeing’s possession and use of
Lockheed Martin’s documents in the EELV and other competi-
tions. The Corporation believes that the counterclaim is without
merit and moved to dismiss it.
On July 28, 2003, BAE SYSTEMS North America, Inc.
and BAE SYSTEMS Information and Electronic Systems
Integration, Inc. filed a lawsuit against the Corporation in the
Chancery Court for New Castle County in Delaware, seeking
damages of not less than $40 million. BAE seeks indemnification
from Lockheed Martin for BAE’s payment of a civil judgment
entered in 2001 and related costs arising from a lawsuit involving
one of the Aerospace Electronics Systems businesses purchased
by BAE from the Corporation in November 2000. Lockheed
Martin disputes the indemnification claim and is defending
against it.
Nine lawsuits have been filed against the Corporation as
a result of an incident in July 2003 at its aircraft parts manu-
facturing facility in Meridian, Mississippi, which resulted in
the deaths of seven of its employees and the wounding of eight
others. Six of the lawsuits were filed in the U.S. District Court
for the Southern District of Mississippi, and three lawsuits were
filed in the Circuit Court of Lauderdale County, Mississippi. The
lawsuits allege various torts, including wrongful death, inten-
tional infliction of injury, negligent supervision and intentional
infliction of emotional distress. In addition, four of the actions
in federal court allege racial or gender discrimination. The
U.S. Court of Appeals for the Fifth Circuit has accepted an
interlocutory appeal certified by the District Court from its
ruling in one of the lawsuits that the tort and wrongful death
claims are not barred by the exclusivity provisions of the
Mississippi worker’s compensation statute. In another of the
lawsuits, the Corporation’s request to file an interlocutory
appeal from a similar ruling by the Circuit Court for Lauderdale
County has been granted and the Corporation expects to file an
appeal with the Mississippi Supreme Court. The lawsuits are
proceeding during the pendency of the appeals, and the
Corporation continues to defend against them. In addition,
subsequent to the incident, 21 charges of race-related discrim-
ination, one charge of sexual discrimination and one disabil-
ity-related charge were filed by employees with the offices of
the Equal Employment Opportunity Commission (EEOC).
The Jackson, Mississippi EEOC office has issued right to sue
letters allowing the complainants to pursue private litigation.