Tecumseh Products 2012 Annual Report Download - page 62

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Litigation
General
We are party to litigation in the ordinary course of business. Litigation occasionally involves claims for punitive as well as
compensatory damages arising out of use of our products. Although we are self-insured to some extent, we maintain insurance
against certain product liability losses. We are also subject to administrative proceedings with respect to claims involving the
discharge of hazardous substances into the environment. Some of these claims assert damages and liability for remedial
investigation and clean-up costs. We are also typically involved in commercial and employee disputes in the ordinary course of
business. Although their ultimate outcome cannot be predicted with certainty, and some may be disposed of unfavorably to us,
management considers that appropriate reserves have been established and, except as described below, does not believe that the
disposition of these matters will have a material adverse effect on our consolidated financial position, cash flows or results of
operations. With the exception of the settlement of the working capital adjustment made with the purchaser of our former
Engine & Power Train business segment, our reserves for contingent liabilities have not historically differed materially from
estimates upon their final outcomes. However, discovery of new facts, developments in litigation, or settlement negotiations
could cause estimates to differ materially from current expectations in the future. Except as disclosed below, we do not believe
we have any pending loss contingencies that are probable or reasonably possible of having a material impact to our
consolidated financial position, results of operations or cash flows.
Canadian Horsepower label litigation
On March 19, 2010, Robert Foster and Murray Davenport filed a lawsuit under the Class Proceedings Act in the Ontario
Superior Court of Justice against us and several other defendants (including Sears Canada Inc., Sears Holdings Corporation,
John Deere Limited, Platinum Equity, LLC, Briggs & Stratton Corporation, Kawasaki Motors Corp., USA, MTD Products Inc.,
The Toro Company, American Honda Motor Co., Electrolux Home Products, Inc., Husqvarna Consumer Outdoor Products
N.A., Inc. and Kohler Co.), alleging that defendants conspired to fix prices of lawn mowers and lawn mower engines in
Canada, to lessen competition in lawn mowers and lawn mower engines in Canada, and to mislabel the horsepower of lawn
mower engines and lawn mowers in violation of the Canadian Competition Act, civil conspiracy prohibitions and the Consumer
Packaging and Labeling Act. Plaintiffs seek to represent a class of all persons in Canada who purchased, for their own use and
not for resale, a lawn mower containing a gas combustible engine of 30 horsepower or less provided that either the lawn mower
or the engine contained within the lawn mower was manufactured and/or sold by a defendant or their predecessors between
January 1, 1994 and the date of judgment. Plaintiffs seek undetermined money damages, punitive damages, interest, costs and
equitable relief. In addition, Snowstorm Acquisition Corporation and Platinum Equity, LLC, the purchasers of Tecumseh Power
Company and its subsidiaries and Motoco a.s. in November 2007, have notified us that they claim indemnification with respect
to this lawsuit under our Stock Purchase Agreement with them.
At this time, we do not have a reasonable estimate of the amount of our ultimate liability, if any, or the amount of any potential
future settlement, but the amount could be material to our financial position, consolidated results of operations and cash flows.
On May 3, 2010, a class action was commenced in the Superior Court of the Province of Quebec by Eric Liverman and Sidney
Vadish against us and several other defendants (including those listed above) advancing allegations similar to those
outlined immediately above. Plaintiffs seek undetermined monetary damages, punitive damages, interest, costs, and equitable
relief. As stated above, Snowstorm Acquisition Corporation and Platinum Equity, LLC, the purchasers of Tecumseh Power
Company and its subsidiaries and Motoco a.s. in November 2007, have notified us that they claim indemnification with respect
to this lawsuit under our Stock Purchase Agreement with them.
At this time, we do not have a reasonable estimate of the amount of our ultimate liability, if any, or the amount of any potential
future settlement, but the amount could be material to our financial position, consolidated results of operations and cash flows.
Compressor industry antitrust investigation
On February 17, 2009, we received a subpoena from the United States Department of Justice Antitrust Division (“DOJ”) and a
formal request for information from the Secretariat of Economic Law of the Ministry of Justice of Brazil (“SDE”) related to
investigations by these authorities into possible anti-competitive pricing arrangements among certain manufacturers in the
compressor industry. The European Commission began an investigation of the industry on the same day.
We have entered into a conditional amnesty agreement with the DOJ under the Antitrust Division’s Corporate Leniency
Policy. Pursuant to the agreement, the DOJ has agreed to not bring any criminal prosecution or impose any monetary fines with
respect to the investigation against us as long as we, among other things, continue our full cooperation in the investigation. We
have received similar conditional immunity from the European Commission and the SDE, and have received or requested
immunity or leniency from competition authorities in other jurisdictions. On December 7, 2011, the European Commission
announced it had reached a cartel settlement under which certain of our competitors received fines for the conduct investigated.
As a result of our conditional immunity, we were not assessed any fine.