Tecumseh Products 2014 Annual Report Download - page 68

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refrigeration purposes (but excluding those used for air conditioning) purchased from February 25, 2005 to December 31, 2008
(the "Covered Products").
On October 15, 2012, we entered into a settlement agreement with the direct purchaser plaintiffs (the "Settlement Agreement").
The Settlement Agreement was made by and between us and our subsidiaries and affiliates, and plaintiffs, both individually and
on behalf of a class of persons who purchased the Covered Products in the United States, its territories and possessions, directly
from a defendant. Under the terms of the Settlement Agreement, in exchange for plaintiffs' full release of all U.S. direct
purchaser claims against us relating to refrigeration compressors, we agreed to pay a settlement amount of $7.0 million and, in
addition, agreed to pay up to $150,000 for notice and administrative costs associated with administering the settlement. These
costs were recorded as an expense in the second quarter ended June 30, 2010 (and paid in the third quarter of 2010) in the line
item captioned "Impairments, restructuring charges, and other items" on our Consolidated Statements of Operations. On June
16, 2014, the court issued an order granting final approval of the Settlement Agreement between Tecumseh and the direct
purchaser plaintiffs. The court also issued a Final Judgment dismissing all direct purchaser actions against Tecumseh and
several other defendants.
We entered into a Settlement Agreement on March 21, 2014 with the named indirect purchaser plaintiffs pursuant to which
these plaintiffs agreed to enter a Stipulated Order of Dismissal with Prejudice and Without Costs that dismisses all claims and
causes of action alleged in their third consolidated amended complaint. Our share of the settlement was $250,000. The court
entered this order on April 9, 2014.
On March 12, 2012, a proceeding was commenced by Electrolux do Brasil S.A., in the Civil Division of the State District
Court in São Paulo, Brazil, against Tecumseh Do Brasil Ltda. and two other defendants controlled by Whirlpool, jointly and
severally. The complaint alleges that Electrolux suffered damages from over pricing due to the activities of a cartel of which we
and Whirlpool were members. The complaint states that the amount in controversy is Brazilian Real 1,000,000. However,
Electrolux would be entitled to recover any damages it is able to prove in the proceeding, in the event that they exceed this
amount. We timely filed opposition to this claim. We intend to continue to vigorously contest the claim.
On March 20, 2013, a proceeding was commenced by Electrolux Home Products Corporation N.V. in the Regional Court of
Kiel, Germany against Tecumseh Europe S.A. and several other defendants, jointly and severally. The claim alleges total
estimated damages of approximately €63.0 million based on 15% of Electrolux's total purchases in Europe of the relevant
compressors, the vast majority of which were purchased from a competitor. We filed our initial response to the claim on
August 30, 2013. On August 22, 2013, the District Court of Kiel decided to stay the case until the Court of Justice of the
European Union issues a decision in another case regarding jurisdictional issues that are also raised in this case. On March 20,
2014, we entered into a Settlement Agreement with AB Electrolux and its affiliates (“Electrolux”) pursuant to which Electrolux
agreed to release us from all antitrust claims worldwide except those currently pending in the Brazil case described above and
except for Electrolux's share of any direct purchaser settlement payments pursuant to the settlement described above. We
agreed to pay Electrolux US$1.5 million over three years in connection with this settlement agreement.
On December 18, 2013, BSH Boschund Siemens Hausgerate GMBH ("Bosch") sent the company a letter in which it threatened
to initiate court proceedings in Germany against Tecumseh unless Tecumseh pays Bosch damages for alleged overcharges
relating to its purchases of compressors. A complaint was filed by Bosch in the Regional Court of Munich I on August 25,
2014 against us and several other defendants (including Embraco Europe S.r.l., Whirlpool S.A. and Panasonic Corporation). We
intend to vigorously contest the claim. Danfoss (one of the other participants in the conduct) pre-empted Bosch’s claim in
Munich by filing a declarative claim against Bosch in Denmark, to which Bosch has filed a counterclaim for damages. In
connection with this proceeding in Denmark, Danfoss has filed a contribution claim in Denmark against Tecumseh as well as a
claim for damages in France against Tecumseh Europe. In addition, Embraco has issued third party notices to Tecumseh for a
contribution claim in connection with the Embraco claims.
Products Liability/ Warranty Claim
On July 31, 2014, Tecumseh Europe S.A. was served a writ (on the merits) before the Commercial court of La Roche-sur-Yon
by the five companies of the Atlantic Industrie SAS group. The dispute alleges product failures associated with the supply by
Tecumseh Europe of evaporating units mounted on Atlantic's thermodynamic water heaters pursuant to a November 2009
purchase agreement. The writ seeks the payment of 16,715,109 Euros as damages alleging our failure to satisfy our obligation
of information, hidden defects, lack of conformity and breach of the purchase agreement. We have informed our insurance
company about this dispute. Under our insurance policy, we are responsible for the first 60,000 Euros, with our insurance
covering up to the next 3.5 million Euros. Our insurance company has assumed the defense of this claim, subject to a
reservation of rights. See Note 7, "Warranties" for additional detail regarding the accrual related to this issue. We intend to
vigorously contest Atlantic's claim.
Due to the uncertainty of our liability in the "Litigation" issues discussed above, or other cases that may be brought in the
future, we have not recognized any impact in our financial statements, other than for the claims subject to the settlement
agreements as well as our estimated contractual obligation related to the Atlantic claim described above. Our ultimate liability