World Fuel Services 2014 Annual Report Download - page 22

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Item 3. Legal Proceedings
Lac-Mégantic, Quebec
As described in Note 7 to the Consolidated Financial Statements – Commitments and Contingencies – Lac-Mégantic,
Quebec, various lawsuits have been filed against us and other third parties related to the Lac-Mégantic incident. In 2013,
we, certain of our subsidiaries, DPM and DPTS, along with a number of third parties, including MMA and certain of its
affiliates, as well as several manufacturers and lessors of tank cars, were named as defendants in twenty complaints filed
in the Circuit Court of Cook County, Illinois. The complaints generally allege wrongful death and negligence in the failure to
provide for the proper and safe transportation of crude oil and seek economic and compensatory damages, as well as costs.
The actions were removed to the United States District Court for the Northern District of Illinois (the “IL District Court”) and
subsequently reassigned to a single judge in the IL District Court (other than one action that was remanded to state court
prior to reassignment and another that was voluntarily dismissed by the plaintiffs).
The plaintiffs subsequently filed a motion to have these actions remanded to state court. We filed a motion in the United
States District Court for the District of Maine (the “ME District Court”), where MMA’s bankruptcy is pending, to transfer all of
these actions to that court. On March 21, 2014, the ME District Court granted the transfer motion. On April 4, 2014, the
plaintiffs filed a motion for reconsideration of the order granting the transfer motion and a motion requesting the ME District
Court abstain from exercising jurisdiction over the cases. The motion for reconsideration was denied and the motion for
abstention remains pending. On May 1, 2014, the plaintiffs filed a notice stating their intention to appeal the order granting
the transfer motion to the First Circuit Court of Appeals. On June 17, 2014, the ME District Court entered a consent order
staying proceedings in the transferred cases pending the appeal. On November 11, 2014, the Bankruptcy Trustee and
plaintiffs moved to amend the consent order staying proceedings in the transferred cases to allow plaintiffs to file additional
cases in other jurisdictions. We and other parties opposed this motion which is currently pending before the court. We
believe the plaintiffs’ claims against us, certain of our subsidiaries, DPM and DPTS are without merit and intend to vigorously
defend against such claims and pursue any and all defenses available.
In 2013, we, certain of our subsidiaries, DPM and DPTS, along with a number of other third parties, including CPR, MMA
and certain of its affiliates, several manufacturers and lessors of tank cars, as well as the intended purchaser and certain
suppliers of the crude oil, were named as defendants in a motion filed in Quebec Superior Court to authorize the bringing
of a class-action lawsuit seeking economic, compensatory and punitive damages, as well as costs. The motion generally
alleges wrongful death and negligence in the failure to provide for the proper and safe transportation of crude oil. We believe
these claims against us, certain of our subsidiaries, DPM and DPTS are without merit and intend to vigorously defend
against such claims and pursue any and all defenses available.
In 2013, the Quebec Minister for Sustainable Development, Environment, Wildlife and Parks (the “Minister”) issued an order
requiring MMA and us to recover the spilled crude oil caused by the incident and to otherwise fully remediate the impact of
the incident on the environment. The Minister subsequently issued a modified order, to which CPR was added as a party.
The requirements of the modified order with respect to us are not materially different from the initial order (the initial order
and modified order are hereinafter collectively referred to as the “Order”). We have filed a contestation of the Order before
the Tribunal administratif du Québec, an administrative body responsible for hearing such contestations, that challenges
the legality and validity of the Order on various grounds. In July and September of 2014, we voluntarily entered into
agreements with the government of Quebec to perform sediment characterization work in Lake Mégantic and the Chaudière
River and certain remediation work in the Chaudière River. The associated cost of these activities is not significant and will
be covered by insurance. These agreements were made without admission of liability and under full reservation of rights.
We continue to challenge both the legality and validity of the Order.
On January 30, 2014, the Trustee for MMA’s U.S. bankruptcy estate (the “Trustee”) filed an adversary proceeding against
us, and certain of our subsidiaries, in the United States Bankruptcy Court for the District of Maine alleging negligence in the
failure to provide the proper and safe transportation of crude oil, and seeking economic damages, as well as costs and
expenses associated with MMA’s lawsuits arising from the incident. On May 29, 2014, we and our named subsidiaries filed
an answer to the Trustee’s complaint. In the quarter ended December 31, 2014, the Trustee moved for, and was granted,
leave to file an amended complaint in the adversary proceeding naming CPR and Irving Oil Limited as defendants. We
believe these claims against us and certain of our subsidiaries are without merit and intend to vigorously defend against
such claims and pursue any and all defenses available.
The Trustee and the Monitor are continuing to explore a potential global settlement of all third party claims arising out of the
incident. The Monitor has represented in court filings that those discussions resulted in firm commitments from certain third