Alcoa 2013 Annual Report Download - page 61

Phillip Abraham. As previously reported, on March 1, 2012, Alcoa was served with a complaint involving
approximately 200 individual persons claimed to be residents of St. Croix who are alleged to have suffered personal
injury or property damage from Hurricane Georges or winds blowing material from the property since the time of the
hurricane in September 1998. This complaint, Abraham, et al. v. Alcoa, et al. alleges claims essentially identical to
those set forth in the Abednego v. Alcoa complaint. The matter was originally filed in the Superior Court of the Virgin
Islands, St. Croix Division, on March 30, 2011. By motion filed March 12, 2012, Alcoa sought dismissal of this
complaint on several grounds, including failure to timely serve the complaint and being barred by the statute of
limitations. That motion is still pending.
Other Matters
As previously reported, along with various asbestos manufacturers and distributors, Alcoa and its subsidiaries as
premises owners are defendants in several hundred active lawsuits filed on behalf of persons alleging injury
predominantly as a result of occupational exposure to asbestos at various Company facilities. In addition, an Alcoa
subsidiary company has been named, along with a large common group of industrial companies, in a pattern complaint
where the Company’s involvement is not evident. Since 1999, several thousand such complaints have been filed. To
date, the subsidiary has been dismissed from almost every case that was actually placed in line for trial. Alcoa, its
subsidiaries and acquired companies, all have had numerous insurance policies over the years that provide coverage for
asbestos based claims. Many of these policies provide layers of coverage for varying periods of time and for varying
locations. Alcoa has significant insurance coverage and believes that its reserves are adequate for its known asbestos
exposure related liabilities. The costs of defense and settlement have not been and are not expected to be material to the
results of operations, cash flows, and financial position of the Company.
As previously reported, in November 2006, in Curtis v. Alcoa Inc., Civil Action No. 3:06cv448 (E.D. Tenn.), a class
action was filed by plaintiffs representing approximately 13,000 retired former employees of Alcoa or Reynolds Metals
Company and spouses and dependents of such retirees alleging violation of the Employee Retirement Income Security
Act (ERISA) and the Labor-Management Relations Act by requiring plaintiffs, beginning January 1, 2007, to pay
health insurance premiums and increased co-payments and co-insurance for certain medical procedures and
prescription drugs. Plaintiffs alleged these changes to their retiree health care plans violated their rights to vested health
care benefits. Plaintiffs additionally alleged that Alcoa had breached its fiduciary duty to plaintiffs under ERISA by
misrepresenting to them that their health benefits would never change. Plaintiffs sought injunctive and declaratory
relief, back payment of benefits, and attorneys’ fees. Alcoa had consented to treatment of plaintiffs’ claims as a class
action. Trial in the matter was held over eight days commencing September 22, 2009 and ending on October 1, 2009 in
federal court in Knoxville, TN before the Honorable Thomas Phillips, U.S. District Court Judge.
On March 9, 2011, the court issued a judgment order dismissing plaintiffs’ lawsuit in its entirety with prejudice for the
reasons stated in its Findings of Fact and Conclusions of Law. On March 23, 2011, plaintiffs filed a motion for
clarification and/or amendment of the judgment order, which sought, among other things, a declaration that plaintiffs’
retiree benefits are vested subject to an annual cap and an injunction preventing Alcoa, prior to 2017, from modifying
the plan design to which plaintiffs are subject or changing the premiums and deductibles that plaintiffs must pay. Also
on March 23, 2011, plaintiffs filed a motion for award of attorneys’ fees and expenses. On June 11, 2012, the court
issued its memorandum and order denying plaintiffs’ motion for clarification and/or amendment to the original
judgment order. On July 6, 2012, plaintiffs filed a notice of appeal of the court’s March 9, 2011 judgment. On July 12,
2012, the trial court stayed Alcoa’s motion for assessment of costs pending resolution of plaintiffs’ appeal. The appeal
was docketed in the United States Court of Appeals for the Sixth Circuit as case number 12-5801. On August 29, 2012,
the trial court dismissed plaintiffs’ motion for attorneys’ fees without prejudice to refiling the motion following the
resolution of the appeal at the Sixth Circuit Court of Appeals. On May 9, 2013, the Sixth Circuit Court of Appeals
issued an opinion affirming the trial court’s denial of plaintiffs’ claims for lifetime, uncapped retiree healthcare
benefits. Plaintiffs filed a petition for rehearing on May 22, 2013, to which Alcoa filed a response on June 7,
2013. On September 12, 2013, the Sixth Circuit Court of Appeals denied plaintiffs’ petition for rehearing. The trial
court is now considering Alcoa’s request for an award of costs, which had been stayed pending resolution of the
appeal, and the plaintiffs’ request for attorneys’ fees, which had been dismissed without prejudice to refiling following
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