Baker Hughes 2013 Annual Report Download - page 47

Baker Hughes Incorporated17
those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability,
general liability and workers compensation.
On October 21, 2013, a collective action lawsuit alleging that we failed to pay an as-yet-undetermined class of
workers overtime in compliance with the Fair Labor Standards Act was filed titled Zamora et al. v. Baker Hughes
Incorporated, Civil Action No. 2:13-CV-00326, in the U.S. District Court for the Southern District of Texas, Corpus
Christi Division. On October 10, 2013, a class and collective action lawsuit alleging that we failed to pay a
nationwide class of workers overtime in compliance with the Fair Labor Standards Act and certain state laws was
filed titled Lea et al. v. Baker Hughes, Inc., Civil Action No. 3:13-CV-00447, in the U.S. District Court for the
Southern District of Texas, Galveston Division. We are evaluating the background facts and at this time cannot
provide an evaluation of the likelihood of an unfavorable outcome or potential settlement terms.
On May 30, 2013, we received a Civil Investigative Demand ("CID") from the United States Department of
Justice ("DOJ") pursuant to the Antitrust Civil Process Act. The CID seeks documents and information from us for
the period from May 29, 2011 through the date of the CID in connection with a DOJ investigation related to pressure
pumping services in the United States. We are working with the DOJ to provide the requested documents and
information. We are not able to predict what action, if any, might be taken in the future by the DOJ or other
governmental authorities as a result of the investigation.
On September 19, 2012, our subsidiary, Baker Hughes Oilfield Operations, Inc. (“BHOO”) terminated a sand
supply agreement it had entered into with Hi-Crush Operating, LLC (“Hi-Crush”) on October 28, 2011 (as amended
by the First Amendment to Supply Agreement on May 10, 2012, collectively the “Supply Agreement”) as a result of
Hi-Crush's breach of the Supply Agreement. On November 12, 2012, Hi-Crush filed a lawsuit against BHOO in the
129th Judicial District Court in Harris County, Texas., Cause No. 2012-67261; Hi-Crush Operating, LLC v. Baker
Hughes Oilfield Operations, Inc. In its petition, Hi-Crush claimed that BHOO's termination was “invalid” constituting
a breach and that BHOO “anticipatorily repudiated the Supply Agreement without just excuse.” Hi-Crush claimed
that it was entitled to recover liquidated damages of $187 million based on the undelivered Minimum Purchase
Requirement provision defined in the Supply Agreement; in the alternative, Hi-Crush sought an unspecified amount
of actual damages. On December 17, 2012, BHOO filed a responsive pleading denying Hi-Crush's allegations and
also filed a counter claim for breach of contract. On October 10, 2013, BHOO and Hi-Crush entered into a
settlement agreement pursuant to which both parties agreed to jointly dismiss the above litigation. In connection
with this settlement agreement, the parties have entered into a new supply agreement. The settlement agreement
did not have a material impact on our financial position, results of operations or cash flows.
We were among several unrelated companies who received a subpoena from the Office of the New York Attorney
General, dated June 17, 2011. The subpoena received by the Company seeks information and documents relating
to, among other things, natural gas development and hydraulic fracturing. We are discussing the subpoena with the
New York Attorney General's office.
ITEM 4. MINE SAFETY DISCLOSURES
Our barite mining operations, in support of our drilling fluids products and services business, are subject to
regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of
1977. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit
95 to this report.