DuPont 2010 Annual Report Download - page 89

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
Spelter, West Virginia
In September 2006, a West Virginia state court certified a class action captioned Perrine v DuPont, against DuPont that
seeks relief including the provision of remediation services and property value diminution damages for 7,000
residential properties in the vicinity of a closed zinc smelter in Spelter, West Virginia. The action also seeks medical
monitoring for an undetermined number of residents in the class area. The smelter was owned and operated by at least
three companies between 1910 and 2001, including DuPont between 1928 and 1950. DuPont performed remedial
measures at the request of EPA in the late 1990s and in 2001 repurchased the site to facilitate and complete the
remediation. The fall 2007 trial was conducted in four phases: liability, medical monitoring, property and punitive
damages. The jury found against DuPont in all four phases awarding $55.5 for property remediation and $196.2 in
punitive damages. In post trial motions, the court adopted the plaintiffs’ forty-year medical monitoring plan estimated
by plaintiffs to cost $130 and granted plaintiffs’ attorneys legal fees of $127 plus $8 in expenses based on and included
in the total jury award. DuPont appealed to the West Virginia Supreme Court (the Court) seeking review of a number of
issues. The Court issued its decision on March 26, 2010, affirming in part and reversing in part the trial court’s decision.
The Court conditionally affirmed the verdict, but reduced punitive damages to $97.7. The Court reversed the trial court’s
order granting summary judgment to the adult plaintiffs on the issue of statute of limitations and ordered a new jury trial
on the sole issue of when the plaintiffs possessed requisite knowledge to trigger the running of the statute.
In November 2010, plaintiffs and DuPont reached an agreement to settle this matter for $70. In addition, the agreement
requires DuPont to fund a medical monitoring program. The initial set-up costs associated with the program are
included in the $70. The company will reassess its liability related to funding the medical monitoring program as eligible
members of the class elect to participate and enroll in the program. Enrollment in the program is expected to be
complete in the third quarter 2011. As of December 31, 2010, the company has recorded accruals of $70 related this
matter.
General
The company is subject to various lawsuits and claims arising out of the normal course of its business. These lawsuits
and claims include actions based on alleged exposures to products, intellectual property and environmental matters
and contract and antitrust claims. Management has noted a nationwide trend in purported class actions against
chemical manufacturers generally seeking relief such as medical monitoring, property damages, off-site remediation
and punitive damages arising from alleged environmental torts without claiming present personal injuries. Such cases
may allege contamination from unregulated substances or remediated sites. The company also has noted a trend in
public and private nuisance suits being filed on behalf of states, counties, cities and utilities alleging harm to the general
public. Although it is not possible to predict the outcome of these various lawsuits and claims, management does not
anticipate they will have a materially adverse effect on the company’s consolidated financial position or liquidity.
However, the ultimate liabilities may be significant to results of operations in the period recognized. The company
accrues for contingencies when the information available indicates that it is probable that a liability has been incurred
and the amount of the liability can be reasonably estimated.
Environmental
The company is also subject to contingencies pursuant to environmental laws and regulations that in the future may
require the company to take further action to correct the effects on the environment of prior disposal practices or
releases of chemical or petroleum substances by the company or other parties. The company accrues for
environmental remediation activities consistent with the policy set forth in Note 1. Much of this liability results from the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, often referred to as Superfund),
RCRA and similar state and global laws. These laws require the company to undertake certain investigative and
remedial activities at sites where the company conducts or once conducted operations or at sites where company-
generated waste was disposed. The accrual also includes estimated costs related to a number of sites identified by the
company for which it is probable that environmental remediation will be required, but which are not currently the
subject of enforcement activities.
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