Sunoco 2008 Annual Report Download - page 94

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resource damages. Plaintiffs may seek to rely on a “joint liability of industry” theory at trial, although there has
been no ruling as to whether the plaintiffs will be permitted to pursue this theory. Plaintiffs are seeking
compensatory damages, and in some cases injunctive relief, punitive damages and attorneys’ fees.
In December 2007, Sunoco, along with other refiners, entered into a settlement in principle which covers 53
MTBE cases. The settlement required a cash payment by the group of settling refiner defendants of
approximately $422 million (which included attorneys’ fees) plus an agreement in the future to fund costs of
treating existing wells as to which MTBE has not currently been detected but which later is detected, over four
consecutive quarters, above certain concentration levels. As MTBE is no longer used, and based on a generally
declining trend in MTBE contamination, the Company does not anticipate substantial costs associated with the
future treatment of existing wells. The Company established a $28 million accrual ($17 million after tax),
representing its allocation percentage of the settlement, in 2007 and recognized an $18 million gain ($11 million
after tax) in 2008 in connection with an insurance recovery, both of which are reflected in provision for asset
write-downs and other matters in the consolidated statements of income. During 2008, Sunoco made a cash
payment of approximately $28 million and recovered the $18 million of proceeds from the insurance settlement.
The majority of the remaining MTBE cases have been removed to federal court and consolidated for pretrial
purposes in the U.S. District Court for the Southern District of New York (MDL 1358). Discovery is proceeding
in all of these cases. One of the cases in which Sunoco is a defendant is scheduled to proceed to trial in June
2009. Sunoco recently participated in a settlement mediation relating to MTBE cases arising out of MTBE
contamination in the Fort Montgomery, NY area which included two federal cases and two state cases. Sunoco
reached a settlement with the plaintiffs, which is awaiting approval by the court. The impact of the settlement
was not material.
For the group of MTBE cases that are not covered by the settlement, there has been insufficient information
developed about the plaintiffs’ legal theories or the facts that would be relevant to an analysis of the ultimate
liability to Sunoco. Based on the current law and facts available at this time, no accrual has been established for
any potential damages at December 31, 2008 and Sunoco believes that these cases will not have a material
adverse effect on its consolidated financial position.
Conclusion
Many other legal and administrative proceedings are pending or may be brought against Sunoco arising out
of its current and past operations, including matters related to commercial and tax disputes, product liability,
antitrust, employment claims, leaks from pipelines and underground storage tanks, natural resource damage
claims, premises-liability claims, allegations of exposures of third parties to toxic substances (such as benzene or
asbestos) and general environmental claims. Although the ultimate outcome of these proceedings and other
matters identified above cannot be ascertained at this time, it is reasonably possible that some of these matters
could be resolved unfavorably to Sunoco. Management believes that these matters could have a significant
impact on results of operations for any future quarter or year. However, management does not believe that any
additional liabilities which may arise pertaining to such matters would be material in relation to the consolidated
financial position of Sunoco at December 31, 2008.
15. Minority Interests
Cokemaking Operations
Sunoco received a total of $309 million in exchange for interests in its Jewell cokemaking operations in two
separate transactions in 1995 and 2000. Sunoco also received a total of $415 million in exchange for interests in
its Indiana Harbor cokemaking operations in two separate transactions in 1998 and 2002. Sunoco did not
recognize any gain as of the dates of these transactions because the third-party investors were entitled to a
preferential return on their respective investments. In December 2006, Sunoco acquired the limited partnership
interest of the third-party investor in the Jewell cokemaking operation for $155 million and recognized a $3
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