Union Pacific 2002 Annual Report Download - page 35

9
Trucking Operations
Properties related to trucking operations consist primarily of service centers and tractor and trailer equipment. The
following table provides the number of tractors, trailers and service centers owned or leased within the trucking operations:
Equipment and Service Centers 2002 2001 2000
Owned or leased at year-end:
Tractors....................................................................................................... 6,085 5,816 5,408
Trailers ........................................................................................................ 21,597 21,504 18,586
Straight trucks ............................................................................................ 147 138 74
Automobiles and service units .................................................................. 198 191 166
Service centers............................................................................................ 203 199 166
Average age of equipment (years):
Tractors....................................................................................................... 6.4 6.4 6.6
Trailers ........................................................................................................ 10.5 9.7 10.1
Item 3. Legal Proceedings
Shareholder Litigation
As previously reported, a purported derivative action was filed by nine individuals, seven of whom are members of the
Teamsters, on behalf of the Corporation on June 21, 2001, in the Chancery Court of Shelby County, Tennessee, naming as
defendants current and certain former directors of the Corporation and various present and former officers and employees
of OTC, as well as OTC, and, as a nominal defendant, the Corporation. The derivative action alleged, among other things,
that the named defendants breached their fiduciary duties to the Corporation, wasted its assets and mismanaged OTC by
opposing the efforts of the Teamsters to organize the employees of OTC. Plaintiffs claimed that the “anti-union” campaign
allegedly waged by the defendants cost millions of dollars and caused a substantial decline in the value of OTC. On July 31,
2001, the defendants filed a motion to dismiss the action on various grounds, and on July 1, 2002, the court granted the
defendants’ motion and dismissed the derivative action on procedural grounds. The plaintiffs have filed an appeal with the
Tennessee Court of Appeals. The Corporation and the defendents will vigorously defend this appeal and any other efforts
by the plaintiffs.
Environmental Matters
As previously reported in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, a UPRR
train carrying hazardous materials derailed on May 27, 2000 near Eunice, Louisiana, resulting in the evacuation of
approximately 3,500 residents of the surrounding area and numerous claims for personal injury, property damage and
business interruption. Following the incident, forty lawsuits were filed in various courts, and thirty-eight of those cases were
consolidated in the United States District Court for the District of Western Louisiana. The remaining two cases were filed
in the State District Court in Baton Rouge, Louisiana, and are being coordinated with the federal cases. After the federal
District Court certified a class of over 20,000 potential claimants, the Railroad appealed to the Unites States Court of Appeals
for the Fifth Circuit. The plaintiffs agreed to stay the appeal to facilitate settlement negotiations, which are ongoing. While
it is not possible to predict the ultimate outcome of these proceedings, the Railroad believes it has substantial defenses.
Although losses exceed the self-insured retention amounts, the Railroad believes its insurance coverage is adequate to cover
material damage claims or settlement amounts.
As previously reported in the Corporation’s Annual Report on Form 10-K for 2001, on January 30, 2002, the Louisiana
Department of Environmental Quality (LDEQ) issued to the Railroad a notice of a proposed penalty assessment in the
amount of $195,700 in connection with the release of water potentially impacted by the derailment of a train near Eunice,
Louisiana, as discussed above. The Railroad previously met with the LDEQ regarding this matter to present documentation
indicating that no penalty should be assessed. The Railroad has filed suit against the LDEQ in Louisiana State District Court
challenging the penalty.
As previously reported in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, the
District Attorneys of Merced, Madera and Stanislaus counties in the State of California threatened to file criminal charges
against the Railroad in connection with the release of calcium oxide (lime), which leaked from an unidentified railcar between