World Fuel Services 2013 Annual Report Download - page 21

Item 3. Legal Proceedings
Lac-M ´ egantic, Quebec
As described in Note 7 to the Consolidated Financial Statements – Commitments and Contingencies – Lac-M ´ egantic, Quebec, various
lawsuits have been filed against us and other third parties related to the Lac-M ´ egantic incident. In 2013, we, certain of our subsidiaries,
DPM and DPTS, along with a number of third parties, including MMA and certain of its affiliates, as well as several manufacturers and
lessors of tank cars, were named as defendants in twenty complaints filed in the Circuit Court of Cook County, Illinois. The complaints
generally allege wrongful death and negligence in the failure to provide for the proper and safe transportation of crude oil and seek
economic and compensatory damages, as well as costs. The actions were removed to the United States District Court for the
Northern District of Illinois (the ‘‘IL District Court’’) and subsequently reassigned to a single judge in the IL District Court (other than one
action that was remanded to state court prior to reassignment and another that was voluntarily dismissed by the plaintiffs). The
plaintiffs subsequently filed a motion to have these actions remanded to state court. We filed a motion in the United States District
Court for the District of Maine (the ‘‘ME District Court’’), where MMA’s bankruptcy is pending, to transfer all of these actions to that
court. The motion to transfer is currently pending before the ME District Court and the IL District Court has stayed all rulings in the
actions, including the motion to remand, until after the Maine court has ruled on the motion to transfer. We believe these claims
against us, certain of our subsidiaries, DPM and DPTS are without merit and intend to vigorously defend against such claims and
pursue any and all defenses available.
In 2013, we, certain of our subsidiaries, DPM and DPTS, along with a number of other third parties, including CPR, MMA and certain of
its affiliates, several manufacturers and lessors of tank cars, as well as the intended purchaser and certain suppliers of the crude oil,
were named as defendants in a motion filed in Quebec Superior Court to authorize the bringing of a class-action lawsuit seeking
economic, compensatory and punitive damages, as well as costs. The motion generally alleges wrongful death and negligence in the
failure to provide for the proper and safe transportation of crude oil. We believe these claims against us, certain of our subsidiaries,
DPM and DPTS are without merit and intend to vigorously defend against such claims and pursue any and all defenses available.
In 2013, the Quebec Minister for Sustainable Development, Environment, Wildlife and Parks (the ‘‘Minister’’) issued an order requiring
MMA and us to recover the spilled crude oil caused by the incident and to otherwise fully remediate the impact of the incident on the
environment. The Minister subsequently issued a modified order, to which CPR was added as a party. The requirements of the
modified order with respect to us are not materially different from the initial order (the initial order and modified order are hereinafter
collectively referred to as the ‘‘Order’’). We have filed a contestation of the Order before the Tribunal administratif du Qu ´ ebec, an
administrative body responsible for hearing such contestations, that challenges the legality and validity of the Order on various
grounds.
As a result of the Lac-M ´ egantic derailment, the Canadian Transportation Safety Board is conducting an investigation into the cause of
the derailment and the events surrounding it. In addition, the Quebec police are conducting a criminal investigation and are reported to
be coordinating with Canadian and U.S. law enforcement authorities.
Additional claims, lawsuits, proceedings, investigations and orders may be filed, commenced or issued with respect to the incident,
which may involve civil claims for damages or governmental investigative, regulatory or enforcement actions against us.
Cathay Pacific Litigation
On April 11, 2012, Cathay Pacific Airways Limited (‘‘Cathay’’) filed a writ in the High Court of the Republic of Singapore against one of
our subsidiaries, World Fuel Services (Singapore) Pte Ltd. (‘‘WFSS’’) alleging property damage and bodily injuries arising out of the
emergency landing of a Cathay aircraft in Hong Kong on April 13, 2010, which Cathay alleged was caused by contaminated fuel
supplied by WFSS. Cathay also alleged that WFSS supplied contaminated fuel to a Cathay flight originating from the same airport on
April 12, 2010. On November 16, 2012, Cathay filed a Statement of Claim in the High Court of the Hong Kong Special Administrative
Region against WFSS and PT Pertamina (Persero) (‘‘Pertamina’’), the party that supplied the subject fuel to WFSS, alleging breach of
contract and negligence. Although not specified in either the writ or the claim, Cathay was asserting damages relating to the incident of
approximately $34.0 million. Effective December 24, 2013, Cathay, WFSS and Pertamina entered into a settlement agreement
whereby Cathay, in consideration of payments from each of WFSS and Pertamina, agreed to release and forever discharge any and all
claims it may have against WFSS and Pertamina arising out of these incidents without any admission of liability by WFSS or Pertamina.
The amount due to Cathay from WFSS under the settlement agreement was not significant and fully covered by insurance. The parties
jointly filed a Notice of Discontinuance dismissing the Singapore case in January 2014 and the settlement agreement requires that the
parties take similar action to have the Hong Kong case dismissed.
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