XPO expects $35 million charge due to legacy insurance litigation from acquisition
XPO expects to record a charge of approximately $35 million in its third-quarter earnings to address a long-running insurance lawsuit stemming from its 2015 acquisition of Con-way. The case involves environmental and product liability claims related to a truck and parts manufacturing plant sold by a Con-way subsidiary in 1981, which has been litigated in Oregon state court for over ten years. A final judgment has not yet been rendered, and the charge is an estimate.
Less-than-truckload (LTL) carrier XPO expects to record a charge of approximately $35 million in its third-quarter earnings to address a long-running insurance lawsuit stemming from merger activity,according to a securities filing。
This disclosure marks the case nearing its conclusion. The case, which has been litigated in Oregon state court for over a decade, is closely tied to the company's massive acquisition of transportation group Con-way in 2015.
"The matter involves environmental and product liability claims related to a truck and parts manufacturing plant of a Con-way subsidiary, which was sold by Con-way to a third party in 1981, well before XPO's acquisition of Con-way in 2015," XPO said in the filing.
In 2012, Allianz Global Risks US Ins. Co. sued 18 insurance companies, including several that provided services for Freightliner assets, with Con-way joining as an interested party, as XPO previously disclosed inearnings reports. Con-way has a foundational connection to Freightliner, which was acquired by Daimler in 1981.
Thelawsuit involves environmental issues at the Portland Harbor Superfund site, and the Oregon Supreme Court in a 2021 ruling overturned the original decision and remanded the case to the trial court, according to the carrier's SEC filing. Additional hearings were held this month.
A final judgment has not yet been made, and XPO said Thursday that the charge is an estimate.
XPO faces multiple legal issues related to the Con-way acquisition, which at the time rapidly expanded the company, making it thesecond-largestLTL carrier in North America.
Among these legal matters, XPO reached a settlement with the U.S. Department of Justice in 2016 over legal issues inherited from another acquisition, for$10 million. That case involved allegations that Con-way subsidiary Menlo Logistics overbilled the government.
XPOnotedthat the issue involved alleged misconduct from years before the merger transaction. Estes Express Lines and one of its subsidiaries also paid$3 millionas part of the settlement.