Fluor Corp. is appealing a $358.9-million damage award by a St. Louis jury to 16 plaintiffs over health problems linked to a lead smelter it owned from 1981 and 1994 in southeast Missouri.
"We were very surprised by the verdict, planned to appeal immediately and believe it's probable that judgment will be overturned on appeal," Fluor CEO David T. Seaton said of the July 29 circuit court jury award during an August 4 earnings call. “The company does not believe that a loss will ultimately be incurred and therefore does not take any charge for this in the second quarter.”
Fluor stock (NYSE: FLR) was $57.39 a share on Aug. 26, down 24% from a 52-week high of $75.76 a share. The Irving, Texas, contractor recorded $20.8 billion in revenue last year. On Aug. 4, the company announced new contract awards of $9.7 billion and a backlog of $40.3 billion, both company records, in the second quarter that ended on June 30.
The jury award followed a three-month, emotionally charged trial over Fluor’s former ownership of the smelter in Herculaneum, 27 miles southwest of St. Louis. Co-defendant Doe Run Resources Corp., which separately settled with plaintiffs, took over as sole owner in 1994. Fluor had became the site owner through its 1981 acquisition of
St. Joseph Lead Co., which it sold in 1994.
The 52-acre smelter produces 125,000 tons of refined lead annually; the refined lead is used in computer screens, X-ray shields and car batteries. The smelter also produces about as much in waste slag, which is stockpiled on 24 acres on the banks of the Mississippi River.
Last year, Doe Run announced plans to shutter the 119-year-old facility, the nation's only primary lead smelter, by Dec. 31, 2013, rather than install costly equipment needed for improved emissions. The smelter releases 101,000 tons of carbon dioxide, 42,000 tons of sulfur dioxide and 30 tons of lead annually, the U.S. Environmental Protection Agency says.
The litigants, whose ages range from 11 to 26 years old, claim the smelter knowingly exposed them to toxic lead-dust pollution as they grew up, resulting in low IQ scores, hyperactivity and asthma, among other problems. They said lead is a neurotoxin especially harmful to children because it disrupts normal brain development.
This is the first negligence case to reach trial despite state and federal fines against the smelter for air, soil and water contamination involving pollutants such as lead, zinc, copper, chromium and cadmium. In 2008, federal standards for airborne lead became 10 times stricter.
The smelter, which has operated in Herculaneum since 1892, has bought out 160 nearby homes since 2002 through a volunteer buyout program. The smelter owner also has replaced contaminated soil at more than 500 homes surrounding the smelter. Four years ago, Missouri’s health department found a cluster of Lou Gehrig’s disease cases around the smelter.
Last year, Doe Run signed a federal pact requiring it to make $65 million in improvements at 10 company facilities in southeast Missouri, including an $8.1-million guarantee to clean up the Herculaneum smelter site. The company also agreed to pay $7 million in fines for federal environmental violations.
But, the soon-to-be shuttered smelter won't leave the site abandoned. In May, Doe Run announced plans for a new, $200-million lead-metal processing plant for the property, with an initial capacity of 60,000 to 90,000 tons a year.