LTL carrier XPO expects an approximately $35 million charge in its Q3 earnings due to a longstanding insurance lawsuit stemming from M&A activity, according to a securities filing.
The disclosure signals an end to a case that has moved back and forth in Oregon courts for over a decade and has been tied to the company’s monumental purchase of transportation conglomerate Con-way in 2015.
“The matter relates to environmental and product liability claims involving truck and part manufacturing plants of a subsidiary company of Con-way that Con-way sold to a third party in 1981, long before XPO acquired Con-way in 2015,” XPO said in its filing.
In 2012, Allianz Global Risks US Ins. Co. sued 18 insurance companies, including some that provided services for Freightliner assets, and Con-way joined the suit as an interested party, XPO previously noted in earnings reports. Con-way had foundational ties to Freightliner before Daimler acquired it in 1981.
The suit involved environmental issues at the Portland Harbor Superfund Site, and an Oregon Supreme Court decision in 2021 eventually reversed a verdict and sent it back to a trial court, per the carrier’s SEC filing. Additional proceedings were held this month.
A final judgment has not been entered, and XPO’s charge is an estimate, the carrier said Thursday.
XPO has faced several legal issues connected with its acquisition of Con-way, which at the time allowed for a rapid expansion of the company to become the second-biggest LTL carrier in North America.
Among those legal matters, XPO settled a case for $10 million in 2016 with the Justice Department for another legal issue it inherited as part of the acquisition. That case involved Con-way subsidiary Menlo Logistics allegedly overcharging the government.
XPO noted the issue involved allegations of problematic work done years before the M&A deal. Estes Express Lines and a subsidiary also paid $3 million as part of the settlement.
