KBR sues US Army after losing case to Oregon National Guardsmen
The US Army resists KBR’s attempt to “gobble” up more taxpayer dollars as KBR cries “fowl” and sues the US Army Corp of Engineers (USACE) after they refuse to indemnify the “turkey’s” [KBR’s] legal fees from exposure of Oregon National Guard troops and others to sodium dichromate at Qarmat Ali, Iraq. If I were the Army, I would be saying “Stick a fork in ‘em [KBR], they’re DONE!” (OK….that’s all the Thanksgiving cliche’s for now.)
On November 2, 2012, an Oregon federal jury ruled that KBR must pay $85 million to 12 Oregon National Guard members who allegedly suffered emotional distress after the company exposed them to sodium dichromate at Qarmat Ali.
Each guardsman was awarded $6.25 million in punitive damages after the jury determined that KBR “acted with reckless and outrageous indifference to a highly unreasonable risk of harm and conscious indifference to the health, safety and welfare of others,” as well as $850,000 in non-economic damages.
KBR quickly responded:
This is a jury verdict, and not a final judgment in the case. The potential KBR financial impact is unknown until a final judgment is entered by the U.S. District Court for the District of Oregon, which may differ from the jury verdict. Following the final judgment, KBR’s actions may include appealing the decision, seeking to enforce KBR’s indemnity rights under the Restore Iraqi Oil contract with the U.S. Army, and seeking reimbursement for all incurred costs for which KBR is entitled pursuant to the contract under the Federal Acquisition Regulations. The timing of the final judgment and ensuing KBR actions are unknown at this time.
The Project on Government Oversight (POGO) reported in July 2012 that KBR was informed as early as November 18, 2011 the US Army would not indemnify KBR for litigation cost resulting from chemical exposure at Qarmat Ali:
Excerpt from letter (pdf) signed by John H. Rogers-Army Contracting Officer dated November 18, 2011
KBR, as the subject matter expert in oil field issues, was responsible for assessing conditions at each site to which it was sent and taking appropriate action to prevent exposure of any personnel at the site to industrial and environmental hazards. Although the general remediation of pre-existing environmental hazards was beyond the scope of the work contemplated by the contract, it was fully within the authority of KBR to take any actions necessary to protect personnel at the site from exposure to such hazards. KBR obviously understood this, as they moved out with corrective action without receiving prior consent from the contracting officer once they identified the hazards presented by sodium dichromate at Qarmat Ali.
For all these reasons, I continue to believe that any litigation costs that KBR incurs as a result of this litigation are not covered by the classified indemnification agreement. Furthermore, as you know, the Army has taken the position that it will remain neutral in these lawsuits. Accordingly, I must again decline your request that the USACE acknowledge that any recovery will be covered by the classified indemnity agreement and request the Department of Justice to assume responsibility for defense of these suits.
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