Caterpillar Said to Pay $9 Million to Resolve Tractor Suit
March 29, 2011, 4:19 PM EDTBy Jef Feeley
(Updates share prices in next-to-last paragraph.)
March 29 (Bloomberg) -- Caterpillar Inc. paid more than $9 million to settle a paralyzed worker’s lawsuit over a tractor accident that generated one of last year’s largest product- liability verdicts, people familiar with the accord said.
Caterpillar, the world’s largest bulldozer maker, agreed to resolve Alfonso Lopez’s claims that he was left a paraplegic when a defective Caterpillar earth mover suddenly began bouncing up and down on a construction site, two people familiar with the agreement said. The people spoke on the condition of anonymity because they weren’t authorized to speak publicly about the settlement.
A Texas jury awarded Lopez $56.3 million in a January 2010 trial over his spinal injuries, an amount cut by more than half by the trial judge The case was on appeal when the company decided to settle, the people familiar with the accord said.
“Caterpillar took the path of least resistance here,” said Carl Tobias, a law professor at the University of Richmond in Virginia who teaches product-liability law. “They didn’t want to spend the time and money appealing the verdict when they had no guarantees on what the outcome would be. The settlement provided certainty.”
Jim Dugan, a Caterpillar spokesman, declined to comment on the accord. “The case was dismissed, and as such, we have nothing more to add,” he said March 15 in an e-mailed statement.
Rebounding From Slump
Caterpillar, based in Peoria, Illinois, said last week that North American demand for construction equipment is rebounding from the slump that followed the crisis tied to subprime mortgages.
The company is seeing a “slow, steady increase” in demand, Chief Executive Officer Doug Oberhelm said.
In March 2010, Caterpillar officials persuaded a in state court in San Antonio to cut almost $32 million from Lopez’s award.
The jury award was the ninth-largest product-liability verdict of 2010, according to data compiled by Bloomberg. The largest was a more than $505 million verdict against Teva Pharmaceutical Industries Ltd. and Baxter International Inc. in May over the anesthetic propofol, used to sedate patients undergoing colonoscopies.
In the Texas case, Lopez contends he was using a Caterpillar Wheel Tractor 623 G Scraper to help build a subdivision north of Dallas in August 2006 when the machine “suddenly and without warning began dramatically bouncing up and down,” according to court papers.
Spinal Injuries
The scraper’s bucking caused Lopez’s seat to fail and slammed him against the machine’s frame, the papers said. Lopez, 41, suffered spinal injuries and a punctured lung in the accident and is now paralyzed from the waist down.
Lopez’s lawyers argued Caterpillar officials knew about defects in the tractors that made them move erratically and dragged their feet in addressing them.
Jurors ordered Caterpillar and Holt Texas Ltd., the dealership that sold the scraper to Lopez’s employer, to pay $15.8 million in actual damages and $40.5 million in punitive damages.
A judge reduced that award to $24.4 million after noting that Texas limits punitive-damage awards to twice any economic damage award in a case, plus $750,000.
Claims against Caterpillar and Holt were settled last year, people familiar with the agreements said. Howard Hicks, a spokesman for Holt, didn’t return calls for comment on the settlement.
Spurs Owner
Peter Holt, chairman and chief executive officer of Holt Texas, is the majority owner of the National Basketball Association’s San Antonio Spurs.
Caterpillar rose $1.14, or 1 percent, to $110.54 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have risen 18 percent this year.
The case was Lopez v. Caterpillar Inc., 2007-CI-15864, District Court for Bexar County, 224th Judicial District (San Antonio).
--With assistance from Margaret Cronin Fisk in Southfield, Michigan, and Shruti Singh in Chicago. Editors: Glenn Holdcraft, Charles Carter
To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
