Material Agreement - Form 8-K - Insurance News

Material Agreement – Form 8-K

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Item 1.01. Entry into a Material Definitive Agreement.

On April 12, 2024, Tyco Fire Products LP ("Tyco"), a wholly-owned, indirect subsidiary of Johnson Controls International plc (the "Company"), agreed to a settlement with a nationwide class of public water systems that detected PFAS in their drinking water systems that they allege to be associated with the use of Aqueous Film Forming Foam ("AFFF") products manufactured and sold by Tyco. Under the terms of the agreement, Tyco agreed to contribute $750 million to resolve these PFAS claims. The settlement releases these claims against Tyco, Chemguard, Inc. ("Chemguard") and other related corporate entities. This settlement was entered in connection with the previously disclosed AFFF multi-district litigation ("MDL") being overseen by the United States District Court for the District of South Carolina (the "MDL Court"). A charge for $750 million was recorded by the Company in the quarter-ended March 31, 2024.

Tyco expects to contribute an initial $250 million on or about May 25, 2024, with the remaining $500 million to be contributed six months after preliminary court approval of the settlement, which is expected to be addressed by the MDL Court in or around mid-May, 2024. Tyco has a significant amount of insurance through a number of insurers and expects to apply the proceeds recovered under its policies to cover a substantial portion of the total payment, although the specific amount and timing of any insurance recoveries are uncertain.

There are still several procedural and legal steps that must occur before the settlement is final and payments are made. The settlement is subject to approval by the MDL Court and other contingencies, and that process is expected to take several months.

The class of public water systems included in this settlement broadly includes any public water system (as defined in the settlement agreement) that has detected PFAS in its drinking water sources as of May 15, 2024. The following systems are excluded from the settlement class: water systems owned and operated by a State or the United States government; systems that have not detected the presence of PFAS as of May 15, 2024; small transient water systems; privately-owned drinking water wells; and the water system in the city of Marinette, Wisconsin (which is included only if it so requests). The settlement does not resolve claims of public water systems that request exclusion from the class ("opt out") pursuant to the process to be established by the MDL Court. It also does not resolve potential future claims of public water systems that detect PFAS in their water systems for the first time after May 15, 2024, or certain claims not related to drinking water, such as separate alleged claims relating to real property damage or stormwater or wastewater treatment. Finally, this settlement does not affect the other categories of cases that remain at issue in the AFFF MDL, such as personal injury cases, property damage cases, other types of class actions, claims brought by state or territory attorneys general, or other types of damages alleged to be related to the historic use of AFFF manufactured and sold by Tyco and Chemguard, which we describe in further detail in our most recently filed Quarterly Report on Form 10-Q for the quarter ended December 31, 2023.

The settlement does not constitute an admission of liability or wrongdoing by Tyco or Chemguard. If the MDL court does not approve the agreement or certain terms are not fulfilled, Tyco and Chemguard will continue to defend themselves in the litigation. Tyco and Chemguard also intend to continue to vigorously defend themselves in all remaining AFFF matters.

The foregoing description of the terms of the settlement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Settlement Agreement for Water Systems dated April 12, 2024 which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

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Johnson Controls International plc published this content on 12 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 April 2024 11:43:39 UTC.