CONTINGENT LIABILITIES AND ENVIRONMENTAL RESERVES

9 Months Ended

Jul. 31, 2021

Environmental Remediation Obligations [Abstract]

CONTINGENT LIABILITIES AND ENVIRONMENTAL RESERVES

CONTINGENT LIABILITIES AND ENVIRONMENTAL RESERVES

Litigation-related Liabilities

The Company may become involved from time-to-time in litigation and regulatory matters incidental to its business, including governmental investigations, enforcement actions, personal injury claims, product liability, employment health and safety matters, commercial disputes, intellectual property matters, disputes regarding environmental clean-up costs, litigation in connection with acquisitions and divestitures, and other matters arising out of the normal conduct of its business. The Company intends to vigorously defend itself in such litigation. The Company does not believe that the outcome of any pending litigation will have a material adverse effect on its interim condensed consolidated financial statements.

The Company may accrue for contingencies related to litigation and regulatory matters if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions can occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews contingencies to determine whether its accruals are adequate. The amount of ultimate loss may differ from these estimates.

Since 2017, two reconditioning facilities in the Milwaukee, Wisconsin area that are owned by Container Life Cycle Management LLC ("CLCM"), a reconditioning joint venture of the Company, have been subject to an enforcement action conducted by federal and state governmental agencies related to potential violations of environmental laws and regulations. In 2017, the United States Environmental Protection Agency (“U.S. EPA”) and the Wisconsin Department of Natural Resources

(“WDNR”) issued notices of violations to the Company and CLCM regarding violations of certain federal and state environmental laws and regulations. The remedies being sought in these proceedings include compliance with the applicable environmental laws and regulations as being interpreted by the U.S. EPA and WDNR and monetary sanctions. The Company has cooperated with the governmental agencies in these proceedings. As of September 2, 2021, no material citations have been issued or material fines assessed with respect to any violation of environmental laws and regulations. The Company is unable to predict the outcome of these proceedings or estimate a range of reasonable possible monetary sanctions or costs associated with any remedial actions that may be required or requested by the U.S. EPA or WDNR.

In addition, on November 8, 2017, the Company, CLCM and other parties were named as defendants in a punitive class action lawsuit filed in Wisconsin state court concerning one of CLCM’s Milwaukee reconditioning facilities. The plaintiffs are alleging that odors from this facility have invaded their property and are interfering with the use and enjoyment of their property and causing damage to the value of their property. Plaintiffs are seeking compensatory and punitive damages, along with their legal fees. In June 2021, the Milwaukee County Circuit Court approved a class action settlement of these claims on a preliminary basis. The cash settlement component of $0.8 million is to be paid into a fund for the benefit of class members. CLCM has also agreed to make capital improvements in an amount up to $0.5 million to the facility, subject to certain qualifications set forth in the agreement, to further reduce odor emissions. The court is scheduled to hold a final fairness hearing in September 2021 and will either approve or deny the proposed settlement. If the court does not approve of the settlement, the Company and CLCM will vigorously defend themselves in this lawsuit; and in that case the Company would be unable to predict the outcome of this lawsuit or estimate a range of reasonably possible losses.

Environmental Reserves

As of July 31, 2021, and October 31, 2020, the Company's environmental reserves were $19.4 million and $20.2 million, respectively. These reserves are principally based on environmental studies and cost estimates provided by third parties, but also take into account management estimates. The estimated liabilities are reduced to reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of relevant costs. For sites that involve formal actions subject to joint and several liabilities, these actions have formal agreements in place to apportion the liability.

As of July 31, 2021 and October 31, 2020, the Company has accrued $11.0 million and $11.1 million respectively for the Diamond Alkali Superfund Site in New Jersey. It is possible that there could be resolution of uncertainties in the future that would require the Company to record charges that could be material to future earnings.

Aside from the Diamond Alkali Superfund Site, other environmental reserves of the Company as of July 31, 2021 and October 31, 2020 included $8.4 million and $9.1 million, respectively, for its various facilities around the world.

The Company’s exposure to adverse developments with respect to any individual site is not expected to be material. Although environmental remediation could have a material effect on results of operations if a series of adverse developments occur in a particular quarter or year, the Company believes that the chance of a series of adverse developments occurring in the same quarter or year is remote. Future information and developments will require the Company to continually reassess the expected impact of these environmental matters.