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CONTINGENCIES AND LEGAL MATTERS | 12 Months Ended
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Dec. 31, 2016
CONTINGENCIES AND LEGAL MATTERS [Abstract] |
CONTINGENCIES AND LEGAL MATTERS | CONTINGENCIES AND LEGAL MATTERS The Company has been named, along with numerous other nonaffiliated companies, as a defendant in litigation in various states involving asbestos and/or silica. These lawsuits typically assert claims of personal injury arising from alleged exposure to asbestos and/or silica as a consequence of products purportedly distributed by the Company. In 2016, the Company was named in new lawsuits relating to asbestos involving approximately 70 new plaintiffs, while lawsuits relating to asbestos and/or silica involving approximately 80 plaintiffs were dismissed with respect to the Company, typically based on the lack of product identification. At December 31, 2016, the Company is named in cases filed on behalf of approximately 480 plaintiffs in which there is an allegation of exposure to asbestos and/or silica. The Company has denied, or intends to deny, the allegations in all of the above-described lawsuits. If a specific product distributed by the Company is identified in any of these lawsuits, the Company would attempt to exercise indemnification remedies against the product manufacturer. In addition, the Company believes that a substantial number of these claims are covered by insurance. The Company has entered into agreements with its major insurance carriers relating to the scope, coverage and costs of defense of lawsuits involving claims of exposure to asbestos. While the Company is unable to predict the outcome of these lawsuits, it believes that the ultimate resolution will not have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial position or results of operations. From time to time the Company is involved in various other legal and administrative proceedings that are incidental to its business, including claims related to product liability, general negligence, contract disputes, environmental issues, wage and hour laws, intellectual property, employment practices, regulatory compliance or other matters and actions brought by employees, consumers, competitors, suppliers or governmental entities. As a government contractor selling to federal, state and local governmental entities, the Company is also subject to governmental or regulatory inquiries or audits or other proceedings, including those related to contract administration or to pricing compliance. It is not expected that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial position or results of operations. TCPA Matter As previously disclosed, on April 5, 2013, David Davies filed a putative class action lawsuit in the Circuit Court of Cook County, Illinois and sought certification of a class of persons who may have received one or more of approximately 400,000 faxes Grainger sent in connection with a 2009 marketing campaign. The complaint alleges, among other things, that the Company violated the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005 (the “TCPA”), by sending fax advertisements that either were unsolicited and/or did not contain a valid opt-out notice. The TCPA provides for penalties of $500 to $1,500 for each noncompliant individual fax. On May 13, 2013, the Company removed the case to the Federal District Court for the Northern District of Illinois (the “District Court”). On June 27, 2014, the District Court found that Davies was not an adequate class representative. The United States Court of Appeals for the Seventh Circuit denied Davies’ petition for immediate review of the ruling. Davies subsequently moved the District Court for reconsideration of its ruling and his motion was denied on September 28, 2016. Davies may seek to pursue an appeal of the June 27, 2014, ruling at the conclusion of the District Court proceeding. On April 4, 2016, the District Court denied the Company’s motion to dismiss Davies’ individual claims and subsequently the parties filed cross-motions for summary judgment. On November 21, 2016, the District Court denied Plaintiff’s motion and granted, in part, Grainger’s motion for summary judgment. The District Court entered judgment for Grainger on Davies’ common law claim for conversion while granting partial summary judgment for Grainger on Davies’ TCPA claim, finding that Grainger had an established business relationship with Davies and that Grainger properly obtained Davies’ fax number from public directories. The District Court denied Grainger’s motion for summary judgment on the ground that Davies lacks standing to bring his TCPA claim. The District Court further held that the issue of whether the opt-out notice Grainger used on the faxes is clear and conspicuous, as required by the TCPA, is a contested issue of fact to be resolved by a jury at trial. Trial is currently set for February 5, 2018. The Company believes it has strong legal and factual defenses and intends to continue defending itself vigorously in the pending lawsuit. While the Company is unable to predict the outcome of this proceeding, the Company believes that the ultimate outcome of this matter will not have a material adverse effect on the Company’s consolidated financial position or results of operations. Unclaimed Property Grainger regularly performs unclaimed property assessments pursuant to U.S. multi-state escheat laws, which generally require entities to report and remit abandoned and unclaimed property. Failure to timely report and remit the property can result in assessments that include substantial interest and penalties, in addition to the payment of the escheat liability itself. During the fourth quarter of 2016, Grainger identified an obligation associated with unclaimed property for escheatable items for years 2008 through 2012 and estimated statutory interest costs. The aggregate balance of these unrecorded liabilities amounted to approximately $36 million ($23 million, net of tax). Operating expenses for the twelve months ended December 31, 2016, included a pre-tax charge of approximately $36 million related to this event. The Company evaluated the materiality of these unrecorded obligations quantitatively and qualitatively and concluded they were not material to any of the prior periods impacted and that correction of operating expenses as an out-of-period adjustment in the quarter ended December 31, 2016, would not be material to the Consolidated Financial Statements for the year ending December 31, 2016. Accordingly, Grainger determined not to revise previously issued financial statements.

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