UPDATE 1-Texas jury rejects ex-KBR employee Iraq rape claim

Fri Jul 8, 2011 6:55pm EDT

(Adds background, KBR statement)

HOUSTON/SAN FRANCISCO, July 8 (Reuters) - A Texas jury rejected claims brought by a woman who said she was raped by fellow employees while working for KBR Inc (KBR.N) in Iraq six years ago, according to a KBR spokeswoman.

In a case that received attention across the United States, Jamie Leigh Jones alleged she was drugged and raped by KBR employees working as firefighters in Baghdad and accused the company of tolerating abusive behavior and sexual harassment.

But a company spokeswoman said on Friday the federal jury in Houston found in favor of KBR and a former KBR firefighter also named in the lawsuit "on all counts."

Jones had sought compensatory and punitive damages from KBR, an engineering group that was once the biggest U.S. military contractor in Iraq, and Halliburton Co (HAL.N), KBR's parent until its 2007 separation.

The lawyer for Jones was not immediately available for comment.

The Jones case generated many headlines because of other KBR controversies in Iraq and the fact that Halliburton and KBR fought to settle the case through arbitration, as specified in her contract.

KBR asked the U.S. Supreme Court to consider its case for arbitration over a court case, before withdrawing that petition last year.

"Since 2005, KBR has been subjected to a continuing series of lies perpetuated by the plaintiff in front of Congress, in the media, and to any audience wishing to lend an ear to this story," KBR said in a statement.

"The outcome of this jury trial as judged by her peers is the same result that the State Department got in the 2005; that the Justice Department found in 2008," KBR added.

The case in U.S. District Court, Southern District of Texas is Jamie Leigh Jones v. Halliburton Company d/b/a KBR Kellogg Brown & Root et al., 07-2719.

Critics of the company note the Jones case was not an isolated one. A former contractor working for KBR pleaded guilty to sexually assaulting a female co-worker in Iraq in 2008, and was sentenced to two years in prison. (Reporting by Anna Driver in Houston and Braden Reddall and Dan Levine in San Francisco; editing by Andre Grenon, Bernard Orr)