Alcoa 2013 Annual Report Download - page 54

between Alcoa and Alumina Limited on an 85% and 15% basis, respectively, but this would occur only if a settlement
is reached with the DOJ and the SEC regarding their investigations. As such, the $85 million civil settlement in 2012
and all legal costs associated with the civil suit and government investigations incurred prior to 2013 were allocated on
a 60% and 40% basis in the respective periods on Alcoa’s Statement of Consolidated Operations. As a result of the
resolutions of the government investigations, the $384 million charge and legal costs incurred in 2013 were allocated
on an 85% and 15% basis per the allocation agreement with Alumina Limited. Additionally, the $85 million civil
settlement from 2012 and all legal costs associated with the civil suit and government investigations incurred prior to
2013 were reallocated on the 85% and 15% basis.
Derivative Actions
As previously reported, on July 21, 2008, the Teamsters Local #500 Severance Fund and the Southeastern
Pennsylvania Transportation Authority filed a shareholder derivative suit in the civil division of the Court of Common
Pleas of Allegheny County, Pennsylvania against certain officers and directors of Alcoa claiming breach of fiduciary
duty, gross mismanagement, and other violations. This derivative action stems from the civil litigation brought by Alba
against Alcoa, AWA, Victor Phillip Dahdaleh, and others, and the subsequent investigation of Alcoa by the DOJ and
the SEC with respect to Alba’s claims. This derivative action claims that the defendants caused or failed to prevent the
matters alleged in the Alba lawsuit. The director defendants filed a motion to dismiss on November 21, 2008. On
September 3, 2009, a hearing was held on Alcoa’s motion and, on October 12, 2009, the court issued its order denying
Alcoa’s motion to dismiss but finding that a derivative action during the conduct of the DOJ investigation and
pendency of the underlying complaint by Alba would be contrary to the interest of shareholders and, therefore, stayed
the case until further order of the court. This derivative action is in its preliminary stages, and the Company is unable to
reasonably predict an outcome or to estimate a range of reasonably possible loss.
As previously reported, on March 6, 2009, the Philadelphia Gas Works Retirement Fund filed a shareholder derivative
suit in the civil division of the Court of Common Pleas of Philadelphia County, Pennsylvania. This action was brought
against certain officers and directors of Alcoa claiming breach of fiduciary duty and other violations and is based on
the allegations made in the previously disclosed civil litigation brought by Alba against Alcoa, AWA, Victor Phillip
Dahdaleh, and others, and the subsequent investigation of Alcoa by the DOJ and the SEC with respect to Alba’s claims.
This derivative action claims that the defendants caused or failed to prevent the conduct alleged in the Alba lawsuit. On
August 7, 2009, the director and officer defendants filed an unopposed motion to coordinate the case with the
Teamsters Local #500 suit, described immediately above, in the Allegheny County Common Pleas Court. The
Allegheny County court issued its order consolidating the case on September 18, 2009. Thereafter, on October 31,
2009, the court assigned this action to the Commerce and Complex Litigation division of the Allegheny County Court
of Common Pleas and on November 20, 2009, the court granted defendants’ motion to stay all proceedings in the
Philadelphia Gas action until the earlier of the court lifting the stay in the Teamsters derivative action or further order
of the court in this action. This derivative action is in its preliminary stages and the Company is unable to reasonably
predict an outcome or to estimate a range of reasonably possible loss.
As previously reported, on June 19, 2012, Catherine Rubery (plaintiff) filed a shareholder derivative suit in the United
States District Court for the Western District of Pennsylvania against William Rice, Victor Dahdaleh and current and
former members of the Alcoa Board of Directors (collectively, defendants) claiming breach of fiduciary duty and
corporate waste. This derivative action stems from the previously disclosed civil litigation brought by Alba against
Alcoa, and the subsequent investigation of Alcoa by the DOJ and the SEC described above. This derivative action
claims that defendants caused or failed to prevent illegal bribes of foreign officials, failed to implement an internal
controls system to prevent bribes from occurring and wasted corporate assets by paying improper bribes and incurring
substantial legal liability. Furthermore, plaintiff seeks an order of contribution and indemnification from defendants.
The derivative action is in its preliminary stage and Alcoa is unable to reasonably predict an outcome or to estimate a
range of reasonably possible loss.
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