Freeport-McMoRan 2013 Annual Report Download - page 114

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
112 | FREEPORT-McMoRan
committed by the directors and certain officers of FCX: two FCX
subsidiaries, PXP and certain of its directors, and MMR and certain
of its directors and officers. The actions seek as relief, among
other things, an injunction barring or rescinding both the PXP merger
and the MMR merger and requiring submission of the proposed
PXP merger and MMR merger to a vote of FCX stockholders,
damages, and attorneys’ fees and costs. On October 10, 2013, FCX
and the other defendants filed a motion to dismiss the second
amended consolidated complaint that was filed by plaintiffs on
July 19, 2013. Oral argument on the motion to dismiss is scheduled
in the Delaware Chancery Court on March 12, 2014. FCX intends
to vigorously defend itself in these matters.
Ten putative class actions challenging the MMR merger were
filed on behalf of MMR stockholders. Nine were filed in the Court
of Chancery of the State of Delaware. On January 25, 2013, the
Court of Chancery consolidated the actions into a single action,
In Re McMoRan Exploration Co. Stockholder Litigation,
No. 8132-VCN. On June 28, 2013, the parties entered into a settlement
agreement, and on October 11, 2013, the court held a hearing
to consider the evidence in support of the proposed settlement.
On October 16, 2013, the court entered an order approving
the settlement, the terms of which were not material to FCX.
One action was also filed in the Civil District Court for the Parish
of Orleans of the State of Louisiana: Langley v. Moffett et al.,
No. 2012-11904, filed December 19, 2012. On April 19, 2013, the
Louisiana Civil District Court granted defendants’ motion to stay
the action pending the resolution of the consolidated action
brought by MMR stockholders in the Delaware Court of Chancery.
As a result of the settlement of the consolidated Delaware
action, the Louisiana action will be dismissed. Each of the actions
names some or all of the following as defendants, in addition to
MMR and its directors: FCX, two FCX subsidiaries, the Gulf Coast
Ultra Deep Royalty Trust and PXP. The actions alleged that
MMR’s directors breached their fiduciary duties because they,
among other things, pursued their own interests at the expense
of stockholders and failed to maximize stockholder value
with respect to the merger, and that PXP, FCX, or both, aided and
abetted the breach of fiduciary duty by MMR’s directors. The
Delaware action also asserted claims derivatively on behalf of
MMR. The actions sought, among other things, injunctive relief
barring or rescinding the MMR merger, damages, and attorneys’
fees and costs.
Kay County Litigation. On May 23, 2012, the Board of
Commissioners of Kay County, Oklahoma, filed suit in Oklahoma
District Court against FCX and several affiliates, including
Blackwell Zinc Company, Inc. (BZC), an indirect subsidiary of FCX
that owned and operated a zinc smelter in Blackwell, Oklahoma,
from 1916 to 1974, entitled Board of Commissioners of the County
of Kay, Oklahoma v. Freeport-McMoRan Copper & Gold Inc., et al.,
United States District Court, Western District of Oklahoma, Case
No. 5:12-cv-00601-C. The suit alleged that BZC permitted large
for a particular period, depending on the nature and magnitude of
the outcome and the operating results for the period. Refer to
Note 1 for further discussion of FCX’s accounting policy for
litigation contingencies.
Asbestos Claims. Since approximately 1990, FMC and various
subsidiaries have been named as defendants in a large number of
lawsuits that claim personal injury either from exposure to
asbestos allegedly contained in electrical wire products produced
or marketed many years ago or from asbestos contained in
buildings and facilities located at properties owned or operated
by FMC affiliates, or from alleged asbestos in talc products. Many
of these suits involve a large number of codefendants. Based on
litigation results to date and facts currently known, FCX believes
there is a reasonable possibility that losses may have been
incurred related to these matters; however, FCX also believes that
the amounts of any such losses, individually or in the aggregate,
are not material to its consolidated financial statements. There
can be no assurance, however, that future developments will not
alter this conclusion.
Shareholder Litigation. Fourteen derivative actions challenging
the PXP merger and/or the MMR merger were filed on behalf of
FCX by purported FCX stockholders. Ten were filed in the Court of
Chancery of the State of Delaware and three were filed in the
Superior Court of the State of Arizona, County of Maricopa. On
January 25, 2013, the Delaware Court of Chancery consolidated
the Delaware actions into a single action, In Re Freeport-McMoRan
Copper & Gold Inc. Derivative Litigation, No. 8145-VCN. On
March 5, 2013, an additional complaint was filed in the Delaware
Court of Chancery, Stephen Blau MD Money Purchase Pension
Plan Trust v. Moffett et al., No. 8389-VCN. A motion to consolidate
that action with In Re Freeport-McMoRan Copper & Gold Inc.
Derivative Litigation is pending. On January 17, 2013, the Arizona
Superior Court consolidated two of the Arizona actions into In Re
Freeport-McMoRan Derivative Litigation, No. CV2012-018351. A
third Arizona complaint, Harris v. Adkerson et al., No. CV2013-
004163, was consolidated with the first two Arizona actions on
February 8, 2013. On March 18, 2013, the Delaware Court of
Chancery granted the stipulation made by the parties to allow the
plaintiffs in In Re Freeport-McMoRan Derivative Litigation, No.
CV2012-01835, to intervene in the consolidated Delaware action.
On October 17, 2013, the Arizona Superior Court extended the
permanent stay of the Arizona actions until March 31, 2014. The
actions name some or all of the following as defendants: the
directors and certain officers of FCX, two FCX subsidiaries, PXP
and certain of its directors, and MMR and certain of its directors
and officers. The actions allege, among other things, that the
FCX directors breached their fiduciary duties to FCX stockholders
because they, among other things, pursued their own interests
at the expense of stockholders in approving the PXP and MMR
mergers. The complaints also allege that some or all of the
following parties aided and abetted the wrongful acts allegedly