Alcoa 2014 Annual Report Download - page 145

duty claims. Trial in the matter was held over eight days commencing September 22, 2009 and ending on October 1,
2009 in federal court in Knoxville, TN before the Honorable Thomas Phillips, U.S. District Court Judge.
On March 9, 2011, the court issued a judgment order dismissing plaintiffs’ lawsuit in its entirety with prejudice for the
reasons stated in its Findings of Fact and Conclusions of Law. On March 23, 2011, plaintiffs filed a motion for
clarification and/or amendment of the judgment order, which sought, among other things, a declaration that plaintiffs’
retiree benefits are vested subject to an annual cap and an injunction preventing Alcoa, prior to 2017, from modifying
the plan design to which plaintiffs are subject or changing the premiums and deductibles that plaintiffs must pay. Also
on March 23, 2011, plaintiffs filed a motion for award of attorneys’ fees and expenses. On June 11, 2012, the court
issued its memorandum and order denying plaintiffs’ motion for clarification and/or amendment to the original
judgment order. On July 6, 2012, plaintiffs filed a notice of appeal of the court’s March 9, 2011 judgment. On July 12,
2012, the trial court stayed Alcoa’s motion for assessment of costs pending resolution of plaintiffs’ appeal. The appeal
was docketed in the United States Court of Appeals for the Sixth Circuit as case number 12-5801. On August 29, 2012,
the trial court dismissed plaintiffs’ motion for attorneys’ fees without prejudice to refiling the motion following the
resolution of the appeal at the Sixth Circuit Court of Appeals. On May 9, 2013, the Sixth Circuit Court of Appeals
issued an opinion affirming the trial court’s denial of plaintiffs’ claims for lifetime, uncapped retiree healthcare
benefits. Plaintiffs filed a petition for rehearing on May 22, 2013 to which Alcoa filed a response on June 7,
2013. On September 12, 2013, the Sixth Circuit Court of Appeals denied plaintiffs’ petition for rehearing. On
December 17, 2013 the United States Supreme Court docketed the plaintiffs’ petition for writ of certiorari to the Sixth
Circuit Court of Appeals as Charles Curtis, et al., Individually and on Behalf of All Others Similarly Situated,
Petitioners v. Alcoa Inc., et al., Docket No.13-728. Alcoa’s opposition to this petition was filed on January 16, 2014
and Petitioners filed their reply on January 29, 2014. On February 24, 2014, the Supreme Court denied plaintiffs’
petition. The Supreme Court’s refusal to hear the matter ended the substantive litigation and affirmed Alcoa’s
collectively bargained cap on the Company’s contributions to union retiree medical costs.
The trial court then considered Alcoa’s request for an award of costs, which had been stayed pending resolution of the
appeal, and the plaintiffs’ request for attorneys’ fees, which had been dismissed without prejudice to refiling following
resolution of the appeal. By order dated June 26, 2014, the trial court denied plaintiff’s petition for award of attorneys’
fees and expenses. Thereafter, the plaintiffs and Alcoa agreed to dismiss their respective petitions for fees and costs.
This case has been fully resolved.
Before 2002, Alcoa purchased power in Italy in the regulated energy market and received a drawback of a portion of
the price of power under a special tariff in an amount calculated in accordance with a published resolution of the Italian
Energy Authority, Energy Authority Resolution n. 204/1999 (“204/1999”). In 2001, the Energy Authority published
another resolution, which clarified that the drawback would be calculated in the same manner, and in the same amount,
in either the regulated or unregulated market. At the beginning of 2002, Alcoa left the regulated energy market to
purchase energy in the unregulated market. Subsequently, in 2004, the Energy Authority introduced regulation no.
148/2004 which set forth a different method for calculating the special tariff that would result in a different drawback
for the regulated and unregulated markets. Alcoa challenged the new regulation in the Administrative Court of Milan
and received a favorable judgment in 2006. Following this ruling, Alcoa continued to receive the power price drawback
in accordance with the original calculation method, through 2009, when the European Commission declared all such
special tariffs to be impermissible “state aid.” In 2010, the Energy Authority appealed the 2006 ruling to the Consiglio
di Stato (final court of appeal). On December 2, 2011, the Consiglio di Stato ruled in favor of the Energy Authority and
against Alcoa, thus presenting the opportunity for the energy regulators to seek reimbursement from Alcoa of an
amount equal to the difference between the actual drawback amounts received over the relevant time period, and the
drawback as it would have been calculated in accordance with regulation 148/2004. On February 23, 2012, Alcoa filed
its appeal of the decision of the Consiglio di Stato (this appeal was subsequently withdrawn in March
2013). On March 26, 2012, Alcoa received a letter from the agency (Cassa Conguaglio per il Settore Eletrico (CCSE))
responsible for making and collecting payments on behalf of the Energy Authority demanding payment in the amount
of approximately $110 (€85), including interest. By letter dated April 5, 2012, Alcoa informed CCSE that it disputes
the payment demand of CCSE since (i) CCSE was not authorized by the Consiglio di Stato decisions to seek payment
of any amount, (ii) the decision of the Consiglio di Stato has been appealed (see above), and (iii) in any event, no
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