Dow Chemical 2013 Annual Report Download - page 128

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Urethane Matters
On February 16, 2006, the Company, among others, received a subpoena from the U.S. Department of Justice ("DOJ") as part
of a previously announced antitrust investigation of manufacturers of polyurethane chemicals, including methylene diphenyl
diisocyanate, toluene diisocyanate, polyether polyols and system house products. The Company cooperated with the DOJ and,
following an extensive investigation, on December 10, 2007, the Company received notice from the DOJ that it had closed its
investigation of potential antitrust violations involving these products without indictments or pleas.
In 2005, the Company, among others, was named as a defendant in multiple civil class action lawsuits alleging a conspiracy to
fix the price of various urethane chemical products, namely the products that were the subject of the above described DOJ
antitrust investigation. These lawsuits were consolidated in the U.S. District Court for the District of Kansas (the “District
Court”) or have been tolled. On July 29, 2008, the District Court certified a class of purchasers of the products for the six-year
period from 1999 through 2004. Shortly thereafter, a series of “opt-out” cases were filed by a number of large volume
purchasers; these cases are substantively identical to the class action lawsuit, but expanded the time period to include 1994
through 1998. In January 2013, the class action lawsuit went to trial in the District Court with the Company as the sole
remaining defendant, the other defendants having previously settled. On February 20, 2013, the jury in the matter returned a
damages verdict of approximately $400 million against the Company, which would be trebled under applicable antitrust laws -
less offsets from other settling defendants - if the verdict is not vacated or otherwise set aside by the District Court. The
Company filed post-trial motions on March 5, 2013, requesting the District Court grant judgment in favor of the Company,
grant the Company a new trial and/or decertify the class.
On May 15, 2013, the District Court denied the Company's request to overturn the verdict and, under antitrust laws, tripled the
damages verdict resulting in a $1.2 billion judgment. On July 26, 2013, the District Court entered an amended judgment in the
amount of $1.06 billion. The Company is appealing this amended judgment.
In addition to the matters described above, there are two separate but inter-related matters in Ontario and Quebec, Canada, both
of which are pending a decision on class certification.
The Company has concluded it is not probable that a loss will occur and, therefore, a liability has not been recorded with
respect to these matters.
Other Litigation Matters
In addition to the specific matters described above, the Company is party to a number of other claims and lawsuits arising out of
the normal course of business with respect to commercial matters, including product liability, governmental regulation and
other actions. Certain of these actions purport to be class actions and seek damages in very large amounts. All such claims are
being contested. Dow has an active risk management program consisting of numerous insurance policies secured from many
carriers at various times. These policies often provide coverage that will be utilized to minimize the financial impact, if any, of
the contingencies described above.
Summary
Except for the possible effect of Union Carbide’s Asbestos-Related Matters and the Urethane Matters described above, it is the
opinion of the Company’s management that the possibility is remote that the aggregate of all claims and lawsuits will have a
material adverse impact on the results of operations, financial condition and cash flows of the Company.