Dow Chemical 2015 Annual Report Download - page 30

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While the Company expects abundant and cost-advantaged supplies of NGLs in the United States to persist for the foreseeable
future, if NGLs were to become significantly less advantaged than crude oil-based feedstocks, it could have a negative impact
on the Company’s results of operations and future investments. Also, if the Company’s key suppliers of feedstocks and energy
are unable to provide the raw materials required for production, it could have a negative impact on the Company's results of
operations.
Supply/Demand Balance: Earnings generated by the Company's products vary based in part on the balance of supply
relative to demand within the industry.
The balance of supply relative to demand within the industry may be significantly impacted by the addition of new capacity,
especially for basic commodities where capacity is generally added in large increments as world-scale facilities are built. This
may disrupt industry balances and result in downward pressure on prices due to the increase in supply, which could negatively
impact the Company's results of operations.
Litigation: The Company is party to a number of 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 the claims and lawsuits facing the Company purport to be class actions and seek damages in very large amounts. All
such claims are contested. With the exception of the possible effect of the asbestos-related liability of Union Carbide
Corporation (“Union Carbide”) and certain urethane matters, described below, it is the opinion of the Company's management
that the possibility is remote that the aggregate of all such claims and lawsuits will have a material adverse impact on the
Company's consolidated financial statements.
Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past
four decades. At December 31, 2015, Union Carbide's asbestos-related liability for pending and future claims was $437 million
($513 million at December 31, 2014) and its receivable for insurance recoveries related to the asbestos liability was $10 million
($10 million at December 31, 2014). At December 31, 2015, Union Carbide also had receivables of $51 million ($69 million at
December 31, 2014) for insurance recoveries for defense and resolution costs. It is the opinion of the Company's management
that it is reasonably possible that the cost of Union Carbide disposing of its asbestos-related claims, including future defense
costs, could have a material impact on the Company's results of operations and cash flows for a particular period and on the
consolidated financial position of the Company.
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 polyurethane chemicals, including methylene diphenyl diisocyanate,
toluene diisocyanate, polyether polyols and system house products. 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. 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 returned a damages verdict of approximately $400 million against the Company, which ultimately
was trebled by the District Court under applicable antitrust laws, less offsets from other settling defendants, resulting in a
judgment entered in July 2013 in the amount of $1.06 billion. The Company appealed this judgment to the U.S. Tenth Circuit
Court of Appeals ("Tenth Circuit" or "Court of Appeals"), and on September 29, 2014, the Court of Appeals issued an opinion
affirming the District Court judgment. On October 14, 2014, the Company filed a petition for Rehearing or Rehearing En Banc
(collectively the "Rehearing Petition") with the Court of Appeals, which was denied on November 7, 2014.
On March 9, 2015, the Company filed a petition for writ of certiorari ("Writ Petition") with the U.S. Supreme Court, seeking
judicial review by the Supreme Court and requesting that it correct fundamental errors in the Circuit Court opinion. While it is
unknowable whether or not the Supreme Court will accept the Writ Petition for review, there are several compelling reasons
why the Supreme Court should grant the Writ Petition and, if it is accepted, the Company believes it is likely that the District
Court judgment will be vacated. Specifically, it is the Company's position that the Tenth Circuit decision violates the law as
expressed by the Supreme Court as set out in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) and Comcast Corp. v.
Behrend, 133 S. Ct. 1426 (2013). The Tenth Circuit also did not follow accepted law from other federal circuits on dispositive
case issues, including legal precedent from the U.S. First, Second, Third, Fifth, Ninth and D.C. Circuit Courts. Finally, the
Company argues that the erroneous law applied by the Tenth Circuit is not supported by any other federal circuit court. In April
2015, six amici filed amicus briefs in support of the Company's Writ Petition. The parties briefing is now complete. Dow filed
its reply brief on May 22, 2015. On June 8, 2015, the Supreme Court granted a petition for a writ of certiorari in another case,
Tyson Foods, Inc. v. Bouaphakeo, PEG, et al., ("Tyson Foods") (Supreme Court No. 14-1146), which presented an issue core to
the questions presented in the Company's Writ Petition: whether class-wide damages can be determined by simply applying the
average injury observed in a sample. The Company's case was considered by the Supreme Court in conference on June 11,
2015. On June 15, 2015, the Supreme Court issued its decisions from its conference and did not rule on the Company's Writ
Petition. Subsequently, the Writ Petition has not been listed for further consideration by the Supreme Court at its weekly