Dow Chemical 2015 Annual Report Download - page 35

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The Dow Chemical Company and Subsidiaries
PART I, Item 3. Legal Proceedings.
LEGAL PROCEEDINGS
Asbestos-Related Matters of Union Carbide Corporation
Union Carbide Corporation (“Union Carbide”), a wholly owned subsidiary of the Company, is and has been involved in a large
number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege
personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages.
The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing
products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former
Union Carbide subsidiary, Amchem Products, Inc.
It is the opinion of Dow’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.
For additional information, see Part II, Item 7. Other Matters, Asbestos-Related Matters of Union Carbide Corporation in
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 15 to the Consolidated
Financial Statements.
Environmental Matters
In a meeting on July 22, 2015, Rohm and Haas Company and Rohm and Haas Chemicals LLC (collectively, “ROH”), wholly
owned subsidiaries of the Company, were informed by representatives of the U.S. Environmental Protection Agency (“EPA”)
of the EPA’s intent to seek injunctive relief and assess a civil penalty in excess of $100,000 for alleged violations of the General
Duty Clause of the Clean Air Act at ROH’s Louisville, Kentucky, site. Discussions between ROH and the EPA are ongoing.
Dow Benelux B.V. ("Dow Benelux"), a Netherlands-based wholly owned subsidiary of the Company, received a summons
dated July 20, 2012 from the Public Prosecutor in The Netherlands to appear before the criminal section of the District Court in
Breda, The Netherlands (which venue was subsequently changed to the District Court of Middelburg) (the "Court"). The
allegations contained in the summons relate to seven process safety incidents and environmental spills that occurred between
2005 and 2008 at Dow Benelux's Terneuzen manufacturing facility. The Public Prosecutor alleges that each of the incidents
constitutes a violation of certain Netherlands safety procedures and environmental regulations, notably Section 5 of the Major
Accidents Decree 1999 and/or Section 18.18 of the Environmental Act. In addition, five of the incidents allegedly also
constitute a violation of Section 173a of the Dutch Criminal Code. The trial in the first instance on this matter was held from
January 14, 2014 through February 7, 2014. On March 24, 2014, the Court issued a guilty verdict and imposed a
Euro 1.8 million fine against Dow Benelux. The Court's judgment is subject to an appeal with the Court of Appeal in Den
Bosch ("Court of Appeal"), and Dow Benelux has filed a notice of appeal. A new and independent trial will be held by the
Court of Appeal. As a first procedural step in the appeal, a pre-trial hearing was held on January 18, 2016, to discuss scheduling
of the proceedings on the merits, which Dow Benelux expects to occur during the second half of 2016.
Derivative Litigation
On March 6, 2013, Jeffrey Kaufman ("Kaufman"), purportedly in the name of and on behalf of the Company, commenced an
action in the United States District Court for the District of Delaware (the "Court") against the Company and certain officers
and directors of the Company (the "Defendants") alleging, among other things, that between 2007-2012, Defendants violated
federal securities and state law surrounding equity awards and disclosures involving the 1988 Award and Option Plan and the
2012 Stock Incentive Plan ("2012 Plan") (collectively, the "Plans") with respect to the tax-deductible nature of certain awards
under the Plans. The relief sought in this litigation includes the recovery of certain equity awards and injunctive relief, as well
as attorneys' fees. The Company first moved to dismiss the complaint on May 14, 2013 and, in response to the subsequent
filing by Kaufman of an amended complaint, the Company filed an amended motion to dismiss on August 30, 2013. On
September 30, 2014, the Court entered an order in favor of the Defendants dismissing the complaint in its entirety. On
November 18, 2014, the Court granted Plaintiff’s motion for reargument on one count, alleging that the 2012 proxy failed to
include the approximate number of persons eligible to receive awards under the 2012 Plan. The Company believes the lawsuit
to be without merit, has filed an answer on the remaining count, and will continue to vigorously defend the lawsuit.