Medtronic 2015 Annual Report Download - page 135

Medtronic plc
Notes to Consolidated Financial Statements (Continued)
including attorneys’ fees and expenses that will be paid to plaintiffs’ counsel. If the settlement is finally approved by the court,
it will resolve and release all claims in all actions that were or could have been brought by Covidien shareholders challenging
any aspect of the Transactions. There can be no assurance that United States District Court for the District of Massachusetts will
approve the settlement. In such event, the proposed settlement as contemplated by the memorandum of understanding may be
terminated.
The Company has not recorded an expense related to damages in connection with the shareholder related matters because any
potential loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company cannot
reasonably estimate the range of loss, if any, that may result from these matters.
Environmental Proceedings
Covidien is involved in various stages of investigation and cleanup related to environmental remediation matters at a number of
sites. These projects relate to a variety of activities, including removal of solvents, metals and other hazardous substances from
soil and groundwater. The ultimate cost of site cleanup and timing of future cash flows is difficult to predict given uncertainties
regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup
methods.
Covidien is a successor to a company which owned and operated a chemical manufacturing facility in Orrington, Maine from
1967 until 1982, and is responsible for the costs of completing an environmental site investigation as required by the Maine
Department of Environmental Protection (MDEP). MDEP served a compliance order on Mallinckrodt LLC and United States
Surgical Corporation in December 2008. The compliance order included a directive to remove a significant volume of soils at
the site. On December 19, 2008, Covidien filed an appeal with the Maine Board of Environmental Protection (Maine Board) to
challenge the terms of the compliance order. A hearing before the Maine Board began on January 25, 2010 and concluded on
February 4, 2010. On August 19, 2010, the Maine Board modified the MDEP order and issued a final order requiring removal of
two landfills, capping of the remaining three landfills, installation of a groundwater extraction system and long-term monitoring
of the site and the three remaining landfills.
On April 3, 2014, the Maine Supreme Judicial Court affirmed the Maine Board’s compliance order. Covidien has proceeded
with implementation of the investigation and remediation at the site in accordance with the MDEP order as modified by the
Maine Board order. See “Accrued Certain Litigation Charges” within Note 1 for additional discussion.
Covidien has also been involved in a lawsuit filed in the U.S. District Court for the District of Maine by the Natural Resources
Defense Council and the Maine People’s Alliance. Plaintiffs sought an injunction requiring Covidien to conduct extensive
studies of mercury contamination of the Penobscot River and Bay and options for remediating such contamination, and to
perform appropriate remedial activities, if necessary.
On July 29, 2002, following a March 2002 trial, the District Court entered an opinion and order which held that conditions in the
Penobscot River and Bay may pose an imminent and substantial endangerment and that Covidien was liable for the cost of
performing a study of the river and bay. The District Court subsequently appointed an independent study panel to oversee the
study and ordered Covidien to pay costs associated with the study. A report issued by the study panel contains recommendations
for a variety of potential remedial options which could be implemented individually or in a variety of combinations, and
includes preliminary cost estimates for the potential remedial options, which the report describes as “very rough estimates of
cost,” ranging from $25 million to $235 million. The report indicates that these costs are subject to uncertainties, and that before
any remedial option is implemented, further engineering studies and engineering design work are necessary to determine the
feasibility of the proposed remedial options. In June of 2014, a trial was held to determine if remediation was necessary and
feasible, and, at a post-trial hearing on June 18, 2015, the Court indicated that further engineering study and engineering design
work is appropriate to determine the nature and extent of remediation in the Penobscot River and Bay. See “Accrued Certain
Litigation Charges” within Note 1 for additional discussion.
Other Matters
One of Covidien’s subsidiaries, ev3 Inc., (ev3) acquired Appriva Medical, Inc. in 2002. The acquisition agreement relating to
ev3’s acquisition of Appriva Medical contained four contingent milestone payments totaling $175 million. ev3 determined that
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