3M 2012 Annual Report Download - page 114
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The Company retained outside counsel to conduct an assessment of its policies, practices, and controls and to evaluate its
overall compliance with the Foreign Corrupt Practices Act (FCPA), including a review of its practices in certain other
countries and acquired entities. As part of its review, the Company has also reported to the DOJ and SEC issues arising
from transactions in other countries. In January 2013, the DOJ and SEC each notified the Company that they are terminating
their investigations into possible violations of the FCPA without taking any action or imposing any fines against the Company.
Among the reasons cited by the DOJ for closing its investigation included the Company’s voluntary disclosure and
cooperation, the Company’s thorough investigation, and the steps the Company has taken to enhance its anti-corruption
compliance program.
Other Matters
Commercial Litigation
In September 2010, various parties, on behalf of a purported class of shareholders of Cogent, Inc. (“Cogent”), commenced
three lawsuits against the Company, Cogent, and its directors in the Delaware Court of Chancery. Plaintiffs allege that 3M, in
connection with its tender offer for Cogent shares, aided and abetted the breach of fiduciary duties by Cogent directors and
seek an unspecified amount of damages. The three cases were consolidated, expedited discovery was conducted, and
Plaintiffs’ motion for a preliminary injunction to enjoin the acquisition was denied on October 1, 2010. On November 15,
2010, plaintiffs filed an amended complaint that added Cogent directors appointed by 3M, as named defendants, and
asserted additional claims of breach of fiduciary duties in connection with the acquisition and a subsequent offering period.
3M completed its acquisition of Cogent in December 2010. In March 2012, all parties to the litigation agreed to settle this
litigation for an amount that is not material to the Company. On August 30, 2012, the Court of Chancery approved the
settlement and dismissed plaintiffs’ claims.
Separately, several purported holders of Cogent shares, representing a total of approximately 5.8 million shares, have
asserted appraisal rights under Delaware law. The Company has answered the appraisal petition and is defending this
matter vigorously. Trial in Delaware occurred in November 2012; post-trial briefing is ongoing.
In October 2012, four plaintiffs filed purported class actions against Ceradyne, its directors, 3M and Cyborg Acquisition
Corporation (a direct wholly owned subsidiary of 3M) in connection with 3M’s proposed acquisition of Ceradyne. Two suits
were filed in California Superior Court for Orange County and two were filed in the Delaware Chancery Court. The suits seek
principally to enjoin the proposed acquisition of Ceradyne, and allege that the defendants breached and/or aided and abetted
the breach of their fiduciary duties to Ceradyne by seeking to sell Ceradyne through an allegedly unfair process and for an
unfair price and on unfair terms, and/or by allegedly failing to make adequate disclosures to Ceradyne stockholders
regarding the proposed acquisition of Ceradyne. The California court consolidated the two California actions. In the
Delaware cases, the plaintiffs' motions to expedite proceedings, which the defendants have opposed, was denied by the
Delaware Chancery Court. The parties reached a settlement of those matters for an amount that is not material to the
Company. The settlement papers are presently being drafted, and the settlement will be presented to the California court for
preliminary and final approval.
Separately, one Ceradyne shareholder, who purports to hold 16,656 shares, filed a petition for appraisal rights under
Delaware law.
3M filed suit against Avery Dennison Corporation in the United States District Court for the District of Minnesota in June
2010, alleging that Avery's OmniCube™ full cube retroreflective sheeting products, which are used for highway signage,
infringe a number of 3M patents. 3M’s motion to preliminarily enjoin the sales of Avery’s OmniCube retroreflective sheeting
was denied in December 2010. 3M also sought a declaratory judgment from the District Court in Minnesota that 3M's
Diamond Grade™ DG3 full cube retroreflective sheeting does not infringe two Avery patents. The District Court granted
Avery's motion to dismiss 3M's declaratory judgment suit in March 2011. 3M appealed the dismissal of the declaratory
judgment lawsuit, and in January 2012, the Federal Circuit Court of Appeals issued a decision reversing the district court and
reinstating the declaratory judgment action. Avery did not appeal this decision, and that action, including Avery’s
counterclaims against 3M for infringement of the Avery patents, is proceeding in the District Court in Minnesota. In October
2010, Avery Dennison filed a lawsuit against the Company in the United States District Court for the Central District of
California, alleging that 3M monopolized or attempted to monopolize the markets for Type XI retroreflective sheeting and for
broad high performance sheeting in violation of the Sherman Act, as well as other claims. Avery alleges that 3M manipulated
the standards-setting process of the American Society for Testing and Materials (ASTM), a private organization responsible
for creating standards for, among other things, retroreflective sheeting used for highway signage; entered into illegal and
anticompetitive contracts; and engaged in other anticompetitive acts including false advertising and disparagement. 3M’s
motion to transfer the antitrust case to the United States District Court for the District of Minnesota was granted in February
2011. 3M's patent infringement lawsuit against Avery, the declaratory judgment action against Avery (with Avery’s patent
infringement counterclaims), and Avery's antitrust suit against 3M are moving forward in the Minnesota Court.
In March 2012, the district court issued its claim construction ruling in the 3M patent case, finding in 3M's favor on 16 of
the 19 disputed terms. Fact and expert discovery in that case have concluded and the parties are awaiting oral argument