COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2016 | |
| Commitments and Contingencies Disclosure [Abstract] | Ìý |
| COMMITMENTS AND CONTINGENCIES |
NOTE 20 - COMMITMENTS AND CONTINGENCIES
Contingencies
Litigation
We are currently a party to various claims and legal proceedings incidental to our operations. If management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable than another. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Based on currently available information, management believes that the ultimate outcome of these matters, individually and in the aggregate, will not have a material effect on our financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, additional funding requirements or an injunction. If an unfavorable ruling were to occur, there exists the possibility of a material impact on the financial position and results of operations of the period in which the ruling occurs, or future periods. However, we do not believe that any pending litigation, not covered by insurance, will result in a material liability in relation to our consolidated financial statements. Currently, we have an insurance coverage receivable to cover settlement of the following putative class action and derivative shareholder lawsuits:
Putative Class Action Lawsuits. In May 2014, alleged purchasers of our common shares filed suit in the U.S. District Court for the Northern District of Ohio against us and certain former officers and directors of the Company. The action is captioned Department of the Treasury of the State of New Jersey and Its Division of Investment v. Cliffs Natural Resources Inc., et al., No. 1:14-CV-1031. As amended, the action asserted violations of the federal securities laws based on alleged false or misleading statements or omissions during the period of March 14, 2012 to March 26, 2013, regarding operations at our Bloom Lake mine in Québec, Canada, and the impact of those operations on our finances and outlook, including sustainability of the dividend, and that the alleged misstatements caused our common shares to trade at artificially inflated prices. The parties settled this suit for $84 million and the case was dismissed on June 30, 2016. The settlement amount has been funded by insurance and will have no impact on our Statements of Unaudited Condensed Consolidated Operations and resulted in the reductions of the Insurance coverage receivable and Insured loss in the Statement of Unaudited Condensed Consolidated Financial Position by $84 million.
In June 2014, an alleged purchaser of the depositary shares issued by Cliffs in a public offering in February 2013 filed a putative class action, which is captionedÌýRosenberg v. Cliffs Natural Resources Inc., et al., No. CV-14-828140 (Cuyahoga County, Ohio, Court of Common Pleas). As amended, the suit asserted claims against us, certain current and former officers and directors of the Company, and several underwriters of the offering, alleging disclosure violations in the offering documents regarding operations at our Bloom Lake mine, the impact of those operations on our finances and outlook, and about the progress of our former exploratory chromite project in Ontario, Canada. The parties settled this suit for $10 million and the case was dismissed on April 14, 2016. The settlement amount has been funded by insurance and will have no impact on our Statements of Unaudited Condensed Consolidated Operations and resulted in the reduction of the Insurance coverage receivable and Insured loss in the Statement of Unaudited Condensed Consolidated Financial Position by $10 million.
Shareholder Derivative Lawsuits. In June and July 2014, alleged shareholders of Cliffs filed three derivative actions in the Cuyahoga County, Ohio, Court of Common Pleas asserting claims against certain current and former officers and directors of the Company. These actions, captioned Black v. Carrabba, et al., No. CV-14-827803, Asmussen v. Carrabba, et al., No. CV-14-829259, and Williams, et al. v. Carrabba, et al., No. CV-14-829499, alleged that the individually named defendants violated their fiduciary duties to the Company by, among other things, disseminating false and misleading information regarding operations at our Bloom Lake mine in Québec, Canada, and the impact of those operations on our finances and outlook, including sustainability of the dividend, failing to maintain internal controls, and failing to appropriately oversee and manage the Company. The complaints asserted additional claims for unjust enrichment, abuse of control, gross mismanagement, overpayment upon departure of certain executives, and waste of corporate assets. The parties settled this suit for $775,000 in attorneys' fees and expenses, which will be funded by insurance, and an agreement to enact or continue various corporate governance related measures. These cases were dismissed on July 7, 2016. A fourth near-identical shareholder derivative case, captioned Mansour v. Carrabba, et al., No. 16-CV-00390, had been filed in the U.S. District Court for the Northern District of Ohio and was voluntarily dismissed by the plaintiff on April 18, 2016. The resolution of these cases will have no impact on our financial position or operations.
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