In Re Molycorp, Inc.
Securities Litigation

Civil Action No. 13-Civ-5697 (PAC) (S.D.N.Y.)


Update: We are aware that some Class Members received notice of the settlement too late to submit proof of claim forms prior to the May 18 deadline. For that reason, we and Class Counsel plan to ask the Court to allow us to process and accept late-filed claims so long as they are received by us within 5 months following the original May 18 deadline.

CLASS DEFINITION: ALL PERSONS WHO PURCHASED OR ACQUIRED MOLYCORP, INC. (“MOLYCORP”) SECURITIES DURING THE PERIOD FROM FEBRUARY 21, 2012 THROUGH OCTOBER 15, 2013, INCLUSIVE (the “CLASS PERIOD”), YOU COULD RECEIVE A PAYMENT FROM A CLASS ACTION SETTLEMENT. CERTAIN PERSONS ARE EXCLUDED FROM THE DEFINITION OF THE CLASS AS SET FORTH BELOW 1

Important Dates

Revised to April 24, 2017 - Deadline to Request Exclusion (must be postmarked by this date)

Revised to April 24, 2017 - Deadline to Object (must be received by this date)

Revised to May 1, 2017 - Deadline to file a Notice of Intention to Appear at the Settlement Hearing (must be received by this date)

Revised to May 15, 2017 at 4:30 p.m. Settlement Hearing - Before the Honorable Paul A. Crotty, United States District Court Judge, at 4:30 p.m. on May 15, 2017, in Courtroom 14C of the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York

May 18, 2017 - Deadline to submit a Claim and Release Form (postmarked by this date)


PLEASE READ THE NOTICE CAREFULLY.

IF YOU WISH TO COMMENT IN FAVOR OF THE SETTLEMENT OR OBJECT TO THE SETTLEMENT, YOU MUST FOLLOW THE DIRECTIONS IN THE NOTICE.

YOUR LEGAL RIGHTS MAY BE AFFECTED BY THIS LAWSUIT.

TO RECEIVE MONEY FROM THIS SETTLEMENT, YOU MUST SUBMIT A VALID PROOF OF CLAIM AND RELEASE FORM (“CLAIM FORM”) POSTMARKED ON OR BEFORE MAY 18, 2017.

IF YOU DO NOT WISH TO PARTICIPATE IN THE SETTLEMENT, YOU MAY REQUEST TO BE EXCLUDED FROM THE SETTLEMENT BY SENDING A WRITTEN REQUEST FOR EXCLUSION THAT MUST BE POSTMARKED ON OR BEFORE APRIL 24, 2017.

IF YOU RECEIVED THE NOTICE ON BEHALF OF A SETTLEMENT CLASS MEMBER WHO IS DECEASED, YOU SHOULD PROVIDE THE NOTICE TO THE AUTHORIZED LEGAL REPRESENTATIVE OF THAT SETTLEMENT CLASS MEMBER.

YOU ARE HEREBY NOTIFIED AS FOLLOWS: 2

A proposed Settlement has been reached by the Parties in the constituent actions that make up the consolidated class action pending in the United States District Court for the Southern District of New York (the “District Court”), which was brought on behalf of the Settlement Class. The District Court has preliminarily approved the Settlement, the terms of which are set forth in the Stipulation, which is available by clicking here, and has preliminarily certified the Settlement Class for purposes of Settlement only. You have received the Notice because the Parties’ records indicate that you may be a member of the Settlement Class. The Notice is designed to inform you of your rights, how you can submit a Claim Form, and how you can comment in favor of the Settlement or object to the Settlement. If the Settlement is finally approved by the District Court, the Settlement will be binding upon you, unless you exclude yourself, even if you do not submit a Claim Form to obtain money from the Net Settlement Fund and even if you object to the Settlement.

A hearing to be held by the District Court on notice to the Settlement Class, to consider approval of the Settlement, the Plan of Allocation, and the Fee and Expense Application (the “Settlement Hearing”) will be held before the Honorable Paul A. Crotty, United States District Court Judge, at 4:30 p.m. on May 15, 2017, in Courtroom 14C of the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York.

THE FOLLOWING RECITATION DOES NOT CONSTITUTE FINDINGS OF THE COURT AND SHOULD NOT BE UNDERSTOOD AS AN EXPRESSION OF ANY OPINION OF THE COURT AS TO THE MERITS OF ANY CLAIMS OR DEFENSES BY ANY OF THE PARTIES. IT IS BASED ON CONTENTIONS OF THE PARTIES AND IS SENT FOR THE SOLE PURPOSE OF INFORMING YOU OF THE EXISTENCE OF THE LAWSUIT AND OF THE FINAL SETTLEMENT HEARING ON A PROPOSED SETTLEMENT SO THAT YOU MAY MAKE APPROPRIATE DECISIONS AS TO STEPS YOU MAY, OR MAY NOT, WISH TO TAKE IN RELATION TO THE LAWSUIT.

BACKGROUND OF THE LAWSUIT

On or about August 14, 2013, Plaintiff Macie Jurkowski commenced a securities class action in the United States District Court for the Southern District of New York against Molycorp, Constantine E. Karayanopoulos, Mark. A. Smith, Michael F. Doolan, and Kevin W. Johnson, alleging violations of §§ 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§ 78j(b) & 78t(a), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. On or about August 22, 2015, Plaintiff Gail Fialkov commenced a separate securities class action asserting similar claims against the same defendants. The complaints alleged that between August 2, 2012 and August 7, 2013, defendants issued false and misleading statements about Molycorp’s business and operations.

By Order dated April 2, 2014, the Court consolidated these actions, and appointed Gary Armstrong as Lead Plaintiff and Kirby McInerney LLP as Lead Counsel for the consolidated action (“Lead Counsel”). On May 19, 2014, Plaintiffs filed the Consolidated Class Action Complaint (“the CAC”) against Defendants Molycorp, Constantine E. Karayanopoulos, Mark. A. Smith, and Michael F. Doolan, as well as against John L. Burba and John F. Ashburn, Jr (collectively the “Defendants”).

On August 13, 2014, the CAC Defendants filed a motion to dismiss the CAC.

By Order dated March 12, 2015, the Court granted the Defendants’ motion to dismiss and, on March 18, 2015, judgment was entered for the Defendants. On April 1, 2015, Plaintiffs filed a motion for reconsideration of the March 12, 2015 Order and March 18, 2015 Judgment.

On June 25, 2015, Molycorp notified the Court that it filed a voluntary petition under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. On July 17, 2015, the Court directed the Clerk of Court to terminate the motion for reconsideration subject to reinstatement based on the disposition of Molycorp’s bankruptcy petition.

On August 17, 2015, Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit (“Court of Appeal”) from the Orders granting Defendants’ motion to dismiss the CAC, the judgment, and the Order terminating Plaintiffs’ motion for reconsideration.

By Order dated September 16, 2015, the Court of Appeal stayed the appeal under United States Bankruptcy Code § 362, 11 U.S.C. § 362. On December 2, 2015, Plaintiffs filed a motion to lift the stay as to the Settling Defendants, which the Court granted on May 6, 2016.

By Order dated May 23, 2016, the District Court denied Plaintiffs’ pending motion for reconsideration of the Court’s March 12, 2015 Order. On June 22, 2016, Plaintiffs filed a notice of appeal from this Order. Plaintiffs’ appeal was pending at the time this Settlement was reached.

By Order dated June 28, 2016, the Court of Appeal granted the Parties’ stipulation to dismiss Molycorp with prejudice and to remove Kevin Johnson from the docket.

On June 9, 2015, counsel for Plaintiffs and Settling Defendants participated in mediated settlement negotiations before former United States District Court Judge Layn Phillips (Ret.) of Phillips ADR Enterprises, P.C. The parties did not reach an agreement at the end of that mediation and continued with the litigation as described above. Following Plaintiffs’ appeal of the District Court’s denial for reconsideration of its March 12, 2015 Order, the Parties negotiated a settlement that they believe is in the best interests of their respective clients. The Settlement allow both sides to avoid the risks and cost of uncertain litigation and the uncertainty of a trial and appeals, and permits Class Members to be compensated without further delay. Plaintiffs and their counsel believe the settlement is best for all Class Members. On June 29, 2016, the Settling Parties agreed in principle to the Settlement which was thereafter memorialized in the Stipulation.

The Settling Defendants have denied the claims asserted against them in the Action and deny having engaged in any wrongdoing or violation of law of any kind whatsoever. The Settling Defendants have agreed to the Settlement solely to eliminate the burden and expense of continued litigation. Accordingly, the Settlement may not be construed as an admission of any wrongdoing by any of the Settling Defendants. The District Court has not ruled on the merits of whether the Defendants violated the securities laws, or any other laws or rules.

Plaintiffs and the Settling Defendants, and their counsel, have concluded that the Settlement is advantageous, considering the risks and uncertainties to each side of continued litigation. The Parties and their counsel have determined that the Settlement is fair, reasonable, and adequate and is in the best interests of the Settlement Class Members.

The Settlement creates a Gross Settlement Fund in the amount of $1,250,000 in cash, plus interest that accrues on the fund prior to distribution. Your recovery from the Gross Settlement Fund will depend on a number of variables, including the number of Molycorp securities that you purchased during the Class Period, and the timing of your purchases and sales. Lead Plaintiff estimates that if all eligible Claimants submit a valid Claim Form, the average distribution per damaged Molycorp common stock will be approximately $0.01 before deduction of Court-approved fees and expenses. Settlement Class Members should note, however, that this is only an estimate based on the overall number of potentially affected Molycorp securities. Settlement Class Members may recover more or less than the amount estimated herein.

Plaintiffs and the Settling Defendants do not agree on the average amount of damages per Molycorp share that would be recoverable if Plaintiffs were to have prevailed in the Action. The issues on which the Parties disagree include: (1) whether any of Defendants’ class period statements were materially false or misleading, (2) if any statements were false and misleading, whether Defendants knew or recklessly disregarded this fact, and (3) whether, and to what extent, any of Defendants’ false or misleading statements artificially inflated the price of Molycorp securities during the class period.

Plaintiffs’ Counsel, who have been prosecuting this Action on a wholly-contingent basis since its inception, have not received any payment of attorneys’ fees for their representation of the Settlement Class and they have advanced the funds to pay expenses necessarily incurred to prosecute the Action. Lead Counsel will apply to the Court for an award of attorneys’ fees for all Plaintiffs’ Counsel in the amount of 33% of the Settlement Fund. In addition, Lead Counsel will apply for reimbursement of litigation expenses (exclusive of administration costs) paid or incurred in connection with the prosecution and resolution of the claims against the Defendants, in an amount not to exceed $75,000 (which may include an application for reimbursement of the reasonable costs and expenses incurred by Lead Plaintiff directly related to its representation of the Settlement Class). Any fees and expenses awarded by the Court will be paid from the Settlement Fund. Settlement Class Members are not personally liable for any such fees or expenses. If the Settlement is approved, and Lead Counsel’s fee and expense application is granted in its entirety, the average cost per Molycorp share of these fees and expenses will be approximately $0.01.

Lead Plaintiff and the Settlement Class are being represented by Kirby McInerney LLP. Any questions regarding the Action or the Settlement should be directed to Ira Press, Esq. at Kirby McInerney LLP, 825 Third Avenue, 16th Floor, New York, NY 10022, (212) 371-6600.

YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT

Submit A Claim Form By May 18, 2017

This is the only way to be eligible to get a payment in connection with the Settlement.

Click here to download a Claim Form.

Exclude Yourself From The Settlement Class By Submitting A Written Request Postmarked No Later Than April 24, 2017

If you exclude yourself from the Settlement Class, you will not be eligible to get any payment from the Net Settlement Fund. This is the only option that allows you to be part of any other lawsuit against any of the Settling Defendants or the other Released Parties concerning the Settled Claims.

Object To The Settlement Or The Request For Fees and Expenses By Submitting A Written Objection So That It Is Received No Later Than April 24, 2017

If you do not like the proposed Settlement, the proposed Plan of Allocation, or the Fee and Expense Application, you may write to the District Court and explain why you do not like them. You cannot object to the Settlement, the Plan of Allocation, or the Fee and Expense Application unless you are a Settlement Class Member and do not exclude yourself.

Go To The Settlement Hearing On May 15, 2017 At 4:30 P.M., And File A Notice Of Intention To Appear No Later Than May 1, 2017

Filing a written objection and notice of intention to appear allows you to speak in court about the fairness of the Settlement, the Plan of Allocation, and/or the Fee and Expense Application. If you submit a written objection, you may (but do not have to) attend the hearing and speak to the District Court about your objection.

Do Nothing

If you are a member of the Settlement Class and you do not submit a Claim Form by May 18, 2017, you will not be eligible to receive any payment from the Net Settlement Fund. You will, however, remain a member of the Settlement Class, which means that you give up your right to sue about the claims that are resolved by the Settlement and you will be bound by any Judgments or Orders entered by the District Court pertaining to the class actions in the Action.



Footnotes:

  • 1. All capitalized terms that are not defined in the Notice have the meaning ascribed to them in the Stipulation of Settlement (the “Stipulation”) dated October 21, 2016, which is available here. [Return to Text]

  • 2. A copy of the Notice may be found by clicking here. [Return to Text]


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