Item 8.01. Other Events
In 2012 and 2013, the Board of Directors of Medtronic, Inc. (the "Company")
received several shareholder demands requesting the Company to pursue claims for
breach of fiduciary duty and other related claims against certain current and
former directors and officers of the Company. In addition, several shareholder
derivative actions were filed against a number of current and former directors
and officers of the Company in Minnesota state court and U.S. District Court for
the District of Minnesota. The shareholder demands and derivative actions made
various allegations, including allegations that the Company, with the knowledge
and complicity of its officers and directors, designed and executed a scheme to
evade the Federal Drug Administration's prohibition against off-label promotion
of medical devices in order to increase sales of INFUSE®, one of the Company's
products. The shareholder demands and derivative actions also included
allegations that various officers and directors breached their fiduciary duties
to the Company by causing it to conspire with physicians to underreport adverse
events in studies involving INFUSE®.
In response to the shareholder demands and derivative lawsuits, the Board of
Directors of the Company established a Special Litigation Committee (the "SLC")
on August 23, 2012. The SLC consisted of a retired Minnesota state court judge
and a corporate law professor at the University of Minnesota Law School. The SLC
was given the power and authority to investigate the claims made in the
shareholder demands and derivative lawsuits, analyze the legal rights and
remedies of the Company, and determine whether any rights and remedies should be
pursued. For approximately 18 months, the SLC conducted an exhaustive
independent investigation of the claims made in the shareholder demands and
derivative lawsuits to decide whether the shareholder claims were meritorious.
On May 30, 2014, the SLC issued a report (the "SLC Report") to the Company's
Board of Directors. In the SLC Report, the SLC concluded that the claims against
the Company's officers and directors in the shareholder demand letters and
derivative lawsuits were without merit and that it would not be in the best
interests of the Company to pursue such claims.
On June 4, 2014, the SLC filed a motion for approval of its findings and for
dismissal with prejudice of the consolidated shareholder derivative actions
pending in Hennepin County Court, Fourth Judicial District, State of Minnesota.
The consolidated cases are captioned Daniel Himmel, derivatively on behalf of
Medtronic, Inc. v. Gary L. Ellis, et al. The motion included a copy of the SLC
Report. The hearing with respect to the motion made by the SLC is scheduled for
July 2, 2014.
The SLC has also indicated that it intends to file a similar motion on June 14,
2014 seeking the dismissal of a similar derivative action pending in the U.S.
District Court for the District of Minnesota captioned Charlotte Kokocinski,
derivatively on behalf of Medtronic, Inc. v. Arthur D. Collins, Jr., et al.
A copy of the SLC Report is attached as Exhibit 99.1 to this Current Report on