SMITHFIELD FOODS INC 10-Q

ITEM 1. LEGAL PROCEEDINGS Other than the following matters, there have been no material changes with respect to the legal proceedings disclosed in our Annual Report on Form 10-K for the fiscal year ended April 28, 2013 , nor have any significant new matters arisen during the six months ended October 27, 2013 . North Carolina Nuisance Litigation In July, August and September 2013, 25 complaints were filed in the Superior Court of Wake County, North Carolina by 479 individual plaintiffs against Smithfield and our wholly owned subsidiary, Murphy-Brown. The complaints relate to operations on approximately 11 company-owned and 79 contract farms. All 25 complaints include causes of action for temporary nuisance, negligence, and negligent entrustment and seek recovery of an unspecified amount of compensatory and punitive damages, attorneys’ fees, costs and pre- and post-judgment interest. Smithfield and Murphy-Brown have filed Motions for Change of Venue, to Dismiss Plaintiffs’ Negligent Entrustment Claim, and for a More Definite Statement in all 25 cases. All 25 complaints stem from requests for pre-litigation mediation of farm nuisance disputes filed in early July 2013 in Wake County, North Carolina. Plaintiffs’ counsel have filed pre-litigation mediation notices on behalf of approximately 334 additional claimants who have not filed complaints. Approximately 224 additional potential claimants have threatened to bring claims but not initiated any formal legal process. The Company believes that the claims are unfounded and intends to defend the suits vigorously. Legal Proceedings Regarding the Merger As previously disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended July 28, 2013, a putative class action was filed in the United States District Court Eastern District of Virginia ( Payne v. Smithfield Foods, et al. , 1:13-cv-00761-LMB-IDD) against the Company, certain of its officers and directors, and Merger Sub. The complaint alleged that the Company officers and directors named in the suit breached their fiduciary duties to the Company's shareholders in connection with the Merger, that the Company and Merger Sub aided and abetted in that breach, and that all defendants violated Rule 14(a) of the Securities Exchange Act of 1934, as amended. The parties to the litigation have submitted a settlement agreement to the court for approval. Should the court approve the settlement agreement, the action would be dismissed with prejudice. The settlement agreement notes that the Company made supplemental disclosures in its definitive proxy statement to its shareholders on the Merger and obligates Smithfield to pay the legal fees and expenses of plaintiff's counsel upon award, if any, by the court. A settlement hearing will be held on January 31, 2014. ITEM 1A. RISK FACTORS There have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended April 28, 2013 . 40