ADT 2006 Annual Report Download - page 89

Shareholder Derivative Litigation
As previously reported in our periodic filings, an action was filed on June 7, 2002 in the Supreme
Court of the State of New York, Levin v. Kozlowski, alleging that the individually named defendants
breached their fiduciary duties, committed waste and mismanagement and engaged in self-dealing in
connection with Tyco’s accounting practices, individual board members’ use of funds, and the financial
disclosures of certain mergers and acquisitions. It is further alleged that certain of the individual
defendants converted corporate assets for their own use. Plaintiffs seek money damages. Plaintiffs
agreed to stay that action pending the resolution of the federal derivative action, which was dismissed
by the United States District Court for the District of New Hampshire on October 14, 2004; and the
appeal from that ruling was voluntarily dismissed on May 19, 2005. On June 14, 2005, the plaintiffs
resumed the Levin action. On September 22, 2005, the Company filed a motion to dismiss the
derivative complaint. On November 14, 2006, the Supreme Court of the State of New York dismissed
the complaint with prejudice.
ERISA Litigation and Investigation
As previously reported in our periodic filings, Tyco and certain of our current and former
employees, officers and directors, have been named as defendants in eight class actions brought under
the Employee Retirement Income Security Act. Two of the actions were filed in the United States
District Court for the District of New Hampshire and the six remaining actions were transferred to that
court by the Judicial Panel on Multidistrict Litigation. All eight actions have been consolidated in the
District Court in New Hampshire. The complaints purported to bring claims on behalf of the Tyco
International (US) Inc. Retirement Savings and Investment Plans and the participants therein. On
January 12, 2005, the United States District Court for the District of New Hampshire denied, without
prejudice, the Company’s motion to dismiss certain additional individual defendants from the action.
On January 20, 2005, Plaintiffs filed a motion for class certification. On January 27, 2005, the Company
answered the plaintiffs’ consolidated complaint. Also, on January 28, 2005, the Company and certain
individual defendants filed a motion for reconsideration of the Court’s January 12, 2005 order, insofar
as it related to the Tyco International (US) Inc. Retirement Committee. On May 25, 2005, the Court
denied the motion for reconsideration. On July 11, 2005, the Company and certain individual
defendants opposed plaintiffs’ motion for class certification. On August 15, 2006, the Court entered an
order certifying a class ‘‘consisting of all Participants in the Plans for whose individual accounts the
Plans purchased and/or held shares of Tyco Stock Fund at any time from August 12, 1998 to July 25,
2002.’’ On August 29, 2006, Tyco filed a petition for leave to appeal the class certification order to the
United States Court of Appeals for the First Circuit. On November 13, 2006, the Court denied Tyco’s
petition.
In addition, Tyco and certain of our current and former executives have received requests from the
United States Department of Labor for information concerning the administration of the Tyco
International (US) Inc. Retirement Savings and Investment Plans. The current focus of the
Department’s inquiry concerns losses allegedly experienced by the plans due to investments in our
shares. The Department of Labor has authority to bring suit on behalf of the plans and their
participants against those acting as fiduciaries to the plans for recovery of losses and additional
penalties, although it has not informed us of any intention to do so.
Tyco Litigation Against Former Senior Management
Tyco International, Ltd. v. L. Dennis Kozlowski, United States District Court, Southern District of New
York, No. 02-CV-7317, filed September 12, 2002, Amended April 1, 2003. As previously reported in our
periodic filings, we filed a civil complaint against our former Chairman and Chief Executive Officer for
breach of fiduciary duty and other wrongful conduct. The Company amended that complaint on
April 1, 2003. The amended complaint alleges that the defendant misappropriated millions of dollars
2006 Financials 27