ADT 2007 Annual Report Download - page 122

amounts that would have a material adverse effect on its financial position, results of operations or
cash flows. At this time, it is not possible to estimate the amount of loss or probable losses, if any, that
might result from an adverse resolution of these matters.
Securities Class Action Proceedings
As previously reported in our periodic filings, an action entitled Hess v. Tyco International Ltd., et
al., was filed on June 3, 2004 in the Superior Court of the State of California for the County of Los
Angeles against certain of our former directors and officers, our former auditors and Tyco. The
complaint asserts claims of fraud, negligent representation, aiding and abetting breach of fiduciary duty,
tortious interference with fiduciary relationship and conspiracy arising out of an underlying settlement
of litigation brought by shareholders in Progressive Angioplasty Systems, Inc. where the plaintiffs
received our stock as consideration. The claim seeks unspecified monetary damages and other relief.
On October 25, 2006, the Court lifted its previous order staying the case during the pendency of a
related arbitration to which Tyco was not a party. On December 26, 2006, Tyco filed a demurrer
seeking dismissal of the action on the ground that the complaint failed to allege facts sufficient to state
causes of action. Before argument could be heard on the demurrer, the plaintiffs notified the Court
that they would file an amended complaint. The amended complaint was filed on July 9, 2007. The
amended complaint asserts claims of fraud, negligent representation, aiding and abetting breach of
fiduciary duty, and breach of fiduciary duty in connection with, and subsequent to, an underlying
settlement of litigation brought by shareholders in Progressive Angioplasty Systems, Inc. where the
plaintiffs received our stock as consideration. The amended complaint alleges collective losses of not
less than $20 million and seeks compensatory and punitive damages. On September 13, 2007, Tyco filed
its answer to the complaint. The parties have also begun to engage in discovery, serving document
requests and interrogatories.
As previously reported in our periodic filings, on October 30, 2003, Stumpf v. Tyco
International Ltd. was transferred to the District Court of New Hampshire by the Judicial Panel on
Multidistrict Litigation. The complaint asserts claims against Tyco based on Section 11 of the Securities
Act of 1933, 15 U.S.C. Sec. 77(k), Section 15 of the Securities Act, 15 U.S.C. Sec. 77(o), Section 10(b)
of the Securities and Exchange Act of 1934, 15 U.S.C. Sec. 78j(b), and Sec. 20(a) of the Exchange Act,
15 U.S.C. Sec. 78t(a). In orders dated September 2, 2005 and January 6, 2005, the Court denied Tyco’s
motion to dismiss. On June 12, 2007, the Court certified a purported class consisting of ‘‘all persons or
entities who purchased TyCom stock, either pursuant to a July 26, 2000, Registration Statement and
Prospectus for TyCom’s initial public offering, or on the open market between July 26, 2000 and
December 17, 2001.’’ On June 26, 2007, Tyco and TyCom filed a Rule 23(f) Petition seeking leave to
appeal the class certification order. On September 13, 2007, the United States Court of Appeals for the
First Circuit denied Tyco’s petition.
As previously reported in our periodic filings, on November 27, 2002 the State of New Jersey, on
behalf of several state pension funds, filed a complaint, New Jersey v. Tyco International Ltd., et al., in
the United States District Court for the District of New Jersey against Tyco, our former auditors and
certain of our former officers and directors. The complaint was amended on February 11, 2005. As
against all defendants, the amended complaint asserts causes of action under Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, for common law fraud,
aiding and abetting common law fraud, conspiracy to commit fraud and negligent misrepresentation.
Claims are asserted against the individual defendants under Section 20(a) of the Securities Exchange
Act of 1934, Section 15 of the Securities Act of 1933, Section 24(d) of the New Jersey Uniform
Securities Law, Section 421-B:25(III) of the New Hampshire Uniform Securities Law, and for breaches
of fiduciary duties. Claims are also asserted against certain of the individual defendants under
Section 20A of the Securities Exchange Act of 1934, and for violation of the New Jersey RICO statute;
against Tyco under Section 12(a)(2) of the Securities Act of 1933, Section 24(c) of the New Jersey
Uniform Securities Law, Section 421-B:25(II) of the New Hampshire Uniform Securities Law, and for
30 2007 Financials