ADT 2008 Annual Report Download - page 130

Proceedings Not Covered by the Settlement
As previously reported in our periodic filings, a number of lawsuits related to alleged misconduct
of our former management have been filed against Tyco. Because the plaintiffs in these matters were
not similarly situated to the members of the class settlement described above, these matters were not
included in that settlement. The plaintiffs in these matters assert various claims based primarily on
alleged violations of federal securities laws, fraud and negligence. These matters consist of Hess v. Tyco
International Ltd., et al. an action related to Tyco’s indirect purchase of Progressive Angioplasty
Systems, Inc. in 1998, Stumpf v. Tyco International Ltd., an action related to the initial public offering of
TyCom in 2000, which is further described below, Sciallo v. Tyco International Ltd., et al., an action
related to Tyco’s acquisition of U.S. Surgical in 1998, Jasin v. Tyco International Ltd., et al., an action
brought by a pro se plaintiff, and Hall v. Kozlowski, et al, an action brought by a pro se plaintiff relating
to the plaintiff’s employment, 401(k), pension plans and ownership of Tyco common stock. In
November 2008, the Company agreed to settle the Sciallo matter and the Hess matter for
approximately $2 million and $16 million, respectively. Of these amounts, the Company is responsible
for an aggregate of approximately $5 million under the terms of the Separation and Distribution
Agreement. Each of the other matters described above is in the pre-trial stages of litigation and Tyco
intends to vigorously defend each matter.
As previously reported in our periodic filings, Stumpf v. Tyco International Ltd. is a class action
lawsuit that asserts complaints against Tyco, among others, based on alleged violations of the disclosure
provisions of the federal securities laws. The matter arises from Tyco’s July 2000 initial public offering
of common stock of TyCom Inc, and alleges that the TyCom registration statement and prospectus
relating to the sale of common stock were inaccurate, misleading and failed to disclose facts necessary
to make the registration statement and prospectus not misleading. The complaint further alleges the
defendants violated securities laws by making materially false and misleading statements and omissions
concerning, among other things, executive compensation, TyCom’s business prospects and Tyco’s and
TyCom’s finances. The matter is currently in the pre-trial stages of litigation and Tyco intends to
vigorously defend this matter.
ERISA Litigation
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 (‘‘ERISA’’). 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 consolidated complaint purports to bring claims on behalf
of our Retirement Savings and Investment Plans and the participants therein and alleges that the
defendants breached their fiduciary duties under ERISA by negligently misrepresenting and negligently
failing to disclose material information concerning, among other things, the following: related-party
transactions and executive compensation; our mergers and acquisitions and the accounting therefor, as
well as allegedly undisclosed acquisitions; and misstatements of our financial results. The complaint also
asserts that the defendants breached their fiduciary duties by allowing the Plans to invest in our shares
when it was not a prudent investment. The complaints seek recovery of alleged plan losses arising from
alleged breaches of fiduciary duties. 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.’’ This matter
remains in the pre-trial stages of litigation and Tyco intends to vigorously defend it.
2008 Financials 27