AutoZone 2010 Annual Report Download - page 106

Item 3. Legal Proceedings
We are a defendant in a lawsuit entitled “Coalition for a Level Playing Field, L.L.C., et al., v. AutoZone, Inc. et
al.,” filed in the U.S. District Court for the Southern District of New York in October 2004. The case was filed by
more than 200 plaintiffs, which are principally automotive aftermarket warehouse distributors and jobbers, against
a number of defendants, including automotive aftermarket retailers and aftermarket automotive parts
manufacturers. In the amended complaint, the plaintiffs allege, inter alia, that some or all of the automotive
aftermarket retailer defendants have knowingly received, in violation of the Robinson-Patman Act (the “Act”),
from various of the manufacturer defendants benefits such as volume discounts, rebates, early buy allowances and
other allowances, fees, inventory without payment, sham advertising and promotional payments, a share in the
manufacturers' profits, benefits of pay-on-scan purchases, implementation of radio frequency identification
technology, and excessive payments for services purportedly performed for the manufacturers. Additionally, a
subset of plaintiffs alleges a claim of fraud against the automotive aftermarket retailer defendants based on
discovery issues in a prior litigation involving similar claims under the Act. In the prior litigation, the discovery
dispute, as well as the underlying claims, was decided in favor of AutoZone and the other automotive aftermarket
retailer defendants who proceeded to trial, pursuant to a unanimous jury verdict which was affirmed by the
Second Circuit Court of Appeals. In the current litigation, the plaintiffs seek an unspecified amount of damages
(including statutory trebling), attorneys' fees, and a permanent injunction prohibiting the aftermarket retailer
defendants from inducing and/or knowingly receiving discriminatory prices from any of the aftermarket
manufacturer defendants and from opening up any further stores to compete with the plaintiffs as long as the
defendants allegedly continue to violate the Act.
In an order dated September 7, 2010 and issued on September 16, 2010, the court granted motions to dismiss all
claims against AutoZone and its co-defendant competitors and suppliers. Based on the record in the prior
litigation, the court dismissed with prejudice all overlapping claims – that is, those covering the same time periods
covered by the prior litigation and brought by the judgment plaintiffs in the prior litigation. The court also
dismissed with prejudice the plaintiffs’ attempt to revisit discovery disputes from the prior litigation. Further,
with respect to the other claims under the Act, the court found that the factual statements contained in the
complaint fall short of what would be necessary to support a plausible inference of unlawful price
discrimination. Finally, the court held that the AutoZone pay-on-scan program is a difference in non-price terms
that are not governed by the Act. The court ordered the case closed, but also stated that “in an abundance of
caution the Court [was] defer[ring] decision on whether to grant leave to amend to allow plaintiff an opportunity
to propose curative amendments.” Without moving for leave to amend their complaint for a third time, four
plaintiffs filed a Third Amended and Supplemental Complaint (the “Third Amended Complaint”) on October 18,
2010. The Third Amended Complaint repeats and expands certain allegations from previous complaints, asserting
two claims under the Act, but states that all other plaintiffs have withdrawn their claims, and that, inter alia, Chief
Auto Parts, Inc. has been dismissed as a defendant. The court set no specific procedure for further response or
motion by the defendants. We anticipate that the defendants, including AutoZone, will request that the court
reject the Third Amended Complaint and/or will seek to have it dismissed.
We believe this suit to be without merit and are vigorously defending against it. We are unable to estimate a loss
or possible range of loss.
We are involved in various legal proceedings incidental to the conduct of our business. Although the amount of
liability that may result from these other proceedings cannot be ascertained, we do not currently believe that, in
the aggregate, they will result in liabilities material to our financial condition, results of operations, or cash flows.
Item 4. Reserved
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