Barnes and Noble 2010 Annual Report Download - page 60

the plaintiff filed a petition under Federal Rule of Civil
Procedure 23(f) with the Ninth Circuit seeking permission
to file an interlocutory appeal of the certification denial.
The Ninth Circuit denied plaintiff’s petition on April 15,
2010. The parties are now exploring a negotiated resolution
of Hostetter’s remaining individual claims.
Minor v. Barnes & Noble Booksellers, Inc. et al.
On May 1, 2009, a purported class action complaint was
filed against B&N Booksellers, Inc. in the Superior Court
for the State of California alleging wage payments by
instruments in a form that did not comply with the require-
ments of the California Labor Code, allegedly resulting
in impermissible wage payment reductions and calling
for imposition of statutory penalties. The complaint also
alleges a violation of the California Labor Code’s Private
Attorneys General Act and seeks restitution of such alleg-
edly unpaid wages under California’s unfair competition
law, and an injunction compelling compliance with the
California Labor Code. The complaint alleges two sub-
classes of 500 and 200 employees, respectively (there may
be overlap among the subclasses), but contains no allega-
tions concerning the number of alleged violations or the
amount of recovery sought on behalf of the purported class.
On June 3, 2009, B&N Booksellers filed an answer denying
all claims. Discovery concerning purported class member
payroll checks and related information is ongoing.
In re Barnes & Noble Stockholder Derivative Litigation
(Consolidated Cases Formerly Captioned Separately as:
Louisiana Municipal Police Employees Retirement System
v. Riggio et al.; Southeastern Pennsylvania Transportation
Authority v. Riggio et al.; City of Ann Arbor Employees’
Retirement System v. Riggio et al.; Louise Schuman v. Riggio
et al.; Virgin Islands Government Employees’ Retirement
System v. Riggio et al.; Electrical Workers Pension Fund,
Local 103, I.B.E.W. v. Riggio et al.)
Between August 17, 2009 and August 31, 2009, five putative
shareholder derivative complaints were filed in Delaware
Chancery Court against the Company’s directors. The
complaints generally allege breach of fiduciary duty, waste
of corporate assets and unjust enrichment in connection
with the Company’s entry into a definitive agreement to
purchase Barnes & Noble College Booksellers, which was
announced on August 10, 2009 (the Transaction). The
complaints generally seek damages in favor of the Company
in an unspecified amount; costs, fees and interest; dis-
gorgement; restitution; and equitable relief, including
injunctive relief. On September 1, 2009, the Delaware
Chancery Court issued an Order of Consolidation con-
solidating the five lawsuits (the Consolidated Cases) and
directing plaintiffs to file a consolidated amended com-
plaint. In a related development, on August 27, 2009, the
Company received a demand pursuant to Delaware General
Corporation Law, Section 220, on behalf of the Electrical
Workers Pension Fund, Local 103, I.B.E.W., a shareholder,
seeking to inspect certain books and records related to the
Transaction. The Company provided this shareholder with
certain documents, on a confidential basis, in response to
its demand. On September 18, 2009, this shareholder filed
a shareholder derivative complaint in Delaware Chancery
Court against certain of the Company’s directors alleging
breach of fiduciary duty and unjust enrichment and seeking
to enjoin the consummation of the Transaction. At that
time, this shareholder also filed a motion for expedited
proceedings. At a hearing held on September 21, 2009, the
court denied plaintiff’s request for expedited proceedings.
On October 6, 2009, the plaintiffs in the Consolidated
Cases filed a motion seeking to consolidate the later-filed
sixth case with the Consolidated Cases. Also on October 6,
2009, the plaintiff in the sixth case filed a separate motion
seeking to consolidate its case with the Consolidated Cases
and appoint it as co-lead plaintiff and to appoint its counsel
as co-lead counsel. On November 3, 2009, a Consolidated
Complaint was filed in the Consolidated Cases. The
Company and defendants sought an extension of their time
to answer or otherwise respond to the complaints while the
plaintiffs’ respective consolidation motions were pending.
On December 11, 2009, the court entered an order consoli-
dating all actions and appointing co-lead counsel for plain-
tiffs. Plaintiffs designated the Consolidated Complaint
filed on November 3, 2009 to be the operative Complaint.
The Company and defendants filed motions to dismiss the
Consolidated Complaint on January 12, 2010. On January
29, 2010, plaintiffs informed defendants that they would
amend their Complaint rather than respond to defen-
dants’ motions to dismiss. Plaintiffs filed an Amended
Consolidated Complaint on March 16, 2010. The Company
and defendants filed motions to dismiss the Amended
Consolidated Complaint on April 30, 2010. Plaintiffs filed
their response to the motion to dismiss on June 2, 2010.
Spring Design Inc. v. Barnesandnoble.com LLC
On November 2, 2009, plaintiff filed a complaint against
Barnes & Noble.com in the United States District Court for
the Northern District of California alleging breach of non-
disclosure agreement, misappropriation of trade secrets
and unfair competition in connection with Barnes & Noble.
com’s development of its NOOK™ eReader. On November
11, 2009, plaintiff filed its first amended complaint and
58 Barnes & Noble, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued