Blackberry 2016 Annual Report Download - page 105

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated
37
The Company does not provide for claims for which the outcome is not determinable or claims for which the amount of
the loss cannot be reasonably estimated. Any settlements or awards under such claims are provided for when reasonably
determinable.
As of February 29, 2016, there are no claims outstanding for which the Company has assessed the potential loss as both
probable to result and reasonably estimable, therefore no accrual has been made. Further, there are claims outstanding for
which the Company has assessed the potential loss as reasonably possible to result, however an estimate of the amount of
loss cannot reasonably be made. There are many reasons that the Company cannot make these assessments, including,
among others, one or more of the following: the early stages of a proceeding does not require the claimant to specifically
identify the patent that has allegedly been infringed; damages sought are unspecified, unsupportable, unexplained or
uncertain; discovery has not been started or is incomplete; the facts that are in dispute are highly complex (e.g., once a
patent is identified, the analysis of the patent and a comparison to the activities of the Company is a labour-intensive and
highly technical process); the difficulty of assessing novel claims; the parties have not engaged in any meaningful
settlement discussions; the possibility that other parties may share in any ultimate liability; and the often slow pace of
litigation.
Though they do not meet the test for accrual described above, the Company has included the following summaries of
certain of its legal proceedings that it believes may be of interest to its investors.
Between October and December 2013, several purported class action lawsuits and one individual lawsuit were filed
against the Company and certain of its former officers in various jurisdictions alleging that during the period from
September 27, 2012 through September 20, 2013, the Company and certain of its officers made materially false and
misleading statements regarding the Company’s financial condition and business prospects and that certain of the
Company’s financial statements contain material misstatements. The individual lawsuit was voluntarily dismissed. In
respect of the putative U.S. class actions, four motions for the appointment of lead plaintiff were filed. On March 14,
2014, the Judge consolidated the proceedings in the U.S. District Court for the Southern District of New York. On May
27, 2014, the Consolidated Amended Class Action Complaint was filed. The Company filed a motion to dismiss the
complaint. On March 13, 2015, the court issued an order granting the Company’s motion to dismiss. The plaintiffs filed a
motion for reconsideration and for leave to file an amended complaint, which was denied by the court on November 13,
2015. The plaintiffs filed a notice of appeal on December 11, 2015 and filed their opening brief on February 24, 2016.
The Company filed its opposition brief on March 30, 2016. In respect of the putative Ontario class action, the plaintiffs
filed a motion for certification and leave to pursue statutory misrepresentation claims. On November 16, 2015, the
Ontario Superior Court of Justice issued an order granting the plaintiffs’ motion for leave to file a statutory claim for
misrepresentation. On December 2, 2015, the Company filed a notice of motion seeking leave to appeal this ruling. On
January 22, 2016, the court postponed the hearing on the plaintiffs’ certification motion to an undetermined date after
asking the Company to file a motion to dismiss the claims of the U.S. plaintiffs for forum non conveniens. Proceedings
are ongoing.
On October 12, 2015, a group of Good’s institutional investors filed a putative class action lawsuit on behalf of Good’s
common shareholders against members of Good’s former board of directors (the “GTC Directors”) related to the
Company’s acquisition of Good (the “GTC Lawsuit”). The plaintiffs allege that the GTC Directors breached their
fiduciary duty by engaging in a self-interested transaction that benefited the preferred shareholders at the expense of the
common shareholders. The plaintiffs are seeking monetary damages, as well as rescission of the merger agreement
between Good and the Company. While neither Good nor the Company are parties to the GTC Lawsuit, Good has certain
obligations to indemnify the defendants and is providing a defense. On October 29, 2015, Good filed a complaint alleging
that the plaintiffs breached their contractual obligations under a voting agreement providing that, in the event of a sale
transaction that was approved by both the GTC Directors and a majority of the Good preferred shareholders, the plaintiffs
were required to vote their shares in favour of the transaction and refrain from exercising any appraisal or dissenter rights.
Good alleges that the filing of the GTC Lawsuit was a breach of the voting agreement. On December 31, 2015, several
Good shareholders filed a petition seeking appraisal against Good. Proceedings are ongoing.
(d) Concentrations in certain areas of the Company’s business
The Company attempts to ensure that most components essential to the Company’s business are generally available from
multiple sources, however certain components are currently obtained from limited sources within a competitive market,
which subjects the Company to significant supply, availability and pricing risks. Many components are at times subject to
industry-wide shortages and significant commodity pricing fluctuations including those that are available from multiple
sources. In addition, the Company has entered into various agreements for the supply of components, the manufacturing