Classmates.com 2008 Annual Report Download - page 38

Table of Contents
which the customers agreed to purchase additional NetZero shares in the aftermarket at pre-determined prices. Plaintiffs are seeking injunctive
relief and damages. The case against NetZero was coordinated with approximately 300 other suits filed against more than 300 issuers that
conducted their initial public offerings between 1998 and 2000, their underwriters and an unspecified number of their individual corporate
officers and directors. On October 13, 2004, the district court certified a class in six of the other nearly identical actions (the "focus cases"). The
United States Court of Appeals for the Second Circuit subsequently vacated the district court's decision granting class certification. On
October 10, 2008, the district court granted plaintiffs' motion to withdraw without prejudice their Motion for Class Certification in the six focus
cases. The parties in the approximately 300 coordinated class actions, including NetZero, the underwriter defendants in the NetZero class action,
and the plaintiff class in the NetZero action, have reached an agreement in principle under which the insurers for the issuer defendants in the
coordinated cases will make a settlement payment on behalf of the issuers, including NetZero. The settlement is subject to approval by the
parties and is also subject to court approval.
On March 6, 2006, plaintiff Anthony Piercy filed a purported consumer class action lawsuit in the Superior Court of the State of California,
County of Los Angeles, against NetZero claiming that NetZero continues to charge consumers fees after they cancel their Internet access
account. On July 27, 2006, plaintiff Donald E. Ewart filed a purported consumer class action lawsuit in the Superior Court of the State of
California, County of Los Angeles, against NetZero containing substantially similar allegations to the Piercy case. Plaintiffs in both cases sought
injunctive and declaratory relief and damages. These cases subsequently were consolidated as Rasnake v. NetZero. A settlement agreement was
entered into by all parties in this case, and the settlement became final on January 5, 2009.
Our pending lawsuits involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of
other resources to defend. Although we do not believe the outcome of our outstanding legal proceedings, claims and litigation will have a
material adverse effect on our business, financial position, results of operations, or cash flows, the results of legal proceedings, claims and
litigation are inherently uncertain and we cannot assure you that we will not be materially and adversely impacted by the results of such
proceedings. At December 31, 2008, we had not established allowances for losses relating to any of the matters described above, with the
exception of the Rasnake v. NetZero matter.
We are subject to various legal proceedings, claims and litigation that arise in the ordinary course of business. Based on information at this
time, we believe the amount, and ultimate liability, if any, with respect to these actions will not materially affect our business, financial position,
results of operations, or cash flows. We cannot assure you, however, that such actions will not materially and adversely affect our business,
financial position, results of operations, or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matters to a vote of security holders during the quarter ended December 31, 2008.
36