Computer Associates 2009 Annual Report Download - page 99

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dismiss and realign the claims and parties in accordance with the Special Litigation Committee’s recommendations. As
summarized below, the Special Litigation Committee concluded as follows:
•The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue
certain of the claims against Messrs. Wang and Schwartz.
•The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue
certain of the claims against the former Company executives who have pled guilty to various charges of securities
fraud and/or obstruction of justice — including Messrs. Kaplan, Richards, Rivard, Silverstein, Woghin and Zar. The
Special Litigation Committee has determined and directed that these claims be pursued by the Company using
counsel retained by the Company, unless the Special Litigation Committee is able to successfully conclude its
ongoing settlement negotiations with these individuals.
•The Special Litigation Committee has reached a settlement (subject to court approval) with Messrs. Kumar, McWade
and Artzt.
•The Special Litigation Committee believes that the claims (the Director Claims) against current and former Company
directors Messrs. Cron, D’Amato, de Vogel, Fernandes, Grasso, La Blanc, Lorsch, Pieper, Ranieri and Schuetze,
Ms. Kenny, and Alex Vieux should be dismissed. The Special Litigation Committee has concluded that these directors
did not breach their fiduciary duties and the claims against them lack merit.
•The Special Litigation Committee has concluded that it would be in the best interests of the Company to seek
dismissal of the claims against Ernst & Young LLP, KPMG LLP and Mr. McElroy.
The Special Litigation Committee has served a motion which seeks dismissal of the Director Claims, the claims against
Ernst & Young LLP, KPMG LLP and Mr. McElroy, and certain other claims. In addition, the Special Litigation Committee
has asked for the Federal Court’s approval for the Company to be realigned as the plaintiff with respect to claims against
certain other parties, including Messrs. Wang and Schwartz.
Current Procedural Status of Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 and Derivative
Actions Filed in 2004
By letter dated July 19, 2007, counsel for the Special Litigation Committee advised the Federal Court that the Special
Litigation Committee had reached a settlement of the Derivative Actions with two of the three derivative plaintiffs —
Bert Vladimir and Irving Rosenzweig. In connection with the settlement, both of these plaintiffs have agreed to support
the Special Litigation Committee’s motion to dismiss and to realign. The Company has agreed to pay the attorney’s fees
of Messrs. Vladimir and Rosenzweig in an amount up to $525,000 each. If finalized, this settlement would require
approval of the Federal Court. On July 23, 2007, Ranger filed a letter with the Federal Court objecting to the proposed
settlement. On October 29, 2007, the Federal Court denied the Special Litigation Committee’s motion to dismiss and
realign, without prejudice to renewing the motion after a decision by the appellate court regarding the Federal Court’s
decisions concerning the 60(b) Motions.
In a memorandum and order dated August 2, 2007, the Federal Court denied all of the 60(b) Motions and reaffirmed
the 2003 settlements (the August 2 decision). On August 24, 2007, Ranger and the Wyly Litigants filed notices of
appeal of the August 2 decision. On August 16, 2007, the Special Litigation Committee filed a motion to amend or
clarify the August 2 decision, and the Company joined that motion. On September 12, 2007 and October 4, 2007, the
Federal Court issued opinions denying the motions to amend or clarify. On September 18, 2007, the Wyly Litigants and
Ranger filed notices of appeal of the September 12 decision. The Company filed notices of cross-appeal of the
September 12 and October 4 decisions on November 2, 2007. Oral argument on the appeals and cross-appeals
occurred on March 11, 2009, and decisions are pending.
Texas Litigation
On August 9, 2004, a petition was filed by Sam Wyly and Ranger against the Company in the District Court of Dallas
County, Texas, seeking to obtain a declaratory judgment that plaintiffs did not breach two separation agreements they
entered into with the Company in 2002 (the 2002 Agreements). On February 18, 2005, Mr. Wyly filed a separate
lawsuit in the United States District Court for the Northern District of Texas (the Texas Federal Court) alleging that he is
entitled to attorneys’ fees in connection with the original litigation filed in the District Court of Dallas County, Texas. The
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