Computer Associates 2010 Annual Report Download - page 87

October 29, 2007, the Federal Court denied the Special Litigation Committee’s motion to dismiss and realign, without
prejudice to renewing following a decision by the United States Court of Appeals for the Second Circuit on an appeal brought
by Ranger in other derivative litigation.
On December 14, 2009, the Company and the Special Litigation Committee renewed the motion to dismiss and realign. That
motion is 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 alleging that he is entitled to attorneys’ fees in connection with the
original litigation filed in the District Court of Dallas County, Texas. The two actions have been consolidated and transferred to
the Federal Court. On March 31, 2005, the plaintiffs amended their complaint to allege a claim that they were defrauded into
entering the 2002 Agreements and to seek rescission of those agreements and damages. On September 29, 2009, the Federal
Court entered an order granting the Company’s motion for summary judgment, and dismissing the action in its entirety. That
order was appealed to the Second Circuit on October 28, 2009. Although the ultimate outcome cannot be determined, the
Company believes that the claims are unfounded and that the Company has meritorious defenses.
Other civil actions
In 2004, the Company entered a voluntary disclosure agreement (VDA) with the State of Delaware, by which the Company
agreed to disclose information about its failure to comply with certain abandoned property (“escheatment”) procedures and,
in return, the State agreed, among other things, not to impose interest or conduct an audit. The Company engaged an
independent consultant to review its records and provide an estimate of its liability to the State. The State refused to accept
that estimate. In October 2008, the Company commenced an action entitled CA, Inc. v. Cordrey, et al, Civil Action No. 4111-CC
in the Delaware Chancery Court (the Delaware Court) seeking, among other things, to compel the State to abide by its
obligations under the VDA. In November 2008, the State filed a suit in the Delaware Court entitled Cordrey, et al v. CA, Inc.
et al , Civil Action No. 4195-CC, that seeks to enforce a request for payment of abandoned property liability, compel an audit
and impose interest. By an amended complaint, dated March 2, 2009, the State alleged, among other things, that the
Company made material misrepresentations in and unreasonably delayed the VDA process and the state added causes of
action for fraud and/or negligent misrepresentation. On February 18, 2010, the Court dismissed these actions pursuant to a
Stipulation of Settlement, by which the Company agreed to pay $17,650,000 to the State, representing the Company’s liability
for abandoned property liability (excluding equity) for all past years, through and including liability for past years required to
be reported in abandoned property reports due in 2010 and 2011, and inclusive of all interest and penalties. The Stipulation
of Settlement provided, among other things, that “based on its review of materials provided in discovery and information
provided in negotiations subsequent to the filing of its Amended Complaint, the State does not believe that CA engaged in
any acts of fraud.”
In December 2008, a lawsuit captioned Information Protection and Authentication of Texas LLC v. Symantec Corp., et al. was
filed in the United States District Court for the Eastern District of Texas. The complaint seeks monetary damages in an
undisclosed amount against 22 separate defendants including the Company based upon claims for direct and contributory
infringement of two separate patents. The complaint did not disclose which of the Company’s products allegedly infringed the
claimed patents. In discovery, plaintiff had asserted that three of the Company’s security products containing firewall
technology were at issue in this suit. Pursuant to an Order dated April 29, 2010, the court dismissed this action with prejudice
as to the Company based upon a confidential settlement reached between the parties. The terms of that settlement are not
material to the Company.
The Company, various subsidiaries, and certain current and former officers have been named as defendants in various other
lawsuits and claims arising in the normal course of business. The Company believes that it has meritorious defenses in
connection with such lawsuits and claims, and intends to vigorously contest each of them. In the opinion of the Company’s
management, although the outcome of the above matters as well as these other lawsuits and claims cannot be determined,
the results of pending matters against the Company, either individually or in the aggregate, are not expected to have a
material adverse effect on the Company’s financial position, results of operations, or cash flows, although the effect could be
material to the results of operations or cash flows for any individual reporting period.
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