First Data 2007 Annual Report Download - page 28

On October 15, 2003, the plaintiffs moved for leave to file a third amended consolidated complaint similar to the previous complaints but also alleging that
the proxy statement disclosures relating to the antitrust regulatory approval process were inadequate. On October 17, 2003, the plaintiffs filed a motion for
preliminary injunction to enjoin the shareholder vote on the proposed merger and/or the merger itself. The Court denied the plaintiffs' motion on October 20,
2003 but ordered deposition discovery on an expedited basis. On October 27, 2003, the plaintiffs filed a renewed motion to enjoin the shareholder vote, which
was denied by the Court the same day. A motion to dismiss was filed on June 22, 2004 alleging that the claims should be denied and are moot since the
merger has occurred. On October 18, 2004, the Court heard arguments on the plaintiff's motion to amend complaint and defendant's motion to dismiss. On
September 12, 2006, the Court granted the plaintiff's motion to file a third amended complaint.
On June 28, 2007, a hearing was held on Concord's motion to dismiss the third amended complaint. No order has been issued on this motion as yet.
ATM Fee Antitrust Litigation
On July 2, 2004, Pamela Brennan, Terry Crayton, and Darla Martinez filed a class action complaint on behalf of themselves and all others similarly situated in
the United States District Court for the Northern District of California against the Company, its subsidiary Concord EFS, Inc., and various financial
institutions ("Brennan"). Plaintiffs claim that the defendants violated antitrust laws by conspiring to artificially inflate foreign ATM fees that were ultimately
charged to ATM cardholders. Plaintiffs seek a declaratory judgment, injunctive relief, compensatory damages, attorneys' fees, costs and such other relief as
the nature of the case may require or as may seem just and proper to the court. Five similar suits were filed and served in July, August and October 2004, two
in the Central District of California (Los Angeles), two in the Southern District of New York, and one in the Western District of Washington (Seattle). The
plaintiffs sought to have all of the cases consolidated by the Multi District Litigation panel. That request was denied by the panel on December 16, 2004 and
all cases were transferred to the Northern District Court of California and assigned to a single judge. All cases other than Brennan were stayed.
In Brennan, on May 4, 2005, the Court ruled on Defendants' Motion to Dismiss and Motion for Judgment on the Pleadings. The Court did not dismiss the
complaint, except for a technical dismissal of the claims against the Company, Bank One Corporation and JPMorgan Chase. On May 25, 2005, the plaintiffs
filed an amended complaint that clarified the basis for alleging that the holding companies First Data Corporation, Bank One Corporation and JPMorgan
Chase were liable. On July 21, 2005, Concord filed a motion for summary judgment seeking to foreclose claims arising after February 1, 2001—the date that
Concord acquired the STAR network. On August 22, 2005, the Court also consolidated all of the ATM interchange cases pending against the defendants in
Brennan that is now referred to collectively as the "ATM Fee Antitrust Litigation." On September 14, 2006, a hearing on our Motion for Summary Judgment
was held.
On November 30, 2006, the Court issued an order that terminated the pending motion and requested further discovery on the limited issue of procompetitive
justifications for the fixed ATM interchange. On June 25, 2007, the Court issued an order resolving several disputes regarding the scope of this discovery and
on August 3, 2007, Concord filed a motion for summary judgment seeking to dismiss plaintiffs' per se claims, arguing that there are procompetitive
justifications for the ATM interchange. The hearing on this motion was held on March 7, 2008 and the parties await the Court's ruling.
Class Action Lawsuits Challenging Merger Agreement
Six purported class action lawsuits have been filed against the Company and its directors challenging the process by which the Company agreed to enter into
the Merger Agreement. These lawsuits have been consolidated into one action in Colorado state court and one action in Delaware state court, respectively.
These purported class action complaints generally allege that the members of the Company's Board of Directors breached their fiduciary duties of care and
loyalty by entering into the Merger Agreement without regard to the fairness of the transaction to the Company's shareholders or the maximization of
shareholder value. The complaints also allege that the Company and/or KKR aided and abetted the directors' breaches. The complaints generally seek class
certification, an order enjoining consummation of the proposed merger, rescinding the proposed merger if it is consummated and setting it aside or awarding
rescissory damages to members of the class, directing the defendants to exercise their fiduciary duties and account to the class members for unspecified
damages, imposing a constructive trust in favor of the class for benefits improperly received by the defendants, and awarding costs and disbursements,
including reasonable attorneys' fees, experts' fees and other costs and relief the Court deems just and proper.
The parties have entered into a settlement agreement which was executed and submitted to the Colorado state court for approval on December 12, 2007. On
December 17, 2007, the District Court for Arapahoe County, Colorado granted preliminary approval of the settlement. A Notice of Pendancy and Settlement
of Class Action and Hearing on Proposed Settlement was transmitted to the former shareholders of FDC in January. The notice provided for shareholders to
submit any objections to the proposed settlement by February 26, 2008. Two objections were received. On March 7, 2008, the Court granted final approval of
the settlement.
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