LensCrafters 2010 Annual Report Download - page 175

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NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
Amounts paid to settle this litigation and related costs incurred for the years ended December 31, 2010 and 2009, were not
material. The effect of this settlement on the Company’s future operations and cash flow is not material.
Oakley Stockholder Lawsuit
On June 26, 2007, the Pipefitters Local No. 636 Defined Benefit Plan filed a class action complaint, on behalf of itself
and all other stockholders of Oakley, Inc. (“Oakley”), against Oakley and its Board of Directors in California Superior
Court, County of Orange. The complaint alleged, among other things, that the defendants violated their fiduciary duties
to stockholders by approving Oakley’s merger with Luxottica and claimed that the price per share fixed by the merger
agreement was inadequate and unfair. The defendants filed demurrers to the complaint, which the Court granted without
prejudice. On September 14, 2007, the plaintiff filed an amended complaint containing the same allegations as the initial
complaint and adding purported claims for breach of the duty of candor. Because the Company believed the allegations
were without merit, on October 9, 2007, the defendants filed a demurrer to the amended complaint. Rather than respond
to that demurrer, the plaintiff admitted that its claims were moot and on January 4, 2008 filed a motion for attorneys’ fees
and expenses. The hearing for this motion took place on April 17, 2008. On May 29, 2008, the Court issued a ruling denying
the plaintiff’s motion for attorneys’ fees and expenses in its entirety. The court did not rule on the defendants’ demurrer to
the amended complaint. On July 11, 2008, the Court entered an order dismissing the action with prejudice and denying
the plaintiff’s motion for attorneys’ fees and expenses. The plaintiff appealed the Court’s May 29, 2008 ruling and the July
11, 2008 order. On January 11, 2010, the appellate court affirmed the trial court’s decision in all respects. The plaintiff
filed a petition with the California Supreme Court requesting review of the appellate court’s decision. The Supreme Court
denied the plaintiff’s petition for review. Therefore, the appellate court’s decision affirming the denial of the plaintiff’s
request for attorneys’ fees and expenses is now final for all purposes. The Group considers this matter closed.
Costs associated with this litigation incurred for the years ended December 31, 2010 and 2009, were not material.
Fair Credit Reporting Act Litigation
In January 2007, a complaint was filed against Oakley and certain of its subsidiaries in the United States District Court
for the Central District of California, alleging willful violations of the Fair and Accurate Credit Transactions Act related to
the inclusion of credit card expiration dates on sales receipts. The plaintiff brought suit on behalf of a class of Oakley’s
customers. Oakley denied any liability, and later entered into a settlement arrangement with the plaintiff that resulted in a
complete release in favor of the Oakley defendants, with no cash payment to the class members but rather an agreement
by Oakley to issue vouchers for the purchase of products at Oakley retail stores during a limited period of time. The
settlement also provided for the payment of attorneys’ fees and claim administration costs by the Oakley defendants. An
order approving this settlement was entered on November 24, 2008. The settlement became final on January 15, 2009.
The effect of this settlement on the Group’s future operations and cash flow is not material.
Amounts paid to settle this litigation and related costs incurred for the years ended December 31, 2010 and 2009, were not
material. The effect of this settlement on the Company’s future operations and cash flow is not material.
Texas LensCrafters Class Action Lawsuit
In May 2008, two individual optometrists commenced an action against LensCrafters, Inc. (now Luxottica Retail North
America, Inc.) and Luxottica Group S.p.A. in the United States District Court for the Eastern District of Texas, alleging
violations of the Texas Optometry Act (“TOA”) and the Texas Deceptive Trade Practices Act, and tortious interference
with customer relations. The suit alleged that LensCrafters attempted to control the optometrists’ professional judgment
and that certain terms of the optometrists’ sub–lease agreements with LensCrafters violated the TOA. The suit sought
recovery of a civil penalty of up to US$ 1,000 for each day of a violation of the TOA, injunctive relief, punitive damages,
and attorneys’ fees and costs. In August 2008, plaintiffs filed a first amended complaint, adding claims for fraudulent
inducement and breach of contract. In October 2008, plaintiffs filed a second amended complaint seeking to certify the
case as a class action on behalf of all current and former LensCrafters’ sub–lease optometrists. Luxottica Group S.p.A.