Lumber Liquidators 2013 Annual Report Download - page 32

As of February 17, 2014, 31 of our store locations are leased from related parties. See discussion of
properties leased from related parties in Note 5 to the consolidated financial statements included in Item 8 of
this report and within Certain Relationships and Related Transactions, and Director Independence in Item 13
of this report.
Item 3. Legal Proceedings.
On August 30, 2012, Jaroslaw Prusak, a purported customer (‘‘Prusak’’), filed a putative class action
lawsuit, which was subsequently amended, against us in the United States District Court for the Northern
District of Illinois. Prusak alleges that we willfully violated the Fair and Accurate Credit Transactions Act
amendments to the Fair Credit Reporting Act in connection with electronically printed credit card receipts
provided to certain of our customers. Prusak, for himself and the putative class, seeks statutory damages of no
less than $100 and no more than $1,000 per violation, punitive damages, attorney’s fees and costs, and other
relief. Prusak has filed a motion seeking certification of the putative class and the parties have each filed
motions seeking summary judgment with regard to matters at issue in the case. Those motions are currently
pending before the Court. Although we believe we have defenses to the claims asserted and have opposed the
motion to certify the class, no assurances can be given of any particular result. Given the uncertainty inherent
in any litigation, the current stage of the case and the legal standards that must be met for, among other
things, class certification and success on the merits, we cannot reasonably estimate the possible loss or range
of loss that may result from this action.
On or about November 26, 2013, Gregg Kiken (‘‘Kiken’’) filed a securities class action lawsuit, which
was subsequently amended, in the Federal District Court for the Eastern District of Virginia against us, our
Founder, Chief Executive Officer and President, and Chief Financial Officer (collectively, the ‘‘Defendants’’).
In the complaint, Kiken alleges that the Defendants made material false and/or misleading statements and
failed to disclose material adverse facts about our business, operations and prospects. In particular, Kiken
alleges that the Defendants made material misstatements or omissions related to our compliance with the
federal Lacey Act and the chemical content of our wood products. In addition to attorney’s fees and costs,
Kiken seeks to recover damages on behalf of himself and other persons who purchased or otherwise acquired
our stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm
as a result. We dispute Kiken’s claims and intend to defend the matter vigorously. Given the uncertainty of
litigation, the preliminary stage of the case and the legal standards that must be met for, among other things,
class certification and success on the merits, we cannot reasonably estimate the possible loss or range of loss
that may result from this action.
On or about January 14, 2014, the case of Lambert et al. v. Lumber Liquidators Holdings, Inc. was filed
in the United States District Court for the Eastern District of Virginia by four plaintiffs (the ‘‘Original
Plaintiffs’’) on behalf of themselves and a class of persons in Virginia, Alabama and New York who purchased
and installed our wood flooring that was sourced, processed or manufactured in China. The Original Plaintiffs
claim that we made certain misrepresentations regarding the chemical emission levels of the Chinese flooring
products that we sell. On February 11, 2014, an amended complaint was filed in which a number of additional
plaintiffs and purported classes were added (collectively with the Original Plaintiffs, the ‘‘Plaintiffs’’) and the
originally named defendant was replaced with a new one, Lumber Liquidators, Inc. The amended complaint,
which is captioned Williamson et al. v. Lumber Liquidators, Inc., also states additional claims concerning
alleged noncompliance with the federal Lacey Act, namely the importation and sale of wood products that
were originally harvested in Russia without valid authority. The Plaintiffs accuse us of violating the
Racketeering and Corrupt Organizations Act and assert dozens of other legal theories under federal and
various state laws including but not limited to the Magnuson-Moss Warranty Act, breaching of express and
implied warranties, and violating certain state consumer protection and deceptive practice laws. The Plaintiffs
seek actual, consequential and punitive damages, pre- and post-judgment interest, attorney’s fees and costs,
and certain equitable and injunctive relief. We dispute the Plaintiffs’ claims and intend to defend this matter
vigorously. Given the uncertainty of litigation, the preliminary stage of the case and the legal standards that
must be met for, among other things, class certification and success on the merits, we cannot reasonably
estimate the possible loss or range of loss that may result from this action.
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