Lumber Liquidators 2014 Annual Report Download - page 33

Hallandale Matter
On or about September 17, 2014, the City of Hallandale Beach Police Officers’ and Firefighters’
Personnel Retirement Trust (‘‘Hallandale’’) filed a securities class action lawsuit in the United States District
Court for the Eastern District of Virginia against us, our Chief Executive Officer and President and our Chief
Financial Officer (collectively, the ‘‘Hallandale Defendants’’). In the complaint, Hallandale alleges that the
Hallandale Defendants made material false and/or misleading statements that caused losses to investors. In
particular, Hallandale alleges that the Hallandale Defendants made material misstatements or omissions
regarding our supply chain and inventory position. In addition to attorneys’ fees and costs, Hallandale seeks to
recover damages on behalf of itself 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 Hallandale’s claims and intend to defend the matter vigorously. Given the uncertainty of litigation, the
preliminary stage of the case, insurance coverage issues and the legal standards that must be met for, among
other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or
range of loss that may result from this action.
Gold Matter
On or about December 8, 2014, Dana Gold (‘‘Gold’’) filed a purported class action lawsuit in the
United States District Court for the Northern District of California alleging that the Morning Star bamboo
flooring (the ‘‘Bamboo Product’’) that we sell is defective. On February 13, 2015, Gold filed an amended
complaint, which added three additional plaintiffs (collectively with Gold, ‘‘Gold Plaintiffs’’). Gold Plaintiffs
allege that we have engaged in unfair business practices and unfair competition by falsely representing the
quality and characteristics of the Bamboo Product and by concealing the Bamboo Product’s defective nature.
Gold Plaintiffs seek the certification of two separate classes: (i) individuals in the United States who own
homes or other structures where the Bamboo Product has been installed or where Bamboo Product has been
removed and replaced; and (ii) the same description but for owners of California homes or structures only. In
addition to attorneys’ fees and costs, Gold Plaintiffs seek (i) a declaration that we are financially responsible
for notifying all purported class members, (ii) injunctive relief requiring us to replace and/or repair all of the
Bamboo Product installed in structures owned by the purported class members, and (iii) a declaration that we
must disgorge, for the benefit of the purported classes, all or part of its profits received from the sale of the
defective Bamboo Product and/or to make full restitution to Gold Plaintiffs and the purported class members.
We dispute the Gold Plaintiffs’ claims and intend to defend the matter vigorously. Given the uncertainty of
litigation, the preliminary stage of the case, insurance coverage issues and the legal standards that must be met
for, among other things, class certification and success on the merits, we cannot estimate the reasonably
possible loss or range of loss that may result from this action.
Balero Matter
On or about December 11, 2014, Joseph Michael Balero, Michael Ballerini and Lisa Miller (collectively,
the ‘‘Balero Plaintiffs’’) filed a purported class action lawsuit in the Superior Court of the State of California
for the County of Alameda alleging that we engaged in unlawful and fraudulent business practices by selling
certain products in California that do not comply with California’s Airborne Toxic Control Measure to Reduce
Formaldehyde Emissions from Composite Wood Products (the ‘‘CARB Standards’’) and by falsely advertising
and representing that such products meet the CARB standards. The purported class consists of all California
consumers that purchased the subject products since 2011. In addition to attorneys’ fees and costs, the Balero
Plaintiffs seek (i) declarations that our policies and practices of labeling, advertising, distributing and selling
certain products it sells in California violate the CARB standards, (ii) injunctive relief prohibiting us from
continuing to distribute and/or sell laminate flooring products that violate the CARB standards, (iii) restitution
of all money and/or property that the Balero Plaintiffs and other purported class members provided to us for
the purchase and installation of certain products sold by us that allegedly violate the CARB Standards, and
(iv) damages, including actual, compensatory and consequential, incurred by the Balero Plaintiffs and other
purported class members in connection with our alleged breach of warranty. We dispute the claims of the
Balero Plaintiffs and intend to defend the matter vigorously. Given the uncertainty of litigation, the
preliminary stage of the case, insurance coverage issues and the legal standards that must be met for, among
other things, class certification and success on the merits, we cannot estimate the reasonably possible loss or
range of loss that may result from this action.
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