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Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements
(amounts in thousands, except share data and per share amounts)
Note 10. Commitments and Contingencies − (continued)
Morris Matter
On or about August 18, 2015, Kevin Morris (‘‘Morris’’) filed a purported class action lawsuit in the
Circuit Court of the Twentieth Judicial Circuit in St. Clair County, Illinois alleging that the Casa de Colour
Collection by Dura-Wood flooring (the ‘‘Morris Product’’), a brand of solid wood flooring sold by the
Company, is defective due to warping, cupping and buckling. Morris alleges that the Company has engaged in
unfair business practices and unfair competition by falsely representing the quality and characteristics of the
Morris Product and by concealing the Morris Product’s defective nature. In particular, Morris’s allegations
include (i) common law fraud, (ii) breach of implied warranty, (iii) breach of express warranty, (iv) breach of
contract, (v) breach of duty of good faith and fair dealing, (vi) violation of the Illinois Consumer Fraud and
Deceptive Business Practices Act (the ‘‘ICFA’’) and (vii) violation of the Uniform Deceptive Trade Practices
Act (the ‘‘UDTPA’’). Morris did not quantify any alleged damages in his complaint but, in addition to
attorneys’ fees and costs, Morris seeks (i) certification of the purposed class, (ii) injunctive relief requiring the
Company to replace and/or repair all Morris Products installed in structures owned by the purported class,
(iii) an award of compensatory, consequential and statutory damages, pre-judgment interest and post-judgment
interest, (iv) a declaration that the Company must disgorge, for the benefit of the purported class, all or part of
the Company’s profits received from the sale of the Morris Product and/or to make full restitution to Morris
and the purported class, (v) a judgment for actual damages for injuries suffered by Morris and the purported
class as a result of the Company’s violation of the ICFA and (vi) a judgment awarding Morris and the
purported class reasonable attorneys’ fees and costs in accordance with the UDTPA. On September 25, 2015,
the Company removed the action to the United States District Court for the Southern District of Illinois.
Subsequently, the Company filed a motion to dismiss. Morris failed to respond to the motion and, as a result,
the lawsuit was dismissed without prejudice on November 10, 2015.
Ross Matter
On or about February 23, 2016, Joseph Ross and Linda Ross (collectively, ‘‘Ross’’) filed a purported
class action lawsuit in the Second Judicial District Court, State of Nevada, County of Washoe. Ross seeks the
certification of a class of individuals in the State of Nevada who purchased certain hardwood flooring products
produced in China (the ‘‘Ross Products’’). Ross alleges that the Ross Products are defective due to the Ross
Products being contaminated with certain wood-boring insects. In particular, Ross’s allegations include
(i) breach of warranty, (ii) negligence, (iii) strict liability, (iv) negligent misrepresentation, (v) willful
misconduct, and (vi) unjust enrichment. In the complaint, Ross seeks (i) general and special damages
according to proof in excess of $50,000, (ii) attorneys’ fees and costs according to proof, (iii) prejudgment
and post-judgment interest on all sums awarded, according to proof at the maximum legal rate, (iv) costs of
the lawsuit incurred, (v) restitution as authorized by law, (vi) punitive damages as authorized by law, and
(vii) specific performance under our express warranties. The Company disputes Ross’s claims and intends 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, the
Company cannot estimate the reasonably possible loss or range of loss that may result from this action.
Derivative Litigation Matters
Consolidated Cases
On or about March 11, 2015, R. Andre Klein (‘‘Klein’’) filed a shareholder derivative suit in the
United States District Court for the Eastern District of Virginia against the Company’s directors at that time,
as well as its Senior Vice President, Supply Chain, former Chief Merchandising Officer and former Chief
Financial Officer (collectively, the ‘‘Klein Defendants’’). On or about April 1, 2015, Phuc Doan (‘‘Doan’’)
filed a shareholder derivative suit in the United States District Court for the Eastern District of Virginia
against the Company’s directors at that time, as well as its Senior Vice President, Supply Chain, former Chief
Merchandising Officer and former Chief Financial Officer (collectively, the ‘‘Doan Defendants’’). On or about
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