Nordstrom 2000 Annual Report Download - page 37

Cyan Mag Yelo Blk
20100444 Nordstrom
2001 Annual Report • 44pgs. + 4 covers pg. 35
8.375 x 10.875 • PDF • 150 lpi
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35
NORDSTROM, INC. AND SUBSIDIARIES
Note 16: Contingent Liabilities
The Company has been named in various lawsuits and
intends to vigorously defend itself in those cases. The
Company is not in a position at this time to quantify the
amount or range of any possible losses related to those
claims. While no assurance can be given as to the ultimate
outcome of these lawsuits, based on preliminary
investigations, management currently believes that resolving
these matters will not have a material adverse effect on the
Company’s financial position, results of operations or cash
flows.
Cosmetics.The Company was originally named as a
defendant along with other department store and specialty
retailers in nine separate but virtually identical class action
lawsuits filed in various Superior Courts of the State of
California in May, June and July 1998 that have now been
consolidated in Marin County state court. Plaintiffs’
consolidated complaint alleged that the Company and other
retailers agreed to charge identical prices for cosmetics and
fragrances, not to discount such prices, and to urge
manufacturers to refuse to sell to retailers who sell
cosmetics and fragrances at discount prices, resulting in
artificially-inflated retail prices paid by the class in violation
of California state law. Defendants, including the Company,
answered the consolidated complaint denying the
allegations. The Company and the other retail defendants
have produced documents and responded to plaintiffs’ other
discovery requests, including providing witnesses for
depositions.
Last year, plaintiffs filed an amended complaint naming a
number of manufacturers of cosmetics and fragrances and
two other retailers as additional defendants. Plaintiffs’
amended complaint alleges that the retail price of the
"prestige" cosmetics sold in department and specialty stores
was collusively controlled by the retailer and manufacturer
defendants in violation of the Cartwright Act and the
California Unfair Competition Act by various means,
including restricting the sale of prestige cosmetics to
department stores only; agreeing that all department and
specialty stores will sell such cosmetics at the
manufacturer’s suggested retail price ("MSRP"); controlling
the advertising of cosmetics and Gift-With-Purchase
programs; and the manufacturer defendants guaranteeing the
retailer defendants a gross margin equal to 40% of MSRP
and buying back any unsold cosmetics to prevent
discounting from MSRP.
Plaintiffs seek treble damages and restitution in an
unspecified amount, attorneys’ fees and prejudgment
interest, on behalf of a class of all California residents who
purchased cosmetics and fragrances for personal use from
any of the defendants during the period four years prior to
the filing of the amended complaint. Defendants, including
the Company, have answered the amended complaint
denying the allegations. Plaintiffs have submitted requests
for production of documents to the manufacturer defendants,
who are in the process of responding to these and plaintiffs’
other discovery requests. Plaintiffs have not yet moved for
class certification.
Nine West. In early 1999, the Company was named as a
defendant in a number of substantially identical lawsuits
that were consolidated in Federal District Court in New York.
In addition to Nine West, a leading manufacturer and retailer
of men’s, women’s and children’s non-athletic footwear and
accessories, which was later acquired by Jones Apparel,
other defendants included various department store and
specialty retailers. Plaintiffs filed a consolidated complaint
alleging that the retailer defendants agreed with Nine West
and with each other on the minimum prices to be charged
for Nine West shoes. Plaintiffs sought treble damages in an
unspecified amount, attorneys’ fees and prejudgment
interest on behalf of a nationwide class of persons who
purchased Nine West footwear from the defendants during
the period January 1988 to February 1999.
The Federal Trade Commission and the Attorneys General of
the states of New York, Ohio, Texas and Florida then opened
an investigation into the plaintiffs’ allegations, and the
Company and the other defendants submitted documents
and information to those agencies. Last year, Nine