Nordstrom 2003 Annual Report Download - page 48

Note 23: Contingent Liabilities
We have been named in various lawsuits and intend to vigorously defend
ourselves. While we cannot predict the outcome of these lawsuits, we believe
these matters will not have a material adverse effect on our financial position,
results of operations or cash flows.
Cosmetics. We were 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. In May 2000, 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" or “Department
Store” 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.
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 us, have answered
the amended complaint denying the allegations. The defendants have produced
documents and responded to plaintiffs' other discovery requests, including
providing witnesses for depositions.
We entered into a settlement agreement with the plaintiffs and the other
defendants on July 16, 2003. In furtherance of the settlement agreement,
the case was refiled in the United States District Court for the Northern
District of California on behalf of a class of all persons who currently reside
in the United States and who purchased “Department Store” cosmetics
from the defendants during the period May 29, 1994 through July 16,
2003. The Court has given preliminary approval to the settlement. A
summary notice of class certification and the terms of the settlement has
been disseminated to class members. A hearing on whether the Court
will grant final approval of the settlement is scheduled for June 8, 2004.
If approved by the Court, the settlement will result in the plaintiffs' claims
and the claims of all class members being dismissed, with prejudice, in
their entirety. In connection with the settlement agreement, the defendants
will provide class members with certain free products and pay the plaintiffs’
attorneys’ fees. Our share of the cost of the settlement will not have a material
adverse effect on our financial condition.
Washington Public Trust Advocates. In early 2002, we were named as one
of 30 defendants in Washington Public Trust Advocates, ex rel., et al. v. City
of Spokane, et al., filed in the Spokane County Superior Court, State of
Washington. Plaintiff is a not-for-profit corporation bringing claims on
behalf of the City of Spokane and the Spokane Parking Public Development
Authority. The claims relate to the River Park Square Mall and Garage
Project in Spokane, Washington (the "Project"), which includes a Nordstrom
store. The portion of the complaint applicable to us seeks to recover
from us the amount of a Department of Housing and Urban Development
(“HUD”) loan made to the developer of the Project. Damages are sought
in the amount of $22.75 million, or a lesser amount to the extent that the
HUD loan proceeds were used for the construction of the store and not
as tenant improvements. Other portions of the complaint seek to invalidate
bonds issued to finance the public parking garage serving the Project, terminate
the lease of the parking garage by the City of Spokane, and rescind other
agreements between the City of Spokane and the developer of the Project,
as well as damages from the developer of the Project in unspecified
amounts. The Complaint also alleges breach of fiduciary duties by various
defendants, including us, to the people of the City of Spokane regarding
lack of disclosures concerning the developer and the Project. By order
dated August 9, 2002, the court granted our motion to dismiss us from that
lawsuit. Plaintiff attempted to obtain direct review by the Washington Supreme
Court which declined to hear the case and referred it to the Washington
Court of Appeals. On May 20, 2003, the Washington Court of Appeals affirmed
our dismissal.
Other. We are subject to routine litigation incidental to our business.
No material liability is expected.
notes to consolidated financial statements
NORDSTROM, INC. and SUBSIDIARIES
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