Overstock.com 2012 Annual Report Download - page 112

Table of Contents
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Group, Inc., Goldman Sachs & Co., Goldman Sachs Execution & Clearing L.P., ("Goldman Defendants") Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Merrill Lynch Professional Clearing Corporation ("Merrill Lynch Defendants), and Bank of America Securities LLC. On December 15, 2010, we filed
a motion to amend our complaint against the Goldman and Merrill Lynch Defendants to add a cause of action based on the New Jersey Racketeer
Influenced and Corrupt Organization (RICO) Act. Defendants challenged the RICO claim by demurrer and eventually the court sustained the demurrer.
We thereafter entered a settlement agreement with Bank of America Securities LLC, the terms of which are confidential, and have dismissed the action
as to that defendant. On August 19, 2011, the remaining defendants filed a motion for summary judgment. On January 10, 2012 the court granted the
motion for summary judgment as to all remaining defendants and the judgment has been entered. We have appealed. The defendants applied to the court
for reimbursement from us of their allowable court costs in the collective amount of $2.4 million. We challenged the application as excessive under
California law, and, following hearing, the amount was reduced to $689,471, which will be payable only if we do not succeed on our appeal of the
summary judgment. The nature of the loss contingencies relating to any court costs ordered against us are described above.
On May 30, 2008 we filed a complaint in New York state court against the New York State Department of Taxation and Finance, its
Commissioner, the State of New York and its governor, alleging that a New York state tax law is unconstitutional. The effect of the New York law is to
require Internet sellers to collect and remit New York sales taxes on their New York sales even if the seller has no New York tax "nexus" other than
with New York based independent contractors who are Internet advertising affiliates. The complaint asks for the court to declare the law
unconstitutional and enjoin its application to us. New York filed a motion to dismiss. We responded to the motion and filed a motion for summary
judgment, and both motions were heard simultaneously. On January 12, 2009, the court granted New York's motion to dismiss and denied our motion
for summary judgment. We appealed the decision and on November 4, 2010 the New York Appellate Division upheld part of the lower court's ruling
rejecting our claims that the law is unconstitutional on its face, but remanded our claims that the law is unconstitutional as applied, for further discovery
and proceedings in the lower court. We filed with the New York State Court of Appeals a motion of leave to appeal the portions of the decision
upholding the lower court's ruling. On March 15, 2011, the Appellate Division of the New York State Court of Appeals denied our motion for leave to
appeal to the New York State Court of Appeals. We have determined not to pursue at the trial court level our claims that the law is unconstitutional as
applied. We proceeded with an appeal to the New York State Court of Appeals of the Appellate Division's ruling on our claim that the statute is
unconstitutional on its face. The Court heard oral argument on the appeal on February 6, 2013 but has not yet issued its decision.
On August 12, 2008, we along with seven other defendants, were sued in the United States District Court for the Northern District of California,
by Sean Lane, and seventeen other individuals, on their own behalf and for others similarly in a class action suit, alleging violations of the Electronic
Communications Privacy Act, Computer Fraud and Abuse Act, Video Privacy Protection Act, and California's Consumer Legal Remedies Act and
Computer Crime Law. The complaint relates to our use of a product known as Facebook Beacon, created and provided to us by Facebook, Inc.
Facebook Beacon provided the means for Facebook users to share purchasing data among their Facebook friends. The parties extended by agreement
the time for defendants' answer, including our answer, and thereafter, the Plaintiff and Facebook proposed a stipulated settlement to the Court for
approval, which would resolve the case without requirement of financial contribution from us. On March 17, 2010, over
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