Overstock.com 2012 Annual Report Download - page 33

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Table of Contents
to them and their transactions. The application of these regulations to online car listing service providers is not clear. Although we do not expect these
laws to have a significant effect on our listing service, we will incur costs in complying with these laws, and we may from time to time be required to
make changes in our service that may increase our costs, reduce our revenues, cause us to prohibit certain listing or advertising practices, or make other
changes that may adversely affect our car listing service. Further, like our shopping business, our car listing service is subject to most of the same laws
and regulations that apply to other companies conducting business on and off the Internet. To the extent that current or future laws or regulations
prevent users from selling items on our car listing site, they could harm our business. In addition, any negative publicity we receive regarding any
allegations of unlawful or deceptive conduct may damage our reputation, our ability to attract new customers to our main shopping site, and the
Overstock.com brand name generally.
We are involved in substantial litigation.
From time to time we receive claims of and become subject to consumer protection, employment, intellectual property and other commercial
litigation related to the conduct and operation of our business and the sale of products on our Website. In connection with such litigation, we may be
subject to significant damages or equitable remedies. In addition, we have in the past been, are now, and in the future may be, involved in substantial
litigation in which we are the plaintiff, including litigation regarding the constitutionality of certain state tax laws, and the prime broker litigation
described below. Any of such litigation, whether as plaintiff or defendant, could be costly and time consuming and could divert management and key
personnel from our regular business operations. We do not currently believe that any of our outstanding litigation will have a material adverse effect on
our business, prospects, financial condition or results of operations. However, due to the uncertainty of litigation and depending on the amount and the
timing, an unfavorable resolution of some or all of these matters could materially affect our business, prospects, financial condition and results of
operations.
California District Attorneys have sued us for alleged violations of California law.
In April 2008, we received a letter from the Office of the District Attorney of Marin County, California, stating that the District Attorneys of Marin
and four other counties in Northern California had begun an investigation into the way we advertise products for sale. In November 2010, District
Attorneys for the California Counties of Alameda, Marin, Monterey, Napa, Santa Clara, Shasta and Sonoma filed a lawsuit seeking damages and an
injunction, alleging violations of California consumer protection laws, alleging we made untrue or misleading statements concerning our pricing, price
reductions, sources of products and shipping charges. The complaint asks for damages in the amount of not less than $15 million. We dispute the
allegations and intend to defend ourselves vigorously. However, an unfavorable resolution of this matter could materially affect our business, prospects,
financial condition and results of operations.
Our prime broker litigation may have an adverse effect on our business and financial condition.
We remain involved in substantial litigation against Goldman Sachs Group, Inc., Goldman Sachs & Co., Goldman Sachs Execution &
Clearing L.P., Merrill Lynch, Pierce, Fenner & Smith, Inc., and Merrill Lynch Professional Clearing Corporation, and the use of management's time and
attention in connection with the litigation and related matters may reduce the time management is able to spend on other aspects of our business, which
may have adverse effects on other aspects of our business. To the extent that any such adverse effects exceed any benefits we may realize from the
litigation, it could harm our business, prospects, financial condition and results of operation.
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