Panera Bread 2008 Annual Report Download - page 26

ITEM 3. LEGAL PROCEEDINGS
On January 25, 2008 and February 26, 2008, purported class action lawsuits were filed against us and three of
our current or former executive officers by the Western Washington Laborers-Employers Pension Trust and by Sue
Trachet, respectively, on behalf of investors who purchased our common stock during the period between
November 1, 2005 and July 26, 2006. Both lawsuits were filed in the United States District Court for the Eastern
District of Missouri, St. Louis Division. Each complaint alleges that we and the other defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5
under the Exchange Act in connection with our disclosure of system-wide sales and earnings guidance during the
period from November 1, 2005 through July 26, 2006. Each complaint seeks, among other relief, class certification
of the lawsuit, unspecified damages, costs and expenses, including attorneys’ and experts’ fees, and such other relief
as the court might find just and proper. On June 23, 2008, the lawsuits were consolidated and the Western
Washington Laborers-Employers Pension Trust was appointed lead plaintiff in the lawsuit. On August 7, 2008, the
plaintiffs filed an amended complaint, which extended the class period to November 1, 2005 through July 26, 2007.
We believe we and the other defendants have meritorious defenses to each of the claims in the lawsuit and we are
prepared to vigorously defend the lawsuit. On October 6, 2008, we filed a motion to dismiss all of the claims in the
lawsuit. On November 20, 2008, plaintiffs filed an opposition to our motion to dismiss, and on December 3, 2008,
we filed a reply memorandum in support of our motion to dismiss. There can be no assurance, however, that we will
be successful, and an adverse resolution of the lawsuit could have a material adverse effect on our consolidated
financial position and results of operations in the period in which the lawsuit is resolved. We are not presently able
to reasonably estimate potential losses, if any, related to the lawsuit and as such, have not recorded a liability in our
Consolidated Balance Sheets.
On February 22, 2008, a shareholder derivative lawsuit was filed against us as nominal defendant and against
certain of our current or former officers and certain current directors. The lawsuit was filed by Paul Pashcetto in the
Circuit Court of St. Louis, Missouri. The complaint alleges, among other things, breach of fiduciary duty, abuse of
control, waste of corporate assets and unjust enrichment between November 5, 2006 and February 22, 2008. The
complaint seeks, among other relief, unspecified damages, costs and expenses, including attorneys’ fees, an order
requiring us to implement certain corporate governance reforms, restitution from the defendants and such other
relief as the court might find just and proper. We believe we and the other defendants have meritorious defenses to
each of the claims in this lawsuit and we are prepared to vigorously defend the lawsuit. On July 18, 2008, we filed a
motion to dismiss all of the claims in this lawsuit. On August 29, 2008, plaintiff filed an opposition to our motion to
dismiss, and on September 10, 2008, we filed a reply memorandum in support of our motion to dismiss. There can
be no assurance, however, that we will be successful, and an adverse resolution of the lawsuit could have a material
adverse effect on our consolidated financial position and results of operations in the period in which the lawsuit is
resolved. We are not presently able to reasonably estimate potential losses, if any, related to the lawsuit and as such,
have not recorded a liability in our Consolidated Balance Sheets.
On February 22, 2008, a purported class action lawsuit was filed against us and one of our subsidiaries by Pati
Johns, a former employee of ours, in the United States District Court for the District of Northern California. The
complaint alleged, among other things, violations of the Fair Labor Standards Act and the California Labor Code for
failure to pay overtime and termination compensation. Although we believe that our policies and practices were
lawful and that we have meritorious defenses to each of the claims in this case, following mediation with the
plaintiff, we entered into a settlement agreement in late fiscal 2008, which has been preliminarily approved by the
court.
On March 19, 2008, a purported class action lawsuit was filed against us and one of our subsidiaries by
Marion Taylor, a former employee of ours, in the United States District Court for the District of Northern California.
The complaint alleged, among other things, violations of the California Labor Code for failure to pay termination
compensation and failure to provide rest and meal periods. Although we believe that our policies and practices were
lawful and that we have meritorious defenses to each of the claims in this case, following mediation with the
plaintiff, we entered into a settlement agreement in late fiscal 2008. The settlement was finalized in early fiscal
2009.
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