Panera Bread 2008 Annual Report Download - page 78

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period to November 1, 2005 through July 26, 2007. The Company believes it and the other defendants have
meritorious defenses to each of the claims in the lawsuit and the Company is prepared to vigorously defend the
lawsuit. On October 6, 2008, the Company filed a motion to dismiss all of the claims in the lawsuit. On
November 20, 2008, plaintiffs filed an opposition to the Company’s motion to dismiss, and on December 3, 2008,
the Company filed a reply memorandum in support of its motion to dismiss. There can be no assurance, however,
that the Company will be successful, and an adverse resolution of the lawsuit could have a material adverse effect on
the Company’s consolidated financial position and results of operations in the period in which the lawsuit is
resolved. The Company is not presently able to reasonably estimate potential losses, if any, related to the lawsuit and
as such, have not recorded a liability in its Consolidated Balance Sheets.
On February 22, 2008, a shareholder derivative lawsuit was filed against the Company as nominal defendant
and against certain of its 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 the Company to implement certain corporate governance reforms, restitution
from the defendants and such other relief as the court might find just and proper. The Company believes it and the
other defendants have meritorious defenses to each of the claims in this lawsuit and the Company is prepared to
vigorously defend the lawsuit. On July 18, 2008, the Company filed a motion to dismiss all of the claims in this
lawsuit. On August 29, 2008, plaintiff filed an opposition to the Company’s motion to dismiss, and on September 10,
2008, the Company filed a reply memorandum in support of its motion to dismiss. There can be no assurance,
however, that the Company will be successful, and an adverse resolution of the lawsuit could have a material
adverse effect on the Company’s consolidated financial position and results of operations in the period in which the
lawsuit is resolved. The Company is not presently able to reasonably estimate potential losses, if any, related to the
lawsuit and as such, have not recorded a liability in its Consolidated Balance Sheets.
On February 22, 2008, a purported class action lawsuit was filed against the Company and one of its
subsidiaries by Pati Johns, a former employee of the Company’s, 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 the Company
believes that its policies and practices were lawful and that it has meritorious defenses to each of the claims in this
case, following mediation with the plaintiff, the Company entered into a settlement agreement in late fiscal 2008,
which has been preliminarily approved by the court. As a result, the Company accrued approximately $0.5 million
in legal settlement costs for the fiscal year ended December 30, 2008, which it expects will be paid in fiscal 2009.
On March 19, 2008, a purported class action lawsuit was filed against the Company and one of its subsidiaries
by Marion Taylor, a former employee of the Company’s, 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 the Company believes that
its policies and practices were lawful and that it has meritorious defenses to each of the claims in this case, following
mediation with the plaintiff, the Company entered into a settlement agreement in late fiscal 2008. The settlement
was finalized in early fiscal 2009.
In addition, the Company is subject to other routine legal proceedings, claims and litigation in the ordinary
course of its business. Defending lawsuits requires significant management attention and financial resources and the
outcome of any litigation, including the matters described above, is inherently uncertain. The Company does not,
however, currently expect that the costs to resolve these routine matters will have a material adverse effect on its
consolidated financial position, results of operations or cash flows.
71
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)