Panera Bread 2009 Annual Report Download - page 23

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 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. On August 7, 2008, the plaintiff filed
an amended complaint, which extended the class period to November 1, 2005 through July 26, 2007. We believe
that we and the other defendants have meritorious defenses to each of the claims in this lawsuit and we are
vigorously defending the lawsuit. On October 6, 2008, we filed a motion to dismiss all of the claims in this lawsuit.
Following filings by both parties on our motion to dismiss, on June 25, 2009, the Court converted our motion to one
for summary judgment and denied it without prejudice. The Court simultaneously gave us until July 20, 2009 to file
a new motion for summary judgment, which deadline the Court subsequently extended until August 10, 2009. On
August 10, 2009, we filed a motion for summary judgment. On September 9, 2009, the plaintiff filed a request to
deny or continue our motion for summary judgment to allow the plaintiff to conduct discovery. Following a hearing
and subsequent filings by both parties on the plaintiff’s request for discovery, on November 6, 2009, the Court
denied the plaintiff’s request. The plaintiff filed an opposition to our motion for summary judgment on Decem-
ber 12, 2009, and we filed our reply in support of our motion on December 21, 2009. Our motion for summary
judgment is pending as of the date of this filing. There can be no assurance 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 that we and the other defendants have meritorious defenses
to each of the claims in this lawsuit and we are vigorously defending the lawsuit. On July 18, 2008, we filed a motion
to dismiss all of the claims in this lawsuit. Following filings by both parties on our motion to dismiss, on
December 14, 2009, the Court denied our motion. We filed an answer to the complaint on January 27, 2010. There
can be no assurance 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 had meritorious defenses to each of the claims in this case, following mediation with the plaintiff,
we entered into a Court-approved settlement agreement in late fiscal 2008. As a result, we accrued approximately
$0.5 million in legal settlement costs for the fiscal year ended December 30, 2008, which we paid in fiscal 2009.
On December 9, 2009, a purported class action lawsuit was filed against us and one of our subsidiaries by Nick
Sotoudeh, a former employee of ours. The lawsuit was filed in the California Superior Court, County of Contra
Costa. The complaint alleges, among other things, violations of the California Labor Code, failure to pay overtime,
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