Panera Bread 2011 Annual Report Download - page 25

17
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 and
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 alleged 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 net sales and earnings guidance
during the period from November 1, 2005 through July 26, 2006. Each complaint sought, 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. Following the filing of motions by both parties and hearings before the Court,
on February 11, 2011, the parties filed with the Court a Stipulation of Settlement regarding the class action lawsuit. Under the
terms of the Stipulation of Settlement, our primary directors and officers liability insurer deposited $5.7 million into a settlement
fund for payment to class members, plaintiff’s attorneys’ fees and costs of administering the settlement. The Stipulation of
Settlement contains no admission of wrongdoing. On June 22, 2011, the Court granted final approval of the settlement and entered
an order dismissing the class action lawsuit with prejudice. The settlement and dismissal became final on July 22, 2011.
On February 22, 2008, a shareholder derivative lawsuit was filed against us as nominal defendant and against certain of our current
and former officers and certain current directors. The lawsuit was filed by Paul Pashcetto in the Circuit Court of St. Louis, Missouri.
The complaint alleged, 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 sought, 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. Following the filing of motions by both parties
and hearings before the Court, on February 22, 2011, the parties filed with the Court a Stipulation of Settlement regarding the
shareholder derivative lawsuit. Under the terms of the Stipulation of Settlement, we agreed, among other things, to implement
and maintain certain corporate governance additions, modifications and/or formalizations, and our insurer paid plaintiff’s attorneys’
fees and expenses of $1.4 million. The Stipulation of Settlement contains no admission of wrongdoing. On April 8, 2011, the
Court granted final approval of the settlement and entered an order dismissing the shareholder derivative lawsuit with prejudice.
The settlement and dismissal became final on May 8, 2011.
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 one of our subsidiaries. The lawsuit was filed in the California Superior Court, County of Contra Costa. On April
22, 2011, the complaint was amended to add another former employee, Gabriela Brizuela, as a plaintiff. The complaint alleged,
among other things, violations of the California Labor Code, failure to pay overtime, failure to provide meal and rest periods and
termination compensation and violations of California’s Business and Professions Code. The complaint sought, among other
relief, class certification of the lawsuit, unspecified damages, costs and expenses, including attorneys’ fees, and such other relief
as the Court might find just and proper. On November 17, 2011, the parties reached a Memorandum of Agreement regarding the
class action lawsuits and the class action filed by David Carter discussed below. Under the terms of the Memorandum of Agreement,
we agreed to pay a maximum amount of $5.0 million to purported class members, plaintiffs' attorneys' fees, and costs of
administering the settlement. The Memorandum of Agreement contains no admission of wrongdoing. The terms and conditions
of a definitive settlement agreement are under negotiation and such agreement is subject to the final approval by the California
Superior Court. The agreement of $5.0 million is included in accrued expenses in our Consolidated Balance Sheets as of December
27, 2011.
On July 22, 2011, a purported class action lawsuit was filed against us and one of our subsidiaries by David Carter, a former
employee of one of our subsidiaries, and Nikole Benavides, a purported former employee of one of our franchisees. The lawsuit
was filed in the California Superior Court, County of San Bernardino. The complaint alleges, among other things, violations of
the California Labor Code, failure to pay overtime, failure to provide meal and rest periods and termination compensation and
violations of California's Business and Professions Code. The complaint seeks, among other relief, collective and class certification
of the lawsuit, unspecified damages, costs and expenses, including attorneys' fees, and such other relief as the Court might find
just and proper. This matter against our subsidiary was consolidated with the lawsuit described in the immediately preceding
paragraph and is expected to be resolved under the Memorandum of Agreement described above.
On December 16, 2010, a purported class action lawsuit was filed against us and one of our subsidiaries by Denarius Lewis, Caroll
Ruiz, and Corey Weiner, former employees of one of our subsidiaries. The lawsuit was filed in the United States District Court
for the Middle District of Florida. The complaint alleges, among other things, violations of the Fair Labor Standards Act. The
complaint seeks, among other relief, collective and class certification of the lawsuit, unspecified damages, costs and expenses,