Panera Bread 2011 Annual Report Download - page 69

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Legal Proceedings
On January 25, 2008 and February 26, 2008, purported class action lawsuits were filed against the Company and three of the
Company’s current and former executive officers by the Western Washington Laborers-Employers Pension Trust and Sue Trachet,
respectively, on behalf of investors who purchased the Company’s 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 the Company 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 the Company’s
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, the Company’s
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 the Company as nominal defendant and against certain
of its 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 the Company 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, the Company agreed,
among other things, to implement and maintain certain corporate governance additions, modifications and/or formalizations, and
its 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 the Company and one of its subsidiaries by Nick Sotoudeh,
a former employee of a subsidiary of the Company. 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. 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, the Company agreed to pay a maximum amount of $5.0 million to purported class members, plaintiff's 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 the Company's Consolidated
Balance Sheets as of December 27, 2011.
On July 22, 2011, a purported class action lawsuit was filed against the Company and one of its subsidiaries by David Carter, a
former employee of a subsidiary of the Company, and Nikole Benavides, a purported former employee of one of the Company's
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 the Company's 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 the Company and one of its subsidiaries by Denarius
Lewis, Caroll Ruiz, and Corey Weiner, former employees of a subsidiary of the Company. The lawsuit was filed in the United
States District Court for Middle District of Florida. The complaint alleges, among other things, violations of the Fair Labor