Pizza Hut 2010 Annual Report Download - page 218

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On March 14, 2007, a lawsuit styled Boskovich Farms, Inc. v. Taco Bell Corp. and Does 1 through 100 was filed in the
Superior Court of the State of California, Orange County. Boskovich Farms, a supplier of produce to Taco Bell, alleged
in its complaint, among other things, that it suffered damage to its reputation and business as a result of publications
and/or statements it claims were made by Taco Bell in connection with Taco Bell’s reporting of results of certain tests
conducted during investigations on green onions used at Taco Bell restaurants. The parties participated in mediation on
April 10, 2008, without reaching resolution. The arbitration panel heard the parties’ cross motions for summary judgment
on August 12, 2009. On August 14, 2009, the arbitration panel issued an opinion granting Taco Bell’s motion for
summary judgment and dismissing all of Boskovich’s claims with prejudice. On September 23, 2009, Boskovich filed a
motion to vacate the arbitration award. On January 6, 2010 the court heard oral arguments on Boskovich’s motion to
vacate and took the matter under submission. On March 24, 2010, the court denied plaintiff’s motion and confirmed the
arbitration award. Boskovich appealed to the Kentucky Court of Appeals on April 23, 2010. Taco Bell filed its response
on May 19, 2010 and reserved the right to seek attorneys’ fees for the cost of the appeals. Taco Bell denies liability and
intends to vigorously defend against all claims in any arbitration and the lawsuit. However, in view of the inherent
uncertainties of litigation, the outcome of this case cannot be predicted at this time. Likewise, the amount of any potential
loss cannot be reasonably estimated.
On July 9, 2009, a putative class action styled Mark Smith v. Pizza Hut, Inc. was filed in the United States District Court
for the District of Colorado. The complaint alleges that Pizza Hut did not properly reimburse its delivery drivers for
various automobile costs, uniforms costs, and other job-related expenses and seeks to represent a class of delivery drivers
nationwide under the Fair Labor Standards Act (FLSA) and Colorado state law. On January 4, 2010, plaintiffs filed a
motion for conditional certification of a nationwide class of current and former Pizza Hut, Inc. delivery drivers. However,
on March 11, 2010, the court granted Pizza Hut’s pending motion to dismiss for failure to state a claim, with leave to
amend. On March 31, 2010, plaintiffs filed an amended complaint, which in addition to the federal FLSA claims asserts
state-law class action claims under the laws of 16 different states. Pizza Hut filed a motion to dismiss the amended
complaint, and plaintiffs sought leave to amend their complaint a second time. On August 9, 2010, the court granted
plaintiffs’ motion to amend. Pizza Hut has filed another motion to dismiss the Second Amended Complaint. The court
has yet to rule on Pizza Hut’s motion.
Pizza Hut denies liability and intends to vigorously defend against all claims in this lawsuit. However, in view of the
inherent uncertainties of litigation, the outcome of these cases cannot be predicted at this time. Likewise, the amount of
any potential loss cannot be reasonably estimated.
On August 6, 2010, a putative class action styled Jacquelyn Whittington v. Yum Brands, Inc., Taco Bell of America, Inc.
and Taco Bell Corp. was filed in the United States District Court for the District of Colorado. The plaintiff seeks to
represent a nationwide class of assistant managers who were allegedly misclassified and did not receive compensation for
all hours worked and did not receive overtime pay after 40 hours in a week. The plaintiff also purports to represent a
separate class of Colorado assistant managers under Colorado state law, which provides for daily overtime after 12 hours
in a day. Yum has been dismissed from the case. Defendants filed their answer on September 20, 2010, and the parties
commenced class discovery, which is currently on-going.
Taco Bell and the Company deny liability and intend to vigorously defend against all claims in this lawsuit. However, in
view of the inherent uncertainties of litigation, the outcome of this case cannot be predicted at this time. Likewise, the
amount of any potential loss cannot be reasonably estimated.
We are engaged in various other legal proceedings and have certain unresolved claims pending, the ultimate liability for
which, if any, cannot be determined at this time. However, based upon consultation with legal counsel, we are of the
opinion that such proceedings and claims are not expected to have a material adverse effect, individually or in the
aggregate, on our consolidated financial condition or results of operations.
Form 10-K