SkyWest Airlines 2010 Annual Report Download - page 93

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2010
(6) Commitments and Contingencies (Continued)
During the fourth quarter of 2010, the Company and Delta began preliminary settlement
discussions related to the dispute. Notwithstanding the legal merits of the case, the Company offered to
settle the claim for approximately $5.9 million less than the cumulative total of revenue recognized
related to this matter. Those settlement discussions were not successful; however, as a result of the
settlement offer, the Company wrote off $5.9 million of related receivables as of December 31, 2010.
SkyWest Airlines and Atlantic Southeast continue to vigorously pursue their claims set forth in the
Complaint pending in the Georgia State Court of Fulton County.
ExpressJet Stockholder Litigation
Between August 5, 2010, and August 25, 2010, nine substantially similar putative shareholder class
action suits (collectively, the ‘‘Texas State Actions’’) were filed by individual ExpressJet Holdings
stockholders in the District Court of Harris County, Texas against ExpressJet and its directors. Many of
the petitions also name the Company, Atlantic Southeast and/or Express Delaware Merger Co. (the
subsidiary Atlantic Southeast formed for purposes of the ExpressJet Merger (together, the ‘‘SkyWest
Defendants’’) as defendants in the litigation.
The petitions filed in the Texas State Actions generally allege that the ExpressJet Holdings director
defendants breached their fiduciary duties in connection with the negotiations and approval of the
definitive merger agreement which sets forth the terms and conditions of the ExpressJet Merger (the
‘‘Merger Agreement’’, and the ExpressJet Merger) and that the SkyWest Defendants aided and abetted
such alleged breaches of fiduciary duties. The Texas State Actions seek, among other things, an
injunction enjoining the ExpressJet Merger and the transactions contemplated by the Merger
Agreement and rescission of any transactions contemplated by the Merger Agreement which may be
completed. On August 18, 2010, plaintiff Rayside filed a motion to consolidate the Texas State Actions
into Case No. 2010-48784 in the first-filed court (the ‘‘189th District Court). On August 20, 2010,
plaintiffs Levine, Tejeda, Doraiswamy and Swanepoel filed a similar motion in the 189th District Court.
On September 10, 2010, the 189th District Court ordered the consolidation of the Texas State Actions
with and into Case No. 2010-48784 (the consolidated action is referred to herein as the ‘‘Consolidated
Texas State Action’’).
On September 20, 2010, a putative stockholder class action (the ‘‘Texas Federal Action’’ and,
together with the Consolidated Texas State Action, the ‘‘Actions’’) was commenced in the United States
District Court for the Southern District of Texas, Houston Division. The complaint filed in the Texas
Federal Action includes substantially identical allegations to and requests substantially the same relief
as the petitions in the Texas State Actions, but also includes allegations related to the ExpressJet
Holdings preliminary proxy statement filed with the U. S. Securities and Exchange Commission on
September 3, 2010.
On October 8, 2010, counsel for the defendants in the Actions, counsel for the plaintiff class in the
Consolidated Texas State Action and counsel for plaintiff in the Texas Federal Action agreed to and
executed a memorandum of understanding (the ‘‘MOU’’) containing the terms of an agreement in
principle to resolve the Actions. The MOU provides that, in consideration for the settlement of the
Actions, ExpressJet Holdings made certain disclosures in the definitive proxy statement that was sent to
the ExpressJet Holdings stockholders soliciting approval of the ExpressJet Merger. In the MOU, the
defendants in the Actions acknowledge that they considered the claims raised by the plaintiffs in the
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