Time Magazine 2009 Annual Report Download - page 136

carte” basis. On December 3, 2007, plaintiffs filed an amended complaint in this action (the “First Amended
Complaint”) that, among other things, dropped the Section 2 claims and all allegations of horizontal coordination.
The defendants, including the Company, filed motions to dismiss the First Amended Complaint and these motions
were granted, with leave to amend. On March 20, 2008, plaintiffs filed a second amended complaint (the “Second
Amended Complaint”) that modified certain aspects of the First Amended Complaint. On April 22, 2008, the
defendants, including the Company, filed motions to dismiss the Second Amended Complaint, which motions were
denied. On July 14, 2008, the defendants filed motions requesting the court to certify its order for interlocutory
appeal to the U.S. Court of Appeals for the Ninth Circuit, which motions were denied. On November 14, 2008, the
Company was dismissed as a programmer defendant, and Turner Broadcasting System, Inc. was substituted in its
place. On May 1, 2009, by stipulation of the parties, plaintiffs filed a third amended complaint (the “Third Amended
Complaint”) and a related motion to adjudicate an element of plaintiffs’ claim. On June 12, 2009, all defendants
opposed that motion and moved to dismiss the Third Amended Complaint. On the same date, the distributor
defendants also filed a motion to dismiss for lack of standing. In an order dated October 15, 2009, the court denied
plaintiffs’ motion and granted defendants’ motion, dismissing the Third Amended Complaint with prejudice. On
October 30, 2009, plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. The Company
intends to defend against this lawsuit vigorously.
On April 4, 2007, the National Labor Relations Board (“NLRB”) issued a complaint against CNN America Inc.
(“CNN America”) and Team Video Services, LLC (“Team Video”). This administrative proceeding relates to CNN
America’s December 2003 and January 2004 terminations of its contractual relationships with Team Video, under
which Team Video had provided electronic newsgathering services in Washington, DC and New York, NY. The
National Association of Broadcast Employees and Technicians, under which Team Video’s employees were
unionized, initially filed charges of unfair labor practices with the NLRB in February 2004, alleging that CNN
America and Team Video were joint employers, that CNN America was a successor employer to Team Video,
and/or that CNN America discriminated in its hiring practices to avoid becoming a successor employer or due to
specific individuals’ union affiliation or activities. The NLRB investigated the charges and issued the above-noted
complaint. The complaint seeks, among other things, the reinstatement of certain union members and monetary
damages. A hearing in the matter before an NLRB Administrative Law Judge began on December 3, 2007 and
ended on July 21, 2008. On November 19, 2008, the Administrative Law Judge issued a non-binding recommended
decision finding CNN America liable. On February 17, 2009, CNN America filed exceptions to this decision with
the NLRB. The Company intends to defend against this matter vigorously.
On June 6, 2005, David McDavid and certain related entities (collectively, “McDavid”) filed a complaint
against Turner Broadcasting System, Inc. (“Turner”) and the Company in Georgia state court. The complaint
asserted, among other things, claims for breach of contract, breach of fiduciary duty, promissory estoppel and fraud
relating to an alleged oral agreement between plaintiffs and Turner for the sale of the Atlanta Hawks and Thrashers
sports franchises and certain operating rights to the Philips Arena. On August 20, 2008, the court issued an order
dismissing all claims against the Company. The court also dismissed certain claims against Turner for breach of an
alleged oral exclusivity agreement, for promissory estoppel based on the alleged exclusivity agreement and for
breach of fiduciary duty. A trial as to the remaining claims against Turner commenced on October 8, 2008 and
concluded on December 2, 2008. On December 9, 2008, the jury announced its verdict in favor of McDavid on the
breach of contract and promissory estoppel claims, awarding damages on those claims of $281 million and
$35 million, respectively. Pursuant to the court’s direction that McDavid choose one of the two claim awards,
McDavid elected the $281 million award. The jury found in favor of Turner on the two remaining claims of fraud
and breach of confidential information. On January 12, 2009, Turner filed a motion to overturn the jury verdict or, in
the alternative, for a new trial, and, on April 22, 2009, the court denied the motion. On April 23, 2009, Turner filed a
notice of appeal to the Georgia Court of Appeals and on June 15, 2009 posted a $25 million letter of credit as
security pending appeal. Oral argument was held before the court on November 17, 2009. The Company has a
reserve established for this matter at December 31, 2009 of approximately $302 million (including interest accrued
through such date), although it intends to defend against this lawsuit vigorously.
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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)