Zynga 2015 Annual Report Download - page 110

Table of Contents
the court consolidated various of the class actions as In re Zynga Inc. Securities Litigation, Lead Case No. 12-cv-04007-JSW. On January 23, 2013, the court
entered an order appointing a lead plaintiff and approving lead plaintiff’s selection of lead counsel. On April 3, 2013, the lead plaintiff and another named plaintiff
filed a consolidated complaint. On February 25, 2014, the court granted the defendants’ motion to dismiss the consolidated complaint and provided plaintiffs leave
to file an amended complaint.
The lead plaintiff filed a First Amended Complaint on March 31, 2014. The First Amended Complaint alleges that the defendants violated the federal
securities laws by issuing false or misleading statements regarding the Company’s business and financial projections. The plaintiffs seek to represent a class of
persons who purchased or otherwise acquired the Company’s securities between February 14, 2012 and July 25, 2012. The First Amended Complaint asserts claims
for unspecified damages, and an award of costs and expenses to the putative class, including attorneys’ fees. On March 25, 2015, the Court issued an order denying
the defendants’ motion to dismiss the First Amended Complaint. On April 28, 2015, the Court denied the defendants’ motion for leave to seek reconsideration of
that order.
On June 12, 2015, the Court entered a scheduling order setting certain pretrial deadlines leading up to a hearing on any dispositive motions scheduled for
May 12, 2017. On June 24, 2015, pursuant to a stipulation among the parties, the consolidated class actions were reassigned to Magistrate Judge Jacqueline Scott
Corley for all further proceedings.
Pursuant to court order, a mediation session was conducted before the Honorable Edward Infante (Ret.) on August 4, 2015. The parties reached an agreement
in principle to settle In re Zynga Inc. Securities Litigation as to all defendants for $23.0 million. The parties negotiated and executed a final stipulation of settlement
and on October 2, 2015, lead plaintiff’s counsel filed an unopposed motion for preliminary approval of the settlement. In response to issues raised by the Court at
an October 8, 2015 hearing and in an October 9, 2015 order, on October 15, 2015, lead plaintiff’s counsel revised the papers in support of preliminary approval and
filed a supplemental submission in support of lead plaintiff’s unopposed motion for preliminary approval of the settlement. On October 27, 2015, the Court granted
preliminary approval of the class action settlement. On February 11, 2016, the court conducted a final fairness hearing and entered an order granting the motion for
final approval of the settlement. The settlement was funded entirely by insurance and will result in the dismissal of all claims against the defendants. Accordingly
there will be no impact to Zynga’s financial statements.
In addition, a purported securities class action captioned Reyes v. Zynga Inc., et al. was filed on August 1, 2012, in San Francisco County Superior Court.
Subsequent to various proceedings, on February 11, 2015, the court granted plaintiff’s request for voluntary dismissal of the action with prejudice as to the named
plaintiff’s claims and without prejudice as to the claims of any other members of the proposed class.
On April 4, 2013, a purported class action captioned Lee v. Pincus, et al. was filed in the Court of Chancery of the State of Delaware against the Company,
and certain of our current and former directors, officers, and executives. The complaint alleges that the defendants breached fiduciary duties in connection with the
release of certain lock-up agreements entered into in connection with the Company’s initial public offering. The plaintiff seeks to represent a class of certain of the
Company’s shareholders who were subject to the lock-up agreements and who were not permitted to sell shares in an April 2012 secondary offering. On
January 17, 2014, the plaintiff filed an amended complaint. On March 6, 2014, the defendants filed motions to dismiss the amended complaint and a motion to stay
discovery while the motions to dismiss were pending. On November 14, 2014, the court denied the motion to dismiss brought by Zynga and the directors and
granted the motion to dismiss brought by the underwriters who had been named as defendants.
On June 24, 2015, certain of the defendants filed a motion for relief from the court’s November 14, 2014 decision denying the defendants’ motion to dismiss
the complaint. Briefing on the motion for relief from the court’s November 14, 2014 decision is complete. A hearing date has not been set. On August 19, 2015 the
parties agreed to voluntarily dismiss three individual director defendants from the case.
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