Barnes and Noble 2013 Annual Report Download - page 61

through the importation and sale in the United States of
NOOKTM products. The complaint also alleges that Barnes
& Noble is infringing two other patents in the same patent
family: U.S. Patent No. 5,440,749 and U.S. Patent No.
5,530,890. On September 21, 2012, TPL and Barnes &
Noble filed a stipulation agreeing to stay the action pending
final resolution of the ITC action. On September 26, 2012,
the District Court granted the motion to stay.
Adrea LLC v. Barnes & Noble, Inc., barnesandnoble.com LLC
and Nook Media LLC
On June 14, 2013, Adrea LLC filed a complaint against
Barnes & Noble, Inc., barnesandnoble.com LLC and Nook
Media LLC in the United States District Court for the
Southern District of New York alleging that various B&N
Nook products and related online services infringe U.S.
Patent 7,298,851, U.S. Patent 7,299,501, and U.S. Patent
7,620,703. The current deadline to answer or to otherwise
respond is August 9, 2013.
OTHER LITIGATION
Kevin Khoa Nguyen, an individual, on behalf of himself and
all others similarly situated v. Barnes & Noble, Inc.
On April 17, 2012, a complaint was filed in the Superior
Court for the State of California against the Company.
The complaint is styled as a nationwide class action and
includes a California state-wide subclass based on alleged
cancellations of orders for HP TouchPad Tablets placed on
the Company’s website in August 2011. The lawsuit alleges
claims for unfair business practices and false advertising
under both New York and California state law, violation of
the Consumer Legal Remedies Act under California law,
and breach of contract. The complaint demands specific
performance of the alleged contracts to sell HP TouchPad
Tablets at a specified price, injunctive relief, and mon-
etary relief, but does not specify an amount. The Company
submitted its initial response to the complaint on May 18,
2012, and moved to compel plaintiff to arbitrate his claims
on an individual basis pursuant to a contractual arbitration
provision on May 25, 2012. The court denied the Company’s
motion to compel arbitration, and the Company appealed
that denial to the Ninth Circuit Court of Appeals. The
Company filed its opening brief on the appeal on February
11, 2013. The answering brief was filed on April 13, 2013,
and the Company’s reply brief was filed on May 23, 2013.
The Company has also moved to dismiss the complaint and
moved to transfer the action to New York. The court granted
the Company’s motion to stay on November 26, 2012,
and the action has been stayed pending resolution of the
Company’s appeal from the court’s denial of its motion to
compel arbitration.
PIN Pad Litigation
As previously disclosed, the Company discovered that
PIN pads in certain of its stores had been tampered with
to allow criminal access to card data and PIN numbers
on credit and debit cards swiped through the terminals.
Following public disclosure of this matter on October 24,
2012, the Company was served with four putative class
action complaints (three in federal district court in the
Northern District of Illinois and one in the Northern
District of California), each of which alleged on behalf of
national and other classes of customers who swiped credit
and debit cards in Barnes & Noble Retail stores common
law claims such as negligence, breach of contract and inva-
sion of privacy, as well as statutory claims such as violations
of the Fair Credit Reporting Act, state data breach notifi-
cation statutes, and state unfair and deceptive practices
statutes. The actions sought various forms of relief includ-
ing damages, injunctive or equitable relief, multiple or
punitive damages, attorneys’ fees, costs, and interest. All
four cases have now been transferred and/or assigned to
a single Judge in the United States District Court for the
Northern District of Illinois, and a single consolidated
amended complaint has been filed. The Company has filed
a motion to dismiss the consolidated amended complaint
in its entirety. It is uncertain when the Court will render
a decision on that motion. It is possible that additional
litigation arising out of this matter may be commenced on
behalf of customers, banks or other card issuers, payment
card companies or stockholders seeking damages allegedly
arising out of this incident and other related relief.
The Company also has received inquiries related to this
matter from the Federal Trade Commission and eight state
attorneys general, all of which have either been closed
or have not had any recent activity, and the Company
intends to cooperate with them if further activity arises.
In addition, payment card companies and associations
may impose fines by reason of the tampering and federal
or state enforcement authorities may impose penalties or
other remedies against the Company.
At this point the Company is unable to predict the devel-
opments in, outcome of, and economic and other conse-
quences of pending or future litigation or state and federal
inquiries related to this matter.
Dustin Torrez, an individual, on behalf of himself and all
others similarly situated v. Barnes & Noble, Inc.
On October 11, 2011, a complaint was filed in the Superior
Court for the State of California against the Company. The
complaint is styled as a California state-wide class action.
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