Best Buy 2013 Annual Report Download - page 105

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15. Contingencies and Commitments
Contingencies
We are involved in a number of legal proceedings. Where appropriate, we have made accruals with respect to these matters,
which are reflected in our consolidated financial statements. However, there are cases where liability is not probable or the
amount cannot be reasonably estimated and therefore accruals have not been made. We provide disclosure of matters where we
believe liability is reasonably possible and which may be material to our consolidated financial statements.
Securities Actions
In February 2011, a purported class action lawsuit captioned, IBEW Local 98 Pension Fund, individually and on behalf of all
others similarly situated v. Best Buy Co., Inc., et al., was filed against us and certain of our executive officers in the U.S.
District Court for the District of Minnesota. This federal court action alleges, among other things, that we and the officers
named in the complaint violated Sections 10(b) and 20A of the Exchange Act and Rule 10b-5 under the Exchange Act in
connection with press releases and other statements relating to our fiscal 2011 earnings guidance that had been made available
to the public. Additionally, in March 2011, a similar purported class action was filed by a single shareholder, Rene LeBlanc,
against us and certain of our executive officers in the same court. In July 2011, after consolidation of the IBEW Local 98
Pension Fund and Rene LeBlanc actions, a consolidated complaint captioned, IBEW Local 98 Pension Fund v. Best Buy Co.,
Inc., et al., was filed and served. We filed a motion to dismiss the consolidated complaint in September 2011, and in March
2012, subsequent to the end of fiscal 2012, the court issued a decision dismissing the action with prejudice. In April 2012, the
plaintiffs filed a motion to alter or amend the court's decision on our motion to dismiss. In October 2012, the court granted
plaintiff's motion to alter or amend the court's decision on our motion to dismiss in part by vacating such decision and giving
plaintiff leave to file an amended complaint, which plaintiff did in October 2012. We filed a motion to dismiss the amended
complaint in November 2012 and all responsive pleadings were filed in December 2012. A hearing is scheduled for April 26,
2013. The court's decision will be rendered thereafter.
In June 2011, a purported shareholder derivative action captioned, Salvatore M. Talluto, Derivatively and on Behalf of Best
Buy Co., Inc. v. Richard M. Schulze, et al., as Defendants and Best Buy Co., Inc. as Nominal Defendant, was filed against both
present and former members of our Board of Directors serving during the relevant periods in fiscal 2011 and us as a nominal
defendant in the U.S. District Court for the State of Minnesota. The lawsuit alleges that the director defendants breached their
fiduciary duty, among other claims, including violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in
failing to correct public misrepresentations and material misstatements and/or omissions regarding our fiscal 2011 earnings
projections and, for certain directors, selling stock while in possession of material adverse non-public information.
Additionally, in July 2011, a similar purported class action was filed by a single shareholder, Daniel Himmel, against us and
certain of our executive officers in the same court. In November 2011, the respective lawsuits of Salvatore M. Talluto and
Daniel Himmel were consolidated into a new action captioned, In Re: Best Buy Co., Inc. Shareholder Derivative Litigation,
and a stay ordered until after a final resolution of the motion to dismiss in the consolidated IBEW Local 98 Pension Fund v.
Best Buy Co., Inc., et al. case.
The plaintiffs in the above securities actions seek damages, including interest, equitable relief and reimbursement of the costs
and expenses they incurred in the lawsuits. We believe the allegations in the above securities actions are without merit, and we
intend to defend these actions vigorously. Based on our assessment of the facts underlying the claims in the above securities
actions, their respective procedural litigation history, and the degree to which we intend to defend our company in these
matters, the amount or range of reasonably possible losses, if any, cannot be estimated.
Trade Secrets Action
In February 2011, a lawsuit captioned Techforward, Inc. v. Best Buy Co., Inc., et. al. was filed against us in the U.S. District
Court, Central District of California. The case alleges that we implemented our “Buy Back Plan” in February 2011 using trade
secrets misappropriated from plaintiff's buyback plan that were disclosed to us during business relationship discussions and
also breached both an agreement for a limited marketing test of plaintiff's buyback plan and a non-disclosure agreement related
to the business discussions. In November 2012, a jury found we were unjustly enriched through misappropriation of trade
secrets and awarded plaintiff $22 million. The jury also found that although we breached the subject contracts, plaintiff
suffered no resulting damage. In December 2012, the court further awarded the plaintiff $5 million in exemplary damages and
granted plaintiff's motion for $6 million in attorney fees and costs. We believe that the jury verdict and court awards are
inconsistent with the law and the evidence offered at trial or otherwise in error. Accordingly, we appealed the resulting
judgment and awards in February 2013 and intend to vigorously contest these decisions.
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