Big Lots 2014 Annual Report Download - page 146

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NOTE 10 – COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
On May 21, May 22 and July 2, 2012, three shareholder derivative lawsuits were filed in the U.S. District Court for the
Southern District of Ohio against us and certain of our current and former outside directors and executive officers (Jeffrey
Berger, David Kollat, Brenda Lauderback, Philip Mallott, Russell Solt, Dennis Tishkoff, Robert Claxton, Joe Cooper, Steven
Fishman, Charles Haubiel, Timothy Johnson, John Martin, Norman Rankin, Paul Schroeder, Robert Segal and Steven Smart).
The lawsuits were consolidated, and, on August 13, 2012, plaintiffs filed a consolidated complaint, which generally alleges that
the individual defendants traded in our common shares based on material, nonpublic information concerning our guidance for
fiscal 2012 and the first quarter of fiscal 2012 and the director defendants failed to suspend our share repurchase program
during such trading activity. The consolidated complaint asserts claims under Ohio law for breach of fiduciary duty, unjust
enrichment, misappropriation of trade secrets and corporate waste and seeks declaratory relief and disgorgement to us of
proceeds from any wrongful sales of our common shares, plus attorneys’ fees and expenses. The defendants have filed a
motion to dismiss the consolidated complaint, and that motion is fully briefed and awaiting a decision.
We received a letter dated January 28, 2013, sent on behalf of a shareholder demanding that our Board of Directors investigate
and take action in connection with the allegations made in the derivative and securities lawsuits described above. The
shareholder indicated that he would commence a derivative lawsuit if our Board of Directors failed to take the demanded
action. On March 6, 2013, our Board of Directors referred the shareholder’s letter to a committee of independent directors to
investigate the matter. That committee, with the assistance of independent outside counsel, investigated the allegations in the
shareholder’s demand letter and, on August 28, 2013, reported its findings to our Board of Directors along with its
recommendation that the Board reject the shareholder’s demand. Our Board of Directors unanimously accepted the
recommendation of the demand investigation committee and, on September 9, 2013, outside counsel for the committee sent a
letter to counsel for the shareholder informing the shareholder of the Board’s determination. On October 18, 2013, the
shareholder filed a derivative lawsuit in the U.S. District Court for the Southern District of Ohio against us and each of the
current and former outside directors and executive officers named in the 2012 shareholder derivative lawsuit. The plaintiff’s
complaint generally alleges that the individual defendants traded in our common shares based on material, nonpublic
information concerning our guidance for fiscal 2012 and the first quarter of fiscal 2012 and the director defendants failed to
suspend our share repurchase program during such trading activity. The complaint asserts claims under Ohio law for breach of
fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, corporate waste and misappropriation of trade
secrets and seeks damages, injunctive relief and disgorgement to us of proceeds from any wrongful sales of our common
shares, plus attorneys’ fees and expenses. The defendants have filed a motion to dismiss the complaint, and that motion is fully
briefed and awaiting a decision.
On February 10, 2014, a shareholder derivative lawsuit was filed in the Franklin County Common Pleas Court in Columbus,
Ohio, against us and certain of our current and former outside directors and executive officers (David Campisi, Steven
Fishman, Joe Cooper, Charles Haubiel, Timothy Johnson, Robert Claxton, John Martin, Norman Rankin, Paul Schroeder,
Robert Segal, Steven Smart, David Kollat, Jeffrey Berger, James Chambers, Peter Hayes, Brenda Lauderback, Philip Mallott,
Russell Solt, James Tener and Dennis Tishkoff). The plaintiff’s complaint generally alleges that the individual defendants
traded in our common shares based on material, nonpublic information concerning our guidance for fiscal 2012 and the first
quarter of fiscal 2012 and the director defendants failed to suspend our share repurchase program during such trading activity.
The complaint also alleges that we and various individual defendants made false and misleading statements regarding our
Canadian operations prior to our announcement on December 5, 2013 that we were exiting the Canadian market. The
complaint asserts claims under Ohio law for breach of fiduciary duty, unjust enrichment, waste of corporate assets and
misappropriation of insider information and seeks damages, injunctive relief and disgorgement to us of proceeds from any
wrongful sales of our common shares, plus attorneys’ fees and expenses. At the parties’ request, the court has stayed this
lawsuit until after the judge in the federal lawsuits discussed in the preceding paragraphs has ruled on the motions to dismiss
pending in those federal lawsuits.
On July 9, 2012, a putative securities class action lawsuit was filed in the U.S. District Court for the Southern District of Ohio
on behalf of persons who acquired our common shares between February 2, 2012 and April 23, 2012. This lawsuit was filed
against us, Lisa Bachmann, Mr. Cooper, Mr. Fishman and Mr. Haubiel. The complaint in the putative class action generally
alleges that the defendants made statements concerning our financial performance that were false or misleading. The complaint
asserts claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 and seeks damages in an
unspecified amount, plus attorneys’ fees and expenses. The lead plaintiff filed an amended complaint on April 4, 2013, which
added Mr. Johnson as a defendant, removed Ms. Bachmann as a defendant, and extended the putative class period to August 23,
2012. The defendants have filed a motion to dismiss the putative class action complaint, and that motion is fully briefed and
awaiting a decision.