Cardinal Health 2008 Annual Report Download - page 123

Under the memorandum of understanding, in full and final settlement of all claims in the Derivative
Actions, the individual defendants were to cause proceeds from their applicable directors and officers insurance
policies totaling $70.0 million to be paid to the Company, less an amount not more than $12.0 million as is
approved by court order for plaintiffs’ attorneys’ fees and costs. The memorandum of understanding further
provided that the Company and its board of directors adopt a corporate governance enhancement requiring the
audit committee of the board to meet in executive session with the Company’s Chief Financial Officer and Chief
Legal Officer no less than annually. Also under the memorandum of understanding, each plaintiff in the
Derivative Actions and the Company was to grant each of the individual defendants and employees, agents and
representatives of the Company a comprehensive release and covenant not to sue, as broad as permissible under
the law, that with certain narrow exceptions covers all claims by or on behalf of the Company that are or could
have been asserted in the Derivative Actions that arise out of or in connection with or are related to any of the
acts, matters or transactions referred to in the Derivative Actions.
In connection with the settlement and in order to consolidate the Cardinal Health Franklin County derivative
actions with the other Derivative Actions, on July 18, 2007, plaintiffs in the Cardinal Health Franklin County
derivative actions filed a joint complaint in the Court of Common Pleas of Delaware County, Ohio that was
substantively identical to the consolidated amended complaint plaintiffs had previously filed in the Court of
Common Pleas of Franklin County, Ohio. Donald Bosley, et al. v. David Bing et al., No. 07-CVH-07-852.On
August 24, 2007, the Cardinal Health Franklin County derivative actions complaint in Franklin County was
dismissed.
In connection with the settlement and in order to consolidate the Weed derivative action with the other
Derivative Actions, on August 1, 2007, the plaintiff in this action filed a complaint in the Court of Common
Pleas for Delaware County, Ohio that was substantively identical to the complaint plaintiff had previously filed
in the Court of Common Pleas of Franklin County, Ohio. Barry E. Weed v. John F. Havens, et al.,
No. 07-CVG-08-0897. On August 27, 2007, the Weed complaint in Franklin County was dismissed.
On August 22, 2007, the Court of Common Pleas for Delaware County consolidated the Cardinal Health Franklin
County derivative actions and the Weed derivative action filed in that Court with the Staehr derivative action.
On October 8, 2007, a stipulation of settlement incorporating the terms of the settlement discussed above
was filed with the Court, and the Court entered an order preliminarily approving the settlement. On
December 17, 2007, the Court held a final approval hearing and entered an order approving the settlement,
awarding the plaintiffs’ counsel $12.0 million in fees from the $70.0 million settlement amount, and dismissing
the case. During the quarter ended December 31, 2007, the Company received $23.0 million in net proceeds from
the settlement; these proceeds were recognized as income within special items in its consolidated statement of
earnings for the quarter. During the quarter ended June 30, 2008, the Company received the remaining $35.0
million in net proceeds; these proceeds were recognized as income within special items in the consolidated
statement of earnings for the quarter. The individual defendants in the Derivative Actions continue to deny the
violations of law alleged in those actions, and the settlement acknowledged that the individual defendants entered
into the settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation.
Shareholder/ERISA Litigation against Syncor
Eleven purported class action lawsuits have been filed against Syncor and certain of its officers and directors,
asserting claims under the federal securities laws. All of these actions were filed in the United States District Court
for the Central District of California, where they were consolidated into a single proceedings referred to as In re
Syncor International Corp. Securities Litigation (the “Syncor federal securities litigation”). The lead plaintiff filed
a third amended consolidated complaint on December 29, 2004. The Syncor federal securities litigation purports
to be brought on behalf of all purchasers of Syncor shares during various periods, beginning as early as March 30,
2000 and ending as late as November 5, 2002, all prior to the Company’s acquisition of Syncor. The Syncor
federal securities litigation alleges, among other things, that the defendants violated Section 10(b) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder and
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