Cincinnati Bell 2006 Annual Report Download - page 147

In re Broadwing Inc. Derivative Complaint, (Garlich v. Broadwing Inc., et al), Hamilton County Court of
Common Pleas, Case No. A0302720.
This derivative complaint was filed against Broadwing Inc. and ten of its current and former directors on
April 9, 2003 alleging breaches of fiduciary duty arising out of the same allegations discussed in In re
Broadwing Inc. Securities Class Action Lawsuits above. Pursuant to a stipulation between the parties,
defendants were not required, absent further order by the Court, to answer, move, or otherwise respond to this
complaint until 30 days after the federal court rendered a ruling on the defendants’ motion to dismiss in In re
Broadwing Inc. Securities Class Action Lawsuits.
On April 28, 2006, the Company and plaintiffs entered into a MOU, which sets forth an agreement in
principle to settle this matter. For this derivative lawsuit and the lawsuits discussed above, the Company reserved
$6.3 million in the first quarter of 2006 to reflect its contribution to the settlement fund and to cover other
settlement-related expenses. On July 12, 2006, the Company and plaintiffs entered into a definitive Stipulation
and Agreement of Settlement reflecting the terms of the MOU. The Settlement Fairness Hearing took place on
September 6, 2006 and the court has issued an order approving the Stipulation and Agreement of Settlement as
submitted by the parties. Accordingly, this case has been dismissed with prejudice.
In re Broadwing Inc. ERISA Class Action Lawsuits, (Kurtz v. Broadwing Inc., et al), U.S. District Court,
Southern District of Ohio, Western Division, Case No. C-1-02-857.
Between November 18, 2002 and March 17, 2003, five putative class action lawsuits were filed against
Broadwing Inc. and certain of its current and former officers and directors in the United States District Court for
the Southern District of Ohio. Fidelity Management Investment Trust Company was also named as a defendant in
these actions.
These cases, which purport to be brought on behalf of the Cincinnati Bell Inc. Savings and Security Plan,
the Broadwing Retirement Savings Plan, and a class of participants in the Plans, generally alleged that the
defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974
(“ERISA”) by improperly encouraging the Plan participant-plaintiffs to elect to invest in the Company stock fund
within the relevant Plan and by improperly continuing to make employer contributions to the Company stock
fund within the relevant Plan.
On February 22, 2006, the Company entered into a Stipulation and Agreement of Settlement of ERISA
Actions (the “Agreement”) providing for the settlement of the consolidated case with no finding or admission of
any wrongdoing by any of the defendants in the lawsuit. Under the Agreement, defendants were obligated to pay
$11 million, which payment has been made on their behalf by their insurers, to a fund to settle the claims of, and
obtain a release of all claims from, the class members. On March 13, 2006, the Court issued an order giving
preliminary approval of the Agreement and scheduled a Settlement Fairness Hearing. The Settlement Fairness
Hearing took place on June 22, 2006. On October 5, 2006, the Court issued a final order approving the
Stipulation and Agreement of Settlement as submitted by the parties. Accordingly, this case has been dismissed
with prejudice.
Freedom Wireless vs. BCGI, et al U.S. District Court, District of Massachusetts, Case No. 05-110620-EFH.
On September 16, 2005, Freedom Wireless filed a patent infringement action against 24 wireless service
providers, including CBW. The suit alleged that the defendant wireless service providers were in violation of a
patent owned by Freedom Wireless. CBW obtained its rights to use the technology in question through Boston
Communications Group Inc. (“BCGI”). BCGI has acknowledged its obligation to indemnify CBW in accordance
with the terms of the license agreement. This lawsuit was preceded by a direct patent infringement suit against
BCGI by Freedom Wireless, in which BCGI was found liable. On July 21, 2006, BCGI issued a press release
indicating that it had reached a settlement agreement with Freedom Wireless in the underlying patent
infringement action. On October 16, 2006, Freedom Wireless filed a Notice of Dismissal dismissing with
prejudice all patent infringement claims against CBW arising from the alleged patent infringement by BCGI.
Accordingly, the Company considers this case to be closed.
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