Computer Associates 2007 Annual Report Download - page 125

and other unspecified damages allegedly sustained by the Company. On December 19, 2006, the Special Litigation
Committee filed a motion to dismiss or, in the alternative, to stay the action in favor of the consolidated derivative
action originally filed in the Federal Court in June 2004 (see “— Derivative Actions Filed in 2004” above).The Special Litigation
Committee has announced its conclusions, determinations, recommendations and actions with respect to this litigation (see
“— Derivative Actions Filed in 2004” above). In the opinion of management, the resolution of this lawsuit is not expected to
have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
Texas Litigation
On August 9, 2004, a petition was filed by Sam Wyly and Ranger Governance, Ltd. against the Company in the District Court
of Dallas County, Texas (the Ranger Governance Litigation), seeking to obtain a declaratory judgment that plaintiffs did not
breach two separation agreements they entered into with the Company in 2002 (the 2002 Agreements). Plaintiffs seek to
obtain this declaratory judgment in order to file a derivative suit on behalf of the Company (see “— Derivative Actions Filed in
2004” above). On September 3, 2004, the Company filed an answer to the petition and on September 10, 2004, the Company
filed a notice of removal seeking to remove the action to federal court. On February 18, 2005, Mr.Wyly filed a separate lawsuit
in the United States District Court for the Northern District of Texas (the Texas Federal Court) alleging that he is entitled to
attorneys’ fees in connection with the original litigation filed in Texas. The two actions have been consolidated. On March 31,
2005, the plaintiffs amended their complaint to allege a claim that they were defrauded into entering the 2002 Agreements
and to seek rescission of those agreements and damages.The amended complaint in the Ranger Governance Litigation seeks
rescission of the 2002 Agreements, unspecified compensatory, consequential and exemplary damages and a declaratory
judgment that the 2002 Agreements are null and void and that plaintiffs did not breach the 2002 Agreements. On May 11,
2005, the Company moved to dismiss the Texas litigation. On July 21, 2005, the plaintiffs filed a motion for summary
judgment. On July 22, 2005, the Texas Federal Court dismissed the latter two motions without prejudice to refiling the motions
later in the action. On September 1, 2005, the Texas Federal Court granted the Company’s motion to transfer the action to the
Federal Court. Since the transfer, there have been no significant activities or developments.
Other Civil Actions
In June 2004, a lawsuit captioned Scienton Technologies, Inc. et al. v. Computer Associates International, Inc., was filed in the
Federal Court. The complaint seeks monetary damages in various amounts, some of which are unspecified, but which are
alleged to exceed $868 million, based upon claims for, among other things, breaches of contract, misappropriation of trade
secrets, and unfair competition. This matter is in the early stages of discovery. Although the ultimate outcome cannot be
determined, the Company believes that the claims are unfounded and that the Company has meritorious defenses. In the
opinion of management, the resolution of this lawsuit is not expected to have a material adverse effect on the Company’s
financial position, results of operations, or cash flows.
On September 21, 2004, a complaint to compel production of the Company’s books and records, including files that have been
produced by the Company to the USAO and SEC in the course of their joint investigation of the Company’s accounting
practices (see “— The Government Investigation”), was filed by a purported stockholder of the Company in Delaware
Chancery Court pursuant to Section 220 of the Delaware General Corporation Law. The complaint concerns the inspection of
documents related to Mr. Kumar’s compensation, the independence of the Board of Directors and ability of the Board of
Directors to sue for return of that compensation. The Company filed its answer to this complaint on October 15, 2004 and
there have been no developments since that time.
In December 2006, a lawsuit captioned Diagnostic Systems Corp. v. CA, Inc. et al., Case No. SACV06-1211 CJC(ANx), was filed
in the United States District Court for the Central District of California, Southern Division. The complaint seeks a preliminary
and permanent injunction, as well as monetary damages in various amounts, all of which are unspecified, based upon claims
for patent infringement. The Company has not yet responded to the complaint. Although the ultimate outcome cannot be
determined, the Company believes that the claims are unfounded and that the Company has meritorious defenses. In the
opinion of management, the resolution of this lawsuit is not expected to have a material adverse effect on the Company’s
financial position, results of operations, or cash flows.
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