Juno 2013 Annual Report Download - page 147

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Action with the In re Trilegiant Corporation, Inc. action. In response, the court ordered the plaintiff to show cause as to why, among other things, the
plaintiff should be afforded named plaintiff status. The plaintiff filed his response to the order to show cause in February 2013. The court has not yet
ruled upon the request for consolidation or the order to show cause.
In January 2013, Unified Messaging Solutions LLC ("Unified Messaging") filed a complaint in United States District Court, Northern District of
Illinois, against United Online, Inc., Juno Online Services, Inc., NetZero, Inc. and Memory Lane, Inc. alleging patent infringement of five patents
related to email index lists. This case is part of a 58 case multidistrict litigation in Chicago, Illinois with two separate "waves" of defendants. In
December 2013, the court issued its Markman claim construction ruling. In January 2014, the plaintiff filed a notice of motion for reconsideration of the
court's Markman ruling. In February 2014, the court denied plaintiff's motion for reconsideration. On March 7, 2014, the plaintiff agreed to stipulate
that defendants have not infringed, and do not infringe, the asserted claims of the patents, and agreed to consent to the entry of judgment in defendants'
favor on that basis without prejudice to plaintiff's right to re-assert its claims against defendants if the United States Court of Appeals for the Federal
Circuit reverses or modifies, in whole or in part, any of the court's rulings on claim construction.
On March 6, 2014, Modern Telecom Systems LLC filed a complaint in the United States District Court for the Central District of California,
Southern Division, against Juno Online Services, Inc. and NetZero, Inc. alleging infringement of certain patents relating to the commercial operation of
their dial-up internet services. The complaint seeks an injunction, damages and other relief. As of March 11, 2014, neither Juno Online Services, Inc.
nor NetZero, Inc. has been served with the complaint.
The Company has been cooperating with certain governmental authorities in connection with their respective investigations of its former post-
transaction sales practices and certain other current or former business practices.
•In 2010, Classmates, Inc. and FTD.COM Inc. received subpoenas from the Attorney General for the State of Kansas and the Attorney
General for the State of Maryland, respectively. These subpoenas were issued on behalf of a Multistate Work Group that consists of the
Attorneys General for the following states: Alabama, Alaska, Delaware, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Michigan,
Nebraska, New Mexico, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Vermont, and Washington.
The primary focus of the inquiry concerns certain post-transaction sales practices in which these companies previously engaged with
certain third-party vendors and certain auto-renewal practices of Classmates, Inc. In the second quarter of 2012, the Company received
an offer of settlement from the Multistate Work Group consisting of certain injunctive relief and the consideration of two areas of
monetary relief: (1) restitution to consumers and (2) a $20 million payment by Classmates, Inc. and FTD.COM for the violations alleged
by the Multistate Work Group and to reimburse the Multistate Work Group for its investigation costs. The Company rejected the
Multistate Work Group's offer. The Company has since had ongoing discussions with the Multistate Work Group regarding the non-
monetary aspects of a negotiated resolution. In December 2013, Classmates and FTD.COM, Inc. proposed to the Multistate Work
Group to resolve the matter without admitting liability by making a settlement payment of $2.2 million. On February 11, 2014, the
Multistate Work Group responded to the Company's settlement offer of $2.2 million with a counter offer of (1) $17.5 million plus (2)
restitution by Classmates, Inc. to a group of
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