Mattel 2009 Annual Report Download - page 102

the Northern District of California (Harrington v. Mattel, filed August 20, 2007). One other action was
commenced in District of Columbia Superior Court and removed to the United States District Court for the
District of Columbia (DiGiacinto v. Mattel, filed August 29, 2007). Mattel was named as a defendant in all of the
actions, while Fisher-Price was named as a defendant in nineteen of the cases.
Multidistrict Litigation (MDL) in the United States
On September 5, 2007, Mattel and Fisher-Price filed a motion before the Judicial Panel on Multidistrict
Litigation (“JPML”) asking that all federal actions related to the recalls be coordinated and transferred to the
Central District of California (In re Mattel Inc. Toy Lead Paint Products Liability Litigation). On
December 18, 2007, the JPML issued a transfer order, transferring six actions pending outside the Central
District of California (Sarjent, Shoukry, Goldman, Monroe, Chow and Hughey) to the Central District of
California for coordinated or consolidated pretrial proceedings with five actions pending in the Central District
(Mayhew, White, Luttenberger, Puerzer and Shah). The remaining cases (Healy, Powell, Rusterholtz, Jiminez,
Probst, Harrington, DiGiacinto, Allen, Sanders, Entsminger, and White II ), so-called “potential tag-along
actions,” are either already pending in the Central District of California or have been transferred there pursuant to
January 3 and January 17, 2008 conditional transfer orders issued by the JPML. These matters are all currently
pending in In re Mattel, Inc. Toy Lead Paint Products Liability Litigation, No. 2:07-ML-01897-DSF-AJW,
MDL 1897 (C. D. Ca.) (the “MDL proceeding”).
On March 31, 2008, plaintiffs filed a Consolidated Amended Class Action Complaint in the MDL
proceeding, which was followed with a Second Consolidated Amended Complaint (the “Consolidated
Complaint”), filed on May 16, 2008. Plaintiffs seek certification of a class of all persons who, from May 2003
through the present, purchased and/or acquired certain allegedly hazardous toys. The Consolidated Complaint
defines hazardous toys as those toys recalled between August 2, 2007 and October 25, 2007, due to the presence
of lead in excess of applicable standards in the paint on some parts of some of the toys; those toys recalled on
November 21, 2006 and August 14, 2007, related to magnets; and the red and green toy blood pressure cuffs
voluntarily withdrawn from retail stores or replaced at the request of consumers. Defendants named in the
Consolidated Complaint are Mattel, Fisher-Price, Target Corporation, Toys “R” Us, Inc., Wal-Mart Stores, Inc.,
KB Toys, Inc., and Kmart Corporation. Mattel has assumed the defense of Target Corporation, Toys “R” Us,
Inc., KB Toys, Inc., and Kmart Corporation, and agreed to indemnify all of the retailer defendants, for the
specific claims raised in the Consolidated Complaint, which claims relate to the sale of Mattel and Fisher-Price
toys.
In the Consolidated Complaint, plaintiffs assert claims for breach of implied and express warranties,
negligence, strict liability, violation of the United States Consumer Product Safety Act (“CPSA”) and related
Consumer Product Safety Rules, various California consumer protection statutes, and unjust enrichment.
Plaintiffs seek (i) declaratory and injunctive relief enjoining defendants from continuing the allegedly unlawful
practices raised in the Consolidated Complaint; (ii) restitution and disgorgement of monies acquired by
defendants from the allegedly unlawful practices; (iii) costs of initial diagnostic blood lead level testing to detect
possible injury to plaintiffs and members of the class; (iv) costs of treatment for those who test positive to the
initial diagnostic blood lead level testing; (v) reimbursement of the purchase price for the allegedly hazardous
toys; and (vi) costs and attorneys’ fees. On June 24, 2008, defendants filed motions to dismiss the Consolidated
Complaint. On November 24, 2008, the Court granted defendants’ motion with respect to plaintiffs’ claims under
the CPSA related to the magnet toys and the toy blood pressure cuffs and denied defendants’ motions in all other
respects.
On October 13, 2009, plaintiffs and Mattel filed a joint motion with the Court seeking preliminary approval
of a class action settlement of the MDL proceeding, which the Court granted on October 23, 2009. Pursuant to
the Court’s order of preliminary approval, the parties have implemented the settlement, and will seek final
approval from the Court on March 15, 2010. Upon such final approval, Mattel and the other defendants in the
MDL proceeding will be released from all claims arising out of the lead- and magnet-related recalls (except for
92