Neiman Marcus 2013 Annual Report Download - page 134

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approval hearing was held on September 18, 2014. The court stated that final approval of the settlement would be granted, but required plaintiff's counsel to
submit additional information to support plaintiff's motion for attorney's fees.
In addition, the National Labor Relations Board (NLRB) has been pursuing a complaint alleging that the Mandatory Arbitration Agreement’s class
action prohibition violates employees’ rights to engage in concerted activity, which was submitted to an administrative law judge (ALJ) for determination on
a stipulated record. Recently, the ALJ issued a recommended decision and order finding that the Company's Arbitration Agreement and class action waiver
violated the National Labor Relations Act. The matter has now been transferred to the NLRB for further consideration and decision.
On December 6, 2013, a third putative class action was filed against the Company in the San Diego Superior Court by a former employee. The case is
entitled Marisabella Newton v. Neiman Marcus Group, Inc., et al., and the complaint alleges claims similar to those made in the Monjazeb case. After filing
an answer to the complaint in the Newton case and responding to discovery, we reached a settlement of Ms. Newton's individual claims and a dismissal of her
class allegations, subject to court approval. The court approved the settlement and dismissed the case on August 25, 2014.
We will continue to vigorously defend our interests in these matters. Based upon the pending settlement agreement with respect to Ms. Monjazeb's
class action claims, we recorded our currently estimable liabilities with respect to both Ms. Monjazeb's and Ms. Tanguilig's employment class actions
litigation claims in fiscal year 2014, which amount was not material to our financial condition or results of operations. We will continue to evaluate these
matters, and our recorded reserves for such matters, based on subsequent events, new information and future circumstances.
On August 7, 2014, a putative class action complaint was filed against The Neiman Marcus Group LLC in Los Angeles County Superior Court by a
customer, Linda Rubenstein, in connection with the Company's Last Call stores in California. Ms. Rubenstein alleges that the Company has violated various
California consumer protection statutes by implementing a marketing and pricing strategy that suggests that clothing sold at Last Call stores in California
was originally offered for sale at full-line Neiman Marcus stores when allegedly, it was not, and is allegedly of inferior quality to clothing sold at the full-line
stores. On September 12, 2014, we removed the case to the United States District Court for the Central District of California. We will vigorously defend our
interests in this matter. We will continue to evaluate this matter based on subsequent events, new information and future circumstances.
We are currently involved in various other legal actions and proceedings that arose in the ordinary course of business. With respect to the matters
described above as well as all other current outstanding litigation involving us, we believe that any liability arising as a result of such litigation will not have
a material adverse effect on our financial position, results of operations or cash flows.
Cyber-Attack Class Actions Litigation. Three class actions relating to a criminal cyber-attack on our computer systems in 2013 (the Cyber-Attack)
were filed in January 2014 and later voluntarily dismissed by the plaintiffs between February and April 2014. The plaintiffs had alleged negligence and other
claims in connection with their purchases by payment cards. Melissa Frank v. The Neiman Marcus Group, LLC, et al., was filed in the United States District
Court for the Eastern District of New York on January 13, 2014 but was voluntarily dismissed by the plaintiff on April 15, 2014, without prejudice to her
right to re-file a complaint. Donna Clark v. Neiman Marcus Group LTD LLC was filed in the United States District Court for the Northern District of Georgia
on January 27, 2014 but was voluntarily dismissed by the plaintiff on March 11, 2014, without prejudice to her right to re-file a complaint. Christina Wong v.
The Neiman Marcus Group, LLC, et al., was filed in the United States District Court for the Central District of California on January 29, 2014, but was
voluntarily dismissed by the plaintiff on February 10, 2014, without prejudice to her right to re-file a complaint. Three new putative class actions relating to
the Cyber-Attack were filed in March and April 2014, also alleging negligence and other claims in connection with plaintiffs’ purchases by payment cards.
Two of the cases, Katerina Chau v. Neiman Marcus Group LTD, Inc., filed in the United States District Court for the Southern District of California on March
14, 2014, and Michael Shields v. The Neiman Marcus Group, LLC, filed in the United States District Court for the Southern District of California on April 1,
2014, were voluntarily dismissed, with prejudice as to Chau and without prejudice as to Shields. The third case, Hilary Remijas v. The Neiman Marcus Group,
LLC, was filed on March 12, 2014 in the Northern District of Illinois. On June 2, 2014, an amended complaint in the Remijas case was filed, which added
three plaintiffs (Debbie Farnoush and Joanne Kao, California residents; and Melissa Frank, a New York resident) and asserted claims for negligence, implied
contract, unjust enrichment, violation of various consumer protection statutes, invasion of privacy and violation of state data breach laws. The Company
moved to dismiss the Remijas amended complaint on July 2, 2014. On September 16, 2014, the court granted the Company's motion to dismiss the Remijas
case on the grounds that the plaintiffs lacked standing due to their failure to demonstrate an actionable injury.
In addition, payment card companies and associations may require us to reimburse them for unauthorized card charges and costs to replace cards and
may also impose fines or penalties in connection with the security incident, and enforcement
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