Overstock.com 2010 Annual Report Download - page 121

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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
14. COMMITMENTS AND CONTINGENCIES (Continued)
complaint against all the defendants, re-pleading conversion and trespass to chattels causes of action. Defendants again filed demurrer to the amended
complaint and, on July 23, 2009, the court sustained the demurrer. On December 15, 2010, we and the other plaintiffs in the case entered into a settlement
agreement with certain of the defendants requiring the defendants to pay in the aggregate $4.5 million to plaintiffs. The other terms of settlement are
confidential. Remaining defendants in the suit are Goldman Sachs Group, Inc., Goldman Sachs & Co., Goldman Sachs Execution & Clearing L.P., ("Goldman
Defendants") Merrill Lynch, Pierce, Fenner & Smith, Inc., Merrill Lynch Professional Clearing Corporation ("Merrill Lynch Defendants), and Bank of
America Securities LLC. On December 15, 2010, we filed a motion to amend our complaint against the Goldman and Merrill Lynch Defendants to add a
cause of action based on the New Jersey Racketeer Influenced and Corrupt Organization (RICO) Act. The court has allowed the amendment, subject to later
challenge. The New Jersey RICO statute allows for trebling of RICO-related actual damages proved at trial. Discovery in this case continues. A trial date has
been set for December 5, 2011. We intend to continue to vigorously prosecute this action.
On November 17, 2010 we were sued in the Superior Court of California, County of Alameda, by District Attorneys for the California Counties of
Alameda, Marin, Monterey, Napa, Santa Clara, Shasta and Sonoma County. These district attorneys seek damages and an injunction under claims for
violations of California consumer protection laws, alleging we made untrue or misleading statements concerning our pricing, price reductions, sources of
products and shipping charges. The complaint asks for damages in the amount of not less than $15 million. The nature of the loss contingencies relating to
claims that have been asserted against us are described above. The suit is in its early stages, and we intend to vigorously defend this action.
On May 30, 2008 we filed a complaint in New York state court against the New York State Department of Taxation and Finance, its Commissioner, the
State of New York and its governor, alleging that a recently enacted New York state tax law is unconstitutional. The effect of the New York law is to require
Internet sellers to collect and remit New York sales taxes on their New York sales even if the seller has no New York tax "nexus" other than with New York
based independent contractors who are Internet advertising affiliates. The complaint asks for the court to declare the law unconstitutional and enjoin its
application to us. New York filed a motion to dismiss. We responded to the motion and filed a motion for summary judgment, and both motions were heard
simultaneously. On January 12, 2009, the court granted New York's motion to dismiss and denied our motion for summary judgment. We appealed the
decision and on November 4, 2010 the Appellate Division of the New York Supreme Court upheld part of the lower court's ruling rejecting our claims that the
law is unconstitutional on its face, but remanded our claims that the law is unconstitutional as applied, for further discovery and proceedings in the lower
court. We have filed with the New York State Court of Appeals a motion of leave to appeal the portions of the decision upholding the lower court's ruling.
The court has not yet ruled on the motion.
On August 12, 2008, we along with seven other defendants, were sued in the United States District Court for the Northern District of California, by Sean
Lane, and seventeen other individuals, on their own behalf and for others similarly in a class action suit, alleging violations of the Electronic Communications
Privacy Act, Computer Fraud and Abuse Act, Video Privacy Protection Act, and California's Consumer Legal Remedies Act and Computer Crime Law. The
complaint relates to our use of a product known as Facebook Beacon, created and provided to us by Facebook, Inc. Facebook Beacon provided the means for
Facebook users to share purchasing data among their Facebook friends.
F-32