Overstock.com 2012 Annual Report Download - page 113

Table of Contents
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objections lodged by some parties, the Court entered an order accepting settlement. Various parties appealed and on September 20, 2012 the Federal
Appeals Court for the 9th Circuit upheld the settlement. Appealing parties have petitioned for a rehearing. The Court has not yet ruled on the petition.
The nature of the loss contingencies relating to claims that have been asserted against us are described above.
On November 14, 2008, we filed suit in Ohio state court against the Ohio Tax Commissioner, the Ohio Attorney General and the Governor of
Ohio, alleging the Ohio Commercial Activity Tax is unconstitutional. Enacted in 2005, Ohio's Commercial Activity Tax is based on activities in Ohio
that contribute to production or gross income for a company whether or not the company has a physical presence in or nexus within the state. Our
complaint asked for a judgment declaring the tax unconstitutional and for an injunction preventing any enforcement of the tax. The defendants moved to
dismiss the case. On July 28, 2009, the trial court ruled that there was no justiciable controversy in the case, as we had not yet been assessed a tax, and
it granted the defendants' motions to dismiss. In September 2009, we received a letter of determination from the Ohio Department of Taxation noting the
Department's determination that we are required to register for remitting of the Commercial Activity Tax, and owe $612,784 in taxes, interest, and
penalties as of June 30, 2009. The Ohio Department of Taxation issued additional estimated assessments of estimated tax, interest and penalties totaling
$146,162 as of December 31, 2012. We have filed protests to challenge the Department's Assessments on constitutional grounds and the matter is
currently pending before the Ohio Department of Taxation's Legal Division for administrative review and determination. A hearing on these matters was
held November 18, 2011. No administrative ruling has been issued following the hearing. The nature of the loss contingencies relating to claims that
have been asserted against us are described above. We believe the determinations to be unlawful and erroneous and are vigorously contesting the
determination.
On March 10, 2009, we were sued in a class action filed in the United States District Court, Eastern District of New York. Cynthia Hines, the
nominative plaintiff on behalf of herself and others similarly situated, seeks damages under claims for breach of contract, common law fraud and New
York consumer fraud laws. The Plaintiff alleges we failed to properly disclose our returns policy to her and that we improperly imposed a "restocking"
charge on her return of a vacuum cleaner. We filed a motion to dismiss based upon assertions that our agreement with our customers requires all such
actions to be arbitrated in Salt Lake City, Utah. Alternatively, we asked that the case be transferred to the United States District Court for the District of
Utah, so that arbitration may be compelled in that district. On September 8, 2009 the motion to dismiss or transfer was denied, the court stating that our
browsewrap agreement was insufficient under New York law to establish an agreement with the customer to arbitrate disputes in Utah. On October 8,
2009, we filed a Notice of Appeal of the court's ruling. The appeal was denied. On December 31, 2010 Hines filed an amended complaint. The amended
complaint eliminated common law fraud claims and breach of contract claims and added claims for breach of Utah's consumer protection statute and
various other state consumer protection statutes. The amended complaint also asks for an injunction. We filed motions to dismiss and to decertify the
class. The court has not ruled on these motions. The nature of the loss contingencies relating to claims that have been asserted against us are described
above. However, no estimate of the loss or range of loss can be made. We intend to vigorously defend this action.
On September 23, 2009, SpeedTrack, Inc. sued us along with 27 other defendants in the United States District Court in the Northern District of
California. We are alleged to have infringed a patent
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