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Table of Contents
Pandora Media, Inc.
Notes to Consolidated Financial Statements - Continued
Indemnification Agreements
In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business
partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided
by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification
agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities
that may arise by reason of their status or service as directors, officers or employees.
While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any claims under
indemnification arrangements will have a material adverse effect on the Company's financial position, results of operations, or cash flows.
Legal Proceedings
Pandora has been in the past, and continues to be, a party to privacy and patent infringement litigation which has consumed, and may continue to
consume, financial and managerial resources. The Company is also from time to time subject to various other legal proceedings and claims arising in the
ordinary course of its business. We believe that the liabilities associated with these cases, while possible, are not probable, and therefore we have not recorded
any accrual for these as of January 31, 2012. Further, any possible range of loss cannot be reasonably estimated at this time. The Company does not believe
the ultimate resolution of any pending legal matters is likely to have a material adverse effect on its business, financial position, results of operations or cash
flows.
Between December 2010 and February 2011, three putative class action lawsuits were filed against Pandora in the U.S. District Court for the Northern
District of California, alleging that it, along with other defendant corporations, unlawfully accessed and transmitted personally identifiable information of the
plaintiffs in connection with their use of iPhone and iPad applications, and seeking damages and injunctive relief. Between March and July 2011, seven
additional putative class action lawsuits also alleging unlawful access and transmission of personally identifiable information by iPhone and iPad applications
were filed against Pandora in various district courts. These cases were all subsequently consolidated into one matter, In re iPhone Application, and Pandora
was not named as a defendant in the amended consolidated complaint in that case.
On December 30, 2010, a similar putative class action suit was filed in the Superior Court of the Province of Quebec, District of Montreal, Canada. On
December 15, 2011, plaintiffs' motion to dismiss the complaint with respect to Pandora was granted by the court.
On January 7, 2011, a putative class action lawsuit was filed against Pandora in the Circuit Court of Washington County, Arkansas, seeking damages
for the alleged unauthorized access and use of plaintiffs' computers through the placement of embedded Adobe Flash cookies. On December 6, 2011,
Pandora's motion to dismiss the lawsuit was granted without leave to amend. A final judgment was entered by the court on March 5, 2012. Plaintiffs have 30
days from that date in which to file a notice of appeal.
In May 2011, a putative class action lawsuit was filed in the United States District Court for the Middle District of Florida against Google, Inc. In June
2011 the complaint was amended to name Pandora as a defendant. The complaint alleged that the defendant class including Pandora, created, collected or
transferred user location data or other sensitive user information to Google and sought damages and injunctive relief. In July 2011, the plaintiffs filed a
voluntary dismissal of the complaint with respect to Pandora.
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