Qualcomm 2002 Annual Report Download - page 78

The effects on pro forma disclosures of applying the fair value method are not likely
to be representative of the effects on pro forma disclosures of future years
because the fair value method is applicable only to options granted subsequent to
September 30, 1995.
NOTE 11. COMMITMENTS AND CONTINGENCIES
LITIGATION
Schwartz, et al v. QUALCOMM. On December 14, 2000, 77 former QUALCOMM
employees filed a lawsuit against the Company in the District Court for Boulder
County, Colorado, alleging claims for intentional misrepresentation, nondisclosure
and concealment, violation of C.R.S. Section 8-2-104 (obtaining workers by misrepre-
sentation), breach of contract, breach of the implied covenant of good faith and fair
dealing, promissory estoppels, negligent misrepresentation, unjust enrichment, vio-
lation of California Labor Code Section 970, violation of California Civil Code Sections
1709-1710, rescission, violation of California Business & Professions Code Section
17200 and violation of California Civil Code Section 1575. Since then, 10 other individ-
uals have joined the suit as plaintiffs. The complaint seeks economic, emotional distress
and punitive damages and unspecified amounts of interest. On November 29, 2001,
the Court granted the Company’s motion to dismiss 17 of the plaintiffs from the law-
suit. Subsequently, the Court dismissed 3 other plaintiffs from the lawsuit. On
November 18, 2002, the Court granted the Company’s motion to dismiss 66 of the
remaining 67 plaintiffs from the lawsuit (Note 15). Although there can be no assur-
ance that an unfavorable outcome of the dispute would not have a material adverse
effect on the Company’s operating results, liquidity or financial position, the Company
believes the claims are without merit and will vigorously defend the action.
GTE Wireless Incorporated (GTE) v. QUALCOMM. On June 29, 1999, GTE filed an
action in the United States District Court for the Eastern District of Virginia seeking
damages and injunctive relief and asserting that wireless telephones sold by the
Company infringe a single patent allegedly owned by GTE. On September 15, 1999, the
Court granted the Company’s motion to transfer the action to the United States
District Court for the Southern District of California. On February 14, 2002, the District
Court granted QUALCOMM’s motion for summary judgment that QUALCOMM’s products
did not infringe GTE’s asserted patent and denied GTE’s motion seeking summary
judgment of infringement. QUALCOMM’s counterclaims that the patent is invalid or
unenforceable remain pending in the District Court and have been stayed while the
ruling granting QUALCOMM’s motion and denying GTE’s motion is on appeal.
Although there can be no assurance that an unfavorable outcome of the dispute
would not have a material adverse effect on the Company’s operating results, liquidity
or financial position, the Company believes the action is without merit and will vig-
orously defend the action.
Durante, et al v. QUALCOMM. On February 2, 2000, three former QUALCOMM
employees filed a putative class action against the Company, ostensibly on behalf of
themselves and those former employees of the Company whose employment was
terminated in April 1999. Virtually all of the purported class of plaintiffs received sev-
erance packages at the time of the termination of their employment, in exchange for
a release of claims, other than federal age discrimination claims, against the
Company. The complaint was filed in California Superior Court in and for the County
of Los Angeles and purports to state ten causes of action including breach of con-
tract, age discrimination, violation of Labor Code Section 200, violation of Labor Code
Section 970, unfair business practices, intentional infliction of emotional distress,
unjust enrichment, breach of the covenant of good faith and fair dealing, declaratory
relief and undue influence. The complaint seeks an order accelerating all unvested
stock options for the members of the class, plus economic and liquidated damages
of an unspecified amount. On June 27, 2000, the case was ordered transferred from
Los Angeles County Superior Court to San Diego County Superior Court. On July 3,
2000, the Company removed the case to the United States District Court for the
Southern District of California, and discovery commenced. On May 29, 2001, the Court
dismissed all plaintiffs’ claims except for claims arising under the federal Age
Discrimination in Employment Act. On July 16, 2001, the Court granted conditional
class certification on the remaining claims, to be revisited by the Court at the end of
the discovery period. Currently, there are 83 individuals included in the class.
Although there can be no assurance that an unfavorable outcome of the dispute
would not have a material adverse effect on the Company’s operating results, liquid-
ity or financial position, the Company believes the claims are without merit and will
vigorously defend the action.
Zoltar Satellite Alarm Systems, Inc. v. QUALCOMM and SnapTrack. On March 30,
2001, Zoltar Satellite Alarm Systems, Inc. (Zoltar) filed suit against QUALCOMM and
SnapTrack, a QUALCOMM wholly-owned subsidiary, seeking damages and injunctive
relief and alleging infringement of three patents. On August 27, 2001, Zoltar filed an
amended complaint adding Sprint Corp. as a named defendant and narrowing certain
infringement claims against QUALCOMM and SnapTrack. Since then, Zoltar has dis-
missed Sprint Corp. as a defendant. On September 23, 2002, the court denied Zoltar’s
motion for summary judgment that the accused products infringe. QUALCOMM and
SnapTrack’s various motions for summary judgment of noninfringement and invalidity
are currently pending and await hearing. Trial has been set for February 11, 2003.
Although there can be no assurance that an unfavorable outcome of this dispute
would not have a material adverse effect on QUALCOMM’s operating results, liquidity
or financial position, the Company believes the claims are without merit and will
vigorously defend the action.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued