Southwest Airlines 2010 Annual Report Download - page 36

On September 28, 2010, Frederick Leonelli filed a purported class action lawsuit (the “Leonelli complaint”)
on behalf of himself and similarly situated AirTran stockholders in the First Judicial District Court of the State of
Nevada for Carson City against AirTran, Robert L. Fornaro, AirTran’s Chairman, President and Chief Executive
Officer, Arne G. Haak, AirTran’s Senior Vice President of Finance, Treasurer and Chief Financial Officer, each
member of the AirTran board of directors, the Company, and Guadalupe Holdings Corp. (“ Merger Sub”). The
Leonelli complaint generally alleges that the consideration to be received by AirTran’s stockholders in the
merger is unfair and inadequate and that the AirTran officers and directors named as defendants (the “individual
AirTran defendants”) breached their fiduciary duties by approving the merger agreement through an unfair and
flawed process and by approving certain deal protection mechanisms contained in the merger agreement. The
Leonelli complaint further alleges that AirTran, the Company, and Merger Sub aided and abetted the individual
AirTran defendants in the breach of their fiduciary duties to AirTran’s stockholders. The Leonelli complaint
seeks injunctive relief: (i) enjoining the defendants from consummating the merger unless AirTran adopts and
implements a procedure or process to obtain the highest possible price for AirTran’s stockholders and discloses
all material information to AirTran’s stockholders, (ii) directing the individual AirTran defendants to exercise
their fiduciary duties to obtain a transaction that is in the best interests of AirTran’s stockholders, (iii) rescinding,
to the extent already implemented, the merger agreement, including the deal protection devices that may preclude
premium competing bids for AirTran, (iv) awarding plaintiff’s costs and disbursements of the action, including
reasonable attorneys’ and experts’ fees, and (v) granting such other and further equitable relief as the court may
deem just and proper. On the same day, Frank Frohman filed a second purported AirTran shareholder class action
lawsuit (the “Frohman complaint”) in the same court and against the same defendants (other than Mr. Haak) as
the Leonelli complaint. The allegations in the Frohman complaint, as well as the relief requested, are generally
the same as those set forth in the Leonelli complaint. The Frohman complaint was consolidated into the Leonelli
complaint on December 9, 2010. On December 14, 2010, plaintiffs filed a consolidated complaint (the “Leonelli
consolidated complaint”) asserting the same claims and requesting the same relief against the same defendants
(other than Mr. Haak). The Leonelli consolidated complaint also included new allegations, as part of its breach of
fiduciary duty claim, that the individual AirTran defendants caused the Company to file a Form S-4 Registration
Statement with the SEC on November 19, 2010 which omitted or misrepresented material information regarding
the merger. AirTran and the individual AirTran defendants filed a motion to dismiss the Leonelli consolidated
complaint on January 7, 2011, which was joined by the Company and Merger Sub on the same day.
Four purported AirTran shareholder class action lawsuits have also been filed in the Circuit Court of the
Ninth Judicial Circuit in and for Orange County, Florida. Harry Hoffner filed a purported class action lawsuit on
September 30, 2010 against the same defendants (other than Mr. Haak and Merger Sub) as in the Leonelli
complaint. This was followed by lawsuits filed by Robert Debardelan on October 8, 2010, Thomas A.
Rosenberger on October 12, 2010, and Robert Loretitsch on October 15, 2010 against the same defendants plus
Merger Sub. The allegations in these actions, as well as the relief requested, are also generally the same as those
set forth in the Leonelli complaint. On November 15, 2010, these actions were consolidated into one action
styled In re AirTran Shareholder Litigation (the “consolidated Florida action”). On December 2, 2010, the
consolidated Florida action was stayed in its entirety pending resolution of the earlier filed Leonelli complaint.
On October 8, 2010, Douglas Church filed another purported AirTran shareholder class action lawsuit (the
“Church complaint”) in the Eighth Judicial District Court of the State of Nevada for Clark County against the
same defendants (other than Mr. Haak) as in the Leonelli complaint. The allegations set forth in the Church
complaint, as well as the relief requested, were generally the same as those set forth in the Leonelli complaint
with one addition. The Church complaint additionally alleged, as part of its breach of fiduciary duty claim, that
the individual AirTran defendants (other than Mr. Haak) received greater benefits under the merger agreement
than other AirTran stockholders. Mr. Church voluntarily dismissed his lawsuit on November 30, 2010, but on
December 2, 2010, he re-filed a new lawsuit against the same defendants in the United States District Court for
the District of Nevada (the “Church federal complaint”). The Church federal complaint makes the same claims
and seeks the same relief as his original lawsuit, but includes new claims for alleged violations of Sections 14
and 20 of the Securities Exchange Act of 1934 for allegedly providing misleading and incomplete information in
the Form S-4 Registration Statement filed with the SEC on November 19, 2010. Specifically, the Church federal
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