Southwest Airlines 2010 Annual Report Download - page 37

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complaint alleges that the disclosures contained in the Form S-4 Registration Statement omit or misrepresent
material information regarding the process of approving the merger agreement, the merger consideration, and the
intrinsic value of AirTran. AirTran and the individual AirTran defendants filed a motion to dismiss the Church
federal complaint on December 22, 2010.
On January 18, 2011, William Nesbit filed another purported AirTran shareholder class action lawsuit again
in the United States District Court for the District of Nevada against the same defendants (other than Mr. Haak)
as in the Leonelli complaint. The allegations and claims set forth in the Nesbit lawsuit, as well as the relief
requested, were generally the same as those set forth in the Church federal complaint.
While the Company believes that each of the above described lawsuits is without merit, the parties to the
Leonelli consolidated complaint and the Church federal complaint entered into a Memorandum of Understanding
(“MOU”) on January 26, 2011 to settle those lawsuits. The settlement provides for the inclusion of additional
disclosures with respect to various aspects of the merger in the proxy statement/prospectus to be sent to AirTran
stockholders soliciting approval of the merger. In addition, it provides for the payment of plaintiffs’ attorneys’
fees and expenses, subject to court approval. The MOU further provides that the parties will enter into a
stipulation of settlement which will provide, among other things, for the conditional certification of a settlement
class. The MOU and stipulation of settlement are subject to various conditions, including court approval
following notice to AirTran stockholders, completion of certain discovery, and consummation of the merger. If
the settlement is finally approved, it will resolve and release on behalf of the entire class of AirTran stockholders,
all claims that were or could have been brought challenging any aspect of the merger, the merger agreement, and
any disclosure made in connection therewith, among other claims.
The Company is from time to time subject to various legal proceedings and claims arising in the ordinary
course of business, including, but not limited to, examinations by the Internal Revenue Service (IRS).
The Company’s management does not expect that the outcome in any of its currently ongoing legal
proceedings or the outcome of any proposed adjustments presented to date by the IRS, individually or
collectively, will have a material adverse effect on the Company’s financial condition, results of operations, or
cash flow.
Item 4. (Removed and Reserved)
None.
31