Vonage 2008 Annual Report Download - page 26

ITEM 1B.
U
nr
eso
lv
ed S
t
a
ff
Co
mm
e
nt
s
Not applicable
.
ITEM
2.
P
ropert
i
e
s
The
f
ollowin
g
is a summary o
f
our o
ff
ices and locations
:
L
ocat
i
on
B
us
i
ness
U
s
e
Sq
uare
F
oota
g
e
Leas
e
E
x
p
iratio
n
Da
t
e
H
o
l
m
d
e
l
,
N
ew
J
erse
y
C
orporate Headquarters, Network Operations, Customer Service, Sales and Marketing,
a
n
dAd
m
i
n
i
strat
i
on 350
,
000 2017
M
ississauga,
O
ntario
C
ustomer
S
ervice,
S
ales and Marketing, Administration 28,500 201
0
London, United Kingdom
S
ales and Marketing, Administration 3,472 201
0
W
e believe that the
f
acilities that we occupy are adequate
f
or our current needs and do not anticipate leasing any additional space.
ITEM 3
.
L
e
g
a
lP
rocee
di
n
g
s
Liti
g
atio
n
S
tate Attorney General Proceedings
.
I
n 2008, Vonage learne
d
t
hat a group of 28 states’ attorney generals had begun an inves-
t
i
g
ation into certain of our business practices. We have receive
d
document requests
f
rom 22 o
f
the participating states. Th
e
r
equests seek information that Vonage previously produced to the
W
isconsin Attorney
G
eneral as part of an investi
g
ation com-
m
enced in November 2007, which consisted o
f
, among other
thi
ngs, sa
l
es an
d
retent
i
on mar
k
et
i
ng scr
i
pt
i
ng, a
d
vert
i
s
i
ng
di
s-
closures, and information related to our money back
g
uarantee
.
The most recent requests also seek, among other things,
information related to marketing and billing practices, as well a
s
early termination fees. To date, none of the attorney
g
enerals hav
e
f
iled a complaint against us or taken other
f
ormal action. We are
u
nable to predict whether a formal action will be filed against us
.
W
e intend to fully cooperate in the investi
g
ation
.
I
P
O
Litigation
.
D
uring June and July 2006, Vonage, several o
f
our officers and directors, and the firms who served as th
e
u
nderwriters in our initial public offerin
g
(“IPO”) were named as
defendants in several purported class action lawsuits arising out
of our IP
O
.
O
n January 9, 2007, the Judicial Panel on Multidistric
t
L
iti
g
ation trans
f
erred all complaints to the District o
f
New Jersey
.
O
n
S
eptember 7, 2007, the
C
ourt appointed Zyssman
G
roup a
s
t
he lead plaintiff, and the law firm of Zwerlin
g
,
S
chachter and
Zwerlin
g
, LLP as lead counsel. On November 19, 2007, the plain
-
t
iffs filed the Amended
C
omplaint, which generally alleges:
(
i
)
defendants made misstatements re
g
ardin
g
subscriber line
g
rowth and avera
g
e monthly churn rate; (ii) defendants failed t
o
disclose problems with
f
acsimile transmissions and a pending
f
a
x
liti
g
ation case;
(
iii
)
defendants failed to disclose all paten
t
infrin
g
ement claims and issues; and (iv) that the Directed Share
P
rogram suffered from various infirmities. On January 18, 2008
,
d
efendants filed their motions to dismiss the Amended Complaint
,
a
nd brie
f
ing on the matter was completed by April 2, 2008, and
the
C
ourt heard oral argument on
O
ctober 10, 2008. The
C
ourt
has not
y
et ruled on the motion. The
f
irms who served as under-
w
riters to the IPO, pursuant to an indemnification agreement
e
ntered into between us and those firms
p
rior to the IP
O
hav
e
d
emanded that Vona
g
e reimburse them for the costs and fees
i
ncurred by them in defense of the IPO litigation. In addition, three
o
f the firms have demanded that Vonage reimburse them for th
e
c
osts and fees incurred by them in response to various re
g
ulator
y
i
nquiries by the Financial Industry Regulatory Authority (formerl
y
the NA
S
D
)
and the New York
S
tock Exchange, among othe
r
thin
g
s. Vona
g
e has declined to reimburse these three firms any
f
ees or expenses
.
C
onsumer
C
lass Action Liti
g
ations.
We ha
v
e bee
nn
a
m
ed i
n
s
everal purported class actions venued in California, New Jerse
y
,
and Washington alleging a wide variety of deficiencies wit
h
respect to our
b
us
i
ness pract
i
ces, mar
k
et
i
n
gdi
sc
l
osures, ema
il
m
arketing and quality issues
f
or both phone and
f
ax service
.
For exam
p
le, there are various class actions, on behalf o
f
b
oth nationwide and state classes, pendin
g
in New Jersey, Wash-
i
ngton and
C
alifornia generally alleging that we delayed and
/
o
r
refused to allow consumers to cancel their Vona
g
e service; failed
to disclose procedural impediments to cancellation;
f
ailed t
o
adequately disclose that their 30-day money back guarantee doe
s
n
ot
gi
ve consumers 30
d
ays to try out our serv
i
ces; suppresse
d
a
n
dco
n
cea
l
ed
th
e
tr
ue
n
a
t
u
r
eofou
r
se
rvi
ces a
n
dd
i
sse
min
a
t
ed
f
alse advertising about the quality, nature and terms o
f
our serv
-
i
ces; imposed an unlawful early termination fee; and invoke
d
u
nconscionable provisions of our Terms of Service to the detri
-
m
ent of customers. On May 11, 2007, plaintiffs in one action peti
-
tioned the Judicial Panel on Multidistrict Liti
g
ation
(
the “Panel”
),
1
8
VO
NA
G
E ANN
U
AL REP
O
RT 2008