To: H James Morris who wrote (25877 ) 11/14/1998 12:09:00 AM From: Glenn D. Rudolph Read Replies (1) | Respond to of 164687
On August 5, 1998, The Intimate Bookshop and Wallace Kuralt filed a lawsuit in the United States District Court for the Southern District of New York against the Company, Barnes & Noble, Borders Group, Inc. and others alleging antitrust, unfair competition and related claims under the Robinson-Patman Act, the Clayton Act, the Donnelly Act and other New York state statutes and common law. As originally filed the lawsuit sought class action certification, for certain purposes, of a class comprised of independent retail booksellers. The complaint was recently amended to drop the class action allegations and certain claims. A claim for unfair competition was added. The plaintiffs request the following relief: actual damages of approximately $11,250,000, treble damages, injunctive relief, punitive damages, prejudgment and post-judgment interest, attorney' fees and costs. The Company believes the lawsuit is without merit and intends to defend against the plaintiffs' claims vigorously. On October 16, 1998, Wal-Mart Stores, Inc. ("Wal-Mart") filed a lawsuit against the Company, Kleiner Perkins Caufield & Byers, LLP, Richard Dalzell and Drugstore.com, Inc. in the Chancery Court of Benton County, Arkansas. The First Amended Complaint alleges that the defendants have or will inevitably misappropriate Wal-Mart's trade secrets and asserts claims for violation of the Arkansas Trade Secrets Act, the Arkansas Unfair Trade Practices Act, conspiracy, unjust enrichment, tortious interference with business relations and other common law claims. Wal-Mart's prayer for relief seeks entry of a temporary restraining order, permanent injunctive relief, an accounting, compensatory damages, pre-judgment and post-judgment interest, attorneys' fees and costs. The Company was only recently served with the First Amended Complaint and has not as of the date hereof prepared a formal answer. However, the Company believes the lawsuit is without merit and intends to defend against Wal-Mart's claims vigorously. Page 20 Wal-Mart has filed a petition for a temporary restraining order. A hearing on the petition was held on November 2, 1998 and thereafter postponed by order of the Court, until December 2, 1998. From time to time, the Company is subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks and other intellectual property rights. The Company currently is not aware of any such legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, prospects, financial condition and results of operations.