America Online 2009 Annual Report Download - page 100

Table of Contents
The parties to all of the Community Leader-related lawsuits have agreed to settle the lawsuits on terms that did not result in a material incremental
expense or material payment by the Company in 2009. The court granted preliminary approval of the settlement on February 2, 2010. The Company does not
expect to make any additional payments related to this matter.
On August 1, 2005, Thomas Dreiling, a shareholder of Infospace Inc., filed a derivative suit in the U.S. District Court for the Western District of
Washington against AOL LLC and Infospace Inc. as nominal defendant. The complaint, brought in the name of Infospace, asserts violations of Section 16(b)
of the Exchange Act. The plaintiff alleges that certain AOL LLC executives and the founder of Infospace, Naveen Jain, entered into an agreement to
manipulate Infospace's stock price through the exercise of warrants that AOL LLC received in connection with a commercial agreement with Infospace. The
complaint seeks disgorgement of profits, interest and attorneys' fees. On January 3, 2008, the court granted AOL LLC's motion and dismissed the complaint
with prejudice. Plaintiff filed a notice of appeal with the U.S. Court of Appeals for the Ninth Circuit, and the oral argument occurred on May 7, 2009. On
August 19, 2009, the Ninth Circuit issued its opinion affirming the District Court's opinion on all issues. The petitioners' September 2, 2009 motion for
rehearing en banc before the Ninth Circuit was denied on October 13, 2009. The time period for petitioners to seek certiorari before the U.S. Supreme Court
has expired, so the Company expects no further activity in this matter.
On September 22, 2006, Salvadore Ramkissoon and two unnamed plaintiffs filed a putative class action against AOL LLC in the U.S. District Court for
the Northern District of California based on AOL LLC's public posting of AOL LLC member search queries in late July 2006. Among other things, the
complaint alleges violations of the Electronic Communications Privacy Act and California statutes relating to privacy, data protection and false advertising.
The complaint seeks class certification and damages, as well as injunctive relief that would oblige AOL LLC to alter its search query retention practices. In
February 2007, the District Court dismissed the action without prejudice. The plaintiffs then appealed this decision to the Ninth Circuit. On January 16, 2009,
the Ninth Circuit held that AOL LLC's Terms of Service violated California public policy as to any California plaintiffs in the putative class, as it did not
allow for them to fully exercise their rights. The Ninth Circuit reversed and remanded to the District Court for further proceedings. On April 24, 2009, AOL
LLC filed a motion to implement the Ninth Circuit's mandate. AOL LLC filed its answer on June 29, 2009. On July 6, 2009, the District Court found that the
plaintiffs' claims for unjust enrichment and public disclosure of private facts were subject to the forum selection clause in the Terms of Service and thus could
not be pursued in that court. On October 27, 2009, plaintiffs filed a motion for class certification and two additional named individuals filed a motion to
intervene as plaintiffs in the matter. Also on October 27, AOL filed its reply brief with regards to its 12(c) Motion for Judgment on the Pleadings. On
February 2, 2010, the Court issued an Order granting AOL's motion to implement the mandate of the Ninth Circuit. In its Order, the court dismissed named
plaintiff Ramkissoon, as he is not a California resident. In addition, the court dismissed the remaining claim under the Electronic Communications Privacy
Act, as well as the claims for unjust enrichment and public disclosure of private facts. The Court also dismissed without prejudice both the plaintiffs' motion
for class certification as well as AOL's 12(c) motion. Subsequent to the court's order, AOL filed a modified 12(c) motion on February 24, 2010. The Company
intends to defend against this lawsuit vigorously.
Between December 27, 2006 and July 6, 2009, AOL Europe Services S.à r.l. ("AOL Luxembourg"), a wholly-owned subsidiary of AOL organized
under the laws of Luxembourg, received four assessments from the French tax authorities for French value added tax ("VAT") related to AOL Luxembourg's
subscription revenues from French subscribers earned during the period from July 1, 2003 through October 31, 2006. During October 2009, the Company
entered into a settlement agreement with the French tax authority to resolve this matter. The Company recorded an incremental reserve and corresponding
expense of $14.7 million in the third quarter of 2009 related to this matter. The settlement payment was made in the fourth quarter of 2009.
In addition to the matters listed above, AOL is a party to a variety of legal proceedings that arise in the normal course of business. While the results of
such normal course legal proceedings cannot be predicted with certainty, management believes that, based on current knowledge, the final outcome of the
current pending matters will not have a material adverse effect on the Company's financial position, results of operations or cash
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