Apple 2007 Annual Report Download - page 31

defendants' profits, failing to properly account for and take tax deductions for those grants and issuing false financial statements. The Company
is named as a nominal defendant. A consolidated complaint was filed on October 5, 2006, alleging a variety of causes of action under California
law, including claims for unjust enrichment, breach of fiduciary duty, violation of the California Corporations Code, abuse of control,
accounting, constructive trust, rescission, deceit, gross mismanagement and waste of corporate assets. On December 7, 2006, the Court granted
the Company's motion to stay these actions.
On November 3, 2006, the Boston Retirement Board, a purported shareholder, filed a petition for writ of mandate against the Company in
California Superior Court for the County of Santa Clara County ( Boston Retirement Board v. Apple Computer Inc. ). The petition sought to
compel the Company to allow inspection of certain corporate records relating to the Company's option practices and the Special Committee's
investigation. On January 16, 2007, the Company filed a demurrer to the petition. The Court entered an order overruling the demurrer on
March 13, 2007. The Company filed its answer to the petition on April 5, 2007. The trial took place on September 24, 2007. The Court granted
the petition for inspection but narrowed the scope of the records to be produced.
In re Apple iPod Nano Products Liability Litigation (formerly Wimmer v. Apple Computer, Inc.; Moschella, et al., v. Apple Computer, Inc.
;
Calado, et al. v. Apple Computer, Inc. ; Kahan, et al., v. Apple Computer, Inc .; Jennings, et al., v. Apple Computer, Inc. ; Rappel v. Apple
Computer, Inc. ; Mayo v. Apple Computer, Inc. ; Valencia v. Apple Computer, Inc. ; Williamson v. Apple Computer, Inc. ; Sioson v. Apple
Computer, Inc.
Beginning on October 19, 2005, eight complaints were filed in various United States District Courts and two complaints were filed in California
State Court alleging that the Company's iPod nano was defectively designed so that it scratches excessively during normal use, rendering the
screen unreadable.
The federal actions were coordinated in the United States District Court for the Northern District of California and assigned to the Hon. Ronald
Whyte pursuant to an April 17, 2006 order of the Judicial Panel on Multidistrict Litigation. Plaintiffs filed a First Consolidated and Amended
Master Complaint on September 21, 2006, alleging violations of California and other states' consumer protection and warranty laws and claiming
unjust enrichment. The Master Complaint alleges two putative plaintiff classes: (1) all U.S. residents (excluding California residents) who
purchased an iPod nano that was not manufactured or designed using processes necessary to ensure normal resistance to scratching of the screen;
and (2) all iPod nano purchasers other than U.S. residents who purchased an iPod nano that was not manufactured or designed using processes
necessary to ensure normal resistance to scratching of the screen. The Company answered the Master Complaint on November 20, 2006.
The two California State Court actions were coordinated on May 4, 2006, and assigned to the Hon. Carl West in Los Angeles Superior Court.
Plaintiffs filed a Consolidated Amended Class Action Complaint on June 8, 2006, alleging violations of California state consumer protection,
unfair competition, false advertising and warranty laws and claiming unjust enrichment. The Consolidated Complaint alleges a putative plaintiff
class of all California residents who own an iPod nano containing a manufacturing defect that results in the nano being susceptible to excessive
scratching. The Company answered the Consolidated Amended Complaint on October 6, 2006.
Two similar complaints, Carpentier v. Apple Canada, Inc ., and Royer-Brennan v. Apple Computer, Inc. and Apple Canada, Inc . were filed in
Montreal, Quebec, Canada on October 27, 2005 and November 9, 2005, respectively, seeking authorization to institute class actions on behalf of
iPod nano purchasers in Quebec. The Royer-Brennan file was stayed in May 2006 in favor of the Carpentier file. A similar complaint, Mund v.
Apple Canada Inc. and Apple Computer, Inc.
, was filed in Ontario, Canada on January 9, 2006 seeking authorization to institute a class action
on behalf of iPod nano purchasers in Canada. Apple Canada Inc. and Apple Computer, Inc. have served Notices of Intent to Defend.
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