Apple 2008 Annual Report Download - page 31

Table of Contents
In re Apple Computer, Inc. Derivative Litigation (formerly Karant v. Jobs, et al. and Related Actions) (Federal Action)
On June 30, 2006, a putative derivative action captioned Karant v. Jobs, et. al. , was filed in the United States District Court for the Northern
District of California, San Jose Division. A number of related actions were filed in the subsequent weeks and have been consolidated into a
single action captioned In re Apple Computer, Inc. Derivative Litigation , Master File No. C-06-04128-JF before the Hon. Jeremy Fogel. The
actions were filed after the Company’s announcement on June 29, 2006 that an internal investigation had discovered irregularities related to the
issuance of certain stock option grants made between 1997 and 2001, that a special committee of the Company’s outside directors had retained
independent counsel to perform an investigation and that the Company had informed the Securities and Exchange Commission. The action
purports to assert claims on behalf of the Company against several current and former executive officers and members of the Board of Directors
alleging improper backdating of stock option grants to maximize certain defendants’ profits, failing to properly account for and take tax
deductions for those grants, insider trading, and issuing false financial statements. The Company is named as a nominal defendant. The
consolidated complaint alleges various causes of action under federal and California law, including claims for unjust enrichment, breach of
fiduciary duty, violation of the California Corporations Code, abuse of control, gross mismanagement, rescission, constructive fraud and waste
of corporate assets, as well as claims under Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act. Plaintiffs seek damages,
disgorgement, restitution and imposition of a constructive trust. A Consolidated Shareholder Derivative Complaint was filed on December 18,
2006, and a First Amended Shareholder Derivative Complaint was filed on March 6, 2007. On June 12, 2007, the Company’
s Board of Directors
approved a resolution appointing a Special Litigation Committee to make all decisions relating to options litigation. Defendants filed a motion to
dismiss on April 20, 2007, which was heard on September 7, 2007. On November 19, 2007, the Court granted the defendants’ motion to dismiss
with leave to amend. Plaintiffs filed an amended complaint on December 19, 2007. Defendants filed motions to dismiss the amended complaint
on January 25, 2008. The motions to dismiss were originally scheduled to be heard on April 4, 2008. Pursuant to a joint stipulation filed on
April 3, 2008, the Court vacated the hearing date. The parties have reached a settlement, and the Court has granted preliminary approval of the
settlement. The parties’ request for final approval of the settlement is pending.
In re Apple Computer, Inc. Derivative Litigation (formerly Plumbers and Pipefitters v. Jobs, et al. and Related Actions) (State Action); Boston
Retirement Board v. Apple Computer, Inc.
On July 5, 2006, a putative derivative action captioned Plumbers and Pipefitters v. Jobs, et. al. , was filed in California Superior Court for the
County of Santa Clara. A number of related actions were filed in the subsequent weeks, and have been consolidated into a single action
captioned In re Apple Computer, Inc. Derivative Litigation , No. 1:06CV066692, assigned to the Hon. Joseph Huber. These actions purport to
assert claims on behalf of the Company against several current and former executive officers and members of the Board of Directors alleging
improper backdating of stock option grants to maximize certain 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. The parties have reached a
settlement, and the Court has granted preliminary approval of the settlement. The parties’ request for final approval of the settlement is pending.
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 ( 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.
Following a trial held on September 24, 2007, the Court granted the petition for inspection but narrowed the scope of the records to be
produced. On April 16, 2008, the Boston Retirement Board filed a derivative action in California Superior Court for the County of Santa Clara.
On July 31, 2008, Boston Retirement Board attempted to serve the new
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