LEGAL PROCEEDINGS

6 Months Ended

Jun. 30, 2012

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

NOTE 10:             LEGAL PROCEEDINGS

Employee Arbitration

On January 18, 2012, hearings concluded in a consolidated arbitration proceeding commenced in 2009 before the American Arbitration Association in New York, New York, which was filed by four former employees of Epiq and its indirect, wholly owned subsidiary, Epiq eDiscovery Solutions, Inc. (“EDS”) alleging claims of wrongful employment termination.  In April 2012, the parties completed post-trial briefing to the arbitration panel.  In May 2012, the matter concluded and approximately $0.1 million was paid by the Company in June 2012 and is included in “Other operating (income) expense” on the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2012.

Purported Software License Complaint

On or about June 24, 2011, EDS filed a lawsuit against Sybase, Inc. (“Sybase”) and Does 1 to 50, et al. in the Superior Court of the State of California, Alameda County (the “Superior Court”), alleging breach of contract and requesting a declaratory judgment against Sybase.  EDS’s complaint against Sybase relates to a dispute that has arisen under a software license agreement between EDS and Sybase (the “Agreement”) and encompasses a request by EDS for the Superior Court to issue an order:  (a) declaring that EDS currently owes Sybase nothing under the Agreement, and (b) requiring Sybase to provide EDS with certain license keys to software licenses that EDS purchased from Sybase under the Agreement.  On or about July 29, 2011, Sybase filed an answer to the complaint and a cross-complaint, which Sybase subsequently amended, against EDS and Does 51-60 relating to that same dispute and Agreement, alleging that, among other things, EDS owes Sybase additional amounts under the Agreement totaling at least $7.0 million, plus interest and costs of the lawsuit.

In June 2012, EDS and Sybase reached an agreement related to this matter pursuant to which the lawsuit will be dismissed with prejudice.  EDS acquired certain perpetual software licenses valued at $2.6 million which will be paid in two installments.  The first installment of $1.5 million was paid in June 2012 and the remainder will be paid in September 2012. EDS has capitalized the cost of the software licenses and is currently using the licensed software in its operations and plans to continue doing so for the foreseeable future.  The cost of the licenses is recorded in the accompanying Condensed Consolidated Balance Sheets included in Property, Plant & Equipment and will be amortized over their remaining useful lives of three years.