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Commitments and Contingencies
6 Months Ended
Jun. 30, 2011
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
Commitments and Contingencies
Shareholder Settlement
On February 8, 2011 and February 10, 2011, two of our minority shareholders filed class action complaints in the Superior Court of New Jersey, Burlington County, Chancery Division, ("Court") against us, the individual members on our board of directors and MedQuist Holdings Inc. ("Shareholder Litigation"). Plaintiffs alleged that the defendants breached certain fiduciary duties they owed to our minority shareholders in connection with the structuring and disclosure of the Public Exchange Offer.
On March 4, 2011, the parties to the Shareholder Litigation entered into a memorandum of understanding ("MOU") that outlined the material terms of a proposed settlement of the Shareholder Litigation. Under the terms of the MOU, MedQuist Holdings Inc. agreed to extend the expiration of the Public Exchange Offer and further agreed that if, as a result of the Public Exchange Offer, it obtained ownership of at least 90% of our outstanding common stock it would conduct a short-form merger under applicable law to acquire the remaining shares of our common stock that it does not currently own at the same exchange ratio applicable under the Public Exchange Offer. We agreed to make certain supplemental disclosures concerning the Public Exchange Offer, which were contained in an amendment to Schedule 14D-9 that we filed with the SEC on March 7, 2011. We also agreed to use our best efforts to finalize a stipulation of settlement ("Stipulation of Settlement") and present it to the Court for preliminary approval within thirty days of the date of the MOU.
On April 1, 2011, the parties executed the Stipulation of Settlement that memorialized the terms of the settlement outlined in the MOU. On this same date, plaintiffs' counsel filed with the Clerk of the Court a Motion for Preliminary Approval of the Proposed Stipulation of Settlement. The Motion asked the Court to, among other things, (a) hold a hearing to address preliminary approval of the Stipulation of Settlement, (b) certify a class, for purposes of effectuating the Stipulation of Settlement only, of all our shareholders (except the named defendants and their families and affiliates) as of and including the date of the closing of the short-form merger contemplated under the Stipulation of Settlement, and (c) schedule a final hearing within 60 days to determine whether the Stipulation of Settlement is reasonable and fair and should receive final approval.
The Court held a preliminary approval hearing on April 19, 2011 and entered an Order preliminarily approving the settlement and setting a final approval hearing for June 17, 2011 ("Preliminary Approval Order"). The Preliminary Approval Order also required us to provide mail and publication notice of the proposed settlement to all shareholders of recorded and established deadlines for objections to the settlement and for filing briefs in support and in opposition to the settlement.
On June 17, 2011, following mail and publication notice to our shareholders, the Court held a fairness hearing on the settlement. On this date, the Court entered an Order and Final Judgment ("Final Judgment") that, among other things, (a) certified the settlement class consisting of all our shareholders (except the named defendants and their families and affiliates) as of and including the date of the closing of the short-form merger contemplated under the Stipulation of Settlement ("Settlement Class"), (b) found the terms set forth in the Stipulation of Settlement to be fair and reasonable and in the best interests of the Settlement Class, and (c) approved the application for attorney's fees and costs and awarded plaintiffs' counsel $400 which was recorded in Cost (Benefit) of Legal Proceedings, Settlements and Accommodations for the six months ended June 30, 2011, and in Accrued Expenses as of June 30, 2011. The final judgment also dismissed the case with prejudice.
Agreement with Nuance Communications, Inc.
On June 30, 2011, we and Nuance Communications, Inc., ("Nuance"), entered into an agreement whereby we agreed to pay Nuance an agreed upon amount in full satisfaction of our license fee obligations with respect to certain products through June 30, 2015. We also agreed to pay Nuance for one year of maintenance services to be provided by Nuance to us with respect to the licensed products.  The maintenance services will automatically renew for successive one-year terms unless canceled in writing by us prior to the annual renewal date or the underlying agreement expires.  The first installment due under the agreement was paid on June 30, 2011, and is classified in both other current assets and other assets in the accompanying Consolidated Balance Sheets. We are obligated to pay additional installments during the third quarter of 2011.
SEC Investigation of Former Officer
With respect to our historical billing practices, the SEC pursued civil litigation against our former chief financial officer, whose employment ended in July 2004. Pursuant to our bylaws, we had been providing indemnification for the legal fees for our former chief financial officer. In February 2011 we reached a settlement under which our former chief financial officer released us from our indemnification obligations to him upon his settlement of the litigation with the SEC and our payment to him of a negotiated amount. The former chief financial officer settled the SEC litigation and we made our settlement payment to him in May 2011. This settles the last remaining contingency related to our billing practices.