Nordstrom

Nordstrom Can’t Keep Family Plane Ride Claims Sealed

The following is from Law360. By Jonathan Randles
Law360, New York (April 07, 2015, 4:55 PM ET) — A Washington federal judge refused Tuesday to keep sealed portions of a lawsuit accusing Nordstrom Inc. of hiding the cost of operating a fleet of private airplanes for the Nordstrom family, rejecting the company’s argument that the plaintiff had agreed before filing the lawsuit to keep the information under wraps.U.S. District Judge John C. Coughenour denied Nordstrom’s motion to seal the complaint, ruling the company failed to give a “compelling reason” to keep information in the complaint a secret. Plaintiff Judith Burbrink has accused Nordstrom of filing misleading proxy statements with the U.S.Securities and Exchange Commission that mask substantial costs associated with operating the family’s planes.

Judge Coughenour said although a private agreement may have been reached between the parties before the start of the litigation, no deal has been presented to the court. Further, Nordstrom has only offered “vague” privacy concerns related to the release of the information that don’t trump the strong presumption that judicial documents be made public.

“It is possible that Plaintiff violated a private agreement by filing this lawsuit and converting non-public information into a judicial record,” Judge Coughenour said. “However, the Court is not presently tasked with interpreting or enforcing any promises made by Plaintiff to gain access to Nordstrom‘s records.”

Although the complaint was originally filed last month, specific figures detailing the approximate costs of the operation and other information is redacted in the complaint. Nordstrom, which sought to keep the data secret, argued that details related to the board’s “travel habits” should be kept private. The company said Burbrink, who obtained the information through a formal request for company records, agreed to keep the information a secret.

Nordstrom has maintained in SEC filings that the company charges the family market prices for services it provides them. Moreover, the company has stated that payments it receives from the family exceed the estimated costs of providing those services. It has denied the allegations in the complaint and said it will be vindicated in court.

However, the lawsuit claims that contrary to those filings, Nordstrom’s board “has never conducted any analysis of the costs of providing the services to the Nordstrom family.”

The complaint goes on to say that Nordstrom has been operating a “bloated and costly” flight department to manage company planes, as well as personal aircraft for the Nordstrom family. Burbrink claims the flight department has cost shareholders millions of dollars.

Nordstrom and an attorney representing Burbrink declined to comment on the order.

Burbrink is represented by Brad J. Moore of Stritmatter Kessler Whelan, Hung Ta, Natalia Williams and JooYun Kim of Hung G. Ta Esq. PLLC, Peter Safirstein and Roger Sachar of Morgan & Morgan PC and Konstantine W. Kyros of Kyros Law Offices.

Nordstrom is represented by David S. Keenan, Robert P. Varian and M. Todd Scott of Orrick Herrington & Sutcliffe LLP.

The case is Judith Burbank v. Phyllis J. Campbell et al., case number 2:15-cv-00377, in the U.S. District Court for the Western District of Washington.

Nordstrom Family Frequent Fliers via Company Planes Gets Shareholders’ Attention

Nordstrom shareholder derivative suit, family use of company planes

Plaintiff Burbrink alleges that Nordstrom’s provided misleading info that masked the huge expenses racked by the Nordstrom family when they used company planes for personal use. (Photo: Wikimedia Commons)

A derivative shareholder lawsuit was filed with plaintiff Judith Burbrink, claiming that retailer Nordstrom filed false, misleading proxy statements with the SEC that covers up the substantial costs associated with operating the planes while rubber-stamping related party transactions with the family. Nordstrom has claimed in SEC filings that the company charges the family market prices for services it provides them. Moreover, the company has stated that payments it receives from the family exceed the estimated costs of providing those services.

Interestingly, however, the lawsuit claims that contrary to those filings, Nordstrom’s board “has never conducted any analysis of the costs of providing the services to the Nordstrom family.” [emphasis added]

The complaint goes on to say that Nordstrom’s has been operating a “bloated and costly” flight department to manage company planes, as well as personal aircraft for the
Nordstrom family. Specific figures detailing the approximate costs of the operation are redacted in the complaint, but Burbrink claims the flight department has cost shareholders millions of dollars. “Contrary to their materially false and misleading statements, the Board has, year after year, violated their fiduciary duties by blessing the related party transactions with the Nordstrom family without inquiring what the costs to the Company are, and whether the charges to the Nordstrom family equitably reflect their share of use of the Flight Department’s resources,” the lawsuit said. “The Board has also utterly failed to inquire whether the payments from the Nordstrom family adequately compensate the Company for undertaking an aviation-services enterprise that is far removed from the Company’s core business and that exposes the Company to risk of liability,” it added.

According to the complaint, the amount of services the company provided to the Nordstrom family jumped in 2007 during the financial crisis. Between March 2007 and November 2008, the company’s stock price fell from $55 per share to $6.61 per share, which inflicted “steep losses on the Nordstrom family,” the suit said. “Not coincidentally, it was around this time that the Nordstrom family began to shift the costs of flying and maintaining their vast fleet of personal planes on to the Company,” the lawsuit said.

The complaint was filed after the plaintiffs attorneys from Strimatter Kessler Whelan, Morgan & Morgan PC, Kyros Law Offices and Hung G. Ta Esq. PLLC inspected company documents Nordstrom produced. “The Company believes that all of the information in our publicly-filed proxy statement regarding aircraft matters is consistent with SEC requirements, IRS guidelines and other governing laws and regulations,” Nordstrom said Friday in an email. “We strive to act in strict accordance with our governance rules.”
Burbrink is represented by Brad J. Moore of Stritmatter Kessler Whelan, Hung Ta, Natalia Williams and JooYun Kim of Hung G. Ta Esq. PLLC, Peter Safirstein and Roger Sachar of Morgan & Morgan PC and Konstantine W. Kyros of Kyros Law Offices.

NOTE: The aforementioned is an excerpt of what appears in various news articles that surfaced today.

About Us

This blog is maintained by attorneys at Stritmatter Kessler Whelan (SKW), focused on important legal issues, news, and developments... MORE
Connect
   
Subscribe

Add this blog to your feeds or subscribe by email using the form below.

Favorite Quotation

If thou faint in the day of adversity, thy strength is small.
— Proverbs 24:10

Intense love does not measure, it just gives.
— Mother Teresa

The test of a civilization is the way that it cares for its helpless members.
— Pearl S. Buck

You may trod on me in the very dirt. But still, like dirt, I'll rise.
— Maya Angelou

The worst sin towards our fellow creatures is not hate them, but to be indifferent to them; that's the essence of inhumanity.
— George Bernard Shaw

Without justice, courage is weak.
— Benjamin Franklin

Injustice anywhere is a threat to justice everywhere.
— Martin Luther King, Jr.

Fairness is an across-the-board requirement for all our interactions with each other ...Fairness treats everybody the same.
— Barbara Jordan

I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution.
— Thomas Jefferson

Why should there not be a patient confidence in the ultimate justice of the people? Is there any equal hope in the world?
— Abraham Lincoln

I don’t know what kind of a future life I believe in, but I believe that all that we go through here must have some value.
— Eleanor Roosevelt

The basic proposition of the worth and dignity of man is the strongest, the most creative force now present in the world.
— Franklin D. Roosevelt

Justice is the end of government. It is the end of civil society. It ever has been and ever will be pursued until it is obtained, or until liberty be lost in the pursuit.
— James Madison

There is no truth existing which I fear, or would wish unknown to the whole world.
— Thomas Jefferson