Legal Matters

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal Matters

Putative Class Action

On April 24, 2023, a putative stockholder class action entitled Straub v. LivePerson, Inc., No. 1:23-cv-03078, was filed under the federal securities laws against the Company, its former Chief Executive Officer, and Chief Financial Officer in the United States District Court for the Eastern District of New York. The complaint alleged that in violation of Section 10(b) of the

Securities Exchange Act of 1934, the Company made false and misleading statements in its Form 10-Q filings and forecasts for the first, second, and third quarters of fiscal year 2022 based on the Company’s subsequent disclosures in its subsequent annual report on Form 10-K on March 16, 2023. On June 23, 2023, the plaintiff voluntarily dismissed his case without prejudice. On May 1, 2023, a similar putative stockholder class action entitled Weissbrod v. LivePerson, Inc., was filed in the District Court of Tel Aviv, Israel on behalf of Company stockholders who traded Company shares on the Tel Aviv Stock Exchange regarding the same subject matter as asserted in the Straub case. The Tel Aviv case is currently expected to be stayed pending further activity in the New York case. The Company believes these claims are without merit.

[24]7 Litigation

The Company filed an intellectual property suit (the “Company IP Suit”) against [24]7 Customer, Inc. (“[24]7”) on March 6, 2014. On June 22, 2015, and December 7, 2015, [24]7 filed separate countersuits (together, the “Countersuits”) against the Company in the United States District Court for the Northern District of California (the “Court”) alleging patent infringement. The trial with respect to the Company IP Suit occurred on May 24, 2021 with respect to the Company’s first set of intellectual property claims, and the jury awarded approximately $30.3 million in favor of the Company. The Company and [24]7 subsequently reached an agreement on the terms of a permanent injunction and that additional costs were owed to the Company in the amount of $0.4 million. On July 28, 2022, the Court granted the Company’s motion for interest, awarding an additional approximately $4.3 million. In August 2022, 24[7] appealed the judgment in favor of the Company with respect to the Company IP Suit. In addition, a trial to adjudicate the Countersuits began in 2023, and a trial with respect to the Company’s second set of intellectual property claims against [24]7 has been set for early 2024. On February 20, 2023, the Company and [24]7 entered into a binding Memorandum of Understanding (“MOU”) detailing the terms for settlement and resolution of all litigation matters between the parties and subsequently entered into binding settlement and commercial agreements as described in the MOU (the “Agreements”). The referenced litigations are currently stayed and dismissal with prejudice of all litigation matters between the parties is expected in the near term, following the completion of certain collateral documentation described in the Agreements.

COVID-Related Matters

As has been widely reported, there is heightened scrutiny by the federal government across many programs related to COVID-19 that were introduced during the COVID-19 pandemic. The Company and its wholly-owned subsidiary WildHealth were each previously engaged in the delivery of products and services related to COVID-19 testing and have been subsequently subject to governmental inquiries with respect to those COVID-19 related products and services, including inquiries by Medicare, the Department of Justice and the U.S. Food and Drug Administration (“governmental agencies”). As previously disclosed, in November 2022, a professional corporation managed by WildHealth received notice that Medicare reimbursements for its services rendered under a Medicare demonstration program related to COVID-19 testing (the “Program”) were suspended pending further review. Subsequently, WildHealth received and successfully responded to inquiries from additional governmental agencies with respect to its participation in the Program, which are now completed, and is currently in discussions with Medicare regarding resolution of the suspension and release of reimbursements for services rendered under the Program. The Company also previously provided other products and services related to COVID-19 testing and accompanying software. Those COVID-19 related products and services have also been the subject of inquiry and pending review by governmental agencies. The Company and WildHealth have discontinued all products and services related to COVID-19, and have responded to and intend to continue to cooperate with governmental inquiries related to their previous engagement in COVID-19 related product and service offerings.

General Legal, Administrative and Regulatory Inquiries, Investigations and Other Matters

From time to time, the Company is involved in or subject to legal, administrative and regulatory proceedings, inquiries and investigations and actual or threatened claims and/or demands arising in the ordinary course of business (“Claims”), including without limitation direct Claims brought by or against the Company, its affiliates, subsidiaries, directors and/or officers with respect to intellectual property, contracts, employment, commercial, legal, regulatory and/or other matters related to our business, as well as Claims brought against the Company’s customers for whom the Company has a contractual indemnification obligation. The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In addition, in the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matter as appropriate and in compliance with ASC 450. The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, the Company will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range

of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

Regardless of the outcome, litigation and investigations can have an adverse impact on the Company because of defense settlement costs, diversion of management resources and other factors.