Dollar General 2005 Annual Report Download - page 53

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Legal proceedings
On March 14, 2002, a complaint was filed in the
United States District Court for the Northern District of
Alabama (Edith Brown, on behalf of herself and others
similarly situated v. Dolgencorp. Inc., and Dollar General
Corporation, CV02-C-0673-W (“Brown”)). Brown is a
collective action against the Company on behalf of
current and former salaried store managers claiming that
these individuals were entitled to overtime pay and
should not have been classified as exempt employees
under the Fair Labor Standards Act (“FLSA”). Plaintiffs seek
to recover overtime pay, liquidated damages, declaratory
relief and attorneys’ fees.
On January 12, 2004, the court certified an opt-in class
of plaintiffs consisting of all persons employed by the
Company as store managers at any time since March 14,
1999, who regularly worked more than 50 hours per week
and either:(1) customarily supervised less than two
employees at one time; (2) lacked authority to hire or
discharge employees without supervisor approval; or (3)
sometimes worked in non-managerial positions at stores
other than the one he or she managed.The Company’s
request to appeal the certification decision on a
discretionary basis to the 11th U.S. Circuit Court of
Appeals was denied.
Notice was sent to prospective class members and the
deadline for individuals to opt in to the lawsuit was May
31, 2004. Approximately 5,000 individuals opted in.
Although the Company has several pending motions that
may dispose of all or portions of the case, the Company is
unable at this time to predict whether or the extent to
which any of these motions will be successful. A trial date
has not been set.
Three additional lawsuits, Tina Depasquales v. Dollar
General Corp. (Southern District of Georgia, Savannah
Division, CV 404-096, filed May 12, 2004), Karen Buckley v.
Dollar General Corp. (Southern District of Ohio, C-2-04-484,
filed June 8, 2004), and Sheila Ann Hunsucker v. Dollar
General Corp. et al. (Western District of Oklahoma, Civ-04-
165-R, filed February 19, 2004), were filed asserting essen-
tially the same claims as the Brown case, and were subse-
quently consolidated in the Northern District of Alabama
where the Brown litigation is pending.The plaintiffs in the
Depasquales and the Hunsucker lawsuits have since dis-
missed their cases and opted into the Brown case. The
Buckley plaintiff has represented to the Court an intent to
abandon the federal FLSA claim in order to pursue a class
action under Ohio’s state law equivalent of the FLSA.
On October 10, 2005, the Company was served with
an additional lawsuit, Moldoon, et al. v. Dolgencorp, Inc., et
al. (Western District of Louisiana, Lake Charles Division,
CV05-0852, filed May 19, 2005), filed as a putative collec-
tive action in which five current or former store managers
claim to have been improperly classified as exempt execu-
tive employees under the FLSA. Plaintiffs seek injunctive
relief, back wages, liquidated damages and attorneys’ fees.
Although the Company has answered the Moldoon
complaint, discovery has not yet begun. At this time, it is
not possible to predict whether the Court will permit this
action to proceed collectively or whether the action will
be consolidated with the Brown litigation.
The Company believes that its store managers are
and have been properly classified as exempt employees
under the FLSA and that the actions described above are
not appropriate for collective action treatment. The
Company intends to vigorously defend these actions.
However, no assurances can be given that the Company
will be successful in that defense on the merits or other-
wise,and, if it is not, the resolution or resolutions could
have a material adverse effect on the Company’s financial
statements as a whole.
On February 9, 2006, a complaint was filed in the
United States District Court for the Western District of New
York (Tammy Brickey, Becky Norman, Rose Rochow, Sandra
Cogswell and Melinda Sappington v. Dolgencorp, Inc. and
Dollar General Corporation, Case 6:06-cv-06084-DGL
(“Brickey”).The Brickey plaintiffs seek to proceed collective-
ly under the FLSA and as a class under New York and Ohio
wage and hour statutes on behalf of, among others, indi-
viduals employed by the Company as Assistant Store
Managers who claim to be owed wages (including over-
time wages) under those statutes. As of March 16, 2006,
the Company had not yet been served with the Brickey
Complaint. At this time, it is not possible to predict
whether the court will permit this action to proceed col-
lectively or as a class. However, the Company believes that
this action is not appropriate for either collective or class
treatment, and believes that its wage and hour policies
and practices comply with both federal and state law.
Although the Company plans to vigorously defend this
action if it is served, no assurances can be given that the
Company will be successful in its defense on the merits or
otherwise, and, if it is not, the resolution of this action
could have a material adverse effect on the Company’s
financial statements as a whole.
On March 7, 2006, a complaint was filed in the United
States District Court for the Northern District of Alabama
(Janet Calvert v. Dolgencorp, Inc., Case 2:06-cv-00465-VEH)
("Calvert"), in which the plaintiff, a former Store Manager,
alleged that she was paid less than male Store Managers