Dollar General 2006 Annual Report Download - page 76

male store managers because of her sex, in violation of the Equal Pay Act (“EPA”) and Title VII
of the Civil Rights Act of 1964, as amended (“Title VII”). On March 9, 2006, the Calvert
complaint was amended to include seven additional plaintiffs, who also allege to have been paid
less than males because of their sex, and to add allegations of sex discrimination in promotional
opportunities and undefined terms and conditions of employment. In addition to allegations of
intentional sex discrimination, the amended Calvert complaint also alleges that the Company’s
employment policies and practices have a disparate impact on females. The amended Calvert
complaint seeks to proceed collectively under the EPA and as a class under Title VII, and
requests back wages, injunctive and declaratory relief, liquidated damages and attorney’ s fees
and costs.
At this time, it is not possible to predict whether the court will permit Calvert to proceed
collectively or as a class. However, the Company believes that the case is not appropriate for
class or collective treatment and believes that its policies and practices comply with the EPA and
Title VII. The Company intends to vigorously defend the action; however, no assurances can be
given that the Company will be successful in its defense on the merits or otherwise. If the
Company is not successful in defending the Calvert action, its resolution could have a material
adverse effect on the Company’ s financial statements as a whole.
On April 28, 2006, the Company was served with an additional lawsuit, Linda Beeman,
on behalf of herself and all others similarly situated, v. Dolgencorp, Inc. d/b/a Dollar General,
06-CV-0250 (“Beeman”), filed on February 28, 2006 in the United States District Court for the
Northern District of New York, in which the plaintiff, a former store manager, raised claims
substantially similar to those raised in the Calvert matter. The Beeman plaintiff sought to
proceed collectively under the EPA and as a class under Title VII, and requested back wages,
injunctive and declaratory relief, liquidated damages and attorney’ s fees and costs. On November
6, 2006, the parties reached an agreement to settle plaintiff’ s claims for an amount that was not
material to the Company’s financial statements, and that matter is now concluded.
On September 8, 2005, the Company received a request for information from the
Environmental Protection Agency ("EPA") with respect to Krazy String, a product that was
offered for sale in the Company’ s stores. The EPA asserted that Krazy String contained an
aerosol composed of an ozone depleting substance in violation of the Clean Air Act. On July 12,
2006, the Company agreed to an Administrative Compliance Order requiring the destruction of
the Krazy String remaining in inventory. On December 21, 2006, the EPA advised the Company
that they were considering imposing a penalty in connection with Krazy String, but they did not
indicate an estimated amount. On February 5, 2007, the EPA proposed a penalty of
approximately $800,000 which the Company believes is in excess of the amount that is
appropriate pursuant to applicable EPA policies. The Company intends to vigorously defend the
action; however, no assurances can be given that the Company will be successful in its defense
on the merits or otherwise.
Subsequent to the announcement of the Agreement and Plan of Merger among the
Company, Buck Holdings LP and Buck Acquisition Corp (each of Buck Holdings LP and Buck
Acquisition Corp is an affiliate of Kohlberg Kravis Roberts & Co., L.P. (“KKR”)), as more fully
described in Note 14, the Company and its directors were named in seven putative class actions
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