Dollar General 2011 Annual Report Download - page 182

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Commitments and contingencies (Continued)
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 No. 2:06-cv-00465-VEH (‘‘Calvert’’)), in
which the plaintiff, a former store manager, alleged that she was paid less than male store managers
because of her sex, in violation of the Equal Pay Act and Title VII of the Civil Rights Act of 1964, as
amended (‘‘Title VII’’) (now captioned, Wanda Womack, et al. v. Dolgencorp, Inc., Case
No. 2:06-cv-00465-VEH). The complaint subsequently was amended to include additional plaintiffs, who
also allege to have been paid less than males because of their sex, and to add allegations that the
Company’s compensation practices disparately impact females. Under the amended complaint, plaintiffs
seek to proceed collectively under the Equal Pay Act and as a class under Title VII, and request back
wages, injunctive and declaratory relief, liquidated damages, punitive damages and attorneys’ fees and
costs.
On July 9, 2007, the plaintiffs filed a motion in which they asked the court to approve the issuance
of notice to a class of current and former female store managers under the Equal Pay Act. The
Company opposed plaintiffs’ motion. On November 30, 2007, the court conditionally certified a
nationwide class of females under the Equal Pay Act who worked for Dollar General as store managers
between November 30, 2004 and November 30, 2007. The notice was issued on January 11, 2008, and
persons to whom the notice was sent were required to opt into the suit by March 11, 2008.
Approximately 2,100 individuals opted into the lawsuit.
On April 19, 2010, the plaintiffs moved for class certification relating to their Title VII claims. The
Company filed its response to the certification motion in June 2010. Briefing has closed, and the
motion remains pending. The Company’s motion to decertify the Equal Pay Act class was denied as
premature. If the case proceeds, the Company expects to file a similar motion in due course.
The parties agreed to mediate this action, and the court stayed the action pending the results of
the mediation. The mediation occurred in March and April, 2011, and the Company has reached an
agreement in principle to settle the matter on behalf of the entire putative class. The proposed
settlement, which still must be approved by the court, provides for both monetary and equitable relief.
Under the proposed terms, the Company will pay $15.5 million into a fund for the class members that
will be apportioned and paid out to individual members (less any additional attorneys’ fees or litigation
costs approved by the court), upon submission of a valid claim. It will pay an additional $3.25 million
for plaintiffs’ legal fees and costs. Of the total $18.75 million anticipated payment, the Company
expects to receive reimbursement from its Employment Practices Liability Insurance (‘‘EPLI’’) carrier
of approximately $15.9 million, which represents the balance remaining of the $20 million EPLI policy
covering the claims. In addition, the Company has agreed to make certain adjustments to its pay setting
policies and procedures for new store managers. If the settlement is approved, the Company expects to
implement the new pay policies and practices no later than April 2012. Documents related to the
parties’ request for preliminary approval of the proposed settlement were filed on October 28, 2011. A
hearing on the proposed settlement has been held and the Company expects the court to approve the
settlement soon. Because it deemed settlement probable and estimable, the Company accrued for the
net settlement as well as for certain additional anticipated fees related thereto during the first quarter
of 2011, and concurrently recorded a receivable of approximately $15.9 million from its EPLI carrier.
At this time, although probable it is not certain that the court will approve the settlement. If it
does not, and the case proceeds, it is not possible at this time to predict whether the court ultimately
will permit the action to proceed collectively under the Equal Pay Act or as a class under Title VII.
82