Dollar General 2012 Annual Report Download - page 160

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. Commitments and contingencies (Continued)
payments described above, the accrual and receivable were each relieved during the first quarter of
2012.
On April 9, 2012, the Company was served with a lawsuit filed in the United States District Court
for the Eastern District of Virginia entitled Jonathan Marcum v. Dolgencorp. Inc. (Civil Action
No. 3:12-cv-00108-JRS) in which the plaintiffs, one of whose conditional offer of employment was
rescinded, allege that certain of the Company’s background check procedures violate the Fair Credit
Reporting Act (‘‘FCRA’’). Plaintiff Marcum also alleges defamation. According to the complaint and
subsequently filed first and amended complaints, the plaintiff seeks to represent a putative class of
applicants in connection with his FCRA claims. The Company filed its response to the original
complaint in June 2012 and moved to dismiss certain allegations contained in the amended complaint
in November 2012. That motion remains pending. The plaintiff’s certification motion is currently due to
be filed on or before April 5, 2013.
The parties agreed to mediate, and mediation was conducted on January 15, 2013. Although the
mediation was unsuccessful, the parties have continued informally to discuss potential resolution of this
matter. The Company’s Employment Practices Liability Insurance (‘‘EPLI’’) carrier has been placed on
notice of this matter and participated in the mediation and the informal settlement discussions. The
EPLI Policy covering this matter has a $2 million self-insured retention.
At this time, it is not possible to predict whether the court ultimately will permit the action to
proceed as a class under the FCRA. Although the Company intends to vigorously defend the action, no
assurances can be given that it will be successful in the defense on the merits or otherwise. At this
stage in the proceedings, the Company cannot estimate either the size of any potential class or the
value of the claims raised by the plaintiff. Based on settlement discussions and given the Company’s
EPLI coverage, the Company believes that it is likely to expend the balance of its self-insured retention
in settlement of this litigation or otherwise and, therefore, has accrued $1.8 million, an amount that is
immaterial to the Company’s financial statements taken as a whole.
In September 2011, the Chicago Regional Office of the United States Equal Employment
Opportunity Commission (‘‘EEOC’’ or ‘‘Commission’’) notified the Company of a cause finding related
to the Company’s criminal background check policy. The cause finding alleges that Dollar General’s
criminal background check policy, which excludes from employment individuals with certain criminal
convictions for specified periods, has a disparate impact on African-American candidates and
employees in violation of Title VII of the Civil Rights Act of 1964, as amended.
The Company and the EEOC engaged in the statutorily required conciliation process, and despite
the Company’s good faith efforts to resolve the matter, the Commission notified the Company on
July 26, 2012 of its view that conciliation had failed. Based on the Commission’s course of conduct, the
Company believes that litigation may ensue; however, no suit has been filed to date.
The Company believes that its criminal background check process is both lawful and necessary to a
safe environment for its employees and customers and the protection of its assets and shareholders’
investments. The Company also does not believe that this matter would be amenable to class or similar
treatment; however, because at this time the Company cannot estimate or determine the form that any
ultimate litigation would take, the size of any putative class or the damages or other recoveries that
would be sought, it cannot estimate the potential exposure. If the matter were to proceed successfully
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