Hertz 2010 Annual Report Download - page 63

ITEM 3. LEGAL PROCEEDINGS (Continued)
January 1, 2007. The other defendants included various of our competitors, including Avis
Budget Group, Inc., Vanguard Car Rental USA, Inc., Dollar Thrifty Automotive Group, Inc.,
Advantage Rent-A-Car, Inc., Avalon Global Group, Enterprise Rent-A-Car Company, Fox Rent A
Car, Inc., Beverly Hills Rent-A-Car, Inc., Rent4Less, Inc., Autorent Car Rental, Inc., Pacific
Rent-A-Car, Inc., ABC Rent-A-Car, Inc., as well as the California Travel and Tourism
Commission, and Dale E. Bonner. The complaint sought injunctive and declaratory relief, that
all assessments collected and to be collected be held in trust, unspecified monetary damages,
interest, attorneys’ fees and costs. In August 2010, the United States Court of Appeals for the
Ninth Circuit affirmed the district court’s dismissal of plaintiffs’ claims against all defendants.
The deadline for plaintiffs to seek review of the Ninth Circuit’s opinion has passed.
5. Public Liability and Property Damage
We are currently a defendant in numerous actions and have received numerous claims on
which actions have not yet been commenced for public liability and property damage arising
from the operation of motor vehicles and equipment rented from us. The obligation for public
liability and property damage on self-insured U.S. and international vehicles and equipment, as
stated on our balance sheet, represents an estimate for both reported accident claims not yet
paid and claims incurred but not yet reported. The related liabilities are recorded on a
non-discounted basis. Reserve requirements are based on actuarial evaluations of historical
accident claim experience and trends, as well as future projections of ultimate losses,
expenses, premiums and administrative costs. At December 31, 2010 and December 31, 2009
our liability recorded for public liability and property damage matters was $278.7 million and
$277.8 million, respectively. We believe that our analysis was based on the most relevant
information available, combined with reasonable assumptions, and that we may prudently rely
on this information to determine the estimated liability. We note the liability is subject to
significant uncertainties. The adequacy of the liability reserve is regularly monitored based on
evolving accident claim history and insurance related state legislation changes. If our estimates
change or if actual results differ from these assumptions, the amount of the recorded liability is
adjusted to reflect these results.
We intend to assert that we have meritorious defenses in the foregoing matters and we intend to defend
ourselves vigorously.
We have established reserves for matters where we believe that the losses are probable and reasonably
estimated, including for various of the matters set forth above. Other than with respect to the reserve
established for claims for public liability and property damage, none of those reserves are material. For
matters, including those described above, where we have not established a reserve, the ultimate
outcome or resolution cannot be predicted at this time, or the amount of ultimate loss, if any, cannot be
reasonably estimated. Litigation is subject to many uncertainties and the outcome of the individual
litigated matters is not predictable with assurance. It is possible that certain of the actions, claims,
inquiries or proceedings, including those discussed above, could be decided unfavorably to us or any of
our subsidiaries involved. Accordingly, it is possible that an adverse outcome from such a proceeding
could exceed the amount accrued in an amount that could be material to our consolidated financial
condition, results of operations or cash flows in any particular reporting period.
ITEM 4. (REMOVED AND RESERVED)
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