Hertz 2011 Annual Report Download - page 162

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
interest, attorneys’ fees and costs. Plaintiffs dropped their claims against Caroline Beteta.
Plaintiffs’ claims against the rental car defendants have been dismissed, except for the federal
antitrust claim. In June 2010, the United States Court of Appeals for the Ninth Circuit affirmed
the dismissal of the plaintiffs’ antitrust case against the CTTC as a state agency immune from
antitrust complaint because the California Legislature foresaw the alleged price-fixing
conspiracy that was the subject of the complaint. The plaintiffs subsequently filed a petition with
the Ninth Circuit seeking a rehearing and that petition was granted. In November 2010, the
Ninth Circuit withdrew its June opinion and instead held that state action immunity was
improperly invoked. The Ninth Circuit reinstated the plaintiffs’ antitrust claims and remanded
the case to the district court for further proceedings. All proceedings in the case are currently
stayed while the parties engage in settlement discussions.
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, 2011 and December 31, 2010
our liability recorded for public liability and property damage matters was $281.5 million and
$278.7 million, respectively. We believe that our analysis is 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 aggregate
reserves 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.
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