Hertz 2011 Annual Report Download - page 66

ITEM 3. LEGAL PROCEEDINGS (Continued)
addresses class certification discovery. In February 2012, HERC filed a Notice of Removal with
the U.S. District Court for the District of Kansas seeking to remove the case to federal court
based on federal question jurisdiction.
4. California Tourism Assessments
We are currently a defendant in a proceeding that purports to be a class action brought by
Michael Shames and Gary Gramkow against The Hertz Corporation, Dollar Thrifty Automotive
Group, Inc., Avis Budget Group, Inc., Vanguard Car Rental USA, Inc., Enterprise Rent-A-Car
Company, Fox Rent A Car, Inc., Coast Leasing Corp., The California Travel and Tourism
Commission, and Caroline Beteta.
Originally filed in November of 2007, the action is pending in the United States District Court for
the Southern District of California, and plaintiffs claim to represent a class of individuals or
entities that purchased rental car services from a defendant at airports located in California after
January 1, 2007. Plaintiffs allege that the defendants agreed to charge consumers a 2.5%
tourism assessment and not to compete with respect to this assessment, while
misrepresenting that this assessment is owed by consumers, rather than the rental car
defendants, to the California Travel and Tourism Commission, or the ‘‘CTTC.’’ Plaintiffs also
allege that defendants agreed to pass through to consumers a fee known as the Airport
Concession Fee, which fee had previously been required to be included in the rental car
defendants’ individual base rates, without reducing their base rates. Based on these
allegations, the amended complaint seeks treble damages, disgorgement, injunctive relief,
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
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