IHOP 2009 Annual Report Download - page 48
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located in the Kansas City metropolitan area under a lease expiring in July 2023. We also lease a small
executive suite space for our company operations in the Cincinnati market.
Item 3. Legal Proceedings.
We are subject from time to time to lawsuits, claims and governmental inspections or audits arising
in the ordinary course of business. Some of these lawsuits purport to be class actions and/or seek
substantial damages. In the opinion of management, these matters are adequately covered by insurance
or, if not so covered, are without merit or are of such a nature or involve amounts that would not have
a material adverse impact on our business or consolidated financial position.
Gerald Fast v. Applebee’s
The Company is currently defending a collective action filed under the Fair Labor Standards Act
styled Gerald Fast v. Applebee’s International, Inc., in which named plaintiffs claim that tipped workers
in company restaurants perform excessive amounts of non-tipped work for which they should be
compensated at the minimum wage. The court has conditionally certified a nationwide class of servers
and bartenders who have worked in company-operated Applebee’s restaurants since June 19, 2004.
Unlike a class action, a collective action requires potential class members to ‘‘opt in’’ rather than ‘‘opt
out.’’ On February 12, 2008, 5,540 opt-in forms were filed with the court.
In cases of this type, conditional certification of the plaintiff class is granted under a lenient
standard. On January 15, 2009, the Company filed a motion seeking to have the class de-certified and
the plaintiffs filed a motion for summary judgment, both of which were denied by the court. The
parties stipulated to a bench trial which was set to begin on September 8, 2009 in Jefferson City,
Missouri. Just prior to trial, however, the court vacated the trial setting in order to submit key legal
issues to the 8th Circuit for review on interlocutory appeal. Briefing on the issues for interlocutory
appeal was completed by the parties on October 2, 2009.
The Company believes it has strong defenses to the substantive claims asserted and intends to
vigorously defend this case. An estimate of the possible loss, if any, or the range of the loss cannot be
made and, therefore, the Company has not accrued a loss contingency related to this matter. It is
reasonably possible that future events will occur in the near term that provide clarification as to an
estimate of the possible loss, if any, or the range of the loss related to this matter.
Item 4. Reserved.
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