Neiman Marcus 2014 Annual Report Download - page 138

Table of Contents
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Leases. We lease certain property and equipment under various operating leases. The leases provide for monthly fixed rentals and/or contingent
rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other
occupancy costs. Generally, the leases have primary terms ranging from three to 99 years and include renewal options ranging from two to 80 years.
Rent expense and related occupancy costs under operating leases is as follows:
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




















Minimum rent
$ 73,700
$ 47,800
$ 15,200
$ 60,100
Contingent rent
27,700
22,600
6,900
28,200
Other occupancy costs
16,500
9,400
4,000
16,300
Amortization of deferred real estate credits
(800)
(200)
(2,000)
(7,900)
Total rent expense
$ 117,100
$ 79,600
$ 24,100
$ 96,700
Future minimum rental commitments, excluding renewal options, under non-cancelable leases for the next five fiscal years and thereafter are as
follows (in thousands):
2016 $ 81,200
2017 79,200
2018 77,700
2019 73,700
2020 66,400
Thereafter 1,736,600
Employment and Consumer Class Actions Litigation On April 30, 2010, a Class Action Complaint for Injunction and Equitable Relief was filed
against the Company, Newton Holding, LLC, TPG Capital, L.P. and Warburg Pincus LLC in the U.S. District Court for the Central District of California by
Sheila Monjazeb, individually and on behalf of other members of the general public similarly situated. On July 12, 2010, all defendants except for the
Company were dismissed without prejudice, and on August 20, 2010, this case was dismissed by Ms. Monjazeb and refiled in the Superior Court of
California for San Francisco County. This complaint, along with a similar class action lawsuit originally filed by Bernadette Tanguilig in 2007, sought
monetary and injunctive relief and alleged that the Company has engaged in various violations of the California Labor Code and Business and Professions
Code, including without limitation, by (i) asking employees to work “off the clock,” (ii) failing to provide meal and rest breaks to its employees,
(iii) improperly calculating deductions on paychecks delivered to its employees and (iv) failing to provide a chair or allow employees to sit during shifts. The
Monjazeb and Tanguilig class actions were deemed “related” cases and were then brought before the same trial court judge. On October 24, 2011, the court
granted the Company’s motion to compel Ms. Monjazeb and Juan Carlos Pinela (a co-plaintiff in the Tanguilig case) to arbitrate their individual claims in
accordance with the Company’s Mandatory Arbitration Agreement, foreclosing their ability to pursue a class action in court. However, the court’s order
compelling arbitration did not apply to Ms. Tanguilig because she is not bound by the Mandatory Arbitration Agreement. Further, the court determined that
Ms. Tanguilig could not be a class representative of employees who are subject to the Mandatory Arbitration Agreement, thereby limiting the putative class
action to those associates who were employed between December 2003 and July 15, 2007 (the effective date of our Mandatory Arbitration Agreement).
Following the court’s order, Ms. Monjazeb and Mr. Pinela filed demands for arbitration with the American Arbitration Association (AAA) seeking to arbitrate
not only their individual claims, but also class claims, which the Company asserted violated the class action waiver in the Mandatory Arbitration Agreement.
This led to further proceedings in the trial court, a stay of the arbitrations, and a decision by the trial court, on its own motion, to reconsider its order
compelling arbitration. The trial court ultimately decided to vacate its order compelling arbitration due to a recent California appellate court decision.
Following this ruling, the Company timely filed two separate appeals, one with respect to Mr. Pinela and one with respect to Ms. Monjazeb, with the
California Court of Appeal, asserting that the trial court did not have jurisdiction to change its earlier determination of the enforceability of the arbitration
agreement. The appeal with respect to Mr. Pinela has been fully briefed, and oral argument was held on June 9, 2015. On June 29, 2015, the California Court
of Appeal issued its order affirming the trial court's denial of our motion to compel arbitration and awarding Mr. Pinela his costs of
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