Public Storage 2003 Annual Report Download - page 31

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21
Environmental Matters: Our practice is to conduct environmental investigations in connection with
property acquisitions. As a result of environmental investigations of our properties, which commenced in 1995, we
recorded an amount, which in managements best estimate, will be sufficient to satisfy anticipated costs of known
investigation and remediation requirements. Although there can be no assurance, we are not aware of any
environmental contamination of any of our facilities which individually or in the aggregate would be material to the
Companys overall business, financial condition, or results of operations.
ITEM 3. Legal Proceedings
Serrao v. Public Storage, Inc. (filed April 2003) (Superior Court  Orange County)
The plaintiff in this case filed a suit against the Company on behalf of a putative class of renters who rented
self-storage units from the Company. Plaintiff alleges that the Company misrepresented the size of its storage units,
has brought claims under California statutory and common law relating to consumer protection, fraud, unfair
competition, and negligent misrepresentation, and is seeking monetary damages, restitution, and declaratory and
injunctive relief.
The claim in this case is substantially similar to those in Henriquez v. Public Storage, Inc., which was
disclosed in prior reports. In January 2003, the plaintiff caused the Henriquez action to be dismissed. Based upon
the uncertainty inherent in any putative class action, the Company cannot presently determine the potential damages,
if any, or the ultimate outcome of this litigation. On November 3, 2003, the court granted the Companys motion to
strike the plaintiffs nationwide class allegations and to limit any putative class to California residents only. The
Company is vigorously contesting the claims upon which this lawsuit is based including class certification efforts.
Salaam, et al v. Public Storage, Inc. (filed February 2000) (Superior Court  Los Angeles County)
The plaintiffs in this case are suing the Company on behalf of a putative class of California resident
property managers who claim that they were not compensated for all the hours they worked. The named plaintiffs
have indicated that their claims total less than $20,000 in aggregate. On December 1, 2003, the California Court of
Appeals affirmed the Supreme Courts 2002 denial of plaintiffs motion for class certification. The maximum
potential liability cannot be estimated, but can only be increased if claims are permitted to be brought on behalf of
others under the California Unfair Business Practices Act. The affirmation of denial of class certification does not
address the claim under the California Unfair Business Practices Act.
The Company is continuing to vigorously contest the claims in this case and intends to resist any expansion
beyond the named plaintiffs, including by opposing claims on behalf of others under the California Unfair Business
Practices Act. The Company cannot presently determine the potential damages, if any, or the ultimate outcome of
this litigation.
Gustavson et al. v. Public Storage, Inc. (filed June 2003) (Superior Court-Los Angeles County)
In November 2002, a shareholder of the Company made a demand on the Board of Directors that
challenged the fairness of the Companys acquisition of PS Insurance Company, Ltd. (PSIC) and demanded that
the Board recover the profits earned by PSIC from November 1995 through December 2001 and that the entire
purchase price paid by the Company for PSIC in excess of PSICs net assets be returned to the Company.
The contract to acquire PSIC was approved by the independent directors of the Company in March 2001,
and the transaction was closed in December 2001. PSIC was formerly owned by B. Wayne Hughes, currently the
Chairman of the Board (and in 2001 also the Chief Executive Officer) of the Company, B. Wayne Hughes, Jr.,
currently a director (and in 2001 also an officer) of the Company and Tamara H. Gustavson, who in 2001 was an
officer of the Company. In exchange for the Hughes familys shares in PSIC, the Company issued to them
1,439,765 shares of common stock (or a net of 1,138,733 shares, after taking into account 301,032 shares held by
PSIC).