Redbox 2012 Annual Report Download - page 90

Letters of Credit
As of December 31, 2012, we had five irrevocable standby letters of credit that totaled $6.8 million. These
standby letters of credit, which expire at various times through 2013, are used to collateralize certain obligations
to third parties. As of December 31, 2012, no amounts were outstanding under these standby letter of credit
agreements.
Legal Matters
In October 2009, an Illinois resident, Laurie Piechur, individually and on behalf of all others similarly situated,
filed a putative class action complaint against our Redbox subsidiary in the Circuit Court for the Twentieth
Judicial Circuit, St. Clair County, Illinois. The plaintiff alleges that, among other things, Redbox charges
consumers illegal and excessive late fees in violation of the Illinois Consumer Fraud and Deceptive Business
Practices Act, and that Redbox’s rental terms violate the Illinois Rental Purchase Agreement Act or the Illinois
Automatic Contract Renewal Act and the plaintiff is seeking monetary damages and other relief. In November
2009, Redbox removed the case to the U.S. District Court for the Southern District of Illinois. In February 2010,
the District Court remanded the case to the Circuit Court for the Twentieth Judicial Circuit, St. Clair County,
Illinois. In May 2010, the court denied Redbox’s motion to dismiss the plaintiff’s claims, and also denied the
plaintiff’s motion for partial summary judgment. In November 2011, the plaintiff moved for class certification,
and Redbox moved for summary judgment. The court denied Redbox’s motion for summary judgment in
February 2012. The plaintiff filed an amended complaint on April 19, 2012, and an amended motion for class
certification on June 5, 2012. The court denied Redbox’s motion to dismiss the complaint. The class certification
motion has been briefed and argued, and the court has not yet ruled on the motion for class certification. The
plaintiff has dismissed its claims regarding Redbox’s fees and is only pursuing its claims under the Illinois Rental
Purchase Agreement Act and the Illinois Automatic Contract Renewal Act. We believe that the claims against us
are without merit and intend to defend ourselves vigorously in this matter. Currently, no accrual has been
established as it was not possible to estimate the possible loss or range of loss because this matter had not
advanced to a stage where we could make any such estimate.
Related to a putative class action complaint previously disclosed, on March 2 and 10, 2011, shareholder
derivative actions were filed in the Superior Court of the State of Washington (King County), allegedly on behalf
of and for the benefit of Coinstar, against certain of its current and former directors and officers. Coinstar was
named as a nominal defendant. On April 12, 2011, the court consolidated these actions as a single action entitled
In re Coinstar, Inc. Derivative Litigation. A third substantially similar complaint was later filed in the same court.
On April 18, 2011, two purported shareholder derivative actions were filed in the U.S. District Court for the
Western District of Washington. On May 26, 2011, the court consolidated the federal derivative actions and
joined them with the securities class actions, captioned In re Coinstar Securities Litigation, for pre-trial
proceedings. The derivative plaintiffs’ consolidated complaint was filed on July 15, 2011. We moved to dismiss
this complaint on August 12, 2011 on the ground that the plaintiffs had not made a pre-litigation demand on our
Board of Directors and had not demonstrated that such a demand would have been futile. On November 14,
2011, the court granted our motion and issued an order dismissing the complaint with leave to amend the
compliant. On November 23, 2011, plaintiffs moved to stay the action or defer filing of an amended complaint in
order to allow them time to inspect Coinstar’s books and records prior to any such amendment. On December 22,
2011, the court entered an order granting in part and denying in part plaintiffs’ motion. The order grants
plaintiffs’ request to defer filing of an amended complaint, but provided that if plaintiffs choose to file an
amended complaint, they must pay attorneys’ fees incurred by defendants on the motion to dismiss the
consolidated complaint. On April 9, 2012, before expiration of plaintiffs’ deadline to file an amended complaint,
the parties filed a joint status report with the court indicating they had agreed upon a proposed settlement of the
federal and state derivative actions. On April 27, 2012, a stipulation and agreement of settlement, was filed with
the court, along with Plaintiffs’ unopposed motion for preliminary approval of the settlement. On May 25, 2012,
the court conducted a hearing on the motion. On August 6, 2012, after some supplemental briefing by the parties,
the court granted preliminary approval of the settlement. On November 9, 2012, the court granted final approval
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