Redbox 2013 Annual Report Download - page 97

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In March 2011, a California resident, Blake Boesky, individually and on behalf of all others similarly situated, filed a putative
class action complaint against our Redbox subsidiary in the U.S. District Court for the Northern District of Illinois. The
plaintiff alleges that Redbox retains personally identifiable information of consumers for a time period in excess of that allowed
under the Video Privacy Protection Act, 18 U.S.C. §§ 2710, et seq. A substantially similar complaint was filed in the same court
in March 2011 by an Illinois resident, Kevin Sterk. Since the filing of the complaint, Blake Boesky has been replaced by a
different named plaintiff, Jiah Chung, and an amended complaint has been filed alleging disclosures of personally identifiable
information, in addition to plaintiffs' claims of retention of such information. Plaintiffs are seeking statutory damages,
injunctive relief, attorneys' fees, costs of suit, and interest. The court has consolidated the cases. The court denied Redbox's
motion to dismiss the plaintiffs' claims upon interlocutory appeal. The U.S. Court of Appeals for the Seventh Circuit reversed
the district court's denial of Redbox's motion to dismiss plaintiff's claims involving retention of information, holding that the
plaintiffs could not maintain a suit for damages under this theory. On April 25, 2012, the plaintiffs amended their complaint to
add claims under the Stored Communications Act, 18 U.S.C. § 2707, and for breach of contract. On May 9, 2012, Redbox
moved to dismiss the amended complaint. On July 23, 2012, the court dismissed the added retention claims, except to the
extent that plaintiffs seek injunctive, non-monetary relief. On August 16, 2013, the court granted summary judgment in
Redbox's favor on all remaining claims, and entered a final judgment for Redbox. On September 16, 2013, plaintiff filed a
notice of appeal. Pursuant to Seventh Circuit Rule 33, the case was referred for a Prehearing Conference, and briefing of the
appeal is suspended pending further court order. 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 is 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.
In February 2011, a California resident, Michael Mehrens, individually and on behalf of all others similarly situated, filed a
putative class action complaint against our Redbox subsidiary in the Superior Court of the State of California, County of Los
Angeles. The plaintiff alleges that, among other things, Redbox violated California's Song-Beverly Credit Card Act of 1971
(“Song-Beverly”) with respect to the collection and recording of consumer personal identification information, and violated the
California Business and Professions Code § 17200 based on the alleged violation of Song-Beverly. A similar complaint alleging
violations of Song-Beverly and the right to privacy generally was filed in March 2011 in the Superior Court of the State of
California, County of Alameda, by a California resident, John Sinibaldi. A third similar complaint alleging only a violation of
Song-Beverly, was filed in March 2011 in the Superior Court of the State of California, County of San Diego, by a California
resident, Richard Schiff. Plaintiffs are seeking compensatory damages and civil penalties, injunctive relief, attorneys' fees, costs
of suit, and interest. Redbox removed the Mehrens case to the U.S. District Court for the Central District of California, the
Sinibaldi case to the U.S. District Court for the Northern District of California, and the Schiff case to the U.S. District Court for
the Southern District of California. The Sinibaldi case was subsequently transferred to the U.S. District Court for the Central
District of California, where the Mehrens case is pending, and these two cases have been consolidated. At the same time, the
plaintiffs substituted Nicolle DiSimone as the named plaintiff in the Mehrens case. After Redbox filed a motion to dismiss, stay,
or transfer, the Schiff case was transferred to the U.S. District Court for the Central District of California. On January 4, 2013,
the Court dismissed with prejudice the Schiff case for failure to prosecute and failure to comply with court rules and orders.
Redbox moved to dismiss the DiSimone/Sinibaldi case, and DiSimone/Sinibaldi moved for class certification. In January 2012,
the Court granted Redbox's motion to dismiss with prejudice and denied DiSimone/Sinibaldi's motion for class certification as
moot. On February 2, 2012, Plaintiffs filed their notice of appeal. After a stay pending the California Supreme Court's decision
in a case presenting similar issues involving Song-Beverly in a case to which Redbox is not a party, Plaintiffs filed their
opening brief on April 15, 2013. The matter is fully briefed, and oral argument occurred on January 8, 2014. 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 is 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.
Other Contingencies
During the year ended December 31, 2013, we resolved a previously disclosed loss contingency related to a supply agreement
and recognized a benefit of $11.4 million included in direct operating expense in our Consolidated Statements of
Comprehensive Income.
NOTE 20: GUARANTOR SUBSIDIARIES
Certain of our wholly-owned subsidiaries have, jointly and severally, fully and unconditionally guaranteed the Senior Notes.
Pursuant to SEC regulations, we have presented in columnar format the condensed consolidating financial information for
Outerwall Inc., the guarantor subsidiaries on a combined basis, and all non-guarantor subsidiaries on a combined basis in the
following tables: