Rite Aid 2011 Annual Report Download - page 21

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involve rent increases. Although from time to time, we may be near capacity at some of our
distribution facilities, particularly at our older facilities, we believe that the capacity of our facilities is
adequate.
We also own a 55,800 square foot ice cream manufacturing facility located in El Monte, California.
On a regular basis and as part of our normal business, we evaluate store performance and may
reduce in size, close or relocate a store if the store is redundant, underperforming or otherwise deemed
unsuitable. We also evaluate strategic dispositions and acquisitions of facilities and prescription files.
When we reduce in size, close or relocate a store or close distribution center facilities, we often
continue to have leasing obligations or own the property. We attempt to sublease this space. As of
February 26, 2011, we had 9,351,693 square feet of excess space, 4,827,532 square feet of which was
subleased.
Item 3. Legal Proceedings
We are currently a defendant in several putative collective or class action lawsuits filed in federal
or state courts in Pennsylvania, New Jersey, New York, Maryland and Oregon, purportedly on behalf
of, in some cases (i) current and former assistant store managers, or (ii) current and former store
managers and assistant store managers, respectively, working in our stores at various locations. The
lawsuits allege violations of the Fair Labor Standards Act and of certain state wage and hour statutes.
The lawsuits seek various combinations of unpaid compensation (including overtime compensation),
liquidated damages, exemplary damages, pre- and post-judgment interest as well as attorneys’ fees and
costs. In one of the cases, Craig et al v. Rite Aid Corporation et al, pending in the United States District
Court for the Middle District of Pennsylvania, brought on behalf of current and former assistant store
managers, the Court, on December 9, 2009, conditionally certified a nationwide collective group of
individuals who worked for us as assistant store managers since December 9, 2006. Notice of the Craig
action has been sent to the purported members of the collective group (approximately 6,700 current
and former store managers) and approximately 1,100 have joined the Craig action. In another of the
cases, Indergit v. Rite Aid Corporation et al, pending in the United States District Court for the Southern
District of New York, brought on behalf of current and former store managers and assistant store
managers, the Court, on April 2, 2010, conditionally certified a nationwide collective group of
individuals who worked for us as store managers since March 31, 2007. The Court ordered that Notice
of the Indergit action be sent to the purported members of the collective group (approximately 7,000
current and former store managers) and approximately 1,550 have joined the Indergit action. At this
time, we are not able to predict the outcome of these lawsuits, or any possible monetary exposure
associated with the lawsuits. Our management believes, however, that the lawsuits are without merit
and not appropriate for collective or class action treatment. We are vigorously defending all of these
claims.
We are currently a defendant in several putative class action lawsuits filed in state courts in
California alleging violations of California wage and hour laws pertaining primarily to pay for missed
meals and rest periods. These suits purport to be class actions and seek substantial damages. At this
time, we are not able to predict the outcome of these lawsuits, or any possible monetary exposure
associated with the lawsuits. Our management believes, however, that the plaintiffs’ allegations are
without merit and that their claims are not appropriate for class action treatment. We are vigorously
defending all of these claims.
We were served with a United States Department of Health and Human Services Office of the
Inspector General (‘‘OIG’’) Subpoena dated March 5, 2010 in connection with an investigation being
conducted by the OIG, the United States Attorney’s Office for the Central District of California and
the United States Department of Justice Commercial Litigation Branch. The subpoena requests records
related to any gift card or similar programs for customers who transferred prescriptions for drugs or
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