Rite Aid 2016 Annual Report Download - page 144

RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 27, 2016, February 28, 2015 and March 1, 2014
(In thousands, except per share amounts)
21. Commitments, Contingencies and Guarantees (Continued)
the merits of the claims is ongoing. At this time, the Company is not able to either predict the outcome
of this lawsuit or estimate a potential range of loss with respect to the lawsuit. The Company’s
management believes, however, that this lawsuit is without merit and is vigorously defending this
lawsuit.
The Company is currently a defendant in several lawsuits filed in state courts in California alleging
violations of California wage and hour laws, rules and regulations pertaining primarily to failure to pay
overtime, failure to pay for missed meals and rest periods, failure to reimburse business expenses and
failure to provide employee seating (the ‘‘California Cases’’). The lawsuits pertaining to failure to
reimburse business expenses and provide employee seating purport to be class actions and seek
substantial damages. The single-plaintiff and multi-plaintiff lawsuits regarding failure to pay overtime
and failure to pay for missed meals and rest periods, in the aggregate, seek substantial damages. The
Company has aggressively challenged the merits of the lawsuits and, where applicable, the allegations
that the cases should be certified as class or representative actions.
With respect to cases involving pharmacist meal and rest periods (Chase and Scherwin v. Rite Aid
Corporation pending in Los Angeles County Superior Court and Kyle v. Rite Aid Corporation pending in
Sacramento County Superior Court), during the period ended March 1, 2014, the Company recorded a
legal accrual with respect to these matters. The Company settled the lawsuit for $9.0 million. Following
final approval by the Court earlier in the year, all settlement funds were disbursed in March 2016.
In the employee seating case (Hall v. Rite Aid Corporation, San Diego County Superior Court), the
Court, in October 2011, granted the plaintiff’s motion for class certification. The Company filed its
motion for decertification, which motion was granted in November 2012. Plaintiff subsequently
appealed the Court’s order which appeal was granted in May 2014. The Company filed a petition for
review of the appellate court’s decision with the California Supreme Court, which petition was denied
in August 2014. Proceedings in the Hall case are stayed pending a decision by the California Supreme
Court in two similar cases. That decision was rendered on April 4, 2016. The Company is conferring
with counsel about next steps in the litigation. A further status conference in the case is scheduled for
May 13, 2016. With respect to the California Cases (other than Chase and Scherwin and Kyle), the
Company, at this time, is not able to predict either the outcome of these lawsuits or estimate a
potential range of loss with respect to said lawsuits.
The Company was served with a Civil Investigative Demand Subpoena Duces Tecum dated
August 26, 2011 by the United States Attorney’s Office for the Eastern District of Michigan. The
subpoena requests records regarding the relationship of Rite Aid’s Rx Savings Program to the reporting
of usual and customary charges to publicly funded health programs. In connection with the same
investigation, the Company was served with a Civil Subpoena Duces Tecum dated February 22, 2013 by
the State of Indiana Office of the Attorney General requesting additional information regarding both
Rite Aid’s Rx Savings Program and usual and customary charges. The Company has responded to both
of the subpoenas. To enable the parties to discuss a possible resolution, the Medicaid Fraud Control
Units of the several states, commonwealths and the District of Columbia and Rite Aid have entered
into an agreement tolling the statute of limitations until October 7, 2015. The parties agreed to extend
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