Thrifty Car Rental 2011 Annual Report Download - page 28

On September 22, 2009, a purported class action complaint was filed in Illinois state court by Susan
and Jeffrey Dillon, individually and on behalf of all persons who rented a vehicle from Thrifty Car
Rental in Colorado from September 22, 2006 forward, who signed a rental agreement which
obligated them to pay for loss of use of a vehicle if damaged, and who were charged for loss of use
or an administrative fee related to the vehicle damage claim. Plaintiffs assert claims for breach of
contract, violations of the Colorado Consumer Protection Act and for declaratory judgment under the
Colorado Uniform Declaratory Judgment Law related to the assessment of loss of use and
administrative fees in connection with vehicle damage claims against renters. The case is styled:
Susan and Jeffrey Dillon v. DTG Operations, Inc. d/b/a Thrifty Car Rental (Case No. 09CH34874,
Cook County Circuit Court, Chancery Division, Illinois). On July 23, 2010, these actions were
dismissed with prejudice. The plaintiffs filed their notice of appeal on August 19, 2010. Appellate
briefing was completed on May 16, 2011 and oral argument on the appeal occurred on December 6,
2011, and the parties are awaiting a ruling.
Various class action complaints relating to the now terminated proposed merger transaction with
Hertz Global Holdings, Inc. (“Hertz”) have been filed in Oklahoma state court, Oklahoma federal
court, and Delaware Chancery Court against the Company, its directors, and Hertz by various
plaintiffs, for themselves and on behalf of the Company's stockholders, excluding defendants and
their affiliates. These complaints allege that the consideration the Company's stockholders would
have received in connection with the proposed transaction with Hertz is inadequate and that the
Company's directors breached their fiduciary duties to stockholders in negotiating and approving the
merger agreement. These complaints also allege that the proxy materials that were sent to the
Company's stockholders to approve the merger agreement are materially false and misleading. The
cases and their current status are as follows: 1) Henzel v. Dollar Thrifty Automotive Group, Inc., et al.
(Consolidated Case No. CJ-2010-02761, Dist. Ct. Tulsa County, Oklahoma) - this case has not been
dismissed but is currently inactive and 2) In Re: Dollar Thrifty Shareholder Litigation (Consolidated
Case No. 5458-VCS, Delaware Court of Chancery) - on October 18, 2011, plaintiffs sought
permission to amend their pleadings to assert additional claims that members of the Company’s
board of directors (the “Board”) breached their fiduciary duties concerning the following matters: (a)
the Board’s response to a merger proposal by Avis Budget Group, Inc. (“Avis Budget”) in September,
2010; (b) the Board’s use of defensive measures, including the adoption of a poison pill, in response
to the Exchange Offer made by Hertz; (c) the Board’s response to the failure of Hertz to submit an
improved final offer meeting certain Board criteria by October 10, 2011; and (d) the Board’s alleged
failure to make full material disclosures to the Company’s stockholders concerning the Hertz offer,
the Company’s stand-alone plan, and the Company’s negotiations with Hertz regarding a business
combination. The court has not ruled on the plaintiffs’ request to amend. On November 1, 2011, the
plaintiffs advised the court that the parties have agreed to stay further activity pending the outcome
of the Hertz antitrust review process.
Given the inherent uncertainties of litigation, the ultimate outcome of these matters cannot be
predicted at this time, nor can the amount of ultimate loss, if any, be reasonably estimated.
Various other legal actions, claims and governmental inquiries and proceedings have been in the
past, or may be in the future, asserted or instituted against the Company, including other purported
class actions or proceedings relating to the Hertz transaction terminated in October 2010 or a
potential acquisition transaction, and some that may demand large monetary damages or other relief
which could result in significant expenditures. Litigation is subject to many uncertainties and is
inherently unpredictable. The Company is also subject to potential liability related to environmental
matters. The Company establishes reserves for litigation and environmental matters when the loss
is probable and reasonably estimable. It is reasonably possible that the final resolution of some of
these matters may require the Company to make expenditures in excess of established reserves.
The term “reasonably possible” is used herein to mean that the chance of a future transaction or
event occurring is more than remote but less than probable. Disclosure for specific legal
contingencies is provided if the likelihood of occurrence is at least reasonably possible and the
exposure is considered material to the consolidated financial statements. The Company evaluates
developments in its legal matters that could affect the amount of previously accrued reserves and
makes adjustments as appropriate. Significant judgment is required to determine both likelihood of a
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