Western Union 2015 Annual Report Download - page 215

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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The Company and one of its subsidiaries are defendants in two purported class action lawsuits: James P. Tennille v. The
Western Union Company and Robert P. Smet v. The Western Union Company, both of which are pending in the United States
District Court for the District of Colorado. The original complaints asserted claims for violation of various consumer protection
laws, unjust enrichment, conversion and declaratory relief, based on allegations that the Company waits too long to inform
consumers if their money transfers are not redeemed by the recipients and that the Company uses the unredeemed funds to generate
income until the funds are escheated to state governments. The Tennille complaint was served on the Company on April 27, 2009.
The Smet complaint was served on the Company on April 6, 2010. On September 21, 2009, the Court granted the Company's
motion to dismiss the Tennille complaint and gave the plaintiff leave to file an amended complaint. On October 21, 2009, Tennille
filed an amended complaint. The Company moved to dismiss the Tennille amended complaint and the Smet complaint. On
November 8, 2010, the Court denied the motion to dismiss as to the plaintiffs' unjust enrichment and conversion claims. On
February 4, 2011, the Court dismissed the plaintiffs' consumer protection claims. On March 11, 2011, the plaintiffs filed an amended
complaint that adds a claim for breach of fiduciary duty, various elements to its declaratory relief claim and WUFSI as a defendant.
On April 25, 2011, the Company and WUFSI filed a motion to dismiss the breach of fiduciary duty and declaratory relief claims.
WUFSI also moved to compel arbitration of the plaintiffs' claims and to stay the action pending arbitration. On November 21,
2011, the Court denied the motion to compel arbitration and the stay request. Both companies appealed the decision. On January
24, 2012, the United States Court of Appeals for the Tenth Circuit granted the companies' request to stay the District Court
proceedings pending their appeal. During the fourth quarter of 2012, the parties executed a settlement agreement, which the Court
preliminarily approved on January 3, 2013. On June 25, 2013, the Court entered an order certifying the class and granting final
approval to the settlement. Under the approved settlement, a substantial amount of the settlement proceeds, as well as all of the
class counsel’s fees, administrative fees and other expenses, would be paid from the class members' unclaimed money transfer
funds, which are included within "Settlement obligations" in the Company's Consolidated Balance Sheets. These fees and other
expenses are currently estimated to be approximately $50 million. During the final approval hearing, the Court overruled objections
to the settlement that had been filed by several class members. In July 2013, two of those class members filed notices of appeal.
On May 1, 2015, the United States Court of Appeals for the Tenth Circuit affirmed the District Court’s decision to overrule the
objections filed by the two class members who appealed. On January 11, 2016, the United States Supreme Court denied petitions
for certiorari that were filed by the two class members who appealed. On February 1, 2016, pursuant to the settlement agreement
and the Court's June 25, 2013 final approval order, Western Union deposited the class members' unclaimed money transfer funds
into a class settlement fund, from which class member claims, administrative fees and class counsel’s fees, as well as other expenses
will be paid. On November 6, 2013, the Attorney General of California notified Western Union of the California Controller’s
position that Western Union’s deposit of the unclaimed money transfer funds into the class settlement fund pursuant to the settlement
“will not satisfy Western Union’s obligations to report and remit funds” under California’s unclaimed property law, and that
“Western Union will remain liable to the State of California” for the funds that would have escheated to California in the absence
of the settlement. The State of Pennsylvania and District of Columbia have previously expressed similar views. Other states have
also recently expressed concerns about the settlement and many have not yet expressed an opinion. Since some states and
jurisdictions believe that the Company must escheat its full share of the settlement fund and that the deductions for class counsel's
fees, administrative costs, and other expenses that are required under the settlement agreement are not permitted, there is a reasonable
possibility a loss could result up to approximately the amount of those fees and other expenses. However, given the number of
jurisdictions involved and the fact that no actions have been brought, the Company is unable to provide a more precise estimate
of the range of possible loss.
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