Western Union 2015 Annual Report Download - page 217

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
115
On March 12, 2014, Jason Douglas filed a purported class action complaint in the United States District Court for the Northern
District of Illinois asserting a claim under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., based on allegations
that since 2009, the Company has sent text messages to class members’ wireless telephones without their consent. During the first
quarter of 2015, the Company's insurance carrier and the plaintiff reached an agreement to create an $8.5 million settlement fund
that will be used to pay all class member claims, class counsel’s fees and the costs of administering the settlement. The agreement
has been signed by the parties and, on November 10, 2015, the Court granted preliminary approval to the settlement. The Company
accrued an amount equal to the retention under its insurance policy in previous quarters and believes that any amounts in excess
of this accrual will be covered by the insurer. However, if the Company's insurer is unable to or refuses to satisfy its obligations
under the policy or the parties are unable to reach a definitive agreement or otherwise agree on a resolution, the Company's financial
condition, results of operations, and cash flows could be adversely impacted. As the parties have reached an agreement in this
matter, the Company believes that the potential for additional loss in excess of amounts already accrued is remote.
On February 10, 2015, Caryn Pincus filed a purported class action lawsuit in the United States District Court for the Southern
District of Florida against Speedpay, Inc. (“Speedpay”), a subsidiary of the Company, asserting claims based on allegations that
Speedpay imposed an unlawful surcharge on credit card transactions and that Speedpay engages in money transmission without
a license. The complaint requests certification of a class and two subclasses generally comprised of consumers in Florida who
made a payment through Speedpay’s bill payment services using a credit card and were charged a surcharge for such payment
during the four-year and five-year periods prior to the filing of the complaint through the date of class certification. On April 6,
2015, Speedpay filed a motion to dismiss the complaint. On April 23, 2015, in response to the motion to dismiss, Pincus filed an
amended complaint that adds claims (1) under the Florida Civil Remedies for Criminal Practices Act, which authorizes civil
remedies for certain criminal conduct; and (2) for violation of the federal Racketeer Influenced and Corrupt Organizations Act. On
May 15, 2015, Speedpay filed a motion to dismiss the amended complaint. On October 6, 2015, the Court entered an order denying
Speedpay’s motion to dismiss. On October 20, 2015, Speedpay filed an answer to the amended complaint. On December 1, 2015,
Pincus filed a second amended complaint that revised her factual allegations, but added no new claims. On December 18, 2015,
Speedpay filed an answer to the second amended complaint. As this action is in a preliminary stage, the Company is unable to
predict the outcome, or the possible loss or range of loss, if any, which could be associated with this action. Speedpay intends to
vigorously defend itself in this matter.
In addition to the principal matters described above, the Company is a party to a variety of other legal matters that arise in
the normal course of the Company's business. While the results of these other legal matters cannot be predicted with certainty,
management believes that the final outcome of these matters will not have a material adverse effect either individually or in the
aggregate on the Company's financial condition, results of operations, or cash flows.
On January 26, 2006, the First Data Corporation ("First Data") Board of Directors announced its intention to pursue the
distribution of all of its money transfer and consumer payments business and its interest in a Western Union money transfer agent,
as well as its related assets, including real estate, through a tax-free distribution to First Data shareholders (the “Spin-off”). The
Spin-off resulted in the formation of the Company and these assets and businesses no longer being part of First Data. Pursuant to
the separation and distribution agreement with First Data in connection with the Spin-off, First Data and the Company are each
liable for, and agreed to perform, all liabilities with respect to their respective businesses. In addition, the separation and distribution
agreement also provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities
of the Company's business with the Company and financial responsibility for the obligations and liabilities of First Data's retained
businesses with First Data. The Company also entered into a tax allocation agreement that sets forth the rights and obligations of
First Data and the Company with respect to taxes imposed on their respective businesses both prior to and after the Spin-off as
well as potential tax obligations for which the Company may be liable in conjunction with the Spin-off (see Note 10).
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