Avis 2006 Annual Report Download - page 31

Table of Contents
expenses) of the Company or its subsidiaries which are not primarily related to any of the respective businesses of Realogy, Wyndham
Worldwide, Travelport and/or the Company’
s vehicle rental operations, in each case incurred or allegedly incurred on or prior to the date of the
separation of Travelport from the Company. Such litigation includes the litigation described below.
After the April 15, 1998 announcement of the discovery of accounting irregularities in the former CUC International, Inc. (“CUC”) business
units, and prior to the filing of this annual report on Form 10-K, approximately 70 lawsuits claiming to be class actions and other proceedings
were commenced against the Company and other defendants, of which a number of lawsuits have been settled. Approximately five lawsuits
remain unresolved in addition to the matter described below.
In Re Cendant Corporation Litigation
, Master File No. 98-1664 (WHW) (D.N.J.) (the “Securities Action”), is a consolidated class action
brought on behalf of all persons who acquired securities of Cendant and CUC, except PRIDES securities, between May 31, 1995 and
August 28, 1998. Named as defendants are the Company; 28 current and former officers and directors of Cendant, CUC and HFS Incorporated;
and Ernst & Young LLP, CUC’s former independent accounting firm.
The Amended and Consolidated Class Action Complaint in the Securities Action alleges that, among other things, the lead plaintiffs and
members of the class were damaged when they acquired securities of Cendant and CUC because, as a result of accounting irregularities,
Cendant’s and CUC’s previously issued financial statements were materially false and misleading, and the allegedly false and misleading
financial statements caused the prices of Cendant’s and CUC’s securities to be inflated artificially.
On December 7, 1999, we announced that we had reached an agreement to settle claims made by class members in the Securities Action for
approximately $2,850 million in cash plus 50 percent of any net recovery we receive from Ernst & Young as a result of our cross-claims
against Ernst & Young as described below. This settlement received all necessary court approvals and was fully funded on May 24, 2002.
On January 25, 1999, we asserted cross-claims against Ernst & Young that alleged that Ernst & Young failed to follow professional standards
to discover and recklessly disregarded the accounting irregularities and is therefore liable to us for damages in unspecified amounts. The cross-
claims assert claims for breaches of Ernst & Young’s audit agreements with us, negligence, breaches of fiduciary duty, fraud and contribution.
On July 18, 2000, we filed amended cross-claims against Ernst & Young asserting the same claims.
On March 26, 1999, Ernst & Young filed cross-claims against us and certain of our present and former officers and directors that alleged that
any failure by Ernst & Young to discover the accounting irregularities was caused by misrepresentations and omissions made to Ernst & Young
in the course of its audits and other reviews of our financial statements. Ernst & Young’s cross-claims assert claims for breach of contract,
fraud, fraudulent inducement, negligent misrepresentation and contribution. Damages in unspecified amounts are sought for the costs to
Ernst & Young associated with defending the various shareholder lawsuits, lost business it claims is attributable to Ernst & Young’s
association with us, and for harm to Ernst & Young’s reputation. On June 4, 2001, Ernst & Young filed amended cross-claims against us
asserting the same claims.
Realogy, Wyndham Worldwide and Travelport have assumed under the Separation Agreement certain contingent and other corporate liabilities
(and related costs and expenses), which are primarily related to each of their respective businesses.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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