Avis 2007 Annual Report Download - page 32

Table of Contents
for our car and truck rental operations. Office space is also leased in Orlando, Florida; Englewood, Colorado; Wichita Falls, Texas; Tulsa,
Oklahoma; and Fredericton, Canada pursuant to leases expiring in 2010, except for the Englewood and Fredericton leases which expire in
2011. These locations primarily provide operational services for both brands, including call center operations. The Budget office at Redding,
California was closed in 2005 and is currently vacant and is subject to a lease expiring in 2011. In addition, there are approximately 15 other
leased office locations in the United States for administrative activities, regional sales and operations activities.
We lease or have vehicle rental concessions for both the Avis and Budget brands at locations throughout the world. Avis operates
approximately 1,000 locations in the United States and approximately 315 locations outside the United States. Of those locations,
approximately 240 in the United States and approximately 120 outside the United States are at airports. Budget operates at approximately 620
locations in the United States of which approximately 160 are at airports. Budget also operates at approximately 180 locations outside the
United States of which approximately 60 are at airports. Typically, an airport receives a percentage of vehicle rental revenue, with a guaranteed
minimum. Because there is a limit to the number of vehicle rental locations in an airport, vehicle rental companies frequently bid for the
available locations, usually on the basis of the size of the guaranteed minimums. We believe that our properties are sufficient to meet our
present needs and we do not anticipate any difficulty in securing additional space, as needed, on acceptable terms.
ITEM 3. LEGAL PROCEEDINGS
Vehicle Rental Litigation
We, along with our subsidiaries, are involved from time to time in legal proceedings in the ordinary course of business, including the cases
described below.
On August 8, 2006, Ludwig v. Avis Rent A Car System, Inc. and Farrell v. Budget Rent A Car System, Inc . were commenced in the Superior
Court of California in and for Los Angeles on behalf of plaintiffs and all others similarly situated claiming violations of California Civil Code
Section 1936 and unlawful, unfair or fraudulent business practices under California Business and Professions Code Section 17203. In both
cases, plaintiffs seek class certification, general and compensatory damages, attorneys’ fees and seek that Avis and Budget, respectively, be
enjoined from future conduct constituting violations of Civil Code Section 1936. Section 1936 of the California Civil Code establishes the
additional daily rates which a rental car company may charge for the optional loss damage waiver product based on the manufacturer suggested
retail price (MSRP) of the vehicle in 2002 with Consumer Price Index increases to the MSRP commencing January 1, 2003. Plaintiffs contend
that the amount of the daily charge imposed for certain classes of vehicles exceeds the amount set forth in the statute based on the vehicle cost.
No class certification hearing has been scheduled or heard by the court. On January 8, 2008, the court determined that no further briefing on
any motions, including class certification motions, could occur until after a decision is reached on our motion for summary judgment.
Avis has been named as a defendant in two putative class actions ( Esquivel v. Avis
, commenced January 24, 2004 in the 214th Judicial District
of Nueces County, Texas, and Stafford v. Avis , commenced February 16, 2005 in the District Court in and for Creek County, State of
Oklahoma). Each case alleges that the Company’s use and collection of the fuel service charge (“FSC”), pursuant to its rental agreements,
constitutes an illegal penalty and is therefore a breach of the rental agreements between the Company and the putative class members and is
unconscionable under the relevant state Uniform Commercial Code. The cases assert other causes of action such as fraudulent
misrepresentation, unjust enrichment and unfair trade practice under the Oklahoma Consumer Protection Act. The putative class in Esquivel
comprises all Texas residents who were charged an FSC by Avis or its licensee in Texas after February 6, 2000; and in Stafford , the class
comprises all persons who were charged an FSC by Avis, or alternatively, all Oklahoma residents who were charged an FSC by Avis. In each
case, the plaintiff seeks an unspecified amount of compensatory damages, with the return of all FSC paid or the difference between the FSC
and the Company’s actual costs, disgorgement of unearned profits, attorneys’ fees and costs. In
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