Cash America 2008 Annual Report Download - page 46

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23
Georgia’s usury law, the Georgia Industrial Loan Act and Georgia’s Racketeer Influenced and Corrupt
Organizations Act. Community State Bank (“CSB”) for some time made loans to Georgia residents through
Cash America’s Georgia operating locations. The complaint in this lawsuit claims that Cash America was
the true lender with respect to the loans made to Georgia borrowers and that CSB’s involvement in the
process is “a mere subterfuge.” Based on this claim, the suit alleges that Cash America is the “de facto”
lender and is illegally operating in Georgia. The complaint seeks unspecified compensatory damages,
attorney’s fees, punitive damages and the trebling of any compensatory damages. A previous decision by the
trial judge to strike Cash America’s affirmative defenses based on arbitration (without ruling on Cash
America’s previously filed motion to compel arbitration) was upheld by the Georgia Court of Appeals, and
on September 24, 2007, the Georgia Supreme Court declined to review the decision. The case has been
returned to the State Court of Cobb County, Georgia, where Cash America filed a motion requesting that the
trial court rule on Cash America’s pending motion to compel arbitration and stay the State Court
proceedings. The Court denied the motion to stay and ruled that the motion to compel arbitration was
rendered moot after the Court struck Cash America’s affirmative defenses based on arbitration. The
Georgia Supreme Court declined to review these orders and remanded the case to the State Court of Cobb
County, Georgia where discovery relating to the propriety of class certification is underway. The State Court
issued a Scheduling Order Regarding Class Certification setting a hearing on the propriety of class
certification for June 29, 2009. The Court ordered that discovery directed at the merits of Plaintiff’s claims
be stayed until the Court issues its written decision regarding class certification. Cash America believes that
the Plaintiffs’ claims in this suit are without merit and is vigorously defending this lawsuit.
Cash America and CSB also commenced a federal lawsuit in the U.S. District Court for the
Northern District of Georgia seeking to compel Plaintiffs to arbitrate their claims against Cash America and
CSB. The U.S. District Court dismissed the federal action for lack of subject matter jurisdiction, and Cash
America and CSB appealed the dismissal of their complaint to the U.S. Court of Appeals for the 11th
Circuit. The 11th Circuit issued a panel decision on April 27, 2007 reversing the district court’s dismissal of
the action and remanding the action to the district court for a determination of the issue of the enforceability
of the parties’ arbitration agreements. Plaintiff requested the 11th Circuit to review this decision en banc and
this request was granted. The en banc rehearing took place on February 26, 2008. The 11th Circuit has
stayed consideration of this matter pending the resolution of the United States Supreme Court case, Vaden v.
Discover Bank (“Vaden”). Oral arguments in the Vaden case were heard by the United States Supreme
Court in October 2008 and an opinion is expected to be issued in early 2009. The Strong litigation is still at
an early stage, and neither the likelihood of an unfavorable outcome nor the ultimate liability, if any, with
respect to this litigation can be determined at this time.
Information concerning proceedings related to a dispute between the Company and the State of
Pennsylvania regarding the propriety and enforceability of a 2008 Pennsylvania regulatory directive that has
not yet become effective is contained in the subsection labeled – “Regulatory Developments” under the
caption “General” in Item 1. of this report, and such “Regulatory Developments” subsection is incorporated
in this Item 3. by this reference.
The Company is also a defendant in certain lawsuits encountered in the ordinary course of its
business. Certain of these matters are covered to an extent by insurance. In the opinion of management, the
resolution of these matters will not have a material adverse effect on the Company’s financial position,
results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the Company’s security holders during the fourth quarter ended
December 31, 2008.