Cash America 2011 Annual Report Download - page 143

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
112
and in violation of various Pennsylvania laws, including the Loan Interest Protection Law, the Pennsylvania Consumer
Discount Company Act (the “CDCA”) and the Unfair Trade Practices and Consumer Protection Laws. The lawsuit
also seeks declaratory judgment that several of CashNetUSA’s contractual provisions, including the class action
waiver and the choice of law and arbitration provisions, are not enforceable under Pennsylvania law and that CashNet
USA’s loan contracts are void and unenforceable. The complaint seeks compensatory damages (including the trebling
of certain damages), punitive damages and attorney’s fees. CashNetUSA filed a motion to enforce the arbitration
provision, including its class action waiver, located in the agreements governing the lending activities. In August 2011,
the U.S. District Court ruled that the arbitration provision, which includes the class action waiver, was valid and
enforceable and granted the motion to compel arbitration and stayed the litigation. In August 2011, the plaintiffs filed a
motion to reconsider, which the court denied, and in September 2011, the plaintiffs filed a motion for certification for
interlocutory appeal, which was denied in November 2011. On February 24, 2012, plaintiffs filed a motion for
reconsideration of the court's decision, and the court has not yet ruled on this motion. Neither the likelihood of an
unfavorable outcome nor the ultimate liability, if any, with respect to this matter can be determined at this time, and
the Company is currently unable to estimate a range of reasonably possible losses, as defined by ASC 450-20-20, for
this litigation. The Company believes that the plaintiffs’ claims in this suit are without merit and intends to vigorously
defend this lawsuit.
On December 4, 2009, Krystle Wilson filed a lawsuit against Cash America Net of Illinois d/b/a CashNetUSA
alleging violation of the Texas Debt Collection Practices Act, violation of the Texas Deceptive Trade Practices Act,
and invasion of privacy. In April 2011, the plaintiff amended her petition to include a purported class action claim, and
named Cash America International, Inc., Cash America Net Holdings, LLC, Cash America Net of Texas, LLC and
Enova Financial Holdings, LLC as additional defendants (and corrected the name of the previously-named defendant
to Cash America Net of Illinois, LLC) (collectively, “CashNet”). The amended petition alleges, among other things,
that CashNet’s consumer loan activities violate the Texas Credit Services Organization Act (“CSOA”) and that in its
efforts to collect on loans issued through the CSOA loan program, CashNet violated the Texas and Federal Fair Debt
Collection Practices Acts. The plaintiff seeks unspecified compensatory damages, attorney’s fees and punitive
damages. In June 2011, CashNet removed this action to the U.S. District Court for the Northern District of Texas (Fort
Worth Division) and filed a motion to enforce the arbitration provision, including the class action waiver, located in
the agreements governing the lending activities. In September 2011, the court granted the parties’ joint motion
requesting that the case be stayed pending resolution of the motion to enforce the arbitration provision. On February 1,
2012, the court ruled that the arbitration provision, which contains the class action waiver, was valid and enforceable
and granted the Company’s motion to compel arbitration and dismissed the litigation.
The Company is also a defendant in certain routine litigation matters 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 is not expected to have a material adverse effect on the Company’s financial position, results of
operations or liquidity.