Cash America 2011 Annual Report Download - page 66

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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 in February
2008, and at the request of the 11th Circuit panel, the parties provided additional briefing in the summer of 2009
following a ruling by the United States Supreme Court that federal courts can compel arbitration of a state court action
in certain instances. In August 2011, the 11th Circuit affirmed the trial court’s decision precluding Cash America from
compelling arbitration, and in September 2011, Cash America filed a petition for rehearing en banc to the 11th Circuit
arguing that the panel’s decision should be reversed. The 11th Circuit declined to review the panel’s decision en banc.
On March 5, 2009, Peter Alfeche and Kim Saunders, on behalf of themselves and all others similarly situated,
filed a purported class action lawsuit in the U.S. District Court for the Eastern District of Pennsylvania against Cash
America International, Inc., Cash America Net of Nevada, LLC (“CashNet Nevada”), Cash America Net of
Pennsylvania, LLC and Cash America of PA, LLC, d/b/a CashNetUSA.com (collectively, “CashNetUSA”). The lawsuit
alleges, among other things, that CashNetUSA’s online consumer loan activities in Pennsylvania were illegal 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.