Petsmart 2013 Annual Report Download - page 78

PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
F-26
Note 12 — Commitments and Contingencies
Advertising Purchase Commitments
As of February 2, 2014, we had obligations to purchase $42.4 million of advertising in 2014.
Product Purchase Commitments
As of February 2, 2014, we had various commitments to purchase $24.8 million of merchandise from certain
vendors in 2014, and $103.5 million in 2015 through 2017.
Litigation and Settlements
We are involved in the legal proceedings described below and are subject to other claims and litigation arising
in the normal course of our business. We have made accruals with respect to certain of these matters, where
appropriate, that are reflected in our consolidated financial statements but are not, individually or in the aggregate,
considered material. For other matters, we have not made accruals because we have not yet determined that a loss
is probable or because the amount of loss cannot be reasonably estimated. While the ultimate outcome of the
matters described below cannot be determined, we currently do not expect that these proceedings and claims,
individually or in the aggregate, will have a material effect on our consolidated financial position, results of
operations, or cash flows. The outcome of any litigation is inherently uncertain, however, and if decided adversely
to us, or if we determine that settlement of particular litigation is appropriate, we may be subject to liability that
could have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
Accordingly, we disclose matters below for which a material loss is reasonably possible. In each case, however,
we have either determined that the range of loss is not reasonably estimable or that any reasonably estimable range
of loss is not material to our consolidated financial statements.
In May 2012, we were named as a defendant in Moore, et al. v. PetSmart, Inc., et al., a lawsuit originally filed
in the California Superior Court for the County of Alameda. PetSmart removed the case to the United States District
Court for the Northern District of California. The complaint brings both individual and class action claims, first
alleging that PetSmart failed to engage in the interactive process and failed to accommodate the disabilities of four
current and former named associates. The complaint also alleges on behalf of current and former hourly store
associates that PetSmart failed to provide pay for all hours worked, failed to properly reimburse associates for
business expenses, failed to properly calculate and pay vacation, failed to provide suitable seating, and failed to
provide timely and uninterrupted meal and rest periods. The lawsuit seeks compensatory damages, statutory
penalties, and other relief, including attorneys' fees, costs, and injunctive relief. In January 2014, the parties entered
a proposed settlement agreement to resolve this matter in line with reserves that were established for this case in
the first and second quarters of 2013. The motion for preliminary approval of the settlement was filed on January
31, 2014, and the hearing on the motion, initially scheduled for March 2014, was continued until April 2014.
In September 2012, a former associate named us as a defendant in McKee, et al. v. PetSmart, Inc., which is
currently pending before the United States District Court for the District of Delaware. The case seeks to assert a
Fair Labor Standards Act collective action on behalf of PetSmart's operations managers nationwide. The complaint
alleges that PetSmart has misclassified operations managers as exempt and as a result failed to pay them overtime
for hours worked in excess of forty hours per week. The plaintiffs seek compensatory damages, liquidated damages,
and other relief, including attorneys' fees, costs, and injunctive relief. The plaintiffs filed a motion for conditional
certification in September 2013, which was granted. The Court conditionally certified a collective action consisting
of all current and former operations managers employed by PetSmart at any time in the preceding three-year period.
Notices were sent to potential class members in February 2014, and the Court has established a 60-day period
within which recipients may consent to join the lawsuit.
Also in September 2012, a former groomer filed a lawsuit against us captioned Negrete, et al. v. PetSmart,
Inc. in the California Superior Court for the County of Shasta. The plaintiff seeks to assert claims on behalf of
current and former California groomers that PetSmart failed to provide pay for all hours worked, failed to properly