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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended March 1, 2014, March 2, 2013 and March 3, 2012
(In thousands, except per share amounts)
17. Commitments, Contingencies and Guarantees (Continued)
store manager claims as to liability only, but denied it as to damages, and denied the Company’s
motion for decertification of the nationwide collective action claims. The Company has filed a motion
seeking reconsideration of the Court’s September 26, 2013 decision and briefing on that motion is
complete and awaiting a ruling. Once approved by the Court, notice of the Rule 23 class certification
as to liability only will be sent to approximately 1,750 current and former store managers in the state of
New York. At this time, the Company is not able to either predict the outcome of this lawsuit or
estimate a potential range of loss with respect to the lawsuit. The Company’s management believes,
however, that this lawsuit is without merit and not appropriate for collective or class action treatment
and is vigorously defending this lawsuit.
The Company is currently a defendant in several putative class action lawsuits filed in state courts
in California alleging violations of California wage and hour laws, rules and regulations pertaining
primarily to failure to pay overtime, pay for missed meals and rest periods and failure to provide
employee seating. These suits purport to be class actions and seek substantial damages. The Company
has aggressively challenged both the merits of the lawsuits and the allegations that the cases should be
certified as class or representative actions. With respect to cases involving meal and rest periods (Chase
and Scherwin v. Rite Aid Corporation pending in Los Angeles County Superior Court and Kyle v. Rite
Aid Corporation pending in Sacramento County Superior Court), in light of the cost and uncertainty
involved in these lawsuits, the Company is involved in ongoing discussions with counsel for the
Plaintiffs concerning a possible resolution of these matters. During the period ended March 1, 2014,
the Company recorded a legal accrual with respect to these matters. With respect to the other lawsuits
described in this paragraph, the Company, at this time, is not able to predict either the outcome of
these lawsuits or estimate a potential range of loss with respect to said lawsuits.
The Company was served with a United States Department of Health and Human Services Office
of the Inspector General (‘‘OIG’’) subpoena dated March 5, 2010 in connection with an investigation
being conducted by the OIG and the United States Attorney’s Office for the Central District of
California. The subpoena requests records related to any gift card inducement programs for customers
who transferred prescriptions for drugs or medicines to the Company’s pharmacies, and whether any
customers who receive federally funded prescription benefits (e.g. Medicare and Medicaid) may have
benefited from those programs. The Company has substantially completed its production of records in
response to the subpoena. In June 2013, the government contacted the Company, and the Company is
involved in ongoing discussions with the government regarding the matter. The Company is unable to
predict the timing or outcome of any review by the government of such information.
The Company was served with a Civil Investigative Demand Subpoena Duces Tecum dated
August 26, 2011 by the United States Attorney’s Office for the Eastern District of Michigan. The
subpoena requests records regarding Rite Aid’s Rx Savings Program and the reporting of usual and
customary charges to publicly funded health programs. In connection with the same investigation, the
Company was served with a Civil Subpoena Duces Tecum dated February 22, 2013 by the State of
Indiana Office of the Attorney General. The Company has substantially completed its response to both
of the subpoenas and is unable to predict the timing or outcome of any review by the government of
such information.
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