individuals who accepted the
Company’s prior settlement offer. The Company accrued an
additional $675 thousand
related to this matter in the first quarter 2021. The Savidis MOU
is subject to certain contingencies, including court approval of
the definitive settlement agreement. There can be no assurance that
a settlement will be approved or as to the ultimate outcome of the
litigation. If a final, court approved settlement is not reached,
the Company will defend the matter vigorously and believes there
are meritorious defenses and legal standards that must be met for
success on the merits. If the parties are unable to finalize the
settlement, the Savidis matter could have a material adverse effect
on the Company’s financial condition and results of
operations.
Visnack Lawsuit
On June 29, 2020, Michael
Visnack, on behalf of himself and all others similarly situated
(collectively, the “Visnack Plaintiffs”) filed a purported class
action lawsuit in the Superior Court of California, County of San
Diego, on behalf of all current and former store managers, and
others similarly situated. The Complaint alleges violation of the
California Labor Code including, among other items, failure to pay
wages and overtime, wage statement violations, meal and rest break
violations, unpaid reimbursements and waiting time, and engaging in
unfair business practices (the “Visnack matter”). The Visnack
Plaintiffs seek certification of a class period beginning September
20, 2019, through the date of Notice of Class Certification, if
granted. The Visnack Plaintiffs did not quantify any alleged
damages but, in addition to attorneys’ fees and costs, they seek
unspecified amounts for each of the causes of action such as unpaid
wages and overtime wages, failure to provide meal periods and rest
breaks, payroll record and wage statement violations, failure to
reimburse expenses and waiting time, liquidated and/or punitive
damages, declaratory relief, restitution, statutory penalties,
injunctive relief and other damages.
On December 14, 2020, the court
ruled in favor of a motion by the Company to compel arbitration for
Michael Visnack under the existing agreement between the Company
and Mr. Visnack. The court declined to outright dismiss the
putative class claims but stayed the putative class claims and
Private Attorneys General Act claims pending arbitration. The court
denied plaintiff’s request to conduct discovery. In the first
quarter of 2021, the Company received notice that Mr. Visnack has
filed an arbitration claim, which the Company intends to defend.
Mr. Visnack is a Collective Member of the Mason Putative Class and
will have the opportunity to decide whether to participate in the
Mason settlement and release his claims against the Company, in
which case he would be removed as the lead Plaintiff in the Visnack
matter. In December 2020, the Company began contacting
individuals who constitute the purported class in the Visnack
matter and has offered individual settlements in satisfaction of
their claims. To the extent individuals accepted these settlement
offers, they have released the Company from the claims and been
removed from the purported class. As of March 31, 2021, the Company
had reached agreement with a portion of the purported class
incurring less than $50 thousand in fees, taxes, and other costs.
The Company included those amounts in “Other Matters” in the chart
above.
The Company is evaluating the Visnack Putative Class Employees'
claims and intends to defend itself vigorously in this matter.
Given the uncertainty of litigation, the preliminary stage of the
case and the legal standards that must be met for, among other
things, class certification and success on the merits, the Company
cannot estimate the reasonably possible loss or range of loss, if
any, that may result from this action and therefore no accrual has
been made related to this. Any such losses could, potentially, have
a material adverse effect, individually or collectively, on the
Company’s results of operations, financial condition and
liquidity.
Kramer lawsuit
In November 2017, Robert J.
Kramer, on behalf of himself and all others similarly situated
(collectively, the “Kramer Plaintiffs”) filed a purported class
action lawsuit in the Superior Court of California, County of
Sacramento on behalf of all current and former store managers, all
others with similar job functions and/or titles and all current and
former employees classified as non-exempt or incorrectly classified
as exempt and who worked for the Company in the State of California
alleging violation of the California Labor Code including, among
other items, failure to pay wages and overtime and engaging in
unfair business practices (the “Kramer matter”). The Company
reached settlement for this matter for $4.75 million in the
third quarter of 2019 and paid that amount to the settlement
administrator in the second quarter of 2020 for distribution to
class members.