Litigation And Contingent Liabilities

6 Months Ended

Jun. 30, 2012

Litigation And Contingent Liabilities [Abstract]

Litigation And Contingent Liabilities

13.        LITIGATION AND CONTINGENT LIABILITIES

In the normal course of business and as a result of the customer-oriented nature of the industry in which we operate, industry participants are frequently subject to various customer claims and litigation seeking damages and statutory penalties.  The claims allege, among other theories of liability, violations of state, federal and foreign truth-in-lending, credit availability, credit reporting, customer protection, warranty, debt collection, insurance and other customer-oriented laws and regulations, including claims seeking damages for physical and mental damages relating to our repossession and sale of the customer’s vehicle and other debt collection activities.  As the assignee of Consumer Loans originated by Dealers, we may also be named as a co-defendant in lawsuits filed by customers principally against Dealers.  We may also have disputes and litigation with Dealers. The claims may allege, among other theories of liability, that we breached our dealer servicing agreement.  Many of these cases are filed as purported class actions and seek damages in large dollar amounts.  Current actions to which we are a party include the following matters.

On December 3, 2010, we received a civil investigative demand from the Missouri Attorney General Office relating to our practices regarding collections from Missouri consumers who claim to have not received title from the Dealer at the time of their purchase.  On January 24, 2011, we provided an initial response and on May 16, 2011, we filed a supplemental response.  We are in continued discussions with the Attorney General with respect to the demand for information.  We are cooperating with the inquiry.

On November 22, 2011, an arbitration proceeding against us was commenced before the American Arbitration Association ("AAA") in Southfield, Michigan.  The arbitration demand was brought by a Dealer and seeks unspecified money damages for alleged breach of the dealer servicing agreement.  The claimant purports to proceed on behalf of a putative class of similarly situated Dealers.  On or about January 3, 2012, we filed an answer, denying the allegations in the demand and opposing claimant’s attempt to proceed on a class-wide basis based on the terms of the parties’ arbitration agreement, which does not authorize classwide arbitration, and recent controlling Supreme Court authority. An arbitration panel was never appointed.On August 1, 2012, we received notice that the Dealer dismissed the proceeding against the Company.We also received a demand from a group of five individual Dealers for alleged damages relating to the dealer servicing agreement. We intend to vigorously defend ourselves against any claims that may be brought by these Dealers.

An adverse ultimate disposition in any action to which we are a party or otherwise subject could have a material adverse impact on our financial position, liquidity and results of operations.