Litigation And Contingent Liabilities

9 Months Ended

Sep. 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.  The following matters include current actions to which we are a party and updates to matters that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

On December 3, 2010, we received a civil investigative demand from the Office of the Missouri Attorney General 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 cooperated with the Attorney General throughout the entire investigation, which the State confirms has been completed.  We have reached an agreement in principle with the State of Missouri to enter into an assurance of voluntary compliance that resolves all possible claims by the State in relation to the subject of the civil investigative demand but which involves no admission of any violation or wrongdoing by the Company.  We will continue to work with the Attorney General to finalize the terms of the settlement.

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 soughtunspecified money damages for alleged breach of the dealer servicing agreement.  The claimant purportedto 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 class-widearbitration, 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.

On September 7, 2012, an arbitration proceeding against us was commenced before the AAA in Southfield, Michigan.  The arbitration demand was brought by a group of six Dealers and sought unspecified money damages for claims relating to the dealer servicing agreements of these Dealers.  We previously received an unfiled demand from five of these six Dealers alleging similar claims.  On or about September 27, 2012, we filed an objection to the consolidation of these arbitration claims based on the terms of the parties’ respective arbitration agreements, which do not authorize consolidated arbitration proceedings.  On October 9, 2012, the AAA sustained our objection holding that the cases could only proceed on an individual basis.  Plaintiffs failed to do so and the AAA deemed the matter not properly filed.

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.