Item 3. Legal Proceedings
Item 3. Legal Proceedings
Consumer Litigation.
We are routinely involved in various legal proceedings resulting from our consumer finance activities and practices, both continuing and
discontinued. Consumers can and do initiate lawsuits against us alleging violations of law applicable to collection of receivables, and
such lawsuits sometimes allege that resolution as a class action is appropriate. For the most part, we have legal and factual defenses
to consumer claims, which we routinely contest or settle (for immaterial amounts) depending on the particular circumstances of each case.
Following our filing of a
complaint for a deficiency judgment in the Superior Court at Waterbury, Connecticut, the defendant filed a cross-claim on October 16,
2019 alleging that our deficiency notices were not compliant with Connecticut law, and seeking relief on behalf of a class of Connecticut
obligors whose vehicles we had repossessed. The complaint seeks primarily damages, injunctive relief, waiver of contract deficiencies,
and attorney fees and interest. The defendant’s contract provided for resolution of disputes exclusively by arbitration, and exclusively
on an individual basis, not a class basis. Nevertheless, in August 2021, the court denied our motion to compel arbitration, without opinion.
In April 2024 a motion for certification of a class was filed. Prior to the motion being ruled upon, summary judgment was granted in our
favor, disposing of the claims against CPS. An appeal of the summary judgment ruling was filed on October 25, 2024 and a cross appeal
of the denial of the motion to compel arbitration was filed on October 31, 2024.
Wage and Hour Claim.
On September 24, 2018, a former employee filed a lawsuit against us in the Superior Court of Orange County, California, alleging that
we incorrectly classified our sales representatives as outside salespersons exempt from overtime wages, mandatory break periods and certain
other employee protective provisions of California and federal law. The complaint sought injunctive relief, an award of unpaid wages,
liquidated damages, and attorney fees and interest. The plaintiff purported to act on behalf of a class of similarly situated employees
and ex-employees. We believe that our compensation practices with respect to our sales representatives are compliant with applicable law.
In August 2023, the parties settled by agreement the claims of the plaintiff and a California settlement class for $1.1 million. The settlement
was approved by the court on October 9, 2024. Under the settlement, the Company paid, after September 30, 2024, $1.1 million to the settlement
administrator.
In General. There can
be no assurance as to the outcomes of the matters described or referenced above. We record at each measurement date, most recently as
of December 31, 2024, our best estimate of probable incurred losses for legal contingencies, including the matters identified above. The
amount of losses that may ultimately be incurred cannot be estimated with certainty. However, based on such information as is available
to us, we believe that the range of reasonably possible losses for the legal proceedings and contingencies we face, including those described
or identified above, as of December 31, 2024 does not exceed $3.2 million.
Accordingly, we believe that
the ultimate resolution of such legal proceedings and contingencies should not have a material adverse effect on our consolidated financial
condition. We note, however, that in light of the uncertainties inherent in contested proceedings there can be no assurance that the ultimate
resolution of these matters will not be material to our operating results for a particular period, depending on, among other factors,
the size of the loss or liability imposed and the level of our income for that period.
Item 4. Mine Safety Disclosures
Not applicable.
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Information about Our Executive Officers
Set forth below are the names, ages, offices held, tenure, and certain
biographical information of each of our executive officers as of the filing of this report:
Charles E. Bradley, Jr .,
65, has been our Chief Executive Officer since January 1992, a director since our formation in March 1991, and was elected Chairman of
the Board of Directors in July 2001. Prior to that he was our President from March 1991 to December 2022. From April 1989 to November
1990, he served as Chief Operating Officer of Barnard and Company, a private investment firm. From September 1987 to March 1989, Mr. Bradley,
Jr. was an associate of The Harding Group, a private investment banking firm. Mr. Bradley does not currently serve on the board of
directors of any other publicly-traded companies.
Michael T. Lavin,
52, has been President since December 2022, Chief Operating Officer since February 2019, and our Chief Legal Officer since March 2014.
Prior to that, he was our Executive Vice President since March 2014, Senior Vice President – General Counsel since March 2013,
Senior Vice President and Corporate Counsel since May 2009 and our Vice President- Legal since joining the Company in November of 2001.
Mr. Lavin was previously engaged as an associate at a large law firm and a spin off start up law firm.
Danny Bharwani , 57,
has been Chief Financial Officer since September 2022 and Executive Vice President – Finance since December 2022. Previously, he
was our Senior Vice President – Finance from April 2016 to December 2022 and Vice President – Finance from June 2002 to April
2016. He joined us as Assistant Controller in August 1997. Mr. Bharwani was previously employed as Assistant Controller at The Todd-AO
Corporation, from 1989 to 1997.
Christopher Terry,
57, has been Executive Vice President of Risk Management, Systems, and IT since December 2022. Prior to that he was our Senior Vice President
of Risk Management, Systems, and IT from October 2018 to December 2022, and Senior Vice President of Risk Management from May 2017 to
October 2018. Prior to that, he was our Senior Vice President of Servicing from May 2005 to August 2013. He was Senior Vice President
of Asset Recovery from August 2013 to May 2017 and from January 2003 to May 2005. He joined us in January 1995 as a loan officer, held
a series of successively more responsible positions, and was promoted to Vice President - Asset Recovery in June 1999. Mr. Terry
was previously a branch manager with Norwest Financial from 1990 to October 1994.
Teri L. Robinson, 62,
has been Executive Vice President of Sales and Originations since December 2022. Prior to that she was Senior Vice President of Sales
and Originations from June 2020 to December 2022 and Senior Vice President of Originations from April 2007 to June 2020. Prior to that,
she held the position of Vice President of Originations since August 1998. She joined the Company in June 1991 as an Operations Specialist,
and held a series of successively more responsible positions. Previously, Ms. Robinson held an administrative position at Greco &
Associates.
Michele Baumeister ,
58, has been Senior Vice President of Originations since June 2023. Prior to that she was the Vice President of Originations from March
2017 to June 2023. She started with the Company in March 1997 as a Loan Processor and held a series of more senior positions within the
Originations Department. Ms. Baumeister was previously a personal banker with Western Financial.
April Crisp , 38, has been the Senior Vice
President of Compliance and Regulatory Affairs since June 2023. Prior to that, she was the Vice President of Legal from August 2016 to
June 2023, and the Assistant Vice President of Legal from November 2013 to August 2016. Ms. Crisp is a California barred attorney.
Charles Gonel , 44,
has been Senior Vice President of Servicing since June 2023. Prior to that he was the Vice President of Collections from March 2015 to
June 2023. He joined the Company in March 2008 as a Collections Analyst and transferred into the Risk Management Department in 2010
where he held a sequence of increasingly more responsible positions. Prior to joining CPS, he was a Quality Assurance Analyst with AT&T
Wireless.
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John P. Harton , 60,
has been Senior Vice President – Business Development since June 2020. Prior to that he was Senior Vice President – Program
Development from March 2019 to June 2020, Senior Vice President – Marketing from March 2014 to March 2019 , and Vice President –
Marketing from April 2010 to March 2014. He joined the Company in April 1996 as a loan officer, held a series of successively more responsible
positions, and was promoted to Vice President - Originations in June 2007. Mr. Harton was previously a branch manager with American General
Finance from 1990 to March 1996.
Catrina Ralston , 49,
has been Senior Vice President of Human Resources since December 2022. Prior to that, she was Vice President - Human Resources since March
2016. She joined the Company in 1997 as an Operations Clerk and transferred into the Human Resources Department in 2001 where she held
a series of successively more responsible positions. Prior to joining CPS, Ms. Ralston worked as a customer service representative for
the City of Virginia Beach Parks & Recreation Department.
Lisette Reynoso , 37,
has been Senior Vice President and General Counsel since June 2023. Prior to that she was the Vice President of Legal from January 2020
to June 2023, the Assistant Vice President of Legal/Corporate Counsel from December 2018 to January 2020, and Corporate Counsel from December
2015 to December 2018. Ms. Reynoso is a California barred attorney.
Susan Ryan , 53, has
been Senior Vice President of Servicing since June 2023. Prior to that she was the Vice President of Collections from March 2015 to June
2023. She started with the Company in 2003 as a Deficiency Supervisor where she took on more responsibility over time. Prior to joining
CPS, she was a Deficiency Supervisor with The Finance Company.
Steve Schween , 62,
has been Senior Vice President of Systems since December 2022. Previously, he was Vice President of Systems from February 2014. He joined
in the Company in 2000 as a Systems Analyst and took on more responsibility over time. Mr. Schween was previously a Systems Analyst with
Jeunique International.
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PART II