NOTE 4.  CONTINGENCIES

In the normal course of business, certain of the Company’s subsidiaries are defendants in a number of lawsuits, claims or arbitrations which allege that the subsidiaries’ services caused damage.  In addition, the Company defends employment related cases and claims from time to time. We are involved in certain environmental matters primarily arising in the normal course of business. We are actively contesting each of these matters. 

On December 2, 2014, Plaintiff Killian Pest Control sued Rollins, Inc. and its subsidiary HomeTeam Pest Defense in the United States District Court, Northern District of California, alleging that HomeTeam’s exclusive use of its “tubes in the walls” system violates the federal Sherman Antitrust Act, and California’s Cartwright Act and Business and Professions Code.  Plaintiff sought a declaratory judgment that the alleged misconduct violates the Sherman and Cartwright Acts, and the Business and Professions Code; a permanent injunction against continuing alleged violations; and monetary damages.  The case was dismissed with prejudice by the Court’s Order of  July 3, 2017 following the parties’ agreement to settle the matter with a payment by HomeTeam of $21,000.

On December 2, 2014, Plaintiff Jose Luis Garnica, on behalf of himself and a class of similarly situated customers, sued Rollins, Inc. and its subsidiary HomeTeam Pest Defense alleging that HomeTeam’s exclusive use of its “tubes in the walls” system violates the federal Sherman Antitrust Act.  A second Plaintiff, Cora Potter, subsequently was added.  Plaintiffs sought a declaratory judgment that the alleged misconduct violates the Sherman Act; a permanent injunction against continuing violations; and monetary damages.  On February 3, 2017, the Court issued an order denying Plaintiffs’ Motion for Class Certification.  At a hearing on February 9, 2017, the Court granted Plaintiffs’ leave to seek certification of a class of customers limited to their own geographic market, the Bakersfield, California area.  Plaintiffs then sought leave from the ninth Circuit Court of Appeals to appeal the ruling on class certification, but leave was denied.  On May 30, 2017 the Plaintiffs filed a request to dismiss the lawsuit with prejudice as to the named Plaintiffs and without prejudice as to the putative class members.  The case was dismissed by order of the Court on June 8, 2017.

Management does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate will have a material adverse effect on the Company’s financial position, results of operations or liquidity; however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual quarter or year.