Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 195

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1A
Chunk 195
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 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