Contingencies

6 Months Ended

Apr. 30, 2011

Contingencies [Abstract]

Contingencies

9. Contingencies

The Company is a defendant in certain proceedings arising in the ordinary course of business, including class actions and purported class actions. Litigation outcomes can be difficult to predict and are often resolved over long periods of time. Estimating probable losses requires the analysis of theoretical outcomes that often depend on judgments about potential actions by third parties. Loss contingencies are recorded as liabilities if both: (1) it is probable or known that a liability has been incurred and (2) the amount of the loss is reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. Legal costs associated with loss contingencies are expensed as incurred.

The Company is a defendant in the previously reported consolidated cases of Augustus, Hall and Davis v. American Commercial Security Services filed July 12, 2005, in the Superior Court of California, Los Angeles County (the “Augustus case”). The Augustus case involves allegations that the Company violated certain state laws relating to meal and rest breaks. On January 8, 2009, the Augustus case was certified as a class action by the Superior Court of California, Los Angeles County. On October 6, 2010, the Company moved to de-certify the class and for summary judgment. Plaintiffs also moved for summary judgment on the rest break claim. On December 28, 2010, the Superior Court de-certified the portion of the class related to the meal break claims and granted summary judgment for the plaintiffs with respect to the rest break claim. On January 21, 2011, the Company filed a writ challenging the Court’s decision on the rest breaks, which writ was denied. A trial date of September 12, 2011 has been set.

The Company is a defendant in the previously reported consolidated cases of Batiz/Heine v. ACSS filed on June 7, 2006, in the U.S. District Court of California, Central District (the “Batiz case”). The Batiz case involves allegations relating to unpaid overtime. On September 29, 2010, the Batiz case was de-certified as a class action by the United States District Court of California, Central District, and all opt-in plaintiffs were dismissed without prejudice. During the three months ended April 30, 2011, the Company settled this case and paid an aggregate amount of approximately $0.3 million in connection with the settlement.

The Company is a defendant in the previously reported consolidated cases of Bucio and Martinez v. ABM Janitorial Services filed on April 7, 2006, in the Superior Court of California, County of San Francisco (the “Bucio case”). The Bucio case is a purported class action and involves allegations that the Company failed to track work time and provide breaks. On April 19, 2011 the trial court held a hearing on plaintiffs’ motion to certify the class. At the conclusion of that hearing, the trial court denied plaintiffs’ motion to certify the class and requested that the parties submit a proposed order denying class certification, which has been submitted to the court by the Company. On May 11, 2011, the plaintiffs filed a motion for relief which requested that the trial court reconsider certain evidentiary rulings it made in the April 19, 2011 hearing.

The Company is a defendant in the previously reported case of Khadera v. American Building Maintenance Co.-West and ABM Industries filed on March 24, 2008, in U.S. District Court of Washington, Western District (the “Khadera case”). The Khadera case is a class action and involves allegations relating to unpaid overtime and meal and rest claims. Class certification has been granted only with respect to certain overtime claims under federal law. The Company is also a defendant in the previously reported case of Simpson v. ABM Janitorial Services-Northwest, Inc., and ABM Industries Incorporated filed on September 24, 2010 in the Superior Court for the State of Washington in and for King County (the “Simpson case”). The Simpson case involves allegations relating to unpaid overtime, off-the-clock work, and failure to provide meal and rest periods under Washington law. On April 13, 2011, the parties mediated the Khadera and Simpson cases, but did not reach a settlement. A trial date has not been set.

The Company is a defendant in the previously reported case of Diaz/Morales/Reyes v. Ampco System Parking filed on December 5, 2006, in Los Angeles Superior Court (the “Diaz case”). On January 19, 2011, a mediation between the parties took place, which concluded without the parties reaching agreement. On April 21, 2011, the court granted a stay of the case pending the decision of the California Supreme Court in Brinker v. Hohnbaum (the “Brinker case”). The Brinker case involves issues similar to those involved in the Diaz case. The Company intends to continue to vigorously defend itself. The Company has accrued its best estimate of the probable liability. There can be no assurance that any judgment or settlement relating to the Diaz case will not be material to the Company.

The Company accrues amounts it believes are adequate to address any liabilities related to litigation and arbitration proceedings and to other contingencies that the Company believes will result in a probable loss. However, the ultimate resolution of such matters is always uncertain. Any such proceeding brought against the Company could have a material adverse impact on its financial condition and results of operations. The total amount accrued for all probable losses at April 30, 2011 was $5.6 million.