*NEWS*STAPLES SETTLES PRICING LAWSUITS
*NEWS*STAPLES SETTLES PRICING LAWSUITS
2006-01-24 at 9:57:00 am #14042
Staples settles pricing lawsuit
In novel pact, stores in Mass. will hand out $7.50 vouchers
Staples Inc. yesterday signed a class-action settlement agreeing to resolve charges that it violated the state’s item-pricing regulation by giving a $7.50 voucher to as many as 76,800 Massachusetts shoppers.
Under terms of the proposed settlement, the vouchers will be handed out to the first 1,200 shoppers who visit any of the chain’s 64 Massachusetts stores this year on a yet-to-be-selected Monday, identified in court papers as ”Consumer Day.”
”It’s a novel way to do it,” said Jim Copland, director of the Center for Legal Policy at the conservative Manhattan Institute in New York, which successfully pushed for federal restrictions on class-action lawsuits last year. ”It’s not a bad way to structure these things.”
The proposed Staples settlement marks the first time consumers in Massachusetts have received direct compensation from an item-pricing class-action settlement. In previous cases involving such retailers as Home Depot, Wal-Mart, and Target, settlement money went to various groups or causes, some with tenuous consumer connections.
Some Beacon Hill lawmakers have criticized the past settlements as frivolous and of no benefit to consumers. A bill surfaced last year as the Legislature was going out of session that would have prohibited item-pricing class-action claims, even those already in progress.
Colman Herman, a Dorchester resident who is the lead plaintiff in the Staples case and worked on some of the other cases, said the voucher approach should address many of the lawmakers’ concerns.
”This is the first item-pricing case where the money actually gets into the pockets of consumers,” said Herman, who plans to pick up a voucher but will receive no other compensation as part of the settlement.
If all 1,200 vouchers are distributed at each store, the settlement would cost Staples $576,000, plus another $210,000 in fees paid to the attorneys who prosecuted the case.
In the settlement agreement, Staples repeatedly denies any wrongdoing and says it has spent a total of $3.9 million since February 2000 complying with the state’s item-pricing regulations, which initially required retailers to put pricing stickers on all items in their stores but was modified in December 2003 to allow the use of aisle scanners.
”Staples asserts that few, if any, of the settlement class members were injured in fact by any alleged failure of Staples to comply with the item-pricing regulation,” the proposed settlement says. The retailer said it agreed to settle ”to avoid the further expense, inconvenience, and distraction of this litigation.”
The date of Consumer Day won’t be selected until a judge gives final approval to the proposed settlement. The Staples vouchers must be redeemed at the store on the day they are handed out, but otherwise there are relatively few restrictions on their use.
The vouchers will be handed out one for every customer 15 or older. The vouchers can be used to buy anything except gift cards, postage stamps, or store services, and cannot be used for website purchases. There is no minimum purchase required, and the vouchers can be combined with coupon deals. No change will be returned for items purchased costing less than $7.50.
Herman sued Home Depot in a small-claims court session in 1999 after failing to persuade Attorney General Thomas F. Reilly to enforce item pricing. His skirmishes with Home Depot mushroomed into a $3.8 million class-action settlement and spawned a series of lawsuits against several other retailers
Herman now acknowledges the initial settlement approach, giving money to various nonprofit groups, was wrong, and says the Staples case could be a new template. Copland of the Manhattan Institute applauded the Staples approach for moving away from meaningless discount coupons, but said he thought it was ridiculous that an individual could sue a retailer for failing to comply with an obscure state law.
”To me, this is sort of a shakedown,” he said.
How much Staples will eventually pay out depends on how many consumers show up on Consumer Day. Staples is required to pay a minimum of $252,000, according to the settlement. If redeemed vouchers total less than $252,000, the leftover balance will be paid to the National Consumer Law Center in Boston.
Staples is required to publicize Consumer Day only with signage at its stores and notices placed in customer bags. Sam Perkins, an attorney at the Boston law firm of Brody, Hardoon, Perkins & Kesten, which handled the case, said the settlement prohibits the plaintiffs from running ads promoting Consumer Day, but he said he plans to notify groups that could benefit from it.
For example, Perkins said, he could envision schools coordinating their students and parents to buy badly needed school supplies