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Staples Swiftly Settles Rewards Points Class Action For $2M
By Daniel Siegal.
Law360, Los Angeles (December 14, 2016)– Staples Inc. has agreed to pay $2 million to end a class action filed a week ago in California federal court alleging it misleads consumers about the way it tallies up rewards points by cheating them on transactions in which they use coupons.
Named plaintiff Neil Torczyner filed an unopposed motion preliminary settlement approval on Wednesday indicating Staples has agreed to pay out $10 each to claims-filing customers to resolve the allegations that it used tricky calculation of its rewards points to deprive those customers of the value they expected to get from the rewards program.
Torczyner noted that although 28 million consumers use Staples’ rewards program, discovery indicated that the number affected by the alleged misleading practice is significantly smaller, and that the average out-of-pocket damages per class member is only $2, making the settlement a significant value.
“Given the very high costs of litigating a consumer protection case against large and well-funded companies, class members would have no practical way to individually pursue their claims,” Torczyner argues. “The proposed settlement is the best and only means to ensure that all class members receive prompt and efficient relief.
Torczyner only filed his complaint last week, but actually had already reached a deal with Staples several days before his suit was filed, following a years-long, pre-suit process of discovery and negotiations with the company, according to his brief in support of settlement approval.
Torczyner first sent a letter to Massachusetts-based Staples in March 2013, indicating he intended to bring a claim under the Massachusetts Consumer Protection Act regarding the allegedly misleading rewards program, and the parties entered a tolling agreement while they engaged in informal discovery and negotiations.
Torczyner contends in his brief that in October 2013, Staples recognized “certain alleged discrepancies” in his rewards account, and agreed to look through its rewards program policies and records. After a full-day mediation, the parties made headway on a deal, and ultimately, reached a settlement on Dec. 3.
In his complaint, Torczyner alleged the company was spreading discounts for coupons across the total points collected in a purchase instead of just against the item the coupon was used for, nicking the total number of rewards points the customer racks up.
Those rewards points are valuable, he said. They can be used as credit for purchases at Staples stores or online, and should be added up the way the company advertises, he said in the suit.
Torczyner said the trouble started when he used a coupon for a package of bottled water. The coupon took $1.50 off the cost of the water itself, making it a non-qualifying purchase for rewards points purposes, according to the suit.
But when he looked at his rewards points, it appeared that the company had spread out the value of the coupon over the whole transaction, limiting the number of points he could collect for items that were qualifying and that weren’t impacted by the coupon, he said. He should have gotten $7.98 in points, but received $7.02 instead, according to the filing.
Under the deal filed Wednesday, Staples also agrees to change its terms and conditions for product-specific coupons to make it clear how they impact the rewards program.
The deal also provides for Torczyner’s attorneys to seek up to $500,000 in attorneys’ fees, and for Torczyner to receive a $5,000 incentive award.
Representatives for the parties did not immediately respond to requests for comment Wednesday.
The proposed class is represented by David R. Stickney of Bernstein Litowitz Berger & Grossmann LLP and Frank R. Schirripa and Michael A. Rose of Hach Rose Schirripa & Cheverie LLP.
Staples is represented by Michelle Doolin of Cooley LLP.
The case is Neil Torczyner v. Staples Inc., case number 3:16-cv-02965, in the U.S. District Court for the Southern District of California.
– Additional reporting by Kat Greene. Editing by Orlando Lorenzo.
https://www.law360.com/articles/872926/staples-swiftly-settles-rewards-points-class-action-for-2m
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