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September 2, 2010 |
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| January 25, 2007 |
By: Julie Kay |
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harper Image was so confident its settlement of a federal class action suit in Miami over an allegedly defective air purifier would be approved that it included news of the $60 million plan in a stockholder report.
But Miami attorney Michael Tein, who represents 2 million consumers in a similar national class action suit brought in a California state court, derailed the settlement, at least for now, after appearing Tuesday at a hearing before a Miami federal judge.
Using a PowerPoint presentation before U.S. District Judge Cecilia Altonaga, Tein outlined what class members could buy with a proposed $19 merchandise credit minus shipping and handling: basically socks, a holiday CD or a trick golf ball.
The lawyers who brought the suit would get more than $1.8 million.
Altonaga denied the settlement without prejudice. She directed the attorneys to remove a provision barring anyone in the class from suing the retailer over health claims associated with the purifier. Attorneys said they also would remove a provision that prevents class members from disparaging Sharper Image, which Tein assailed as an attack on the First Amendment.
“We’re very pleased with Judge Altonaga’s ruling,” Tein said Wednesday.
His class action lawsuit filed in California against San Francisco-based Sharper Image in 2004 is being prepared for trial.
Coral Gables attorney Robert Parks filed the Miami suit a year later.
Although the Miami settlement was delayed, Parks called Altonaga’s ruling a win for his side, saying she indicated she would approve the settlement once the provisions she found objectionable are removed. “We look at this as a total win,” he said. “Everyone is focusing on the denial part.”
Millions of customers have bought the $300 Ionic Breeze purifiers since 1999. The gadget was designed to remove dust, pollen and other pollution from the air but failed to work, according to the California class action complaint.
Consumer Reports slammed the device in one of its issues and was sued for libel by Sharper Image. That suit was thrown out.
Sharper Image, a Nasdaq-listed company, denied its machine is defective. But it said it was in the best interests of the company and its shareholders to settle the class action, according to court papers.
Tein has accused the company of colluding with Parks to bring a secret settlement in Florida to derail the California case. He labeled the proposed Florida settlement a “reverse auction.”
Sharper Image agreed to pay $1.875 million to Parks and his co-counsel, the firm of Lightfoot Franklin & White in Birmingham, Ala.
“I think your honor will see that what these folks — who are all excellent, excellent lawyers — have done is they have turned the system on its head,” Tein said at Tuesday’s hearing. “They have stolen the courthouse from the Superior Court of California, and I mean nothing short of that.”
“These guys know exactly what a reverse auction is. They know exactly what it means to take bona fide claims where there has been merits discovery … and to sell these customers out, two million folks who have spent $300 of their hard-earned money for this machine, buying a bill of goods from their clients.”
Tein has identified a potential nationwide class of 2 million consumers, while the Florida class action recognizes 3.2 million consumers nationally.
Parks said he was mystified why Tein was trying to intervene in the case after knowing about it for two years.
“They didn’t intervene until they realized Sharper Image wanted to settle with us,” he said. “They’re greedy.”
Tein said lawyers don’t intervene in the myriad of “copycat” class actions lawsuits brought around the country until they get to the class certification stage. The Miami case has not been certified.
Tein also complained bitterly to Altonaga that the class certification filings in Miami were sealed at the request of the parties. Tein said in an interview that he only found out the papers were sealed because he had been checking the Florida docket daily. One day, he saw the class certification papers on the Pacer system, and the next day they were sealed, he said. After he complained, Altonaga directed the attorneys to provide the filings to Tein.
Both Parks and Los Angeles attorney Terry Young, who represents Sharper Image, argued at the hearing that Altonaga should approve the preliminary settlement and take up Tein’s objections at a fairness hearing, the last step in the approval process. Altonaga has not scheduled that hearing.
“They want two bites of the apple,” Parks said at the hearing. “I have been accused of a lot, but I don’t think I have ever been so broad-blanketed at one point on such fallacious grounds.”
Young called Tein’s appearance at the hearing “trial by ambush.”
Altonaga effectively barred Tein from intervening in the case brought by Parks in Miami, calling his class representatives “moot.”
However, she indicated she will carefully scrutinize other issues, such as the $19 store credits, the First Amendment issue and waivers over personal injury lawsuits “carefully” at the fairness hearing.
“The concerns over enjoining class members from disparaging Sharper Image, the concerns over the value of what has been bargained for on behalf of the class, the concern over the amount of fees, all of those issues I am sure I will be addressing at the final fairness hearing,” she said.
Julie Kay can be reached at jkay@alm.com or at (954) 468-2622.
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