Class-Action Lawsuit May Cost Sharper Image $900 Million

Class-Action Lawsuit May Cost Sharper Image 0 Million
The lawsuit, which is being pushed by 27 state attorneys general and several plaintiffs attorneys, could push Sharper Image into bankruptcy.
Since 1999, 3 million consumers have bought the $300 Ionic Breeze, and while the product is made to clear the air of dust, pollen, and other pollution, many were "ineffective" and "in some cases caused more health problems such as allergies," says an article on law.com.

The lawsuit, which is being pushed by 27 state attorneys general and several plaintiffs attorneys, could push Sharper Image into bankruptcy. However, if the company can convince U.S. District Judge Cecilia Altonaga in a final hearing that compensating consumers in cash could severely damage the company, then Sharper Image can possibly escape bankruptcy.

According to the article, James Hitchner of the Financial Valuation Group of Atlanta is expected to show and to "testify about his conclusions that the company is 'both weak and underperforming' and has a 'high probability of bankruptcy within the next 12 months.'"

What, then, is the solution?

Attorney Robert Parks, representing a plaintiff's group, "is seeking final approval for a settlement that would provide consumers with $19 coupons for future purchases, plus an 'ozone-guard' attachment to the machine, subject to availability," continues the article.

While Parks thinks they have a "strong, viable settlement," Miami attorney Michael Tein "who represents an estimated 2 million consumers in a parallel class-action lawsuit...argued in court papers that class members should be fully compensated in cash. He said the coupon settlement would provide plaintiffs with, after shipping and handling, socks, a holiday CD, or a trick gold ball."

Other lawyers representing the consumers agreed. One of their arguments is "that the settlement does not meet the spirit of the 2005 Class Action Fairness Act." And according to the same article, "recent studies suggest that only 13% of coupons are redeemed in consumer class actions."

Lead counsel Amy Radon also said that "the fact that the only way in which class members can obtain value from their coupons is by spending more money at Sharper Image raises serious questions about the fairness of this agreement."

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