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Settlement
Amount:
$55,000,000 estimated settlement value |
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Case
Name:
CALIFORNIA CONSUMERS, et al. v. THE COLUMBIA HOUSE |
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Case
Number:
Sonoma County Superior Court Case No. 216699 |
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Plaintiff:
Nationwide Class Action |
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Defendants:
The Columbia House |
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Facts
and Background:
Columbia House is a nationwide music company which offers members
the opportunity to join one or more "music clubs"
which offer discounted CDs and cassette tapes. Columbia House
sends uniform offers to prospective new members through direct
mail campaigns and advertisements placed in popular magazines
and newspapers. Each prospective new member is offered a certain
number of CDs or
cassettes for "FREE" or for 1¢ (the "enrollment
package"). The offers state in small print that "shipping
and handling" will be added, but fail to state the amount
of the shipping and handling charges.
Upon joining the "club," the new member selects his
or her "FREE" CDs or cassettes from a pre-determined
list. Upon receipt of the enrollment package, the new member
is billed a "shipping and handling" charge for each
selection, often at a total charge of $30.00 or more.. |
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Plaintiff's
Contentions:
Plaintiffs alleged that defendant systematically deceived and
misled consumers by (1) failing to disclose that the "shipping
and handling" charge would be applied to each selection;
(2) failing to disclose the actual amount of the charge which
is known to Columbia House at the time the offer is made; (3)
distributing letters to those who complained which failed to
accurately identify the basis for the charges. In addition,
plaintiff alleged the "shipping and handling" charge
had no relation to any actual costs to ship or handle the merchandise,
that defendant's charges were unreasonable and/or that said
charges exceeded 80% of the actual cost of the free merchandise,
thereby violating California law. |
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Defendants'
Contentions:
Defendant denied any wrongdoing, denied that any consumers were
deceived or misled, and further contended that the information
regarding the amount of the charges was disclosed in the "New
Members Guide" which accompanied the shipment of the enrollment
package, that the "shipping and handling" charges
were reasonable, did not exceed 80% of the actual cost of the
product, and were consistent with competitors' rates. Defendant
contended that any consumer who did not want to pay the shipping
and
handling charge could simply return the merchandise within a
10-day no risk period. |
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Damages:
Excess charges paid by consumers for "shipping and handling"
their enrollment packages. |
