Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Mich.: Settlement approved in false advertising suit against Son over television claims, (Aug 1, 2013)

By Jody Coultas, J.D.

The federal district court in Detroit has approved a class action settlement in a false advertising and state unfair trade practices suit filed by a television purchaser against Sony Electronics, Inc. for misrepresenting its televisions (Date v. Sony Electronics, Inc., July 31, 2013, Borman, P.).

The television purchaser alleged that Sony falsely advertised its Grand Wega televisions, Models KDS-R50XBR1 and KDS-R60XBR1, and sought to represent all U.S. end user consumers who purchased, or received as a gift from the original retail purchaser, a KDS-R50XBR1 or KDS-R60XBR1 television. The parties filed a joint application for final approval of a class action settlement, for approval of an award of attorneys’ fees for the purchaser, and for approval of a $7,000 incentive/service award for named purchaser.

Federal Rule of Civil Procedure 23(a) requires a class representative to show that the class is so numerous that joinder of all members is impracticable; there are questions of law or fact common to the class; the claims or defenses of the representative parties are typical of the claims or defenses of the class; and the representative parties will fairly and adequately protect the interests of the class. Rule 23(b)(3) requires the representative to show that common questions of law or fact predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

The purchaser met the requirements for class certification, according to the court. Approximately 175,000 televisions were sold, which met the numerosity requirement. The common question was whether Sony deceptively marketed the televisions as having 1080p input capabilities that the televisions did not actually possess. The class representative’s claim was typical of the class and an adequate representative. The small size of any potential individual claim showed that no class member’s interest in individually controlling prosecution of a separate action was significantly greater than the benefit to the class of aggregating the claims.

Notice of the claims was sufficient, according to the court. The claims administrator received 6,594 claims, far exceeding the number of claims filed in response to an earlier settlement that the court rejected and spoke to the sufficiency of the notice procedures, as well as to the attractiveness of the settlement terms to consumers.

The court found that the terms of the settlement agreement were fair, adequate, and reasonable. Under the terms of the agreement, all class members who submit valid claim forms will receive a $60.00 gift card that does not expire and redeemable for the purchase of any item available online at the Sony store or at a Sony retail store (including music or movies). The purchaser had estimated the value of an individual class member’s actual claim to be $200. The court noted that the release of claims by which all class members will be bound, regardless of whether or not they are qualified to obtain the benefit by demonstrating their purchase of a 1080p device, was limited to claims that relate to the 1080p input functionality of the televisions. This was fair in light of the fact that these are the purchasers who could most successfully assert the only claim being waived, i.e. a claim that they have been damaged by the lack of 1080p input capability. Each of the factors that courts use to determine fairness of a settlement weighed in favor of approving the agreement.

Sony also agreed to pay the costs of notice and claims processing and $435,000.00 in attorneys’ fees, to be shared among all counsel. This was also fair and reasonable, according to the court.

The case is No. 07-15474.

Attorneys: Alan M. Mansfield (Robbins Umeda and Fink, LLP) for David Dale, Jr. Clarence L. Pozza , Jr. (Miller, Canfield, Paddock and Stone, P.L.C.) for Sony Electronics, Inc.

Companies: Sony Electronics, Inc.

Cases: Advertising StateUnfairTradePractices MichiganNews