Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—DNJ: Court Requires Timeshare Company to Produce Marketing Materials in Class Action, (Apr 5, 2013)

By Jody Coultas, J.D.

In a New Jersey Consumer Fraud Act (CFA) class action against RCI, LLC—a company that offers vacation opportunities through its exchange networks—timeshare purchasers’ requests for documents and interrogatories were granted in part by the federal district court in Trenton (Barton v. RCI, LLC, March 28, 2013, Arpert, D.).

RCI had a large affiliate network of resorts around the world, including the Blue Bay family of resorts, and helps those resorts develop business plans to attract new owners and to sell more vacation ownership by marketing the exchange programs offered by RCI. RCI also advertised a points program that allowed customers to exchange points they received from purchasing vacation timeshare time for car rentals and airline tickets. According to the purchasers, the business began denying the exchange of points and put a cap on the number of points that could be exchanged. The purchasers alleged that RCI violated the CFA by omitting and misrepresenting material information about the "Points Program."

The purchasers filed a motion to compel RCI to provide supplemental answers to certain interrogatories and to produce supplemental documents and information in response to certain requests for production. Separately, RCI filed a motion to compel certain documents that the purchasers withheld.

Materials sought by the purchasers were relevant to issues pertaining to class certification and were not so vague or ambiguous as to be incomprehensible to RCI, according to the court. The purchasers sought marketing materials and related correspondences between RCI and Blue Bay regarding use of those marketing materials and the sale of Points Program memberships, arguing that the requested materials were highly relevant to an evaluation of the suitability of class treatment of their CFA claim. RCI argued that the requests exceeded the scope of permissible class certification discovery, were overly broad and unduly burdensome, and irrelevant. Although the requests were, in some instances, duplicative, the court found that they were not so vague or ambiguous as to be incomprehensible.

The court granted, in part, the purchasers’ requests for additional documents and interrogatories allegedly related to their calculation of damages for the class. In support of the purchasers’ request for documents and interrogatories, they argued that they were required as part of the class certification burden to demonstrate one or more methodologies for proving damages on a class-wide basis. RCI was required to produce the total number of nights putative class members purchased and the total equivalent point value of those nights, and to set forth those totals by year. The court also required RCI to state whether it had ever equated one or more points with a monetary value, and if so, to state each monetary value and to explain the context in which it was utilized. RCI was directed to provide a supplemental answer specifically identifying the data and documents that were considered and/or relied upon in deciding to impose an annual points cap. Other requests were denied on the basis of that the information was not relevant to the issues of class certification.

In response to RCI’s motion to compel, the court required the purchasers to produce engagement letters between counsel and the proposed class representatives. RCI argued that the engagement letters were relevant to the issue of whether the purchasers were adequate class representatives and whether counsel was adequate. The engagement letters were also necessary to determine the specific terms of the arrangement between the purchasers and counsel.

The case is No. 10-3657 (PGS).

Attorneys: David C. Berman for Kenneth A. Barton. David S. Sager (Lowenstein Sandler LLP) for RCI, LLC.

Companies: RCI, LLC

Cases: StateUnfairTradePractices NewJerseyNews