CALA News about San Diego

What Does the Costco Class Action Cost YOU?

I recently posted an item to our Facebook and Twitter pages about a proposed class action settlement regarding Costco. This lawsuit challenges Costco's practice of deeming the 12-month term of memberships that are renewed after their expiration as having commenced on the expiration date, rather than on the date they are renewed. The lawsuit alleges that this practice is unlawful and deprives Costco members of a portion of the membership period for which they paid a renewal fee. Oh, and Costco denies all claims and liability stated in the lawsuit. What else is new?

The proposed settlement would give class members $4.17 to $12.50, depending on their membership. The highly talented lawyers that thought up this scheme get $5.38 million dollars and the cost to Costco is $38.8 million dollars. But I think it goes farther than that. The cost of the Costco Class Action is far greater. Costco reported their third quarter results on May 28th, and the company, like so many others, is having a tough time. Richard Galanti, Costco's CFO, even cited this lawsuit as one of the reasons for its poor performance.

Rhonda Dupler who brought the class action lawsuit will also be given $25,000 for her "time and energy devoted to this case." Give me a break.

I am a Costco member.  I did not actually see people complaining in the aisles about this horrific issue. People were not storming the doors wanting to speak to management. This is just more of the same **** (rhymes with wrap).

One of the kings of class actions, Bill Lerach, was sentenced to jail for paying lead plaintiffs' to bring cases. He is no longer allowed to practice law. His case brought light as to the sleazy nature of class actions. And every time California tries to reform the class action process, the legislation is killed in committee. SB 298 by State Senator Van Tran (R-CA) would have made minimal reforms and was defeated earlier this spring.

In these tough economic times we and the California Legislature need to look at reforming the class action process. It is a broken system. Even the lawyers taking this obnoxious fee have to know it. Stand up and tell your state legislators you want change now!

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