Court Delays RCI Points Settlement
from TimeSharing Today
The proposed settlement of a classaction lawsuit on behalf of Points members against RCI is no longer proceeding smoothly towards court approval of the settlement terms. In an order issued January 11, 2013, three days before a scheduled hearing to consider preliminary approval of the settlement, Judge Peter G. Sheridan of the United State District Court for New Jersey adjourned the hearing "until such time when the Court can interview any proposed expert as to his or her qualifications."
In his order, the judge noted his uncertainty that the modification of internal controls proposed in the settlement will remedy the complaints made by plaintiffs. "Accordingly, the Court requires an appropriate independent expert to review the modifications and to report to the Court as to their effectiveness."
The complaint, filed in January 2009 by Anton Glenz and others, had alleged that RCI engages in a "fraudulent, deceptive and unconscionable marketing scheme" by representing "that only members of the program can access the timeshares," whereas RCI actually engages in the "practice of skimming a large percentage of the timeshares from the system, including many prime timeshares, and renting them to the general public at a profit to RCI, or selling them to vendors who then rent them to the general public." A similar suit by Weeks members was settled in 2010. In his order, Judge Sheridan expressed concern whether the terms of that earlier settlement had proved effective in resolving plaintiff's complaints. The Glenz complaint had sought damages based on New Jersey's Consumer Fraud Act, breach of the covenant of good faith and fair dealing implied in every contract, and breach of a fiduciary duty owed to RCI members. Glenz also asked that RCI be required to divulge to him and other class members the amount of its profits from "its practice of skimming Timeshare Intervals from the RCI Spacebank."
An argument made in opposition to the proposed settlement was that sufficient pre-trial discovery had not been conducted, which would have enabled the Glenz attorneys to make a proper evaluation of the proposed settlement terms. The benefits of the settlement are not likely to create a great deal of excitement among Points members:
- Members who believe they were unable to secure an exchange because weeks were rented can submit a two-page claim form listing three such instances, after which they will receive $12. Former members who file claim forms will receive $10.
- For at least three consecutive years, RCI will publish its Terms and Conditions for the Points Exchange Program in at least 10-point font.
- For two years, RCI will be obligated to post on its website certain statistics as follows:
- The total number of points attributable to inventory deposited by or on behalf of RCI Points Members that was, more than 90 days in advance of the start date of the inventory, rented by RCI for consideration or used by RCI for any other purpose;
- The total number of points used by RCI Points Members for Points Partner Inventory or for Inventory that was not deposited by or on behalf of RCI Points Members; and
- The total number of points used by RCI Points Members for inventory that was deposited by or on behalf of RCI Points Members.
- The legal fees of plaintiffs' attorneys up to the amount of $835,000 will be paid by RCI.
If a settlement agreement eventually receives preliminary approval by the Court, notice of the settlement agreement will be disseminated to Points Members by a postcard mailing, by email, by a posting on the RCI website, and by publication in USA Today.
Members who don't wish to be bound by the terms of the settlement can opt out. The notice will include the date of a "fairness hearing" at which members can submit written comments or appear in court to express their views on the proposed settlement.