Facts

In order to shop at Costco Stores, consumers must purchase a 12-month membership. Defendant Costco Wholesale Corporation advertised that consumers could sign up for a membership with a "Risk Free 100 percent Satisfaction Guarantee." Plaintiff, Scott Pearlstone, enrolled in a 12-month executive membership with Costco. Plaintiff was not satisfied with his shopping experience and therefore cancelled his membership. However, after cancelling his membership, plaintiff was refunded only a portion of the amount he originally paid for his executive membership. Plaintiff filed a class action lawsuit on behalf of other similarly situated individuals, against defendant to prevent defendant's practice of withholding money refunded on cancelled store memberships.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that defendant's practice of denying consumers their full refund when cancelling their membership contravened defendant's claim in its advertisement that consumers could sign up for a membership with a "Risk-Free 100 percent Satisfaction Guarantee." Plaintiff contended that this practice was a breach of the "Member Privileges and Conditions" brochure. Plaintiff also contended that defendant was unjustly enriched by retaining a portion of the money plaintiff paid for the memberships. Plaintiff also contended that defendant's practice of denying consumers refund money violated the Missouri Merchandising Practices Act.

DEFENDANT'S CONTENTIONS: Defendant denied plaintiff's contentions.

Result

Defendant agreed to settle the case for $525,000. Under the settlement agreement, class counsel may file a motion for attorney's fees in the amount of $175,000 and $5,000 was allocated for the class representative.

Other Information

JUDGE: Hon. Stephen R. Clark.