RCI Points Settlement Moves Forward

From TimeSharing Today, January 2012

A class action lawsuit on behalf of Points members against RCI is moving towards a settlement. 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.

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 disgorge to him and other class members the amount of its profits from "its practice of skimming Timeshare Intervals from the RCI Spacebank."

A lengthy settlement agreement signed by the attorneys for the plaintiffs and RCI was the subject matter of a motion hearing scheduled for December 20, 2011, after which the court will decide whether to give preliminary approval to the settlement.

Attorneys for plaintiffs in a separate but similar lawsuit on behalf of California Points members filed a motion seeking to have their lawsuit consolidated with the Glenz matter. They also submitted a brief in opposition to preliminary approval of the Glenz settlement agreement.

RCI opposed the motion to consolidate because the Glenz case is at the settlement stage and the other matter, filed almost two years later, would become moot if the settlement is ultimately approved.

One of the arguments 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.
• RCI will be obligated to post on its website certain statistics relating to the deposit of inventory by members and to RCI's rental of weeks.
• The legal fees of plaintiffs' attorneys up to the amount of $835,000 will be paid by RCI.

If preliminarily approved by the court, notice of the settlement agreement will be disseminated to Points members by a postard mailing, by email, by a posting on the RCI website and by publication in USA Today.

Members who do not wish to be bound by the terms of the settlement can opt out. The notice will include the date of a "fairness hearing" to be held later this year, at which time members can submit written comments or appear in court to express their views on the proposed settlement.