Business news : Judge OKs Settlement Over Skechers Toning Claims

Louisville, Ky. — A federal judge approved a $40 million class-action settlement Monday between Skechers USA Inc. and consumers who bought toning shoes after ads made unfounded claims that the footwear would help people lose weight and strengthen muscles.

U.S. District Judge Thomas B. Russell in Louisville approved the deal, which covers more than 520,000 claims. About 1,000 people eligible for coverage by the settlement opted not to take part.

Those with approved claims will be able to get a maximum repayment for their purchase — up to $80 per pair of Shape-Ups; $84 per pair of Resistance Runner shoes; up to $54 per pair of Podded Sole Shoes; and $40 per pair of Tone-Ups.

Russell also awarded $5 million for the attorneys in the case to split. Russell ordered that the money cannot come from the $40 million settlement fund set aside for consumers.

Two people that served as the lead plaintiffs in the case will receive payments of $2,500 each.
Russell considered multiple factors in deciding to approve the settlement and found it provides just compensation to the plaintiffs.

"Accordingly, the court finds that the proposed settlement is fair, reasonable and adequate," Russell wrote.

The approval comes a year after Manhattan Beach, Calif.-based Skechers reached a deal with the Federal Trade Commission over the ads. The settlement covers more than 70 lawsuits from across the country. The lawsuits were consolidated in federal court in Louisville. Skechers denied the allegations but said it settled to avoid long litigation.

The settlement grew out of a series of ads Skechers aired featuring celebrity endorsers such as Kim Kardashian and Brooke Burke, with claims that the shoes could help people lose weight and strengthen their butt, leg and stomach muscles.

Skechers billed its Shape-ups as a fitness tool designed to promote weight loss and tone muscles with the shoe's curved "rocker" or rolling bottom — saying it provides natural instability and causes the consumer to "use more energy with every step." Shape-ups cost about $100 and are sold at retailers nationwide.

Ads for the Resistance Runner shoes claimed people who wear them could increase "muscle activation" by up to 85 percent for posture-related muscles and 71 percent for one of the muscles in the buttocks.

Eleven people filed objections to the settlement, ranging from people seeking the full purchase price of their shoes in return to one person saying the settlement would preclude him from seeking damages on his own.

The judge rejected those arguments.

Should claims not consume the entire $40 million settlement, Russell ordered the remaining money to go to the Federal Trade Commission.

A settlement with the FTC bars Skechers from running the ads in the future.
The agency settled similar charges with Reebok last year over its EasyTone walking shoes and RunTone running shoes. That $25 million agreement also provided customer refunds.

By Brett Barrouquere Associated Press

From The Detroit News: http://www.detroitnews.com/article/20130513/BIZ/305130425#ixzz2TFVWnJKt 


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