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Blockbuster Asks Court to Deny Class-action Status in 'Late-fees' Litigation

13 Jan, 2011 By: Erik Gruenwedel

Lawyers representing Blockbuster Inc. Jan. 13 filed a motion with the bankruptcy court requesting it not grant class-action status to a decade-old late-fees lawsuit filed in Illinois.

Specifically, Blockbuster lawyers said the plaintiffs — Marc Cohen, Mark Perper and Uwe Stueckrad — in their 1999 lawsuit did not merit class-action qualifications due to myriad legal reasons, including the fact the case does not meet the requirements of non-Illinois residents.

The motion, filed in U.S. Bankruptcy Court for the Southern District of New York, also alleges that one plaintiff continued to voluntarily pay “extended viewing” fees and “unreturned video” charges after the suit was filed, and even considered the fees “reasonable.”

In the original suit, the plaintiffs alleged the late fees represented illegal penalties that arose from improper damages assessed against a customer for his or her breach of contract. They claimed the fees were open ended and not based on “good faith” estimates of actual damages, among other concerns.

Blockbuster stopped charging late fees Jan. 1, 2005, following the settlement of a separate trial in Texas, which was given class-action status. The Illinois plaintiffs, however, refused to accept that decision.

Halting late fees cost Blockbuster about $250 million a year in operating income, according to financial filings. The company reinstituted more clearly defined late fees last May — about four months before it filed for bankruptcy.

Separately, a group of unsecured Blockbuster debtors filed a motion asking the court to not consider class-action status on the Illinois case.

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