Iomega, Class Act or Class Action?:
A Continuing Study
Into How Iomega Treats
Its Customers and Employees
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[The following is a transcription of an action filed 10 March 1997 against iomega. I alone am responsible for any errors that may remain after proofing. Thank you in advance for any errors you may bring to my attention.
Copies of this case can be obtained for $11.00 ($1 per page, $US), by writing to
Richard Kiger
Master of Chancery
Register of Chancery
Herrmann Courthouse
King Street
Wilmington, DE 19801
or by calling
302-571-7540
I thank Steve Newton, Delaware Division of Libraries, for his help in determining how to obtain copies of this case.
--SL, 15 June 1997]
"The class action lawsuit against Iomega, a copy of which is on your site, has been amended and refiled in Chancery Court, Delaware on May 9. The reference no is 15608NC."
--SL, 24 July 1997]
IN THE CHANCERY COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
--------------------------------------x CHRISTINE AND JOHN PIZZIMENTI ) and R&B SERVICES, INC., on behalf of ) themselves and All Others Similarly ) Situated. ) Plaintiffs, ) ) vs. ) ) IOMEGA CORPORATION, ) ) Defendant. ) ) --------------------------------------X
Plaintiffs Christine and John Pizzimenti and R&B Services, Inc., by their attorneys, for their Complaint allege, upon information and belief, except as to the allegations contained in paragraphs 5 and 6, which plaintiffs allege upon personal knowledge, as follows:
1. This is a class action for breach of contract, and for violations of Delaware's Consumer Fraud Act, 6 Del. C. §§ 2511 -2526, against Iomega Corporation, an entity that produces a computer storage device known as a Zip drive ("Iomega Zip drive" or "Zip drive") and the accompanying disks ("Zip disks"). The plaintiff class, defined more particularly in paragraph 8 below, consists of all persons in the United States who purchased Iomega Zip drives and/or Zip disks since July 1, 1996 and who have suffered economic loss or damage as a result of defendant's failure to timely pay rebates on Iomega Zip drives and/or Zip disks, as described herein.
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2. As set forth in more detail below, since July 1, 1996, defendant has sold Iomega Zip drives and Zip disks by a program through which purchasers of Iomega Zip drives and Zip disks would receive a rebate and/or free merchandise by sending in a claim form and other specified documentation. For convenience, both the monetary rebates and free merchandise are referred to herein as "rebates.
3. Despite the fact that the rebate offer stated that purchasers would receive their rebates within a specified time period, defendant has wrongfully retained the rebate funds beyond that time period and has failed to ship the free merchandise within that time period, and numerous purchasers have not received their rebates after several months of waiting, or only received their rebate after a lengthy delay. The delays in payment of the rebates continue despite publicized complaints by purchasers of Iomega Zip drives.
4. Plaintiffs seek an injunction pursuant to 6 Del. C. § 2523 requiring immediate payment of the rebates, as well as damages in the form of lost interest.
6. Plaintiff R&B Services, Inc. is a Delaware corporation with its principal place of business at 90 Second Street, Mineola, New York 11501. which purchased an Iomega Zip drive after July 1, 1996, is entitled to a rebate and did not receive a rebate within the time period specified by defendant.
7. Defendant Iomega Corporation ("Iomega") is a Delaware corporation with its principal place of business at 1821 West Iomega Way, Roy, Utah 84067.
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CLASS ACTION ALLEGATIONS
8. Plaintiffs bring this action on behalf of themselves and all others similarly situated. The Class that plaintiffs seek to represent is composed of all persons in the United States who purchased Iomega Zip drives and/or disks since July 1, 1996 who did nor or have not received their rebate within the time period specified in the rebate offer. Excluded from the Class are defendant, any entity in which defendant has a controlling interest, and any of defendant's subsidiaries, affiliates, officers, and directors.
9. The Class for whose benefit this action is brought is so numerous that joinder of all Class members is impracticable. Plaintiffs believe that defendant has sold approximately two million Zip drives since July 1, 1996, although the exact number and identities of individual Class members can only be ascertained through appropriate discovery.
10. There are questions of law and fact common to the Class that predominate over any questions affecting only individual Class members.
11. Among the questions of law and fact common to the class are the following:
(a) Whether defendant was and is contractually obligated to pay rebates to purchasers of Iomega Zip drives and Zip disks within the time period specified in the rebate offer;
(b) Whether defendant breached its contractual obligations by failing to pay rebates to purchasers of Iomega Zip drives and Zip disks within the time period specified in the rebate offer;
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(c) Whether plaintiffs and the other members of the Class have been damaged as a result of defendant's breach of contract and, if so, what is the appropriate monetary relief to which each member of the Class is entitled;
(d) Whether defendant's activities constitute a violation of Delaware's Consumer Fraud Act, 6 Del. C. §§ 2511 -2526, for which plaintiff and the members of the Class are entitled to recover damages; and
(e) Whether plaintiffs and the members of the Class are entitled to injunctive relief pursuant to 6 Del. C. § 2523.
12. Plaintiffs' claims are typical of the claims of the other members of the Class, since all such claims arise out of the purchase of Iomega Zip drives and/or disks by plaintiffs and the other Class members, and from Iomega's failure timely to pay the promised rebates to plaintiffs and the other Class members,
13. Plaintiffs are committed to the vigorous prosecution of this action and have retained competent counsel experienced in the prosecution of class actions and consumer litigation. Accordingly, plaintiffs are adequate representatives of the Class and will fairly and adequately protect the interests of the Class.
14. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications which would establish incompatible standards of conduct for defendant.
15. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. The Class is readily definable, and, moreover, since the damages suffered by individual Class members may be relatively small, the expense and burden
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of individual litigation make it impossible for the members of the Class individually to redress the wrongs done to them. Plaintiffs anticipate that there will be no difficulty in the management of this litigation as a class action.
17. In March, 1995, Iomega introduced the Iomega Zip drive, an external data storage system using removable disks with a 100 megabyte storage capacity. Zip drive technology has been touted by some as an eventual replacement for traditional computer hard drives.
18. Iomega reports that it has sold 4 million Zip drives through February, 1997. Plaintiffs believe that approximately 2 million have been sold since July 1, 1996.
19. On July 1, 1996, defendant began offering rebates to purchasers of purchasers of Iomega Zip drives and Zip disks.
20. From July 1, 1996 through September 30, 1996 purchasers could receive a $50.00 rebate of the purchase price of a Zip drive, and a $20 rebate of the purchase price of ten Zip disks. Consumers who purchased both were to receive, in addition, a Zip drive carrying case and two disk caddies. Iomega Zip drives typically retail for approximately $199.99. Thus, the promised rebate on the Zip drive was typically for 25% of the purchase price.
21. From October 1, 1996 through March 31, 1997, purchasers of an Iomega Zip drive can receive, at their option, either a $150 monetary rebate or a "'Game Pack-t-Go' bundle" valued by defendant at more than $150. [Is this info accurate? -- SL, 16 June 1997] Purchasers of ten Zip disks can receive, at
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their option, either a $20 monetary rebate or a "'Net Stuff Organizer' bundle'' valued by defendant at more than $50.
22. After purchasing an Iomega Zip drive and/or Zip disks, consumers claimed their rebate by mailing in a rebate coupon. along with a purchase receipt and the "UPC" label from the product packaging. The rebate offer stated that purchasers would receive their rebates within a specified time period. For the initial rebate offer, the specified time period was four to six weeks. For the second rebate offer, the specified time period is stated on Iomega's World Wide Web page as six to eight weeks, and on at least some rebate coupons as eight to ten weeks.
23. Notwithstanding its obligation to pay rebates to purchasers within the specified time period after the purchaser mailed in the rebate coupon and other materials, defendant has repeatedly failed to pay rebates within that time period. Purchasers continue to await rebates for weeks or, often, months after the specified period has elapsed.
24. Examples of complaints from purchasers of Iomega Zip drives and/or disks who have not received their rebates, as found on computer Internet "chat" boards demonstrate defendant's conduct:
(a) A Marine Corps Survey Officer reported that his supply clerk mailed in the required materials on September 30, 1996. He had not received a rebate as of January 24, 1997, on which date the clerk called Iomega and was told that "there is nothing on file, except for our customer #."
(b) A consumer reported that he had not received his rebate "over 25 weeks into their 4-6 week delivery time, " that he had called Iomega several times to complain, and that
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he was told on his last call on January 13, 1997 that Iomega had lost his "UPC" panels and thus could not honor the rebate.
(c) A consumer reported that he sent in his rebate materials in September, 1996. He twice called Iomega Customer Service, who told him he would receive his rebate in January. Upon calling Iomega in January he was told that his rebate was not in Iomega's system and must have been lost in the mail. He e-mailed Iomega in mid-January and had received no response as of January 30, 1997.
25. The February, 1997 issue of PC World Magazine contained a letter to the editor from a consumer complaining of waiting three months for his rebate. The editor noted that the magazine had received six letters complaining about rebate delays. The consumer who wrote the letter apparently only received his rebate after complaining to the magazine.
26. In some instances where defendant has paid rebates to members of the Class, after a substantial delay beyond the period specified in the rebate offer, defendant has mailed the checks several months after they were written. Such a practice has allowed defendant to retain moneys due to consumers for several months after defendant knew that it owed consumers the money.
27. Defendant itself, on its World Wide Web page, acknowledges that consumers have not yet received rebates from the first rebate offer. Since all rebate coupons for that offer had to be received by the end of October, 1996 to be eligible, Iomega thus admits that at least some rebates are several months overdue.
28. As a result of defendant's failure to pay rebates and/or its delays in paying rebates, plaintiffs and the members of the Class have been deprived of the time value of the
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monetary rebate payment during the time of delay following the expiration of the specified time period set forth in the rebate offers. Even though such amounts individually may be small, in the aggregate they add up to the interest on millions of dollars, which defendant has wrongfully retained.
29. Plaintiffs and the members of the class have also been deprived of the value and use of the merchandise components of the rebates during the time of delay following the expiration of the time period set forth in the rebate offers.
30. The total amount of damages suffered by plaintiffs and the members of the Class as a result of defendants' unlawful conduct has not yet been fully ascertained at this time and will be proven at trial.
31. Plaintiffs seeks injunctive relief and damages on behalf of themselves and all Class members .
33. The aforementioned rebate offers constituted offers to contract by Iomega that consumers accepted by purchasing an Iomega Zip drive and/or Zip disks and sending in the required materials.
34. Defendant breached the contracts by failing to send rebates to consumers within the time specified in the rebate offer.
35. Defendant's breach of contract has directly, forseeably, and proximately caused damages to plaintiffs and the members of the Class in amounts yet to be determined.
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SECOND CAUSE OF ACTION
[Violation of The Delaware Consumer Fraud Act]
36. Plaintiffs reassert and reallege paragraphs 1 through 35 as if fully set forth here.
37. Plaintiffs and the other members of the Class are consumers who purchased Iomega Zip drives and/or zip disks through retail distributors.
38. The aforesaid actions and failures to act of defendant constitute acts, uses, or employment by defendant of unconscionable consumer practices, deception, fraud, false pretenses, false promises, misrepresentations, or the concealment, suppression, or omission of material fact with the intention that others rely upon such concealment, suppression, or omission, in connection with the sale or advertisement of merchandise, within the meaning of Delaware's Consumer Fraud Act, 6 Del. C. §§ 2511-2526.
39. The aforesaid violations of the Consumer Fraud Act have directly, foreseeably, and proximately caused damages to plaintiffs and the members of the Class in amounts yet to be determined.
41. By improperly retaining plaintiffs' and the Class members' rebates and the interest thereon, defendant has acquired money in violation of the Delaware Consumer Fraud Act, and injunctive relief will restore the improperly acquired money to plaintiffs and members of the Class.
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42. Due to the ongoing nature of defendant's unlawful conduct, which continues despite publicized complaints by purchasers of Iomega Zip drives, injunctive relief is necessary to prevent defendant from engaging in activities that violate the Delaware Consumer Fraud Act.
43. Accordingly, plaintiffs and the members of the Class are entitled to injunctive relief pursuant to 6 Del. C. § 2523, in the form of an Order requiring defendant to pay immediately all overdue rebates (as the term "rebates" is defined in paragraph 2 herein) to purchasers of Iomega Zip drives and/or disks and requiring defendant to, in the future, pay all rebates (as the term "rebates" is defined in paragraph 2 herein) to purchasers of Iomega Zip drives and/or disks within the time period specified in the rebate offer.
WHEREFORE, plaintiffs, on behalf of themselves and all others similarly situated, pray for judgment against defendants as follows:
(a) For an Order certifying the Class and appointing plaintiffs and their counsel to represent the Class;
(b) For an Order requiring defendant to pay immediately all overdue rebates (as the term "rebates" is defined in paragraph 2 herein) to purchasers of Iomega Zip drives and/or disks and requiring defendant to, in the future, pay all rebates (as the term "rebates" is defined in paragraph 2 herein) to purchasers of Iomega Zip drives and/or disks within the time period specified in the rebate offer;
(c) For damages in the form of interest on all overdue monetary rebates;
(d) For the costs and disbursements incurred in connection with this action, including reasonable attorneys' fees; and
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(e) For such other and further relief as the court deems just and proper.
OBERLY, JENNINGS & DREXLER, P.A. ___________________________________ CHARLES M. OBERLY, III LAWRENCE S. DREXLER 800 DELAWARE AVENUE, SUITE 901 P.O. BOX 2054 WILMINGTON, DE 19899 (302) 576-2000 Attorney for Plaintiffs Of Counsel: BERNSTEIN LSTOWITZ BERGER & GROSSMANN LLP Edward A. Grossman Seth R. Lesser Andrew C. Levitt 1285 Avenue of the Americas New York, New York 10019 (212) 554-1400- telephone (212 554-1444 - facsimile Albert A. Natoli 305 Broadway, Suite 200 New York, New York 10007 (212) 619-8087- telephone (212) 619-8097- facsimile DATED: [March 10, 1997] C:\DOCS\LSD\IOMEGA\COMPLAIN
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Return to page presenting rebate lawsuit
Perhaps the comment I need to make most often, when I read letters from people complaining about Iomega, is that it does no good for us to complain to each other. Please write to those in positions of authority, about such matters.
Thank you for your interest!
©Stephen A. Langford, Oro Valley, Arizona, 23 July 1997. ALL RIGHTS RESERVED. This document may be freely transmitted in its entirety, so long as no monies are earned during the transaction/s. Permission is required for any and all other pertinent circumstances.
(Metering for this page was begun on 15 June 1997.)