Honolulu Weekly

Lex Brodie’s, the local tire retailer long synonymous with the service and graciousness of its founder and namesake, has agreed to pay $622,500 to settle a lawsuit charging that it ripped off consumers by overcharging on advertised 2-for-1 specials.

The company was owned at that time by Finova Hawaiian Holdings LLC, a subsidiary of The Finova Group, a mainland financial services company, which purchased it in a foreclosure sale in 2002. Finova sold the tire company to another investor group this summer, according to published reports.

According to the class action suit filed in January 2005 by the law firm of Bronster Crabtree & Hoshibata, the tire company lured customers with ’special’ 2-for-1 sales, but inflated the prices so that the amount paid was actually the same as the regular, non-discounted price for the same tires.

The company ’simply called the price ‘two for one’ while charging approximately the same price per tire as it had always charged,’ the suit alleges.

The attorneys estimate customers were overcharged a total of $925,539.50, although the company ‘vigorously disputes’ the figure and continues to deny any wrongdoing. The proposed settlement amounts to 66 percent of the estimated overcharges.

The lawsuit’s allegations cover tires sold at supposed 2-for-1 prices during the period from April 23, 2002, until the sales were halted soon after the suit was filed.

The settlement received preliminary court approval in October, and notices were mailed at the end of November to the last known addresses of all consumers who bought 2-for-1 tires during the period covered by the suit. The deal is expected to get final approval during a hearing before Circuit Court Judge Bert Ayabe on Dec. 28 at 9am.

Finova has already paid the $622,500 into an escrow fund. After attorneys’ fees and legal expenses are paid, all remaining funds will be divided among the tire buyers who have been identified.

Robert Hatch, one of the attorneys representing plaintiffs in the case, says a review of all sales receipts identified approximately 19,000 tire transactions during the period, but he is unable to say how many individual buyers were involved. Hatch says consumers who have received notices in the mail do not have to take any action in order to receive their shares of the settlement. Checks are expected to be mailed in 2007.

Hatch says the settlement only covers tires bought at 2-for-1 prices during the discrete period covered by the case.

‘If you bought tires that weren’t on the 2-for-1 sale, or before April 23, 2002, then you are not part of the class,’ Hatch says.

Attorneys representing Finova and Lex Brodie’s fought successfully to keep much of the case secret. Court records show that a number of documents were filed under seal and remain confidential, including the document containing the request for secrecy.

In his ruling on the matter, Judge Ayabe says the plaintiff’s case would not suffer if information was withheld from the public and that the company might violate a contract with Michelin if pricing details were disclosed.

Company founder Lex Brodie sold the business in 1990, although the firm has continued to use his name.

For more reports from Ian Lind, visit [www.ilind.net].