Fulfillment: California Court Clarifies Rule on Cataloger Fees
Reported by Donna Loyle, editor in chief, Catalog Success magazine
In a precedent-setting case for catalogers, a California Appellate court recently clarified rules concerning fees listed on order forms. In short, the fees were allowable because the order forms created shipment contracts, not sale-on-approval contracts. The case is an important one for direct marketers.
The case, Wilson vs. Brawn of California, was brought by a customer of International Male catalog, owned by Hanover Direct. The plaintiff, Jacq Wilson, argued that the insurance fee he paid for his shipment was deceptive, even though he knew of the fee before ordering and did not want to return the items after he received them.
Wilson argued that International Male’s contracts were sale-on-approval contracts, because the cataloger offered a satisfaction guarantee to customers. Therefore, the insurance fee did not have any value to customers, because the cataloger bore the risk of loss for any damage to products during shipment. The trial court ruled in favor of Wilson, but the California Court of Appeal over-ruled and sided with the catalog company.
Following is an Idea Factory exclusive interview with George Dougherty and Charles Bergen, principals at Grippo and Elden (http://www.grippoelden.com/), the Chicago-based law firm that represented Brawn of California in the case.
Idea Factory: Please give us some background on this case and its importance to catalogers.
Bergen: Lately several lawsuits have been filed disputing catalogers’ fees, such as shipping and handling. This case, however, was about an insurance fee as disclosed on an order form for International Male catalog. In California, there are laws that allow consumers rights of recovery in which the plaintiff doesn’t even have show he or she has been harmed. The charge just has to be offensive to the person.
Dougherty: It’s a very pro-consumer piece of legislation.
Bergen: The plaintiff in this case, Jacq Wilson of San Francisco, claimed that the insurance fee charged by International Male was illusory. He claimed the fee was misleading. The trial court ruled that Wilson’s transaction qualified as a sale-on-approval contract. But the Appellate court over-ruled and said it was a shipment contract.