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A deal to settle claims that Craftmatic — the advertising-happy adjustable bed maker — systematically rips off geriatric clients has a handful of California lawyers and elder advocates tossing and turning. They say the $300,000 settlement — reached in Orange County, Calif., by lawyers for Craftmatic and a class estimated at 85,000 customers — would short-sheet a San Francisco suit making similar charges but seeking far more money. Attorneys with Mill Valley, Calif.’s Chavez & Gertler, Legal Assistance to the Elderly and AARP Foundation Litigation filed a proposed class action last summer on behalf of Craftmatic customers who say they were victimized by illegal sales tactics. They claim that Craftmatic woos elderly consumers with offers of free gifts, sends salespeople to their homes to cajole them into buying a bed, and quotes artificially high initial prices to customers before negotiating a lower price. The frequent result, plaintiffs lawyers say, is that people on fixed incomes buy beds they cannot afford, often through a Craftmatic financing program that charges high fees. Lawyers representing Craftmatic and the Orange County plaintiffs didn’t return calls before press time. In the settlement agreement, the company denies any wrongdoing. The $300,000 in the agreement would go to pay only about 1,500 class members who were overcharged for beds or canceled a bed delivery but did not receive refunds of their deposits. The estimated 83,500 other class members would be precluded from seeking monetary relief unless they opt out of the settlement. The firm handling the case, Callahan, McCune & Willis, would receive $300,000 in attorneys fees. The San Francisco case was slowly moving forward when Craftmatic told the lawyers earlier this year that it had reached a settlement in the Orange County suit that would dispose of the San Francisco claims. “I was shocked,” said Chavez & Gertler partner Mark Chavez, since he thought the Orange County case would be resolved in arbitration as an individual claim. He said the real surprise came in reading the settlement, which he calls “a judicially sanctioned ‘get out of jail free’ card” in a protest filed with Orange County Superior Court. Chavez argues that the deal lets Craftmatic pay a relatively small sum to a small number of plaintiffs to get rid of a much larger number of claims over its sales practices between Nov. 19, 1999, and Jan. 19 of this year. He also argues that the lead plaintiff in the Orange County suit is not typical of the class, since she did not use the Craftmatic financing plan, and the company allowed her to rescind her bed contract. The Orange County case was filed in November 2003, eight months before Chavez and lawyers with the advocacy groups filed suit in San Francisco. Chavez said Monday that he was unaware of the Southern California litigation when he filed. He found out about it when Craftmatic disclosed in court filings that the Orange County case had already been sent to arbitration. “We assumed that case had gone away, and [would be] settled individually,” he said. But Craftmatic and the Southern California plaintiffs lawyers from Callahan, McCune in fact opted out of arbitration and into voluntary mediation, which produced the settlement deal. “The vast majority of people like our client, who did not rescind the contract but tried many times after delivery to cancel the contract, get no relief,” said Deborah Zuckerman, a lawyer for AARP Foundation Litigation who is Chavez’s co-counsel on the case. She protested the settlement proposal Monday at a fairness hearing in Orange County Superior Court. Chavez and Zuckerman were hesitant to criticize the plaintiff attorneys in the Orange County case. Since they were compelled to arbitration, Chavez said, they had little leverage over Craftmatic, and likely would have been unable to pursue a class action before an arbitrator. Zuckerman said she expects a ruling on the Orange County deal within the next few weeks. In the meantime, the San Francisco lawyers are in the discovery stage of Craftmatic’s motion to compel arbitration.

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