021: Forget the Price; What’s the Cost?

Stella Case No. 021, Originally Published: 27 November 2002

The State of Massachusetts still has on its books a law requiring stores to individually mark each item for sale with the price. In an era of bar code scanners and automated checkout (and even bar code readers scattered through stores for shoppers to use if they forgot what the shelf card said), Massachusetts still wants every can, lightbulb, and package of screws offered for sale to be marked with a price.

Naturally, most stores ignore the outdated law. Similar laws have long been repealed in most states, and for good reason: people want low prices, and it’s expensive to mark prices on every tiny item, especially if it goes on sale once in a while. Consumers are damaged too: if price changes are costly for merchants, they’re not encouraged to compete on price.

The law pre-dates computerized checkout, but Colman Herman, 59, doesn’t care — the law’s the law, he says. The Dorchester, Mass., resident complained to Home Depot because the 33 stores it runs in the state didn’t mark prices on items — just as most stores don’t. They refused to do anything. He complained to the state Attorney General. He also refused to enforce the state law; obviously he didn’t consider it much of an issue.

But Herman didn’t back down, he sued, even gaining Class Action status to represent all consumers who were “victimized” by Home Depot’s refusal to put a price sticker on every light switch and piece of lumber. The suit asked for $25 “for each consumer affected” by Home Depot’s actions. No doubt the word “affected” was used since they couldn’t really say “harmed” with a straight face.

Home Depot, knowing the law was clearly not on its side, settled, offering $3.8 million. In addition, it agreed to get its 33 stores into compliance with the state pricing law within three years, which effort it estimates will cost it $20 million.

Of that $3.8 million settlement, half will go to Herman’s attorneys. The rest will be divided up among an “eclectic” mix of consumer groups and charities — and the Massachusetts Attorney General, the very one who determined that going after Home Depot in the first place was not a good use of government funds. The major beneficiaries didn’t even have to show if they were harmed, let alone how. They include Habitat for Humanity ($1 million), the National Consumer Law Center ($100,000), the Friends of the Shattuck Shelter ($50,000), a “consumer advocate” web site registered to an individual, not a non-profit organization ($25,000), and a new entity called the “Consumer Resource Fund” ($725,000), from which the Attorney General will get an unspecified share.

Note that none of the money will go to Colman Herman, even though he’s listed as the “lead plaintiff,” nor to any other members of the “Class” (you know, the “victims” that were “affected” by Home Depot’s actions). Why not? Well, the Boston Globe newspaper reports, “apparently because the damages per person are so small” — at least, once all the non-affected groups grab their share there’s so little left that it would cost too much to find the individual members of the Class. Maybe that’s why Home Depot settled before going to trial: they were probably afraid of a jury ordering them to mail checks for a penny each to 500,000 people.

Home Depot was literally so grateful that the Suffolk Superior Court accepted their settlement offer that its spokesman said the outcome was “the best possible outcome under the circumstances.” The spokesman refused to comment on whether the law was reasonable. “The bottom line is it’s the law and whether it’s good or bad it is the law, and we are bound to comply with it.”

Home Depot did not admit to any wrongdoing, and said in its settlement agreement that it believed “few, if any,” consumers were injured by its actions. Still, coughing up nearly $24 million — which cost will, of course, be passed on to consumers in the form of higher prices — was “the best possible outcome” it could think of. It not only got to make forced “donations” to lawyers, housing and consumer groups, it found it politic to express gratitude over the extortion.

Other state retailers are outraged that Home Depot settled rather than fight the law. “This could have an impact right on down to the corner hardware store,” complained president Jon Hurst of the Retail Association of Massachusetts. “If [Herman]’s promoting himself as a consumer advocate, I think he’s pretty mixed up” — the costs borne by Home Depot and several other retailers “targeted” by such suits will be passed on to consumers, he says, adding his organization will renew its efforts to get the state law repealed.

Why does Herman fight against big companies for virtually no reward? “It’s fun,” he says.

Meanwhile, after earning his lawyers $1.9 million and nothing for himself, Herman is gearing up for a price tag sequel: he has filed an action against Walmart.

Sources

• “$3.8m Accord on Pricing,” Boston Globe, 19 November 2002
• “Item-Pricing Crusader Takes on Wal-Mart,” Boston Globe, 6 October 2002

Case Status

Settled.

My 2020 Thoughts on the Case

“The Massachusetts Item Pricing Law requires food and grocery stores to individually price mark most items with the actual selling price,” the state’s web site still says (emphasis added). That’s food and grocery stores — in 2003, the attorney general revised regulations so “nonfood retailers could avoid marking prices on individual items in their stores as long as they installed scanners every 5,000 square feet so consumers could check prices themselves.” (Source) I guess food store lobbyists aren’t as effective.

This case isn’t really about whether or not Massachusetts consumers have some sort of special need to have a price tag on their extension cords when consumers in other states don’t; it’s about using the legal system to force a company to give money to charities (matched dollar for dollar with payments to lawyers) to “compensate” supposed “victims” — while the actual “victims” (if any!) get nothing.

That’s supposed to be justice? Well, that’s Class Action law for you; it is not at all uncommon for the “Class” (the actual victims) to get a pittance or worse, even in very real cases of damage, while the lawyers laugh all the way to their country clubs. I’m not saying Class Action cases are bad in and of themselves; I’m sure there are plenty of cases where they work as intended, getting real relief to real victims. But like any other type of court action, it can be (and is) severely abused.

Meanwhile, Colman Herman is still raking muck, most recently fighting the state’s public records law: “Meet the New Public Records Law – Same as the Old One” he writes in CommonWealth (the “nonprofit journal of politics, ideas & civic life”), posted here. He’s billed as a “Guest Contributor” …which seems like a slam considering he has written hundreds of articles for them. (Don’t tell me he’s still not taking pay!? I guess he’s still having “fun.”)

His efforts don’t seem to make much headway: he complained about the state public records law in the very same publication as far back as October 2008.

As for his pricing suit against Walmart, the retailer similarly settled that one in January 2004, paying $7.35 million even though regulations had changed by then; the suit was filed well before the change. Again, the settlement involved “grants” to several organizations.

(Update Sources: “Wal-Mart Settles Lawsuit on Item-Pricing for $7.35m”, Boston Globe, 22 January 2004, and “For BJ’s, Ignoring Item Pricing Is a Bargain”, Boston Globe, 14 May 2006).

Letters

In the last post, I slammed a few readers over the head with a cattle prod several times over the rodeo case. I wrote, “The issue here is not whether children should go see rodeos. It is rather obvious that different people have different opinions as to whether rodeos are ‘good’ or ‘bad’. It should be up to each kid’s parents to decide whether or not their children should go see the rodeo. … The case isn’t about rodeo; it’s about abusing the courts to force a personal agenda on others.”

That led to a complaint.

Robyn in Maryland: “I must say I generally enjoy reading your mailing but the rodeo case disturbed me because you consider it a frivolous lawsuit. Trying to spare animals pain is NOT frivolous ever. I hope you learn to love animals.”

Robyn, I cannot possibly have been more clear: the issue is not about rodeo, or even animals. Not. Isn’t. You say you read the case. Read it again — and again — until you understand it. It’s not about rodeo, it’s about parental rights and abuse of the courts.

And it just so happens I love most animals, particularly grilled tri-tip beefsteak with sauteed mushrooms. Oh, and by the way, the case was not about rodeo!

Dan in New Hampshire: “For the people who think rodeos are bad, though, you are the one who doesn’t get it. To use an inflated example, should the kids be brought to see a slave plantation if their parents think that’s okay?”

I responded to Dan, “Absolutely! I can’t think of a better way to demonstrate to growing minds how wrong slavery is.”

To his very great credit, Dan replied, “Hmm. Point taken.”

If you think you can’t change someone’s mind with a simple, good argument, think again!

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