Countywide : Judge Rejects Settlement in Customer Mailing-List Case

A judge Wednesday rejected a proposed settlement of a class-action suit against jewelry store giant Zale Corp.

“I’ve never seen anything like this,” Judge James R. Ross said during a fairness hearing at Superior Court in Fullerton. “The settlement is absolutely denied,” he said, calling the offer “the greatest advertising scheme I’ve ever seen.”

Three law firms--B. Daniel Lynch of Pasadena, Howard Strong of Reseda and Kircher & Nakazato of Newport Beach--filed the lawsuit in October on behalf of 36,000 credit-card holders whose names, addresses and phone numbers were obtained illegally by Zale, according to the suit, which then added the consumers to its mailing lists.

Zale, based in Irving, Texas, operates Zales, Bailey Banks & Biddle, J. Herbert Hall and Gordon’s jewelry stores across California. The company conceded that clerks in its stores had requested home addresses and phone numbers from customers who paid with credit cards.

Zale proposed to settle the suit by erasing from its computers all of the consumer information in question and by mailing a $25 gift certificate to each of the credit-card customers.

In addition, the company proposed paying $155,000 to be divided among the three law firms and $3,000 to each of three Southland customers who initiated the class-action suit: George A. Brennan of La Habra Heights, James Houston of Laguna Hills and Christopher Speare of Mission Viejo.

Judge Ross said that, after reading letters from a number of Zale customers who opposed the settlement, he concluded that it would not have provided enough compensation for those whose privacy was violated. The only beneficiaries, he said, would have been the lawyers involved.

“We’re disappointed the settlement agreement wasn’t approved,” said attorney Lynch, adding that he will request a trial within three months.

Zale’s attorney, Alexander F. Wiles of the law firm Irell & Manella in Los Angeles, called the outcome “an unfortunate proceeding” and reiterated that Zale clerks no longer request personal information from customers.