WHAT HAS BEEN HAPPENING IN THE CASE:

Since the original Fairness Hearing, I have been admitted to the District Court of New Jersey "pro hac vice," that is, only on the RCI Weeks litigation, to formally represent other Objectors who have specifically requested that I represent them as their attorney.  (I shall refer to my client objectors as "the Objectors" -- with a capital "O" -- in my discussion below, but there are other objectors whom I do not represent and who are not included among the Objectors.) Local New Jersey counsel is assisting me.  Both I and another attorney Stephan Willett) who was admitted to the Court for purposes of this case filed motions requesting the Court’s recognition as "lead counsel" for all objectors, but the Court ruled that it is "improbable" that conflicts of interest among the objectors would not arise, and that therefore appointment of lead counsel would not be appropriate.

Some members of the core group of Objectors and I have been trying to negotiate with RCI to improve the settlement terms.  At this point, negotiations for improved terms have not been successful.  Despite substantial effort, RCI has not changed any part of the proposed settlement terms except to extend the class cut-off date from November 20, 2008 (the date on which the original settlement proposal was signed) to August 31, 2009 and to agree to some date changes for deadlines.   During the course of negotiations, RCI did offer a few additional concessions to the Objectors.  The majority of the Objectors deemed these concessions minor and not worth withdrawing the noted objections or agreeing to represent the settlement proposal as fair and reasonable.

 On behalf of the Objectors and based on discussions with the Objectors, I submitted a counterproposal to RCI that addressed what we believed to be the Objectors’ most vital concerns.  The counterproposal was submitted in the spirit of compromise; it was not an effort to demand everything that the Objectors would like to see included in an agreement intended to restrain the RCI practices to which we all object.  RCI rejected the proposal without any discussion or true consideration.

The attorneys for the Plaintiffs have frequently expressed their opinion that they negotiated as good a settlement as was possible, but it appears that they are not intimately familiar with the timesharing exchange system and with RCI.  They did not conduct discovery on the merits of the case, stating that an interim order signed by the prior judge (who has since retired) prevented them from doing so. 

WHERE TO GET INFORMATION:

If you would like to read the 38-page proposed settlement agreement negotiated between RCI and the attorneys for the Plaintiffs, you may download the proposed agreement from the website referenced on the Notice. 

You also can retrieve it from a link on the RCI website home page.  You need not be a current RCI member to access the homepage at www/rci.com.  Once you login, the link disappears.  You should note, though, that while the proposed settlement agreement itself is 38 pages long, with all the attachments the entire file consists of 291 pages.  You might want to be careful to print only the pages that you want to read.

WHERE DO WE GO FROM HERE:

Many issues remain unresolved as the Fairness Hearing approaches and as decisions need to be made concerning how to proceed.  Some Objectors believe that the plaintiffs’ attorneys who brought the RCI Weeks litigation were not fully aware of, or did not fully consider when negotiating the proposed settlement agreement, the other entities and outlets used by RCI (or its parent and sister entities) to dispose of and rent weeks.

These “other exchange programs” are briefly mentioned but not listed in the proposed settlement agreement.  These organizations appear to include Endless Vacation Rentals, Sky Auction, Dream Vacations International and other organizations.  The Objectors with whom I have consulted do not feel that the provisions regarding rentals by RCI effectively cover these other outlets.  In addition, many Objectors with whom I have consulted are concerned that the restrictions placed on RCI’s ability to rent weeks deposited for exchange apply for a two-year period only.  Even Judge Sheridan has expressed concern about this relatively short period of applicability, fearing that the two-year limit will lead to future litigation over the same issues.

The Plaintiffs' attorneys are adamant that the two-year restrictions on RCI will not in any way inhibit future actions against RCI for renting deposited inventory, nor convey upon RCI the freedom to rent deposits in the future without fear of lawsuits.  Whether or not this is true, it doesn't make sense, in my opinion, to settle a case with the intention of trying the same issues all over again in the near future.  Since this case was initially filed early in 2006, a two-year term for changes doesn't make a lot of sense.   

Some Objectors are also seriously concerned about the prices at which RCI rents weeks, and want to include in any acceptable settlement agreement a provision that, except under certain limited circumstances, would prohibit RCI from renting weeks it takes from the spacebank for amounts that are less than the annual maintenance fees at the resorts in question.  There is a strong feeling that RCI’s current practice of renting deposited weeks at discount rental rates seriously undermines sales and resales of timeshare weeks and even continued ownership of the timeshare weeks.  These Objectors believe that few potential timeshare buyers would purchase or own timeshare intervals that they can rent for less than they would have to pay in annual maintenance fees.

Virtually all the objectors that I represent want to ensure that all weeks offered for rent, or deposited with other outlets will remain simultaneously available for exchange through the RCI spacebank.  

It appears to some of us that the current settlement agreement proposal does not require RCI to make any such weeks simultaneously available for exchange if they are “swapped out” to another exchange system, or taken by RCI within 90 days of the start date.  Rather, Section II. C of the proposed settlement appears to allow RCI to transfer weeks to “other exchange programs” if they are exchanged with other weeks or within 90 days of the start date without replacement or compensation to RCI members.

The Plaintiffs' attorneys feel that the wording of Section IX. B (part of the Representations and Warranties) counters the wording of Section II. C, so that RCI indeed does have to replace this inventory.  (Personally, I don't read it that way at all, but if that is what RCI means, then I want to see a clarification so that there can be no question that this is what is meant.)  

 

WHAT ALTERNATIVES ARE AVAILABLE?:

Many Objectors have asked me what they should do with respect to the Notice, the upcoming Fairness Hearing and the proposed settlement itself.  As I see it, the alternatives are to continue to object to the proposed settlement (which allows the Objector to accept one of the benefits offered), to accept the benefit and the proposed settlement without objecting, or to “opt out” of the class (which would preserve an individual’s right to bring a separate lawsuit against RCI).  The proposed settlement agreement provides that if 5% of the class “opts out” of the class (about 80,000 members), then RCI has the option to withdraw from the proposed settlement.  RCI is not required to do so, however.

Judge Sheridan also could reject the proposed settlement at the Fairness Hearing scheduled for November 30 if a substantial number of class members continue to object to the terms of the proposed settlement.  At the aborted fairness hearing on June 16, Judge Sheridan stated that he was very much influenced by the “hundreds” of objections he had received and remarked that in a typical class action suit, he might receive “two or three” objections.

Some RCI members have asked me about “opting out.”  Every member should make an individual choice, but I personally do not intend to “opt out,” as I do not believe that any meaningful changes to RCI’s current policies will be made unless a class action suit is successfully brought.  Furthermore, I do not believe that any “losses” I have suffered due to RCI’s objectionable policies are sufficient to warrant the expenditure of time, energy and attorney fees that any lawsuit I might personally bring, against RCI would require.  I do not believe that it would be feasible to attempt to certify a class (that is, get any new litigation that I might commence declared to be a class action suit) if the pool of possible plaintiffs represents less than 5% of the RCI membership.

I believe that, if the goal is rejection of the proposed settlement agreement, it would be more effective for the Objectors and any other class members who want to see revisions to the proposed settlement agreement to submit objections to the judge.  I believe that a much smaller number of objections than 80,000 would be sufficient to convince the judge to reject the agreement or to postpone a decision on the fairness of the settlement while encouraging RCI to engage in more constructive settlement negotiations.  One of the Objectors has prepared a form for other objectors to complete, rather than writing a letter.  This will hopefully make it more convenient for those who wish to object to do so, and will ensure that the required information is contained in the objection.  

I intend to continue my objection to the current proposed settlement.  Because I already formally objected, I do not need to file another objection.  If you previously filed objections with the court, or sent an email to me, your objections were noted by the Court as well. However, if you only sent an email to me, I would encourage you to file a formal objection, which should be sent to the Court, with copies to the plaintiffs' attorneys, the defendant's attorneys, and to me if you retained me to represent you.        

Each potential class member should accept, object to, or opt out of the settlement as he or she sees fit.  By taking no action, a class member automatically becomes part of the class.  All class members, including those who object, but not those who opt out, are entitled to receive a benefit of their choice, but they must complete and submit a claim form by the due date in order to receive the benefit.  (Forms are available via the link on the RCI website, or by following instructions on the Notice.)

I have requested the only benefit that I personally deem worthwhile for myself – a one-time opportunity to search for an exchange before releasing my week for deposit.  For some members, there are additional benefits, such as benefits for those who paid to extend their deposits and were still not able to obtain satisfactory exchanges.  (There are lists of those members in one of the attachments to the proposed settlement.)  Full details concerning the offered benefits are available via links at the bottom of the RCI website homepage and can be accessed by telephone or website as noted on the postcard Notice. 

WHAT ARE WE ATTORNEYS FOR THE OBJECTORS PLANNING TO DO?

RCI’s refusal to make substantial changes to the proposed settlement agreement has caused the positions of some Objectors to harden and others to question whether it is worthwhile to continue to fight.  After much discussion, local New Jersey counsel and I have decided to continue objecting for those Objectors who wish to keep trying.  

RCI has stated very clearly that it will reject any settlement proposal that completely prohibits it from renting out weeks deposited for exchange and has admitted that its rental program is an important source of revenue.  Many Objectors and potential class members want to see this practice completely prohibited.  Other Objectors and potential class members are willing to allow RCI to rent deposited weeks under certain conditions that are designed to protect exchangers’ rights and benefits.

After lengthy discussion and evaluation of alternatives, local New Jersey counsel and I have decided to submit a new settlement proposal to RCI’s counsel.  As was the case with the original settlement counterproposal, we will not demand everything we want, but rather what we believe we can justify to the Court and for which we feel it is worthwhile to fight.