TULSA, Okla.-A lawsuit of enormous proportion, charging Kmart Corp. with deliberately defrauding automotive service customers nationwide, is still in a Texas courtroom inching its way toward possible certification as a class action. Within 30 days, the U.S. District Court in Dallas may rule on a pending motion to certify.
Last November the court consolidated into one action a suit filed last July by a Tulsa, Okla., attorney, as well as a similar one filed in Austin, Texas, against the nation's second-largest retailer.
If the lawsuit clears the certification hurdle, attorney James Clinton Garland, counsel to the Tulsa law firm Frasier & Frasier, said he will proceed with obtaining additional information he believes will substantiate his claim that, over the last five years, Troy, Mich.-based Kmart has ``ripped off'' millions of customers who purchased auto repair parts and services they did not need.
Potential damages could reach billions of dollars, he said.
In a March 14 statement, Kmart said it has no reason to believe the court will decide the issue within the next month. But Mr. Garland accused the company of dragging its feet, and said he anticipates the judge will make a ruling soon.
Kmart, on the other hand, said it ``believes there are numerous legal and factual reasons why a class should not be certified'' in the Texas litigation.
The company also declared it ``has a strong policy against overselling in our automotive department. All automotive service technicians are required to sign a statement that they will not recommend unneeded parts or repairs....''
Through the discovery process, Mr. Garland has sought a formidable volume of material from Kmart and currently has 18 people working two shifts ``night and day'' on the gargantuan task of sifting through potentially millions of corporate records.
Thus far, they have analyzed data from only 20 of the company's approximately 1,000 automotive service centers. (Kmart has more than 2,500 stores nationwide, but not all provide auto service.)
For the suit, Mr. Garland said his statistician has targeted the review of 101 auto centers.
If class-action status is accorded, he told TIRE BUSINESS he could then, with the court's permission, begin advertising throughout the country seeking persons who might fit into the class, in addition to anyone he has already identified through Kmart documents.
``Already, we have identified literally tens of thousands (of persons) who have been ripped off by Kmart,'' he charged.
Based on records obtained from Kmart's top 50 stores, Mr. Garland said he ascertained ``each of the auto service operations in those stores is making (between) 46- and 52-percent profits on its total operations. You can't do that in the automobile business and operate legitimately.''
If the case attains class-action status, the class would include persons or businesses that purchased automotive services from Kmart between January 1988 and May 1993.