Settlement Reached in Webkinz Antitrust Case

SAN FRANCISCO (CN) - A class that accused Ganz USA of forcing retailers to buy at least $1,000 in unrelated Ganz products in order to buy its popular Webkinz plush toys has settled with the company for more than $2.5 million.

Class members claimed that Ganz illegally tied its Webkinz toys to other "core-line" products, forcing them to buy those products through Ganz instead of other producers.

Each Webkinz toy is linked to an interactive Web site, called Webkinz World, that allows users to take care of a virtual pet by earning points through online games.

Named plaintiff Nuts for Candy said in its 2008 complaint that Ganz illegally forces retailers who want to sell Webkinz to buy at least $1,000 of stuff from its "core line," which "consists of Ganz products unrelated to Webkinz, including lip gloss, magnets, and stuffed and rubber animals."

U.S. District Judge Jeffrey White in San Francisco said in 2010 that the plaintiffs needed to show how the allegedly tied products reduced consumer choice.

"However, the complaint does not allege that consumers are unable to purchase the competing manufacturers' products from other retailers," White wrote.

The judge also tossed an antitrust injury claim, saying the alleged inability to stock store shelves with competing products "does not amount to recognizable harm to competition."

The parties reached a proposed class action settlement, which District Judge Richard Seeborg preliminarily approved in an order last week.

The judge ordered a hearing in September to determine if the settlement is fair, adequate and reasonable.

The proposed class is comprised of those who bought "core line" products as a condition to buying Webkinz toys between 2005 and 2008, and the settlement requires Ganz to pay $2,575,000 to the members.

The amount distributed to each member will depend on the amount of "core line" products each person bought.

Ganz has denied all the claims against it, and continues to deny any legal liability to the settling class.

The parties posted a website with information about the rights of potential class members and background on the lawsuit.

Attorneys Steven K. Williams and Matthew K. Edling of Cotchett, Pitre & McCarthy represented the plaintiff class. Ganz was represented by James Serota and Scott Martin with Greenberg Traurig.

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