Toysrus.com Slapped With Class Action Lawsuit

After enduring a flood of negative publicity over a string of high-profile holiday failures, Toys “R” Us is now facing a class action lawsuit brought by a Seattle, Washington attorney.

Attorney Steve Berman of the firm of Hagens Berman filed the suit in Kings County Superior Court on behalf of a woman who ordered but never received Christmas gifts from the retail giant’s Toysrus.com Web site.

Berman alleges that Toysrus.com “knowingly and deceptively accepted orders for Christmas presents the company knew it could not deliver.”

The “E-Grinch That Stole Christmas”

If approved by the court, the class would include all Toysrus.com customers who bought toys by December 14, 1999 and did not receive them by Christmas Day. Toysrus.com had set December 14th as the cutoff date for guaranteed Christmas delivery.

“There are lots of things in life that are excusable,” said Berman in a statement, “but ruining Christmas for thousands of children isn’t one of them. The thought that Toysrus.com had full knowledge they couldn’t keep the Christmas Eve date but continued to accept orders makes it even worse. To thousands of kids, Toysrus.com is the e-grinch that stole Christmas.”

Toysrus.com, based in Paramus, New Jersey, was unavailable for comment about the lawsuit.

Too Little, Too Late

The suit alleges that when CEO John Barbour declared on December 22nd that the company would not be able to fill orders in time, Toysrus.com had already raked in millions of dollars (US$) from customers and knowingly delayed making that announcement.

Toysrus.com said in a statement last week that that it shipped $39 million in orders over the holiday season and would have shipped much more had it been able to cope with demands.

The company did offer customers who did not receive their order in time an option of canceling it or a $100 Toysrus.com gift certificate.

Tough Foe

Toys “R” Us is facing a seasoned legal adversary in Berman. He represented 13 states in class action suits against tobacco companies and helped wrap up the settlement with Ligget Tobacco Company. Hagens Berman has handled class action suits involving Boeing, the Exxon Valdez oil spill, Egghead and Nordstrom.

Toys “R” Us has 1,534 stores in the U.S., Europe, Australia and Japan. The company reported sales of $2.5 billion last quarter. It re-launched its Web site in June after spinning it off as a subsidiary in April, but experienced traffic problems as the holiday season opened in November.