A federal judge in New Jersey yesterday has ordered American Family Enterprises to conduct a special $100,000 sweepstakes as part of its $33 million settlement of a class action lawsuit for alleged deceptive sweepstakes advertising.
U.S. District Judge Nicholas Politan said he added the special sweepstakes to give 10 lucky winners the “benefit of the bargain they thought they had made” when they subscribed to magazines in hopes of improving their chances of winning the Jersey City, NJ-based firm’s multi-million sweepstakes.
While he did not indicate just when the special sweepstakes would be held, the judge said the winners would be randomly selected from the tens of thousands of people from across the country who filed claims with the court since the tentative settlement was reached last October.
There was no immediate comment on the judge’s action by AFE — formerly known as American Family Enterprises — which must pay each claimant an average of $524 under the agreement in addition to $8 million in legal fees and costs which will be split among 25 law firms across the country.
Judge Politan, citing the maze of pending litigation against AFE, and the company’s Chapter 11 bankruptcy protection filing, said if the settlement had not been reached, chances were that none of the plaintiffs would receive any refund at all.
AFE, owned by Time Inc. and a group of investors, which filed for bankruptcy court protection shortly after reaching the tentative settlement in this case, is “getting out of the sweepstakes business,” according to spokesman Richard Taubman.
He said the stampsheet magazine subscription firm was moving into other areas of promotion because sweepstakes aren’t making money anymore for the company. He declined to elaborate.
Network
