A federal judge in Kentucky last week tentatively approved a $40 million settlement between Skechers USA Inc. and consumers who bought its toning shoes. The agreement comes three months after Skechers reached a deal with the Federal Trade Commission over advertisements for the shoes.
Under the tentative settlement, Skechers' toning shoe purchasers will get a maximum repayment for their purchases – up to $80 per pair of Shape-Ups; $84 per pair of Resistance Runner shoes; up to $54 per pair of Podded Sole Shoes; and $40 per pair for Tone-Ups.
According to the FTC, the ads made unfounded claims that the footwear would help people lose weight and strengthen muscles. The settlement related to a broader agreement that resolves a multi-state investigation led by the attorneys general from Tennessee and Ohio and involving more than 40 states.
While denying the charges, Skechers in May said it would pay a one-time settlement of $45 million dollars plus $5 million in class action attorneys' fees to settle all domestic advertising matters and related claims on a global basis to avoid protracted legal proceedings.
In its 10Q filling with the Securities & Exchange Commission filed on Aug. 9, Skechers said the FTC stipulated final judgment was approved by the U.S. District Court for the Northern District of Ohio on July 12 and consent judgments had been approved and entered by state courts in 44 of the 45 actions while noting that it was waiting for preliminary approval of the consumer class action settlement agreement by the U.S. District Court for the Western District of Kentucky. Skechers wrote, “Although the company believes the $50 million global settlement reflects the current estimated range of loss, the consumer class action settlement has not obtained Court approval and therefore it is not possible to predict the final outcome of the related proceedings or any other pending legal proceedings.”
