DC4MS

Abercrombie & Kent's Legal Moves Rejected in Destination Club Case

Now, As it Opens a New Club, A&K Must Address Past-Fraud, Victims Say Hundreds of victims have six-and seven-figure losses

LOS ANGELES, May 28 /PRNewswire/ -- Abercrombie & Kent's bid to dismiss hundreds of lawsuits arising from the firm's now-bankrupt destination club venture was rejected today by a Los Angeles Superior Court Judge, the attorney for the company's victims, Brian S. Kabateck, said.

A&K was also rejected in its bid to move the case against it from California to Illinois or Connecticut.

A&K has been sued for fraud by 571 members of the now-bankrupt "Private Retreats by Abercrombie & Kent," "Distinctive Retreats by Abercrombie & Kent" and "Andrew Harper's Distinctive Retreats by Abercrombie & Kent." Memberships ranged from $225,000 to $1.3 million. The average victim lost $370,000.

Nevertheless, A&K recently announced the creation of "Abercrombie & Kent Residence Club," a new destination club. (http://www.akresidenceclub.com/_docs...nouncement.pdf.)

That launch must be accompanied by justice for the people who bought six and seven-figure memberships in A&K's previous club venture, which went bankrupt, Kabateck said.

"These victims felt safe in handing over their hard-earned savings and retirement accounts because of the Abercrombie & Kent name," Kabateck, Managing Partner of Kabateck Brown Kellner, LLP, said. "Unless A&K restores that trust by making things right, how can anyone trust this new venture?"

"Today's victory is an important one, but this fight won't be over until A&K's victims find justice," Kabateck said. "This case is a test of what the Abercrombie & Kent name really stands for."

A&K admits its first foray into destination clubs was a disaster. Jarvis J. Slade, president of the new Abercrombie & Kent Residence Club, told Halogen Guides Real Estate (formerly Helium Report) that "Licensing the brand was not the best idea." Halogen reported that the licensing decision was a "smudge on the company's history" and a "poor choice."

To date, Abercrombie & Kent has not treated this "poor choice" as anything but a learning experience for the company's new destination club venture, with victims not receiving so much as an apology.

In exchange for a fee, the lawsuits state, Abercrombie & Kent recklessly gave a fly-by-night company free reign to use their brand in marketing destination clubs. Consumers were duped into thinking they were buying memberships directly in the 40-year-old Abercrombie and Kent, not a start-up operation, the lawsuit states. Abercrombie & Kent actively participated in this deceit. The clubs quickly went bankrupt, leaving the members with nothing to show for their memberships.

"It's simple: we're saying A&K led people to believe they were buying something they weren't," Kabateck said. "The company's active role in this scheme means they can't hide behind the club's operators."

Abercrombie & Kent's announcement of its new club does not mention its previous destination club venture. The firm's press release does reinforce A&K's reputation: "Simply put, no other club can offer its members Abercrombie & Kent's reputation for commitment and integrity ... "

"Abercrombie & Kent's destination club test-drive came at the cost of people's retirement dreams. Their claims of commitment and integrity will ring hollow until they do the right thing," Kabateck said.

Kabateck Brown Kellner, LLP is one of the nation's foremost consumer law firms. Its clients have won more than $750 million against Google, Farmer's Insurance, Eli Lilly and other major corporations. As a plaintiff's-only firm, Kabateck Brown Kellner is always on the consumers'
side.

SOURCE - Kabateck Brown Kellner, LLP

Kagehitokiri

hmm, sounds like a good firm. have they announced what kind of settlement they are seeking?

i would think at a certain point if they want the new club to be successful, they would need to settle without dragging this out... especially being backed by intrawest/fortress now, i cant imagine it would be too horrible financially...

are any of the former T&H members on this forum participating in the suit?
(i presume you cannot comment ON it, but i was just curious)

DC4MS

I want to keep all posts about the lawsuite involving Abercrombie & Kent and Tanner & Haley in this forum.

The Abercrombie & Kent Residence Club has it's own forum for information on that club.

I realize that there may be some confusion, but they involve two separate programs and I feel they should be judged separately.

Kagehitokiri

i was discussing the potential settlement of the lawsuit in the context of the new club.

and i was just curious to see if any forum members are participating in the lawsuit. they could post to that effect in this thread if they felt so inclined.

TarheelTraveler

So the plaintiff's law firm put out a press release in order to encourage A&K to settle. I guess you go after the deep pockets. Interesting timing also.

Kagehitokiri

and intrawest and fortress go even deeper...

rwhaugan

Does anyone have any thoughts about how (other than reputation) these lawsuits might affect the AK club? I assume that the new club is a different legal entity and as such would not directly be affected by any judgment/settlement.

Has AK discussed this matter with its members at all?

DC4MS

That is a great question and one that was not addressed at the DC Symposium.

I think A&K is looking to leverage their brand name with the new club and are "hoping" this issue goes away. Unfortunately, with Google search, prospective new members may encounter this issue for years to come.

That is why I want to keep the A&K "brand licensing" to T&H issue separate from their new A&KRC.

Without knowing all the issues, I can't help but think that A&K may be a victim of T&H as much as the T&H members. Of course, A&K should have had much more control of their brand name when they entered into a business agreement with T&H.

Kagehitokiri

were only talking about reputation really.

A&K is owned by intrawest/fortress.

intrawest bought a 67% stake in A&K in july 2004, with option to buy other 33%. it looks like they have not exercised that option.

intrawest net income
2006 $115,210,000
2005 $32,815,000

fortress net income
2007 ($59,803,000)
2006 $442,884,000
2005 $192,676,000
2004 $114,450,000
2003 $40,271,000

TarheelTraveler

This is a good question, but A&K has discussed this with the members and feel there is no potential exposure to the members. The member's owned club is an entirely different corporate entity than the A&K being sued and, of course, the member entity had no involvement with the licensing debacle.

LTTravel

All this discussion makes me believe that using the A & K name for a destination club was probably not a good choice.

TarheelTraveler

Just took another look at the plaintiff's law firm press release. Not sure why this warrants a press release. Sure you'd like to get the venue changed to your home court and sure you'd like to get a case dismissed based on the other's side initial pleading not having grounds for moving forward, but both are typically long shots. Has this case even gotten far enough along for A&K to have responded to the allegations?