Sharper Image Air Purifier Lawsuit: Settlement Tossed, Bankruptcy

The Sharper Image air purifier lawsuit was a 2005 federal class action, Figueroa v. Sharper Image Corp., brought on behalf of roughly 3.2 million buyers of the Ionic Breeze line. Plaintiffs alleged the purifiers did not clean the air as advertised and emitted potentially harmful ozone. A proposed settlement offering $19 merchandise credits, valued in total at more than $60 million, was rejected by the court in October 2007 as unfair to consumers. Sharper Image then filed for Chapter 11 bankruptcy in February 2008, the case was stayed, and class members never received compensation through the lawsuit.¹²

Why Ionic Breeze Buyers Sued

The Ionic Breeze Quadra was Sharper Image’s flagship electrostatic air purifier, marketed as a silent, filterless way to remove dust, pollen, smoke, and other particles. Units sold for around $300, and the product line made up 28 percent of the chain’s total sales as recently as 2005.²

Consumer Reports tested the device in its February 2002 and October 2003 issues using the industry-standard Clean Air Delivery Rate protocol and found it did a poor job of removing airborne particles. After Sharper Image challenged the methodology, the magazine ran longer six-hour and seventeen-hour tests in a sealed chamber and reached the same conclusion, describing the Ionic Breeze as “quiet but ineffective” with “almost no measurable reduction in airborne particles.”³ A May 2005 report also found that two Ionic Breeze models exceeded the Underwriters Laboratories ozone standard of 50 parts per billion.⁴

The Class Action Filed in Florida

On May 6, 2005, Manuel Figueroa and Dixie M. Garner filed a class action in the U.S. District Court for the Southern District of Florida on behalf of Ionic Breeze purchasers. The case was assigned to Judge Cecilia M. Altonaga.⁵

The complaint alleged that Sharper Image falsely advertised the Ionic Breeze as effective at removing dust, pollen, and other particles, as providing relief for asthma and allergy sufferers, and as offering germicidal protection. It also alleged the devices emitted ozone above the UL 867 standard of 50 parts per billion, making them potentially harmful. The claims included false advertising, breach of express and implied warranty, unjust enrichment, conspiracy, and violations of multiple state consumer protection statutes.⁵

What the Proposed Settlement Offered

In January 2007, Sharper Image announced a proposed settlement covering about 3.2 million consumers who had bought an Ionic Breeze in the United States since May 6, 1999. The class included purchasers of dozens of models across the Quadra, GP, Professional Series, and Hybrid lines.⁶

Buyers who paid more than $100 for a unit would get a $19 merchandise credit, good for one year toward other Sharper Image products. Anyone who paid $100 or less would receive one $19 credit per household. The credits were not redeemable for cash and could not be used on third-party products. Class members could also claim a free OzoneGuard attachment and buy a grill attachment for $7.⁷ Sharper Image agreed to drop certain advertising claims, including that the Ionic Breeze was a medical device, that it removed harmful chemicals from flooring or paint, or that it provided immunity to allergies.⁵

The credits were valued in total at more than $60 million, but the actual cost to the company depended on how many people redeemed them. Plaintiffs’ counsel stood to receive up to $1.875 million in attorney fees. Sharper Image denied any wrongdoing and maintained that scientific testing showed the Ionic Breeze was safe and effective.⁸⁷

Why the Judge Threw the Deal Out

Judge Altonaga held a final fairness hearing in August 2007 and issued a 61-page order on October 11, 2007, rejecting the settlement.¹

The court found that plaintiffs had a strong case that the product did not work, which made a $19 coupon toward more Sharper Image merchandise an inadequate remedy for a device that cost around $300. Rather than requiring the company to disgorge profits, the coupons were more likely to generate additional sales for it. The order called the deal “below the range of recovery in which a settlement of this case may be considered fair.”¹

Applying heightened scrutiny under the Class Action Fairness Act’s coupon-settlement provisions, the judge flagged more problems. Discovery was largely complete, so trial risk was relatively small. The deal had been negotiated before class certification, meaning counsel lacked the information to properly evaluate the case when it was struck. And Sharper Image’s threat to stay proceedings had placed plaintiffs’ counsel in what the court called a “position of weakness” during negotiations.⁹ Public Justice filed formal objections, and 35 state attorneys general submitted amicus briefs arguing that coupon settlements routinely fail to compensate consumers and instead force class members to do more business with the company that wronged them.¹ The court also rejected the roughly $2 million in attorney fees allocated to plaintiffs’ counsel.¹⁰

Bankruptcy Ended the Case Without Payouts

The rejection accelerated a financial slide. Air purifiers dropped from 28 percent of Sharper Image’s revenue in 2005 to 9.4 percent by 2007. The company posted its first loss in fifteen years in 2005, and overall sales fell 21 percent in the first eleven months of 2006. When the settlement collapsed in October 2007, the stock plunged, suppliers began demanding cash on delivery, and holiday sales fell 23 percent.²⁷

On February 19, 2008, The Sharper Image Corporation filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware (Case No. 08-10322). The filing automatically stayed all pending litigation, including Figueroa.² The company’s assets were sold to a consortium of investors in 2008 for $49 million, and the corporate entity was renamed TSIC, Inc.¹¹ The rejected settlement was never revived or replaced. Ionic Breeze buyers received no compensation through the class action.

Gift card holders were treated differently in the bankruptcy: they were certified as a class of creditors in September 2008, and those who provided proof of their cards received full recovery on their claims.¹² That process was separate from the air purifier class action and did not compensate Ionic Breeze buyers for their purchases.

What Changed for Air Purifier Buyers

The Ionic Breeze controversy fed into broader regulatory action against ozone-emitting purifiers. The EPA had warned that ion generators and ozone-generating air cleaners could produce ozone levels “significantly above levels thought harmful to human health” under certain conditions, and that there was “no difference” between ozone in outdoor smog and ozone produced by these devices.¹³

In 2006, California passed AB 2276, directing the California Air Resources Board to set ozone emission standards for indoor air cleaners. The bill’s findings cited EPA and Consumers Union studies concluding that ozone-generating air cleaners did not effectively destroy microbes or reduce pollutants, and noted that such devices had produced indoor ozone up to three times the state outdoor air quality standard.¹⁴ Since 2010, portable indoor air cleaners sold in California must be CARB-certified, and electronic air cleaners are limited to no more than 50 parts per billion of ozone.¹⁵

1
Public Justice. Figueroa v. Sharper Image
2
New York Times. Sharper Image Files for Bankruptcy
3
Consumers Union. CU Files Motion to Strike Sharper Image Lawsuit Under California Anti-SLAPP Statute
4
National Center for Healthy Housing. Air Cleaners Consumers Union Review
5
GovInfo. Figueroa v. Sharper Image Corp., Case No. 05-21251
6
Justia Contracts. Figueroa v. Sharper Image Settlement Agreement
7
CBS News. Sharper Image Settles Air Purifier Suit
8
NBC News. Sharper Image Settles Ionic Breeze Suit
9
CAFA Law Blog. Figueroa v. Sharper Image Corp. Settlement Decision
10
Law.com. Judge Rejects Sharper Image Settlement
11
Yahoo Finance. Sharper Image Wants to Repay Gift Card Holders
12
Cole Schotz. Gift Cards and Their Disparate Treatment in Chapter 11 Cases
13
U.S. Environmental Protection Agency. What Are Ionizers and Other Ozone Generating Air Cleaners
14
California Legislature. AB 2276, Chapter 770
15
California Air Resources Board. List of CARB-Certified Air Cleaning Devices