AERT Settles Suit, Incurs Losses of More Than $6M
by January 26, 2009 12:00 am 78 views
Advanced Environmental Recycling Technologies Inc. of Springdale has received federal approval of a settlement with plaintiffs who sued over the companies ChoiceDek product.
AERT produces composite deck and fence materials from reclaimed wood and plastic products. The company was sued in February 2008 by lawyers seeking class action status for customers who bought the product and had problems with mold and mildew.
In its third quarter filing with the SEC, AERT reported a $6.3 million loss related to the lawsuit during the first nine months of its fiscal year. That was part of a net loss of $11.1 million for the first three quarters, which saw sales decline 26 percent to $18.8 million in the third quarter compared to a year earlier.
AERT has agreed to pay plaintiffs’ attorneys $1.75 million in fees, provide new cleaning videos and replacement product to some customers, as well as removing phrases in its advertising such as “low maintenance.”
AERT began adding zinc borate to its products in October 2006 as a mold inhibitor.
Eligible customers may request to have their decks inspected, cleaned and treated with a mold inhibitor. The claim resolution process also provides additional relief under certain circumstances, such as additional cleanings, refunds, replacement material, coupons for discounted cleanings and/or credit vouchers for use at Lowe’s Home Improvement stores.
“AERT has always stood behind its products, and our associates will continue to work to resolve customer issues with this generation of ChoiceDek products,” said AERT CEO Joe Brooks. “It is the goal of this settlement to make every ChoiceDek customer a happy customer.”
“We commend AERT for standing behind its product and taking care of its customers in this way,” said Jonathan Selbin of Lieff Cabraser Heimann & Bernstein LLP, one of co-lead counsel for the plaintiffs and class. “From the beginning of this process, it was clear to us that customer satisfaction was of utmost importance to AERT, and this settlement evidences that fact. This settlement is an outstanding result for all ChoiceDek owners who bought earlier versions of ChoiceDek and may have experienced mold and mildew problems.”