Judge OKs $2M Oreck Halo Vacuum Class Action Settlement with Stipulation

A Tennessee bankruptcy judge on Monday tentatively approved a $2 million class action settlement that would resolve claims that Oreck Corp. made false and unproven claims about the germ-killing capabilities of some of its vacuum cleaners and air purifiers.

On April 7, U.S. Bankruptcy Judge Keith M. Lundin approved the Oreck class action settlement, which would provide putative Class Members with $2 million if the Oreck entities’ estates are consolidated, and $1.5 million against Oreck Corp., Oreck Direct LLC and Oreck Homecare LLC if the estates are not substantively consolidated “in full satisfaction of any and all claims, whether known or unknown, that the Putative Class may have against the Debtors.”

Judge Lundin ruled that the Oreck Halo class action settlement funds should be held in trust, pending a decision on class certification by the California federal judge who is currently overseeing the Oreck Halo multidistrict litigation (MDL). If the class is not certified, or if the MDL is dismissed with prejudice, the settlement funds will be returned to the Oreck entities. Under the terms of the proposed Oreck false advertising settlement, the company is prohibited from challenging certification of the MDL class action lawsuit.

The class action settlement also requires Oreck to provide the class with access to documents related to the company’s bankruptcy, and to allow the plaintiffs’ attorneys to depose the company’s former employees and officers.

The Oreck vacuum MDL consists of several class action lawsuits that accused Oreck of falsely advertising its Halo vacuum and some of its air purifiers as having scientifically proven germ-fighting capabilities that could reduce the risk of flu and eliminate common germs. The plaintiffs petitioned the bankruptcy court to lift the automatic stay that was imposed after Oreck filed for bankruptcy in May 2013.

The Oreck class action lawsuits were filed in 2011, after the Federal Trade Commission found that the company made false and misleading health claims regarding its Halo vacuum and ProShield Plus air purifying products. The FTC took issue with several of Oreck’s advertisements, including unsubstantiated claims that the Halo “has killed up to 99.9 percent of bacteria exposed to its light in one second or less,” and that it “has been tested and shown to kill up to 99.9 percent of certain common germs, plus dangerous pathogens like E. Coli and MRSA.”

Oreck subsequently agreed to pay the government $750,000 to resolve the FTC charges in April 2011. The company also agreed to stop making any of the allegedly deceptive claims about the capabilities of its vacuum cleaners or other cleaning products without having reliable scientific data to back up the claims.

Putative Class Members are represented by Behram V. Parekh of Kirtland & Packard LLP and Daniel I. Waxman of Wyatt Tarrant & Combs LLP.

The Oreck Vacuum False Advertising Class Action Lawsuit is In re: Oreck Corp. Halo Vacuum and Air Purifiers Marketing and Sales Practices Litigation, Case No. 2:12-ml-02317, in the U.S. District Court for the Central District of California.