This is a follow-up to a previous post I wrote, Duped timeshare buyers score a victory. In that one, a Tennessee couple took Westgate Resorts to court, claiming that they had been misled while buying a timeshare. The court ruled in favor of the couple, and handed Westgate a $600,000 judgment for punitive damages, saying the company "engaged in intentional and fraudulent conduct." The story doesn't end, there, however...The United States Supreme Court building
Here's what's happened since the original court case...
- Westgate took the case to the Tennessee Court of Appeals and lost, though they did get the punitive damages reduced from $600K to $500K due to a cap in the state code.
- In June, the Tennessee Supreme Court turned aside an appeal request, letting the last verdict stand.
- Now the company wants to take the battle to the highest court in the land. They have filed a request for the US Supreme Court to review the case. Why, and what happens now?
Why take it to the top court?
I can think of a few possible reasons that Westgate would decide to take this route.
- To prevent similar lawsuits. According to the Orlando Sentinel, Tennessee lawyers have been talking to other potential plaintiffs. One of the key issues in the case was whether Westgate violated Tennessee law by not providing the couple with a current copy of their POS (Public Offering Statement), instead giving them outdated documents on a CD-ROM. An executive director testified that this was company policy. How many other buyers in Tennessee are in the same situation? There might be many people who could file on similar grounds.
- To reduce the judgment. The company was able to reduce the judgment by $100K in an earlier appeal. They may hope that they could reduce it further (or even entirely) if the Supreme Court reviews the case. In a Utah case, Westgate appealed a ruling to the state supreme court, which determined that a jury's award of punitive damages was unconstitutional, because "the award violates procedural due process." In that case, the original punitive damages totalled $1,000,000. After appeal the case went to arbitration, where the panel awarded damages of just $65,500. That's a huge reduction, but Westgate appealed that, too (unsuccessfully). The Utah supreme court docs make pretty interesting reading...
- To avoid spreading the problem. I don't know how many other states have a similar law about giving timeshare buyers a current copy of the POS documents, but the general issue of "intentional and fraudulent conduct" seems like it could be applicable in numerous other states. If this case stands, then the same type of misleading sales conduct might lead to lawsuits in other states, too.
- To dissuade future plaintiffs. The more difficult, costly, time-consuming, and non-lucrative it is to file a case, the less likely future people will be to do it. In the original Tennessee case, the plaintiffs had to spend over $100K in legal fees before they won their case. How many people can afford an outlay like that? How many people want to expend that much time and effort on it, with all the headaches of a case that can go on for years, making its way through multiple appeals? And when judgments come in as low as in the Utah case, how many people will decide it's not worth the hassle?
What happens next?
- Maybe nothing. The US Supreme Court does not have to agree to review the case. In fact, the odds are against it, since USCourts.gov reports that the court only accepts 100-150 of the 7,000+ cases that people request it to review each year. That means usually less than 2% of requests make it through.
- Does it involve federal law? The Supreme Court cannot hear just any case. Here's what FindLaw.com says:
"A case must involve an issue of federal law or otherwise fall within the jurisdiction of federal courts. A case that involves only an issue of state law or parties within a state will likely stay within the state court system where that state's supreme court would be the last step."
Since much of this case is related to Tennessee consumer protection laws, I'm not sure where federal laws come into it, but I'm sure the company has some legal grounds to raise. If there's a lawyer out there who can shed some light on this, I'd love to hear more!
- What cases do they take? Usually the court takes cases of major importance, or those where other courts have disagreed about federal or constitutional matters. Think about their 2015 decisions on gay marriage, or whether Obamacare health care tax credits are constitional. Those issues can affect thousands or millions of people across the country.
- Presenting the case. If the Supreme Court agrees to hear a case, then both sides will present written briefs and oral arguments to the court. The justices then make their decision.
What could this mean to timeshare owners?
- Additional legal costs. If the Supreme Court agrees to hear the case, then more lawyers will need to be involved. The lower court ordered Westgate to reimburse the Overtons' legal fees, but clearly more costs would be incurred to argue the case to the Supreme Court.
- Legal precedents. Supreme Court decisions can have a sweeping impact on state laws and future cases. Frankly, it seems like this could go either for or against the interests of timeshare buyers and owners, depending on how the case is presented, and what the justices decide (if anything).
I doubt that they'll be dealing with the matter of fraud and misrepresentation in timeshare sales, though personally, I've love to see that addressed at such a high level. I think it's more likely to be a review of how the punitive damages were assessed, or something similar which has minimal risk to the company regardless of how it turns out. While that might not prevent additional similar lawsuits from being successful, it could make them less attractive to file.
I'm not a lawyer, and I don't have any inside knowledge of this case, so this is my own opinion only. If you have more legal knowledge, or personal experiences with Westgate that you'd like to share, I'd love to hear your thoughts in the Reply section below.