Federal Judge Approves $2.75 Million Settlement in Super 8 Litigation

Johnson, Abdallah, Bollweg & Parsons, LLP is pleased to announce that a $2.75 million settlement reached between Super 8 Motels, Inc. and a class of 160 franchisees has been approved the federal district judge overseeing the litigation.

Johnson, Abdallah, Bollweg & Parsons, LLP represented the franchisees in this nationwide class action alleging that Super 8 required them to pay additional mandatory fees in violation of their standard franchise agreements. Specifically, the plaintiffs contended that the imposition of a new mandatory monthly fee of five percent of gross room sales for customers enrolled in the hotel chain's point-based loyalty rewards program was not authorized by their franchise agreements.

The case was brought in South Dakota because Super 8 was originally started by two South Dakotans over a cup of coffee in Aberdeen. The hotel chain was called Super 8 because the original price of rooms was $8.88 per night. Although Super 8 was later sold to Cendant Corporation in New Jersey and then, later, to Wyndham Worldwide, the class members were still operating under their South Dakota contracts. Seven of the class members are in South Dakota, including two in Sioux Falls and one each in Wagner, Winner, Murdo, Wall and Sturgis.

U.S. District Judge Lawrence L. Piersol granted partial summary judgment to the franchisees on liability. The parties then reached a settlement on June 24, 2010.

Scott Abdallah and Ron Parsons of Johnson, Abdallah, Bollweg & Parsons, LLP represented the franchisees.

Bird Hotel Corp. v. Super 8 Motels, Inc., United States District Court for the District of South Dakota, Civ. 06-4073.