Class action suit claims wholesale club sells `gray market’ watches

BJ’s Wholesale Club Inc., a major discount chain based in Natick, Mass., has been accused in a federal class action suit of allegedly selling Movado and other “expensive watches” obtained from “gray market” sources. Also named are 20 “John Does” who may have, in the suit’s words, “conspired with or assisted B.J.’s” in selling the watches.

BJ’s had until May 18 to formally reply to the allegations though its attorneys. They couldn’t be reached at press time.

The suit claims the watches lack valid manufacturer’s warranties, and therefore are “inferior, `second-hand’ or even stolen, have extremely reduced resale values, and cannot be serviced by the manufacturer or most legitimate dealers.” Selling such watches violates consumer protection laws in Pennsylvania and “numerous other states,” says the suit, and constitutes “criminal offenses.”

However, Julie Somers, BJ’s assistant vice president for public relations, told JCK that “the watches are genuine, authentic watches, that come through another source that is not Movado. We aren’t an authorized dealer in Movado watches.” The watches “do come with a warranty, one comparable to Movado’s, but provided by another source.” The name listed on the BJ warranty card, she said, is Progress Trading, in New York City.

BJ’s Wholesale Club Inc. operates 130 clubs in 15 eastern states, plus Ohio. The company has about 16,000 employees and almost seven million members, and in fiscal 2002 posted sales of $5.2 billion.

The class action suit was filed by five lawyers in Pennsylvania, New Jersey, and Texas for a Pennsylvania resident who bought a Movado watch at a BJ’s Club, and for “all others” with similar complaints about watches purchased at the chain’s stores since Nov. 1, 1995.

The legal action was originally filed March 18 in the Philadelphia Court of Common Pleas because, says lead attorney Daniel B. Allanoff of Philadelphia, “we don’t believe this is an issue with federal jurisdiction, and damages per person are less than $75,000.” However, at the request of BJ’s attorneys, the case was moved May 1 to the federal court in Philadelphia.

Defendants sued in a state court have the right to move the case to federal court, but must show that a federal law is involved, citizens in several states are affected, or the amount of damages is more than $75,000 per plaintiff. Allanoff said he will file a request by June 1 asking the federal court to return the case to the Common Pleas court.

According to the legal action, plaintiff Michael C. Nabal, of Upper Darby, Pa., purchased a Movado watch for $269.99 plus tax on Dec. 3, 2001, at a BJ’s store in Springfield, Pa. However, he later found that the enclosed warranty card “did not contain certain information required by Movado . on the warranty cards of its authorized Movado sellers.”

BJ’s isn’t an authorized dealer of Movado or many of the other watches it sells, says Allanoff, “and we suspect every watch [they’ve sold] has followed a similar fact pattern [as Nabal’s].”

The suit claims BJ’s obtains its watches “through unauthorized `gray market’ distribution channels, either from authorized dealers or from distributors who have acquired watches `downstream’ from authorized dealers.” The wholesaler doesn’t tell that to consumers, the suit alleges, because that would reduce the watches’ prices by “many hundreds of dollars” and also “tarnish the name and reputation of B.J.’s.”