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Coupons pile

If dozens of manufacturers and coupon processors had lost a lawsuit and were ordered to pay a penalty worth more than the value of every single coupon redeemed in the entire country last year, it might have affected their ability to offer any coupons at all in the future.

But it appears that won’t happen, now that a federal judge has ruled against a New Jersey man who sued virtually everyone in the coupon industry, for more than a billion dollars. The judge has tentatively tossed the lawsuit, saying that the case lacked merit – and was kind of a mess.

Martucci runs a coupon clearinghouse, acting as a middle man between stores and manufacturers. He collects coupons from retailers, reimburses them out of his own pocket, then submits the coupons to the manufacturers and eventually gets reimbursed himself.

The system appeared to work well for him, for decades – until the manufacturers suddenly stopped accepting his coupons. They suspected fraud on his part, he suspected fraud on their part, so they cut him off – and he sued.

In a federal lawsuit filed last summer, Martucci accused coupon processors Inmar and NCH Marketing, Procter & Gamble and nearly two dozen other coupon-issuing companies, including Campbell’s, Coca-Cola, Georgia-Pacific, Hershey, Nestle and PepsiCo, of conspiring to put him out of business. He sought $24.5 million from each company, and from each of 28 individuals who worked for those companies, for a total of more than $1.3 billion. The lawsuit also asked the judge to award triple actual damages, which would have brought the final total to nearly the same amount as the value of every single coupon redeemed last year.

You knew coupons were valuable – but who knew they could be that valuable?

But, without ruling on Martucci’s claims of collusion and unfair business practices on the defendants’ part, the judge determined last week that Martucci’s lawsuit was full of problems. His “requests for various sums of money” were “not supported by factual assertions”, the judge wrote in an opinion. Plus, Martucci used three different company names in his filings, and it was not entirely clear who he was representing. The “defendants are entitled to know who is suing them,” the judge wrote. Many of the defendants themselves also critiqued his case, citing his “threadbare recitation of the elements” and arguing that “the complaint fails to meet even the most basic pleading standards and should be dismissed.”

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Martucci had argued that the manufacturers, and the larger coupon processors they worked with, abruptly stopped doing business with him. He said they were colluding, in order to sideline him and consolidate the big players’ stranglehold on the industry.

But one of the larger defendants, Procter & Gamble, suggested that he was the one involved in some less-than-honest tactics. P&G cut him off when the number of coupons he submitted for reimbursement suddenly surged by about 500%. He claimed business was getting better – but P&G suspected he might have been submitting extra coupons that were never actually redeemed by customers, in order to line his own pockets.

That kind of coupon fraud is not entirely uncommon. Plenty of retailers and their agents have been busted over the years for clipping their own coupons and falsely submitting them for cash. It’s the basis of the infamous decade-old IOS case that still hasn’t gone to trial.

But it’s unusual for someone accused of padding his accounts, to turn around and sue his accusers.

Martucci argued that together, Inmar and NCH Marketing control about 95% of the coupon redemption business, making it difficult for smaller operators like him to stay in the game. And that was before Inmar announced a couple of weeks ago that it was taking over P&G’s coupon processing, which will only make Inmar’s piece of the coupon processing pie even larger.

That’s not going to make Martucci happy. And it could help bolster his case that a few large players are cornering the market – if he even has a case anymore, that is. He’s been given 45 days to file an amended complaint and correct the myriad of problems that the judge has identified, otherwise the case will be considered closed.

Then, if he hopes to earn $1.3 billion from coupons, he’ll have to do it the hard way – by clipping, and using, them. One coupon at a time.

Photo by rose3694

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