NEW YORK, NY (NATIONAL JEWELER) BY MICHELLE GRAFF- Early next year, a class-action lawsuit will be filed against EGL International and “major retailers” charging that the lab systematically over-graded diamonds that the retailers then knowingly sold to consumers, National Jeweler has learned.
Nashville, Tenn.-based attorney Brian Cummings said Monday that the suit will be filed within the next 60 days by a “major national plaintiffs’ class-action firm,” which he is not yet authorized to name because the firm is still working on the case.
Expected to be filed in California, the main causes of action in the suit will be violations of state consumer protection acts, breach of express warranty and civil RICO (Racketeer Influenced and Corrupt Organizations), which allows those impacted by organized crime to collect treble (triple) damages.
Cummings said the suit will be filed in California because of the strength of that state’s consumer protection act and the volume of business done in California by the retailers that will be named as defendants.
While the exact number of defendants is unknown at this point, there are expected to be between 10 and 20 plaintiffs to start, though that number could grow. He said the intention is for the lawsuit to be limited to large retailers and not target small independent jewelers so it can be “more effective” and move more quickly.
News of a pending major class-action against EGL International and large retailers in the United States is the latest blow to the EGL International brand, which will cease to exist shortly.
While over-grading has been a much-discussed issue in the industry for years, it exploded in 2014.
There were a total of four individual lawsuits filed over EGL International grading reports in Tennessee alone, and they made headlines. Local NBC affiliate WSMV followed the story closely and, later, touted its role in helping to change the industry.
Several months after this news emerged from Nashville, Rapaport Group announced its decision to pull stones graded by any EGL lab from RapNet, its vast diamond trading network, and Polygon removed reports from EGL International only.
Then came even bigger news out of Israel: the EGL labs outside of the United States would be reorganizing, homogenizing their grading practices and eliminating the EGL International brand name, all under the direction of a single, new global manager, Menahem Sevdermish.
Cummings is the attorney who handled three of the cases filed in Nashville involving EGL International grading reports. His clients settled their cases recently, though the terms of those settlements were not disclosed.
He said the goal of the lawsuit is two-fold: to shine a light on the “fraudulent practice” of selling over-graded diamonds and to recover money for consumers who might have been defrauded when they bought these diamonds.
Cummings added that while he would be involved in some aspect of the class action, his exact role is unclear at this time.