Originally from Journal of American Arbitration (JAA)

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I.Overview     

On January 1, 2005, Defendant Blockbuster, Inc. (“Block­buster”) changed its late fee policy by essentially eliminating conventional late fees.  Edwards v. Blockbuster Inc., 400 F. Supp. 2d 1305, 1307 (E.D. Okla. 2005).  The new program, called the “End of Late Fees Program” (“Program”), converted a rental into a sale when a customer would keep the product more than seven days beyond the original rental return date.  Id.  Four months after Blockbuster effectuated the Program, Plaintiff Kenneth W. Edwards challenged the Program by filing a class action suit against Blockbuster seeking to recover a restocking fee that had been charged to a customer’s account after a rental was kept more than seven days beyond the due date but returned within thirty days of the sale.  Id.  The $1.25 fee provided Blockbuster with a way to pay for the associated costs of converting the rental to a sale and back from a sale to a regular rental again.  Id.