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Feb. 29, 2024

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Thrift store chain case was no bargain for Washington attorney general; legal fees top $4.2 million

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FILE - Washington Attorney General Bob Ferguson is seen, April 27, 2023, at the University of Washington's Hans Rosling Center for Population Health in Seattle.
FILE - Washington Attorney General Bob Ferguson is seen, April 27, 2023, at the University of Washington's Hans Rosling Center for Population Health in Seattle. (AP Photo/Lindsey Wasson, File) Photo Gallery

SEATTLE — Washington Attorney General Bob Ferguson’s long-running legal case against the thrift store chain Savers Value Village turned out to be no bargain, as the state has been ordered to pay the company nearly $4.3 million in legal fees.

King County Superior Court Judge David Whedbee issued the award on Tuesday, eight months after the state Supreme Court unanimously rejected the attorney general’s claims that marketing practices by the thrift store chain were deceptive. The judge called the state’s lawsuit “needless.”

“Defending and fully prevailing in this lawsuit was burdensome and costly,” Richard Medway, Savers Value Village general counsel, said in an emailed statement. “But the result underscored the many positive aspects of our unique business model, which benefits the environment, consumers, and our many nonprofit partners.”

Savers Value Village, which is based in Bellevue, Washington, and operates more than 300 stores in the U.S., Canada and Australia, said it would donate more than $1 million of the award to charities.

The attorney general’s office began investigating the company in late 2014 and, after Savers Value Village declined to pay millions of dollars to settle the investigation, Ferguson — a Democrat who is now running for governor — sued.

The state alleged that the thrift chain had created an impression that it was a nonprofit or charitable organization and that purchases at its stores directly benefited charities.

In reality, it’s a for-profit company that pays charitable organizations for donated goods, but it does not provide the charities a direct cut of retail sales. Savers Value Village paid $580 million to charitable partners globally in the five years ending in 2022 and kept 3.2 billion pounds of goods out of landfills, the company said.

Two of the major charities it works with in Washington — Northwest Center, which supports people with disabilities, and Big Brothers Big Sisters of Puget Sound — had urged the attorney general’s office to drop the case.

While commercial speech is given less protection than other messages under the First Amendment, Savers Value Village’s marketing was so wrapped up in promoting the charities it worked with that its practices were entitled to full constitutional protection, the Supreme Court ruled in February.

Ferguson’s office urged the judge not to award any legal fees, arguing that doing so would chill the office from bringing difficult consumer protection cases.

Whedbee said the attorney general’s office acted in good faith, but the way the office handled the case — including ignoring requests by the company’s attorneys to figure out what it was supposedly doing wrong — had drawn out the matter and run up legal costs for the company.

In an emailed statement, Brionna Aho, a spokeswoman for the attorney general’s office, said the lawsuit helped educate the public about the company’s for-profit status and prompted Savers Value Village to make some changes.

The company agreed to register as a commercial fundraiser, after previously being told by the secretary of state’s office that it did not need to. By 2015 it also posted signs in its stores disclosing its status as a for-profit commercial fundraiser and had employees make periodic in-store announcements to that effect.

Aho said the case was the first the attorney general’s consumer protection division had lost since at least 2012, and that no taxpayer money would be used to pay the legal fees. Instead, the money will come from a reserve account kept in case of adverse legal judgments, which is funded by awards from successful cases brought by the attorney general.

The state’s public interest litigation recovered more than $1.3 billion last year alone, she said.

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