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Mangy Peasant
Social climber
Riverside, CA
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May 19, 2011 - 02:28pm PT
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atchafalaya, ROX, the point of this thread is not the co-opiness of REI. It is their LIABILITY for selling their own defective product. Plenty of other threads to take that convo to.
The courts have already determined liability. We can agree or disagree with the courts but, unless anyone here is lawyer specializing Oregon product liability, we are just arguing from the perspective of our personal ignorance of the law.
Of course there is always the court of public opinion, which is what this thread is really about. And the perceptions of the co-opiness, and the size of the stores, and the nature of the products, etc. have a big influence on how people personally judge this situation.
Tell the same story and with the same facts, but change the name of the company, and you might get a very different set of opinions.
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reddirt
climber
PNW
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Topic Author's Reply - May 19, 2011 - 02:29pm PT
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Gene: "If the fork was another company's other than REI, then that company should be liable...."
I meant if it were a non-Novara brand fork on a non-Novara brand bike... even if purchased from REI... then that non-Novara brand would/should/could be liable & REI is merely a conduit, not the owner of that brand.
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Gene
climber
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May 19, 2011 - 02:30pm PT
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Reddirt,
Gotcha!
g
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Ghost
climber
A long way from where I started
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May 19, 2011 - 02:35pm PT
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Thus, those blaming the insurance company are on target. While I have plenty of issues with REI, which is rapidly becoming a supplier I love to hate (despite being a member since 1967 or '68), I don't think REI could do too much here.
John, even assuming that you (and others) are correct in assuming that REI's hands are tied with regard to the insurance company's decision to appeal, I disagree with your last comment.
While REI may not have been able to prevent its insurer from acting as it did, REI certainly could have done many things to show that it actually cared. If it could not legally pay the woman's medical bills, it could have started, or backed, some kind of campaign to help her. Or taken any number of other steps to show that it understood the difference between legal and moral obligations.
By hiding behind its insurance contract it has made a very public statement that it doesn't give a sh#t about what happened to Monika Johnson. Something which could just as easily have happened to your daughter, btw.
I'm no REI hater, but this is not right.
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Port
Trad climber
San Diego
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May 19, 2011 - 02:41pm PT
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A privately owned corporation? If so, then who owns the assets?
Are the profits distributed to anyone other than the co-op members?
If it were a true COOP, there would be a true profit sharing program. It would come in the form of a dividend. What REI has cleverly done is to call their "profit sharing program" a "dividend." BUT it's neither. The "dividend" is based ONLY on what YOU bought, not the profits in total. In a true COOP, members share in profits and income is reinvested, or issued in a dividend depending on the goals of the organization. They may even choose to cut prices. In reality, REI does not distribute profits. Unless you consider 10 percent to be "profit sharing". It sounds more like a marketing budget to me.
My understanding is that REI uses the "member fees", the initial $20, to expand the company as rapidly as possible. The 10 percent you get back, is really not that much considering that prices at REI are high is comparison to online retail and other shops.
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Dolomite
climber
Anchorage
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May 19, 2011 - 02:52pm PT
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I'll defer to Big Steve, whose comments on the original poster's link are far better informed than any here. No dog in this fight one way or the other, but how is dying when a cornice breaks off causally connected to a bike accident?
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Mighty Hiker
climber
Vancouver, B.C.
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May 19, 2011 - 02:54pm PT
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Isn't it all Obama's fault? :-)
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JEleazarian
Trad climber
Fresno CA
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May 19, 2011 - 02:55pm PT
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John M,
The only other option for REI would be to self-insure, which I think would be irresponsible. Insurance companies don't allow third parties the right to direct them to settle because of moral hazard issues. If I like the plaintiff that I injured, I could collude with the plaintiff and force the insurance company to overpay. And yes, that sort of thing still happens.
I think as a matter of responsibility and good business, the better approach for REI would have been to pay Monika from its own funds, at least for her medical expenses, immediately and without question, then sue the manufacturer for reimbursement.
As far as I can tell, the appeal is over the trial court's decision to sever the case of damages that Monika suffered from the issue of who pays. Doing so does two things: It gets Monika the right to recover her damages sooner, and it puts both seller and manufacturer on the hook for paying her, which is essentially the proper outcome under standard tort law.
It seems to me that the appeal, in attempting to force one trial rather than two, is really either an unconscionable attempt to delay the payment of damages, or an attempt to change product liability law to parallel modern comparative negligence law in California, where the plaintiff can recover from the defendant only that amount caused by that particular's conduct. This would be a change in current law, and would, IMHO, be to the detriment of consumers generally.
The philosphy behind strict liability for defective products (whose seminal case in California arose in my home town [Escola v. Coca-Cola Bottling Company of Fresno]), is to spread the cost of injuries suffered from product defects among all users of the product. Thus, in a case where we are not sure who was really at fault, we allocate the cost to the seller and manufacturer, thus making the cost of those injuries a cost of making and selling the product. This cost gets reflected in the price.
If we, instead, tried to parcel out fault when, by assumption, we don't know for sure who is at fault, all we do is delay recovery for the injured party, and increase the administrative cost by adding another layer of lawyering. REI (and its insurer) lost deservedly, based on what I read.
John
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Mangy Peasant
Social climber
Riverside, CA
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May 19, 2011 - 02:58pm PT
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In reality, REI does not distribute profits.
Either the profits go to the members, or they go somewhere else. There is no evidence that anyone but members are receiving profits (which would be fraud.)
Is there a big pile of money accumulating somewhere that should be going back the the members?
So they use their excess cash to grow the business, open more stores, and solicit more members. Which means the dividend amount per member doesn't change, but the number of members grows. But it's still members that get the dividends.
It almost sounds like you are suggesting that they try to pay a bigger dividend to existing members every year. Would that be any more fair?
The dividend system based upon member purchases is transparent and equitable. All members have input into the board selection, and thus ultimately the management decisions.
Somehow people think that once a co-op reaches a certain size, it is no longer a co-op. Why?
In a true COOP, members share in profits and income is reinvested, or issued in a dividend depending on the goals of the organization.
The way you describe REI in your post sounds like it matches the above requirement. What are they doing differently than a "true" co-op?
It's a co-op. A very large co-op that is managed much like a large department store chain, but it's still a co-op.
BTW: I don't have any relationship with REI, have never worked there, and don't really even shop there very often. Just think a lot of the hate is based upon myths.
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originalpmac
Mountain climber
Anywhere I like
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May 19, 2011 - 03:05pm PT
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"REI came to ABQ and all the mom and pop (3 at the time) climbing/outdoor shops closed down.
Forest Service proposed Fee system, REI was all on board; now sells the forest service pass from the customer service desk."
Pretty spot on there. I didn't know about the fees with the FS, but they put an REI in downtown Santa Fe, which for some reason allowed a big chain in, when all of the rest are out on Cerrillos. The SF REI is within a minute walk to the local shop Sangre de Cristo mountain works, a fine shop owned a run by fine people, not to mention the other shops that specialize in downhill skis, or all the local bike shops.
Not trying to drift the thread away from REI's liability, but I think they overall manner in which they do business tells us a lot about what kind of company they really are. I personally haven't shopped there in a couple of years, since I saw them move in on Santa Fe. The Wal-Mart of the outdoors.
And yes, with my limited (understatement) understanding if liability insurance for corporations, I think they should stood by there sh#t. Flaunting all the co-op bullshit and their down to earth image, then not helping out a human with a legitimate claim.. just bull sh#t.
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Anastasia
climber
hanging from an ice pick and missing my mama.
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May 19, 2011 - 03:09pm PT
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I am just really sad about Monika Johnson... What horrible bad luck. First to suffer from this accident and later to lose her life in the mountains. If anything, we should at least sit still for five minutes in her honor.
AFS
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rectorsquid
climber
Lake Tahoe
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May 19, 2011 - 03:16pm PT
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I DON'T see ANY difference...
At the end of the year, members get 10% of that money back.
Beyond that, corporate and insurance law and techniques are not within my grasp so I can't comment beyond saying that REI probably gets sued tens or hundreds of times per year and if they just settled everything, they would go out of business. Business is business and that's how it works.
I think every one bashing REI should investigate all of the businesses with whom they do business. I would guess that they would find that lots of companies that they don't bash have the same problems and do the same things in court.
Dave
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JEleazarian
Trad climber
Fresno CA
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May 19, 2011 - 03:24pm PT
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My disgust with REI might be more style than substance. I just dislike the yuppification that occurred to its product line.
I like to keep my old REI catalogs to compare with the modern ones. The old ones show a company that sold a bit of clothing, and lots of climbing and backpacking equipment. The new ones show a company that sells lots of clothing, along with a smattering of other stuff. The local REI devotes more space to suitcases (called by it travel packs) than it does to climbing.
Lots of hat, but very little cattle.
John
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Port
Trad climber
San Diego
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May 19, 2011 - 03:25pm PT
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Hey Mangy,
Here's a good piece on REI in the seattleweekly.
http://www.seattleweekly.com/2003-06-18/news/who-owns-rei/
It explains that REI is only a partial coop, thus they do not have to release any financial statements. There is no way to tell who owns the company, but it is a company with profits that are not fully distributed to members.
I think its very telling that REI wont release who owns the company, or the salaries of their executives. Why not?
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Mangy Peasant
Social climber
Riverside, CA
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May 19, 2011 - 03:38pm PT
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Yeah I read that years ago and failed to become outraged. Lots of personal backstory and very few facts.
It's possible that there are some mild shenanigans going on - but there is not much hard evidence in the story to support even that idea.
But where the article completely fails is that it does not answer the title question: "Who owns REI?" Same question I have been asking in this thread.
Who's to say this one journalist didn't embellish some facts? They do that sometimes. Can't sell a story about the "scandal" he didn't discover.
The references to Enron are ridiculous, btw.
Until someone proves that there is fraud taking place, I'm not changing my shopping habits.
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Port
Trad climber
San Diego
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May 19, 2011 - 03:40pm PT
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Thanks Gene!, looks like they responded.
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graniteclimber
Trad climber
The Illuminati -- S.P.E.C.T.R.E. Division
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May 19, 2011 - 03:54pm PT
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I think as a matter of responsibility and good business, the better approach for REI would have been to pay Monika from its own funds, at least for her medical expenses, immediately and without question, then sue the manufacturer for reimbursement.
REI, are you paying attention?
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Jingy
climber
Somewhere out there
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May 19, 2011 - 04:01pm PT
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the problem, as far as I can tell, is the American system that requires a co-op like REI to go for profits as much as it does.
Their response, seems to be in line with many businesses in the US (check out BP for "who is responsible when things go bad" for further discussion on the subject).
I believe that had there been adequate quality controls in place at the manufacturers this would not have happened.
I believe that if REI had sub-contracted the work for their Named bikes to a reputable manufacturer this may not have happened.
I believe that if REI really wanted to resovle the issue, they would have paid the costs associated with the medical/dental/wage expenses and then purued the manufactures for reimbursment of their losses, since REI and the manufacturer have all the time in the world to hash out their differences, while humans do not.
Shameful action by REI, horrible/shoddy manufacture of the bike, sad new for the end user.
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graniteclimber
Trad climber
The Illuminati -- S.P.E.C.T.R.E. Division
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May 19, 2011 - 04:06pm PT
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There are plenty of companies that will pay actual expenses. There is more resistance when victim asks for pain and suffering, emotional damages or punitive damages.
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