Ernst & Young and its former consulting unit, Capgemini, have agreed to pay a combined $20 million to settle a class-action lawsuit in which clients sued them for overcharging them for travel expenses.
Miller County, Ark., Circuit Judge Kirk Johnson gave preliminary approval to the settlements, under which E&Y will pay $18 million, while Capgemini will pay $2 million, according to Jeffrey Angelovich, an attorney for the plaintiffs and a partner at the Texas law firm Nix Patterson & Roach.
The agreement resolves a lawsuit originally filed in October 2001, which alleged that the two firms, along with PricewaterhouseCoopers, KPMG and its former consulting unit, BearingPoint, overbilled clients in excess of $100 million for travel-related expenses by billing clients for the full face amount of costs, while at the same time receiving back-end rebates from the vendors. The complaint also alleged that the firms conspired to coordinate their travel departments, and to keep the existence of the rebates from their clients.
KPMG and BearingPoint resolved their portion of the class-action suit back in April, by agreeing to separate settlements of $17 million each, while PwC settled in late December for $54.5 million. All of the firms denied any wrongdoing and all have discontinued back-end incentive payments.
As part of the settlements, Angelovich said that current clients will get certificates that can be used toward the cost of continued services, while former clients will receive certificates redeemable for cash at 60 percent of face value. All of the firms also agreed not to accept back-end rebates for five years unless they pass them on to clients or disclose them.
