What was the total settlement amount that Big O Tires agreed to pay in the Fratilla case?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Fratilla, Brian Jeffrey v. Big O Tires, LLC. Case No. 37-2013-00028542-CU-BT-CTL, Superior Court of California, San Diego County. A purported class action lawsuit was filed on behalf of customers of Big O alleging that Big O's former tire protection program ("Former TPP") is actually an insurance contract under California law which required Big O to register as an insurer, comply with various formatting requirements and disclosures, and notify consumers that the policy was cancellable within 60 days. Other claims relating to the collection of sales tax were dismissed by the Court on February 6, 2015. On February 11, 2015, the Court certified a class consisting of "all persons who, at any time after January 2, 2009, purchased a Former TPP from Big O in the State of California who did not make a claim under the Former TPP that was honored by Big O." In light of Plaintiff filing a motion to file a Third Amended Complaint on March 10, 2016 so as to add a named plaintiff and assert a claim of misrepresentation, the Court decertified the existing class as a condition to such amendment. After a tentative ruling denying class certification, the Court reconsidered and certified the class. The parties reached a settlement under which Big O agreed to pay $2.05 million in total, which the Court has approved by order dated August 24, 2018.
Source: Item 3 — LITIGATION (FDD pages 12–14)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the company was involved in a prior action, Fratilla, Brian Jeffrey v. Big O Tires, LLC. This case was a purported class action lawsuit filed on behalf of customers, alleging that Big O Tires' former tire protection program was effectively an insurance contract under California law, which required Big O Tires to register as an insurer and comply with specific regulations. The court initially dismissed claims related to sales tax collection on February 6, 2015. A class was certified on February 11, 2015, consisting of individuals who purchased the Former TPP from Big O Tires in California after January 2, 2009, and did not make a claim that was honored by Big O Tires.
However, the class certification was later decertified when the plaintiff filed a motion to amend the complaint. The court eventually reconsidered and recertified the class. Ultimately, Big O Tires reached a settlement with the plaintiffs.
Under the settlement terms, Big O Tires agreed to pay a total of $2.05 million. The court approved this settlement on August 24, 2018. This resolution means that Big O Tires avoided further litigation and potential damages, but it also incurred a significant financial obligation to settle the claims related to the tire protection program.