The organizer of the canceled HIMSS20 conference will pay $2.8 million to settle a lawsuit brought by HatchMed and other show exhibitors who complained that they received no refund when the show was called off.
In the class-action suit, companies alleged Chicago-based Healthcare Information and Management Systems Society (HIMSS) committed a "cash grab" by canceling the industry trade show and pocketing the show fees.
HIMSS canceled last year's global health conference in March 2020 just days before it was slated to start due to concerns about COVID-19.
HIMSS organizers took a lot of heat on social media and from attendees for planning to go ahead with the conference under the shadow of pandemic fears. Others were frustrated that HIMSS canceled the conference so late.
At the time, HIMSS originally announced no refunds, which drew a lot of ire from exhibitors and registrants. Attendees and exhibitors complained about a lack of communication from HIMSS organizers and a lack of available refund options.
HIMSS then adjusted its policy and announced in April that it would provide partial credits for the HIMSS21 and HIMSS22 events.
In June 2020, HatchMed Corp., a small business that sells medical devices, beds, and stretchers, and several other companies that paid fees to attend the 2020 show filed a class-action lawsuit.
HatchMed and other exhibitors allege that HIMSS used COVID-19 as a "transparent opportunity for a cash grab" and unilaterally kept exhibitors’ money "without basis," according to the suit, which was filed in the U.S. District Court for the Northern District of Illinois.
HIMSS denies any liability and wrongdoing in the litigation.
In a statement, Karen Groppe, senior director of strategic communications at HIMSS, confirmed the settlement agreement.
"Documents reflecting the negotiated resolution have been filed with the court for preliminary approval and HIMSS looks forward to finalizing the matter. Because this is still an active legal case, HIMSS has no additional comment at this time," she said in the statement.
In the suit, HatchMed said it paid more than $11,000 in November 2019 to reserve floor space to exhibit its products during the 2020 conference, according to the company's suit. Other businesses looking to participate in the five-day show executed similar contracts, it claimed.
The HIMSS conference typically attracts 1,300 exhibitors each year, according to the suit.
HIMSS20 was scheduled to start March 9 and organizers announced March 5 that the show would be canceled after the World Health Organization (WHO) and others declared COVID-19 a global pandemic.
"However, unlike other industry-wide tradeshows, HIMSS decided to utilize its cancellation as an unauthorized cash grab, as it unilaterally determined to keep the money that its exhibitors paid," HatchMed's suit claimed.
That decision breached the contracts HIMSS entered with HatchMed and at least 100 other exhibitors, according to the suit.
During a remote hearing, U.S. District Judge Martha Pacold said the parties had presented an "extensive" and "thorough" argument for granting the deal preliminary approval, Law360 reported. HatchMed's counsel, Peyton Healey of Hedrick Kring PLLC, told Law360 on Friday that he and his client were "very excited" to get it approved.
"We think that we've obtained a good result for the class that really does get them a significant benefit that will be useful at the end of the day," Healey said, Law360 reported.
According to the settlement motion, lawsuit class members have two options: they can apply a 50% credit of their HIMSS20 exhibitor fees to HIMSS21 and another 10% for HIMSS22, or take a 20% cash refund of HIMSS20 fees along with a 30% credit of those fees applied toward HIMSS21 and 10% applied toward HIMSS22
The cash refund will come from a $2.8 million cash fund provided by HIMSS, the settlement states.
HatchMed is represented by Peyton Healey of Hedrick Kring PLLC and Nicholas Peters and Nicole Little of Fitch Even Tabin & Flannery.
HIMSS is represented by Mark Mester, Kirsten Caroline Lee, and Robert C. Collins III of Latham & Watkins.
The HIMSS21 was pushed back to Aug. 9-13 in Las Vegas and will feature both an in-person event and an online component.
Registration for the 2021 event is now open.
Close to 10,000 peak hotel rooms have been reserved in Las Vegas for the August dates, according to HIMSS. The HIMSS21 exhibitor list shows 417 companies have committed to being on the show floor.