Oct. 11 (Bloomberg) -- Sharper Image Corp.'s $22 million settlement of lawsuits over some of the company's air purifiers, doesn't provide enough compensation for consumers, a judge ruled in rejecting the accord.

U.S. District Judge Cecilia Altonaga in Miami said today that the settlement, which would have provided consumers with coupons worth $19 to buy Sharper Image products, wasn't a ``fair, adequate and reasonable'' resolution of the consumers' class-action case over the purifiers.

``The proposed settlement, in which class counsel receive close to $2 million in fees and class members are given a $19 coupon, is below the range of recovery in which a settlement of this case may be considered fair,'' Altonaga said an order.

The judge's 61-page ruling came the same day San Francisco- based Sharper Image, which sells products ranging from hair trimmers to exercise machines, reported that same-stores sales fell 21 percent in September, in part because of a drop in air purifier sales.

Sharper Image shares fell 44 cents, or 12 percent, to $3.31 in Nasdaq Stock Market trading. The shares, which have fallen 64 percent this year, reached a one-year low of $3.17 earlier in the day.

``While we respect the court's decision, we are clearly disappointed'' and ``Sharper Image stands behind the Ionic Breeze,'' the company said in a statement.

`Huge Victory'

``This was a huge victory for the 3 million Americans who used hundreds of their hard-earned dollars to buy a machine that was broken before they even got it out of the box,'' said Michael Tein, a lawyer objecting to the settlement.

In January, Sharper Image agreed to settle the class-action case filed on behalf of about 3.2 million people who bought its Ionic Breeze air purifiers. Consumers complained the devices didn't remove dust and other particles from the air as promised.

Company officials disputed those claims, citing scientific studies that they said validated the purifiers' performance. Sharper Image officials agreed to settle the claims in exchange for giving consumers coupons worth $19 each. The coupons could only be used to buy company products.

Sharper Image also agreed to pay $1.8 million in legal fees to the consumers' lawyers. The company's attorneys told Altonaga at a hearing that the settlement would cost Sharper Image as much as $22 million if all the coupons were redeemed.

Short of Cash

Lawyers for the company and the settling consumers argued Sharper Image's business woes left it short of cash and unable to pay a larger settlement.

In 2005, Sharper Image suffered its first loss in 15 years. The following year, its sales fell 21 percent. The company reported today total sales dropped 39 percent to $19.6 million in September, down from $31.9 million in September 2006, according to a company statement.

Earlier this week, the company's chief accounting officer, Daniel W. Nelson, left. The company said in 2006 that it would re-state three years of earnings following an internal probe of stock-option grants. Sharper Image ousted founder Richard Thalheimer that year following pressure from investors.

Objectors to the settlement, who included attorneys general from 35 states, said the deal didn't provide enough benefit to consumers and criticized the payment of $1.8 million in fees to plaintiffs' attorneys.

``The attorneys general have objected at every turn to each version of the parties' proposed coupon settlement,'' the judge noted.

David Aronoff, a lawyer representing purifier buyers who sought to settle the case in exchange for the coupons, didn't return calls for comment on whether they'd go forward with their claims.

The case is Manuel Figueroa v. Sharper Image Corp, 05- 21251. U.S. District Court, Southern District of Florida (Miami).

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net.

Last Updated: October 11, 2007 21:23 EDT