A federal judge on Thursday rejected a proposed settlement that would have required troubled Sharper Image Corp. to distribute $19 coupons to millions of consumers who bought air purifiers alleged to be defective in a class-action lawsuit.As Sharper Image scrambles to survive a sales slump that has saddled it with huge losses, the decision by U.S. District Judge Cecilia Altonaga in Miami dealt the company another setback. The San Francisco-based tech gadget retailer had hoped to rid itself of a potentially crippling headache with the settlement.

In arguments supporting the settlement proposal, Sharper Image depicted it as the best consumers could hope for because the company is on the verge of bankruptcy, according to Altonaga's 61-page ruling.



Sharper Image has lost $113 million since January 2005.

Despite the company's woes, Altonaga decided the settlement was inadequate because consumers stood a good chance of prevailing in some of their claims if the case were to go to trial.

"While we respect the court's decision, we are clearly disappointed," Sharper Image said in a statement. "The proposed settlement was the result of substantial negotiation... and provided fair terms for all parties."

Sharper Image had estimated the settlement could be worth $60 million to the 3.2 million consumers eligible to participate. Other documents in the case estimated about $25 million of the coupons would be redeemed.

The lawsuit, filed by Manual Figueroa in 2005, alleged that Sharper Image's "Ionic Breeze" purifiers didn't remove dust, pollen and other nettlesome particles as the retailer advertised. The devices sold for several hundred dollars apiece.

Sharper Image repeatedly has stood by the Ionic Breeze's effectiveness, a position it reiterated Thursday.

The company's shares fell 44 cents Thursday finish at $3.31 after management reported September sales plunged by 39 percent.