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In re EasySaver Rewards Litigation class action settlement

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In In re EasySaver Rewards Litig., No. 09-cv-2094 (S.D. Cal.), the attorneys (including Point of Law favorites Baron & Budd) and the class representatives have proposed a settlement agreement where they will collect $8.93 million, while the class will get less than $3 million in cash. The attorneys justify this because they're giving out about $40 million face value in coupons. Instead of complying with the Class Action Fairness Act's requirement that coupons be valued at redemption value, the trial lawyers claim that they're "conservatively discount[ing]" the coupons to 85% of their face value—though limited-use coupons like these more typically have a redemption rate of about 1 to 3%. (Who is going to use a $20 coupon for Internet flower delivery that can't be used on Valentine's Day or combined with any other coupon?) Defendants are barred by the settlement from taking a position on the value of the coupons. Even if one assumes a generous 10% redemption rate, the attorneys come out ahead of their putative clients. To top it all off, the settlement violates Nachshin v. AOL's restrictions on cy pres awards: local charities get the money, including an alma mater of one of the lead attorneys.

Today is the preliminary hearing on the question whether the Southern District of California judge will permit the settlement to go forward. One hopes that the judge unilaterally recognizes his duty to protect class members from violations of the Class Action Fairness Act, since the parties' briefing doesn't mention the applicable law.

And if the class does get notice, one hopes that a class member recognizes the ripoff and considers contacting a non-profit attorney willing to vindicate the class's interests. First the class is ripped off with $15/month loyalty programs, and then their own attorneys aggregate the majority of the value of the settlement for themselves.

The proposed class definition is "All persons who, between August 19, 2005 and the date of entry of the Preliminary Approval order, placed an order with a website operated by Provide Commerce, Inc. and were subsequently enrolled by Regent Group Inc. dba Encore Marketing International, Inc. in one or more of the following membership programs: EasySaver Rewards, RedEnvelope Rewards, or Preferred Buyers Pass." There are apparently about two million class members.

1 Comment

they are a rip off

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.