If a customer ordering on line at Red Envelopes or ProFlowers or some related sites wasn't unusually careful, he or she might find themselves checking boxes to join and be billed monthly for Easy Saver Rewards, a service that wouldn't have been able to obtain subscriptions through normal channels. This resulted in a class action that has settled, but the vast majority of the benefits to class members are coupons of limited application. Though the parties claim the coupons to be worth $20 face value, the reality is that they're not stackable with standard discounts the defendant uses. Thus, someone buying a $70 jewelry order from Red Envelope has a choice of a 30%-off coupon or a $20-off coupon—making the $20 coupon worse than worthless for that particular purchase. Nevertheless, the class counsel is requesting a 25% award—double their lodestar—based on the face value of the coupons, rather than the redemption rate. This artificial inflation of the settlement value swipes millions of dollars that would otherwise go to class members. Class counsel try to get away with this plain violation of the Class Action Fairness Act restrictions on coupon settlements by never using the word "coupon" in the settlement agreement, instead calling the coupons credits.
Furthermore, despite the instruction in Nachshin v. AOL that cy pres in a national class go to national charities, cy pres is instead allocated to local universities, including the alma mater of several of the attorneys involved.
The Center for Class Action Fairness has objected on behalf of a class member. The case is In re EasySaver Rewards Litig., No. 09-cv-2094 (S.D. Cal.).
As always, the Center is not affiliated with the Manhattan Institute. Earlier.