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Opening brief in In re EasySaver Rewards Litigation

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We've previously discussed the abusive coupon settlement in In re EasySaver Rewards Litigation. In February, the district court approved the settlement and an $8.85M attorney award, and the Center for Class Action Fairness filed an appeal on behalf of its objector client. Friday, we filed our opening brief, with the following issues presented:

1. The Class Action Fairness Act ("CAFA") expressly contemplates and sets forth rules for coupon settlements that include relief other than coupons. 28 U.S.C. §1712. Did the district court err as a matter of law in holding that CAFA did not apply to a coupon settlement because it also paid class members a total of about $225,000 in cash?

2(a). 28 U.S.C. §1712 requires that a court calculating an attorney fee for a "proposed settlement in a class action [that] provides for a recovery of coupons to a class member" to value the coupons "based on the value to class members of the coupons that are redeemed." Accord In re HP Inkjet Printer Litig., No. 11-16097, -- F.3d --, 2013 WL 1986396 (9th Cir. May 15, 2013). Did the district court commit an error of law in determining attorneys' fees without determining the "value to class members of the coupons that are redeemed" and ascribing a $20 value to a coupon that was not stackable with already existing discounts?

2(b). In the alternative, if the Class Action Fairness Act does not apply, did the district court commit clear error in finding that the value of the settlement was $38 million and awarding $8.85 million in attorney awards, when the class would receive only about $225,000 in cash plus coupons that were unlikely to be redeemed and even less likely to be redeemed in such a manner to provide the full face value to class members?

3. Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir. 2011), held that it was error for cy pres to favor local charities when there was a national class, and criticized the possibility of conflicts of interest between class counsel and cy pres recipients. Did the district court commit an error of law or abuse its discretion in approving a cy pres component of a settlement involving a national class that favored the alma mater of class counsel, and only distributed funds to local San Diego-area institutions?

4(a). Under Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir. 2011), a settlement fund "belongs solely to the class members." Did the district court err as a matter of law in approving a settlement that provided over $3 million for cy pres but only about $225,000 for class members when there were class members who had not been fully compensated and 99.8% of the class had not made claims?

4(b). In the alternative, if Klier does not apply, In re Baby Products Antitrust Litig., 708 F.3d 163 (3d Cir. 2013), requires a district court to consider the ratio of cy pres to actual class recovery when evaluating the fairness of a settlement. Did the district court err as a matter of law in rejecting Perryman's request that this factor be considered where cy pres recipients would receive more than ten times as much cash as the class would and class counsel would receive more than forty times as much?

As always, the Center is not affiliated with the Manhattan Institute.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.