The Competitive Enterprise Institute objected today to a class action settlement in Cannon v. Ashburn Corp. that illegally awards immediate attorneys’ fees totaling $1.7 million while offering class members who file a claim only $0.20 to $2.00 “credits” toward wine purchases on the defendant’s website. This leaves a severely imbalanced result, giving the attorneys a guaranteed payday that will exceed class recovery.
“More than a decade ago, Congress passed the Class Action Fairness Act (“CAFA”), in part, to snuff out abusive settlements in which class counsel receives handsome cash payments and their clients receive only low-value coupons. As a result, such settlements are far less common today,” said Adam Schulman of CEI. “But sometimes, plaintiffs still try to sneak coupons settlements through without even informing the court of CAFA's existence. Cannon is one such case. If class counsel gets their way, they will walk away with $1.7 million and the class members will be stuck with $2 credits off future wine purchases.”
The suit alleges that defendant, operator of the “Wines ‘Til Sold Out” website, was engaging in false sales by advertising a discount from an original price at which the wines were never sold. The settlement would unacceptably allow class counsel to capture the majority of the concrete settlement benefit, leaving most class members with nothing other than a coupon subject to severe usage restrictions.
Read more about the case here.
ABOUT: The Competitive Enterprise Institute’s Center for Class Action Fairness represents class members against unfair class action procedures and settlements. Originally founded by Ted Frank in 2009, the center has won millions of dollars for consumers and shareholders and won landmark precedents that safeguard consumers, investors, and the courts.