This week, a judge in the U.S. District Court for the Northern District of Illinois approved resolution to a long-running class action over Southwest Airlines’ “premium drink” coupons. The resolution is a win for class members and the Competitive Enterprise Institute’s Center for Class Action Fairness.
In 2012, plaintiffs settled with Southwest in an agreement that would have provided $3 million to class counsel and only drink coupons to class members who filed claims. The Center objected, and the fee award was reduced to $1.65 million. The Center appealed, as did class counsel, seeking to obtain a larger fee award in an unsuccessful cross-appeal. In 2015, the Seventh Circuit Court of Appeals affirmed the settlement, but further reduced attorneys’ fees due to a potential conflict of interest. On remand before the district court, class counsel sought an additional $1.35 million in fees and the court granted an award for $400,000. The Center objected to this supplemental fee request and sought disgorgement of the money on behalf of the class. The district court partially denied the Center’s request in June 2016, so another appeal was filed.
Last week, the Center agreed to dismiss its appeal because Southwest agreed to triple the relief provided to class members and class counsel agreed to reduce their supplemental fee request by $200,000
“This Southwest class action is a perfect example of trial attorneys abusing the system at the expense of consumers. In the original settlement, class members would have only received $412,815 in settlement coupons, a fraction of the nearly $3 million their attorneys requested in fees,” said Melissa Holyoak, senior attorney with CEI’s Center for Class Action Fairness. “But after our objection, and as a result of this settlement, we’re pleased that class members will receive an additional $825,630 in coupons—tripling their relief. And, the plaintiffs’ lawyers receive only $227,647 from the $1.35 million unwarranted and outrageous supplemental fee request.”
About CEI’s Center for Class Action Fairness
CEI’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, courts, and the general public.
Unfair settlements generally serve self-interested lawyers and third parties at the expense of absent class members, whose rights are traded away to settle a class action. The class lawyers want their fees and the defendants want to cheaply and quickly end the lawsuit, but the class’s interests often take a back seat in the process. The Center seeks to solve this problem by representing class members pro bono and presenting judges the other side of the argument. When the Center prevails, lawyers get less, class members get more, and the rule of law is strengthened.