NOTICE: This case was completed at CEI as a project of the Center for Class Action Fairness, which has become the Hamilton Lincoln Law Institute. View their case page here.
Cannon v. Ashburn is a class action involving claims that Wines ‘Til Sold Out (WTSO) sold wines with advertised “Original Prices” and percentage discounts that were deceptive because the wines were never sold at that original price, and as a result, consumers were erroneously led to believe they received a greater discount than they did.
Under the first proposed settlement, class members who submit a claim would receive “credits” in an amount between $0.20 and $2.00 that can be used to purchase wine from Wines ‘Til Sold Out through its website for a period of one year.
Although the parties failed to address the Class Action Fairness Act in their court filings, this settlement contained a number of abusive features that the Act sought to stamp out:
- Class members cannot choose cash in place of a “credit,” meaning they are required to do business with the defendant in order to recover;
- the credits are only available through a claims process;
- the credits expire in one year; and
- a maximum of $2.00 in credits can be used toward each purchase.
Claims and coupon redemption rates in low-value consumer settlements such as this are notoriously low. While class members would receive nominal benefits under the settlement, class counsel negotiated $1.7 million in fees and expenses, unopposed by Wines ‘Til Sold Out, without regard to the actual recovery by class members. The result was a settlement that impermissibly allocated the bulk of the settlement benefit to the class attorneys rather than class members.
On February 16, 2018, the Competitive Enterprise Institute objected to the proposed settlement for its severely imbalanced result and giving the attorneys a guaranteed payday that will exceed class recovery. After CEI’s objection, the parties twice amended the settlement to provide class members with a limited cash option and to ensure that counsel’s fees were proportional to class relief. Despite the improvements, on April 17, 2018, Judge Bumb denied final settlement approval in this case.
“CEI is pleased that the district court recognized its duty to protect absent class members and hold their attorneys accountable. This settlement has improved since the original settlement proposal, but we would welcome an even better deal for class members,” said CEI attorney Adam Schulman. “There are still unknowns and unresolved questions in this case, and Judge Bumb was right to reject the settlement when she didn’t get the answers she needed.”