Attorneys general from 13 states filed an amicus brief supporting the Competitive Enterprise Institute’s Center for Class Action Fairness (CCAF) in its challenge of an unfair class action coupon settlement that involves Provide Commerce, Inc., the parent company of Proflowers.com. The case, In re: Easysaver Rewards Litigation, is on appeal before the U.S. Court of Appeals for the Ninth Circuit.
In Easysaver, class counsel intentionally inflated the value of the settlement—to the tune of $38 million—in order to recover $9 million in attorneys’ fees for themselves, while providing only $200,000 to less than 1% of class members, and leaving 99.8% of class members with a worthless coupon.
“This settlement highlights the various tricks that class counsel employs to create the false perception that they are generating value for class members,” said CCAF attorney Adam Schulman. “The bi-partisan group of attorneys general agreed with CCAF that the settlement harms consumers because it gives an outsized fee to class counsel but leaves class members with coupons of dubious value.”
The vast majority of this settlement’s purported value comes from 1.3 million coupons that are not worth the alleged $20 face value due to significant delivery and handling charges and other limitations on use. The coupons involve so many limitations that class members are unlikely to use them at all: they expire in one year; can only be used on a limited number of products; and cannot be used to purchase a whole product without paying the defendant more money. The worst limitation is that these coupons—for flowers, candies and other holiday gifts—cannot actually be used for holidays like Valentine’s Day, Mother’s Day, or Christmas.
Although the coupons are worth far less than $20, and unlikely to be redeemed, the plaintiffs’ attorneys still used the fake value of the coupons to inflate the settlement’s value by nearly $26 million, boosting their takings by millions of dollars.
CCAF has successfully reversed other coupon settlements including the RadioShack class action settlement where, like this case, class counsel were more concerned about lining their pockets than providing relief to class members.
The Proflowers settlement also includes an additional $3 million in cy pres payments to unrelated parties, including local San Diego universities and the attorneys’ alma maters. CCAF argues this money should be returned to the class.
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, courts, and the general public.
Unfair settlements generally serve self-interested lawyers and third parties at the expense of absent class members, the group of people whose rights are traded away to settle a class action. Lawyers have an interest in their fees, defendants have an interest in cheaply disposing of a lawsuit, and the class’s interests can take a back seat in the process. CEI seeks to solve these problems by representing such class members pro bono and presenting judges with the other side of the argument.