Skip to main content

Search

Consumer Class Actions: 14.9.2 Likelihood That Coupons Will Be Redeemed

The likelihood that coupons will be redeemed is an essential factor in determining the viability of a coupon settlement. If few class members ever benefit from a settlement, it can hardly be viewed as a reasonable one for the class as a whole. Class counsel is well advised to be wary of a coupon offer because the defendant may be counting on a low redemption rate. The defendant will usually be in a superior position to predict the ultimate redemption rate and coupon benefit to the class, so its preference for a non-cash settlement should be viewed with skepticism.

Consumer Class Actions: 14.9.4 Attorney Fees in Coupon Settlements

One of the major changes produced by the Class Action Fairness Act of 2005 (CAFA) involved new requirements regarding attorney fees in coupon settlements for cases filed in federal court on or after its effective date of February 18, 2005.237 The discussions in Congress that preceded the passage of the CAFA are enlightening as to the motivation for the changes. For example, a Louisiana senator lamented:

Consumer Class Actions: 14.10.3 Relationship of Cy Pres Recipient to the Class

The cy pres recipient should be tied as closely to the class as reasonably possible. Moreover, the intended use of such funds should be somehow related to the injury suffered by the class and the purposes of the litigation. In consumer class actions, the funds could be used for consumer protection by consumer advocacy or education organizations.280 For example, in Vasquez v.

Consumer Class Actions: 14.10.5 Responsibilities of Cy Pres Recipients

If the defendant or the court is concerned about the cy pres recipients fulfilling their role, counsel may have to work with the cy pres recipients to obtain assurances that they will meet the purpose of the settlement distribution. If appropriate, counsel may have to insist that the performance of recipients of a cy pres award strictly comply with the plan proposed to the court and should enter into memoranda of understanding to that effect with the recipient organizations.

Consumer Class Actions: 14.10.6 Attorney Fees and the Value of Cy Pres Awards

Most courts calculate attorney fees based on the entire settlement fund, including the cy pres award.318 Courts, however, have scrutinized how cy pres awards are valued for the purpose of calculating fees.319 Courts may determine that the requested attorney fees are excessive if the actual value of the cy pres award is questionable.320 In In re Baby Products Antitrust Litigation, the Third Circuit deemed it

Consumer Class Actions: 14.11.2 Lump Sum Offers

Often the defendant will negotiate settlement of the class fund and fees by offering a lump sum for the entire case and leaving it to the plaintiff’s attorney to determine what amounts should comprise the class fund and what should go towards the attorney fee award. The defendant’s interest lies in its total dollar exposure for settlement and not in how that money is divided between the class and the attorneys representing the class.

Consumer Class Actions: 14.11.4 Quick Pay Provision

Class counsel have increasingly sought to negotiate a “quick pay” provision, wherein the defendant agrees to pay all or part of the class counsel’s fees upon final approval of the settlement but prior to the filing of or resolution of any appeals.342 Defendants may agree to such a provision as a tool to be used against so-called “professional” or “serial” class action settlement objectors.343 Such objectors often file meritless appeals in the hopes that the consequential delay in class couns

Consumer Class Actions: 14.13 Drafting the Proposed Settlement and Related Documents

The first step after a settlement in principle has been reached is to draft the settlement agreement (sometimes called a stipulation of proposed settlement), which sets out the terms of the settlement, states the consideration for settlement (including how the benefits to each class member will be calculated, when they will be paid, and the nature of the release to be given the defendant), indicates whether there is any security for payment, and provides for entry of judgment upon settlement as well as for what will happen in the event the settlement is not approved.

Consumer Class Actions: 18.1.1 Overview

The representative nature of class actions raises difficult questions about the potential res judicata effect of a class action judgment on the ability of unnamed class members to bring later claims against the same defendant. The term “res judicata” is used here to mean “claim preclusion”—that is, that a person may be barred from proceeding with the same cause of action and all claims that were or could have been brought in support of such cause of action.

Consumer Class Actions: 18.1.2 No Res Judicata Without Adequate Representation

Non-parties are ordinarily not bound by prior judgments. An exception exists when there is “privity” between the non-party and a party to the previous action.6

In class litigation, privity between the class representative—who was a party to the prior class case—and absent class members exists only when the prior case was certified by the court to proceed as a class action and the class representative acted as an adequate representative of the class members’ interest.7

Consumer Class Actions: 18.1.3.1 To Bind Class Members, Notice Must Be Sufficiently Informative and Disseminated in a Reasonable Manner

A special due process requirement before a class action judgment can bind an absent class member is that there must be proper notice of the action and, at least when claims for money damages are involved, an opportunity to “opt out.”20 Thus, a prior class action may not foreclose subsequent cases raising the same claims if class members in the first class action were not properly notified of the action.21

Consumer Class Actions: 18.1.3.2 Opting Out Avoids Res Judicata Bar

As noted above, the right of class members to opt out is a prerequisite to the application of res judicata to bar their subsequent claims arising from the same cause of action—at least for claims certified under Rule 23(b)(3) seeking damages.29 Those who in fact elect to opt out are not barred by res judicata from subsequently pursuing claims of any kind.

Consumer Class Actions: 18.1.6 Effect of a Class Action Judgment on an Individual’s Uncertified Claims That Theoretically Could Have Been Brought in a Prior Class Action

A class action generally will encompass only those claims appropriate for class certification, leaving out individual claims that may not be appropriate for class action treatment. One or more plaintiffs may later seek to bring, in another court, a claim against the class action’s defendant that arises from the same events that gave rise to the class claim. The defendant is likely to protest that the subsequent claim was extinguished by the prior class action.

Consumer Class Actions: 18.1.7 Framing the Certification Motion and Notice to Avoid Overbroad Res Judicata

Under Cooper, res judicata will not preclude subsequent litigation of uncertified individual claims when the district court “pointedly refuse[s] to decide [these] individual claims.”65 The class attorney should therefore request that a court’s order certifying the class be specific as to what claims are and are not included in the class action in order to protect the rights of class members to litigate other possible claims separately.

Consumer Class Actions: 18.2.1 Overview

The doctrine of collateral estoppel or “issue preclusion” precludes relitigation, under some circumstances, of a factual or legal issue actually adjudicated in prior litigation.

Consumer Class Actions: 18.2.3 Collateral Estoppel As to Class Defendant

Collateral estoppel may also preclude a class action defendant from relitigating in a later case an issue of fact or law decided in the class action. This is the “offensive” use of collateral estoppel, which precludes a defendant from relitigating an issue it previously litigated and lost against a different plaintiff than the one in the pending action.81

Consumer Class Actions: 8.1.1 Formulating a Discovery Plan and Discovery Schedule

By the time the case is ready to be filed, the plaintiff usually has a sense of what information and documents will be needed for class certification and for proving the allegations in the complaint. In formulating a discovery plan, counsel should review decisions in other, similar cases to get a sense of the type of discovery the plaintiffs obtained in those cases to successfully certify a class.

Consumer Class Actions: 8.1.2 Incorporating Electronically Stored Information (ESI) into a Discovery Plan

The 2006 amendments to the Federal Rules of Civil Procedure address the discovery of electronically stored information (ESI) that may be critical to obtaining the factual evidence needed to certify consumer classes and successfully pursue substantive consumer class claims.27 Electronic documents have largely replaced paper documents, and there is no longer a reasonable dispute that ESI is subject to the same discovery standards as paper records.28 Nevertheless, trial attorneys still encounte