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Settlement Pitfalls

Payday Loan Bar Association Lewis S. Wiener November 2, 2012. Settlement Pitfalls. Agenda. Coupon Settlements Cy Pres. Coupon Settlements. 28 U.S.C 1712 Attorneys ’ fees based on value of coupons that are actually redeemed Heightened judicial scrutiny. What is a Coupon?.

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Settlement Pitfalls

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  1. Payday Loan Bar Association Lewis S. WienerNovember 2, 2012 Settlement Pitfalls

  2. Agenda • Coupon Settlements • Cy Pres

  3. Coupon Settlements • 28 U.S.C 1712 • Attorneys’ fees based on value of coupons that are actually redeemed • Heightened judicial scrutiny

  4. What is a Coupon? • Not defined by CAFA • Common meaning: a plaintiff must spend money in order to realize the settlement benefit; a discount • Not a coupon if plaintiff does not have to spend money

  5. Coupon Settlements Rejected • Figueroa v. Sharper Image Corp., 517 F. Supp. 2d 1292 (S.D. Fla. 2007) (refusing to approve a settlement that would have provided members of the plaintiff class with a $19.00 store credit because the cost of defendant's merchandise vastly exceeded $19.00, and the coupon could not be used to purchase a whole product. Settlement was not fair, adequate or reasonable) • True v American Honda Motor, EDCV 07-0287-VAP (C.D. Cal. Feb 26, 2010) (rejecting settlement that provided members of the plaintiff class $1,000 or $500 coupon offered to consumers to be applied toward the purchase of a new car) • Schlesinger v Ticketmaster Entertainment, Inc., BC304565 (Sept. 26, 2012) ($1.50 coupon to be applied toward a future ticket purchase does not represent real value for class members. Moreover, if a class member never buys a ticket from Ticketmaster, that person would never benefit from the settlement)

  6. Cy Pres • Should be a “driving nexus” between the plaintiff class and the cy pres beneficiaries • In re: Groupon, Inc. Marketing and Sales Practices Litigation, 3:11-md-2238-DMS (S.D. Cal. Sept. 28, 2012)

  7. Thank You Lewis S. Wiener 202.383.0140 lewis.wiener@sutherland.com

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