Chapman v. Tristar Products, Inc.

Docket number: 18-3847, -3866 (6th Cir.)

The Hamilton Legal Law Institute’s Center for Class Action Fairness (CCAF) filed an amicus brief in Chapman v. Tristar Products, Inc. in the Sixth Circuit, supporting a bipartisan coalition of 18 state attorneys general, lead by Mark Brnovich of Arizona, who seek to intervene and oppose an appalling attorney-centered class action settlement. Another amicus was filed by the Department of Justice, which had also opposed the settlement in the district court below.

The underlying complaint filed in the Northern District of Ohio alleges that “Power Pressure Cookers” manufactured by Tristar Products have a design defect that can cause scalding hot contents to burn consumers. Plaintiffs’ counsel settled the case in exchange for: (1) coupons toward buying a new allegedly-defective pressure cooker, which cannot be combined with other discounts, (2) a one-year warranty extension, (3) $25,000 for the named plaintiffs in the case, and (4) up to $2.5 million cash for attorneys’ fees.

The Arizona Attorney General, joined by attorneys general for Arkansas, Florida, Idaho, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nevada, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, and Wyoming, objected on behalf of their residents, many of whom are class members. The U.S. Department of Justice also filed a Statement of Interest opposing the settlement. These filings documented numerous failings of the settlement:

Class members give up valuable claims and 99.6% of them receive nothing from the settlement. Only about 13,000 claims were received out of 3.2 million allegedly defective pressure cookers sold, meaning that 99.6% of class members receive absolutely nothing from the settlement. This makes class members worse off because class members who did not opt out have been forced to give up their right to sue for personal injuries by the pressure cookers.

The coupons are almost worthless. While each coupon has a face value of $72.50, it may not be transferred, and it may only be used for a full retail price Power Pressure Cooker from the defendant, which totals about $189 with shipping. Therefore, to use the coupon, claimants must put up about $117 of their own money, which is hardly a discount given that the same models of pressure cooker are available for $134 on Amazon with free shipping. Given this, the 13,000 claims are optimistically worth $221,000, but it seems unlikely all claimants will pay $117 out of pocket to redeem this “value.”

The fees are disproportionate. The state AGs also argued that the alleged “$72.50 credit” under the settlement amounted to “coupons” under the Class Action Fairness Act (CAFA), which requires attorneys fees to be proportional. The district court awarded plaintiffs nearly $2 million in attorneys’ fees, which it over double what the class received, even counting coupons for their full $72.50. For more information about the settlement’s shortcomings, see the Arizona opening brief and DOJ amicus.

While the district court agreed that the “credits” were coupons under CAFA, it found that attorneys could be paid up to $625/hr based on the time they worked on the case, called lodestar value. The district court approved both the settlement and a $1.98 million fee award over the objection of the state AGs and the DOJ.

Arizona and the other state AGs sought to intervene so that they could challenge the settlement on appeal, but the district court denied this motion. Arizona therefore appealed both denial of intervention and final approval of the settlement. Plaintiffs moved to dismiss the appeal, arguing that state attorneys general simply lack standing to appeal settlements that harm their residents. If the Sixth Circuit agrees, it may not even reach the merits of the underlying settlement.

For this reason, CCAF filed an amicus brief in support of Arizona and the other AGs. Under 28 U.S.C. § 1715, states are permitted to weigh in against class actions that harm their residents’ interests. This provision should provide state watchdogs with a meaningful ability to police class-action settlements through the right of intervention and appellate review. More states should step in when class action settlements harm citizens and class members, as the Tristar settlement does.

Unfortunately, On October 11, 2019, the Sixth Circuit concluded that Arizona lacks standing. Rehearing was denied, and no further appeal was taken. CCAF believes the decision was incorrect and will continue to support states that seek to protect their citizen’s rights.

Case Documents