Docket No. 3:24-cv-0615-wmc (W.D. Wisc.)

HLLI’s Center for Class Action Fairness objected to a $3 million fee request in Todd v. Ashley Furniture Industries, LLC.

The settlement touts $9 million in relief but class members receive no cash, instead getting “vouchers” that expire after one year which can be spent only at four of defendants’ own websites. Class counsel asked for $3 million in fees off that headline number (so 25% of the total award) to be awarded at the settlement hearing, before anyone knows how much of the voucher fund will ever be redeemed.

HLLI’s objection, filed on behalf of class member Kyle Painter, argues that the vouchers are “coupons” under the Class Action Fairness Act, 28 U.S.C. § 1712(a), which requires that fees in coupon settlements be based on the value of redeemed coupons by the class. This clause exists to deter coupon settlements, as Congress doesn’t want class attorneys to be paid in cash while settling their clients’ claims for coupons. That is a recipe for a suboptimal settlement and invites conflicts between class counsel and the putative class.

HLLI identified several issues with the settlement and preliminary approval order. First, the Plaintiffs’ preliminary-approval briefing employed the wrong legal standard in analyzing the CAFA § 1712(a)’s application, which the Court then adopted in its analysis. Second, the vouchers may be worth negative dollars to some class members. Defendants routinely advertise site-wide unstackable discounts. A class member who uses a settlement voucher may therefore forgo a larger everyday discount while permanently releasing her claims. Third, the settlement pays counsel a 25% fee on a presupposed 100% redemption rate for the coupons. But redemption rates in coupon settlements are routinely in the low single digits.

Accordingly, HLLI helped Mr. Painter object to the fee award for the aforementioned reasons and asked the Court to bifurcate the fee request from settlement approval. It can defer any fee award until after the one-year voucher period expires, when the Court can award counsel a reasonable percentage of what the class actually received. That approach follows CAFA’s text and keeps class counsel invested in a robust redemption process rather than a quick payday.

Painter’s objection remains pending before Judge William M. Conley.

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