Docket number: 09-cv-2094 (S.D. Cal.); 16-56307 (Ninth Circuit); 18-1074 (Supreme Court)
The Hamilton Lincoln Law Institute’s Center for Class Action Fairness (CCAF) has long objected to this settlement, which provides only $225,000 to class members nationwide, but $3 million of “cy pres” relief to local third-party law schools, including attorneys’ alma maters.
On October 3, 2018, CCAF won a partial appellate victory as the Ninth Circuit vacated $8.7 million attorneys’ fee award.
However, the Ninth Circuit refused to consider arguments that “cy pres” relief could not make the settlement fair, reasonable, or adequate, so CCAF petitioned the Supreme Court for review. CCAF’s petition was supported by amici including 16 state attorneys general. However, one of the defendants declared bankruptcy, and the petition was denied on June 24, 2019.
Upon remand, on May 1, 2020, the district court adopted several of CCAF’s arguments and awarded only $3.4 million in attorneys’ fees, finding that a larger award would be disproportionate.
Cert petition
The cert petition came on the heels of Frank v. Gaos, a Supreme Court case that would have decided whether there should be limits on class action settlements that benefit third party cy pres recipients more than class members. Frank v. Gaos was argued by CCAF’s Theodore H. Frank in October 2018, but was remanded without a decision on the cy pres issue due to unanswered jurisdictional questions. The underlying complaint in Perryman v. Romero alleges fraud against consumers, so jurisdiction unquestionably exists over the settlement in this petition.
CCAF’s cert petition has been supported by the Center for Individual Rights and by the attorneys’ general of 16 states, led by Arizona. CCAF hoped that the Supreme Court would review Perryman. Unfortunately, one of the defendants declared bankruptcy, and petition was denied on June 24, 2019.
Background of the case
In 2013, the CCAF objected to and then appealed the approval of a nationwide class settlement In re EasySaver Rewards Litigation where 0.2% of the class received a cash benefit, a total of $225,000, and the remaining class members received low-value coupons. In the same settlement, $8.85 million went to the plaintiffs’ lawyers and $3 million to local San Diego universities, including class counsel’s alma maters. On appeal, the Ninth Circuit vacated the settlement approval and remanded for further consideration.
Plaintiffs claimed that the defendants’ gift- and flower-delivery websites violated state and federal law by enrolling customers in rewards programs after luring them with the promise of worthless coupons. Oddly, class counsel negotiated a settlement consisting almost entirely of low-value coupons for class members. These coupons were nearly worthless as they expired after a year, were devalued because they precluded the use of standard freely-available 20% discounts, and could not be used on major holidays such as Valentine’s Day, Mother’s Day, or Christmas. Nevertheless, the district court approved the settlement again on August 9, 2016, and CCAF again appealed the settlement approval.
At the Ninth Circuit, the plaintiffs filed a motion for summary affirmance that was denied. CCAF filed its opening brief on May 1, 2017. That same month, 13 state attorneys general filed an amicus brief supporting CCAF’s challenge. Oral argument will be heard on May 17, 2018.
At the Ninth Circuit, the plaintiffs filed a motion for summary affirmance that was denied. CCAF filed its opening brief on May 1, 2017. That same month, 13 state attorneys general filed an amicus brief supporting CCAF’s challenge. Oral argument was heard on May 17, 2018. On October 3, 2018, the ninth circuit vacated $8.7 million in fees for plaintiffs’ attorneys, ruling the district court failed to apply the Class Action Fairness Act (CAFA) and improperly treated the coupons as cash, which lead to the inflated fee calculation. While CCAF won a victory on attorneys’ fees, the ninth circuit upheld the cy pres portion of the settlement, holding that the district court did not abuse its discretion in approving the use of cy pres or the designated recipients.
Plaintiffs’ attorneys renewed their request for fees, and Perryman continues to oppose the fees as unwarranted and inappropriate given the inadequate representation of the class.
On May 1, 2020, the district court issued its fee order and agreed with several of Perryman’s arguments in awarding only $3.4 million of the requested $8.7 million, allowing the remaining money to go to cy pres charities.
This case was originally brought by the Center for Class Action Fairness. From October 2015 to January 2019, it was a project of the Competitive Enterprise Institute. It is now being actively litigated by the Hamilton Lincoln Law Institute.
Case Documents