Gold v. Lumber Liquidators, Inc.

Docket number: 14-cv-05373-RS

A class action settlement originally proposed to pay attorneys $9.2 million out of the $14 million in cash that defendant Lumber Liquidators agreed to deposit. The settlement would waive claims by consumers that Morning Star Strand Bamboo flooring could not withstand normal ambient moisture because it was defectively manufactured, and fails prematurely well in advance of its 30-year lifetime.

Plaintiffs contend that their fees are fair because the settlement also provides $14 million face value worth of “vouchers.” But to redeem these vouchers, class members must spend hundreds of dollars on yet more flooring products from Lumber Liquidators in the next three years. The vouchers cannot be redeemed for cash, cannot be sold, and cannot be used to buy gift cards.

On behalf of a class member Benjamin Faber, the Hamilton Lincoln Law Institute’s Center for Class Action Fairness filed an objection to the settlement on May 21, 2020. At minimum, the “vouchers” are coupons under the Class Action Fairness Act (CAFA), and so fees should not be awarded until the amount of coupons redeemed is actually known. Faber’s objection is supported by a recent Fourth Circuit involving almost identical coupons with the same defendant, In re Lumber Liquidators Chinese-Manufactured Flooring Prod. Mktg., Sales Practices & Prods. Liab. Litig., 952 F.3d 471 (4th Cir. 2020). In the Fourth Circuit opinions, similar settlement vouchers (there called “e-credits”) were found to be “coupons” under CAFA. The same determination should apply here.

Faber contends that only 25% of the cash fund should be awarded to the attorneys until the actual redemption rate of coupons is known. Attorneys should not be able to walk away with most of the cash while leaving their clients with coupons few class members are likely to redeem.

Prior to the fairness hearing, class counsel agreed to defer fees pending coupon redemption, thus resolving Faber’s primary objection.

A fairness hearing occurred on September 24, 2020, and the the district court approved the settlement over objections on October 22, but it reserved judgment on the total fee award until the three-year claims period elapsed. It awarded only 25% of the $14 million fund, and required the parties to issue status reports concerning redemption of coupons.

As of February 22, 2024, only $4.4 million of vouchers had been redeemed, which is high for a coupon settlement, but still a far cry from the fictional $16 million valuation of the settlements. Plaintiffs have requested reminder notices sent to class members reminding them to redeem their coupons, which is a positive side-effect of tying attorney compensation to results actually achieved. CCAF continues to monitor the settlement to ensure supplemental attorneys’ fee awards remain proportional to value actually received by class members.

Case Documents