Rael v. The Children’s Place, Inc.

Docket number: 3:16-cv-00370 (S.D. Cal.)

Hamilton Lincoln Law Institute attorney Anna St. John objected to a settlement with The Children’s Place because it would pay attorneys over $1 million in fees while leaving class members with only small $6 coupons that few class members will use. The court partially agreed with St. John and has deferred any award of attorneys’ fees until the redemption rate for coupons is actually known.

Under the terms of the settlement, 800,000 “vouchers” would be sent to class members like St. John to resolve claims that The Children’s Place deceptively advertises products as discounted. The vouchers will have a face value of $6 and expire after only six months. Plaintiffs’ attorneys argued that such coupons could be valued at their collective $4.8 million face value for the purpose of awarding attorneys’ fees—but of course the attorneys are paying themselves with cash, not coupons. The settlement forbids The Children’s Place from opposing the $1.08 million fees request, and if the court awards less than that amount, the money remains with defendant.

In her objection, St. John pointed out that counting coupons as cash violates the Class Action Fairness Act. Fees for the attorneys should be proportional to benefits actually realized by the class, so the fee request should be delayed until the coupon redemption rate is known. St. John also argued that the settlement itself should be thrown out, because even if fees are reduced, the money that attorneys negotiated for themselves will remain with the defendant—class members cannot benefit from the $1.08 million fee request that the attorneys negotiated for themselves.

The district court conducted a fairness hearing on July 31, 2020.

On October 23, 2020, the district court ordered that final approval of the settlement and the award of attorneys’ fees should be deferred so that parties could renegotiate provisions of the agreement, including problems flagged by HLLI.

On March 31, 2021, the court approved a modified settlement with narrower scope of release. It also denied without prejudice the fee motion, agreeing with St. John that the value of the settlement could not be determined until the voucher redemption rate was known. HLLI continues to monitor the litigation to ensure the ultimate fee award is proportional to the amount actually recovered by class members.

On March 4, 2024, class counsel renewed their motion for attorneys’ fees in view of the coupons redeemed, reducing their request to $400,000. St. John filed an opposition to the new request on April 1, observing that it remains disproportional to the amount of recovery actually achieved by the class. A hearing on the fee motion will occur in early May.

Case Documents