Fruitstone v. Spartan Race, Inc.

Docket number: 1:20-cv-20836 (S.D. Fla.)

The Hamilton Lincoln Law Institute, on behalf of Jed Nolan, filed an objection to counsel’s request for $2.29 million in fees in the proposed Spartan Race, Inc. class settlement. The lawsuit arose out of Spartan’s labelling of a $14 fee that all event participants were required to purchase.

In exchange for releasing their claims against Spartan, class members are entitled to a coupon. The default coupon is a four month subscription to the Spartan+ Membership, which provides discounts to Spartan merchandise, access to additional Spartan media, free downloads after signing up for an event, and the Spartan Fitness app. Alternatively, class members can elect to receive a $5 voucher for each event in which they paid the $14 fee (up to four). These vouchers can only be used on Spartan’s website, are not stackable with other discounts, and still require class members to spend their own money with Spartan.

Because the proposed settlement consists of coupon relief, the Class Action Fairness Act requires that any fee award be based on the value to class members of the coupons actually redeemed. Nolan objects that counsel’s $2.29 million fee request fails CAFA’s standard. Even assuming a generous 5% redemption rate, counsel allocates over 64% of all settlement benefits to themselves. This is disproportionate under the Eleventh Circuit’s 25% benchmark for fee awards in class settlements.

In the event the court views the Spartan+ Membership as an in-kind benefit, not a coupon, Nolan objects that the value to class members is inflated. Spartan+ is a new offering, has no demonstrated interest, and targets a saturated fitness market. Under a generous valuation, class counsel still asks for close to 92% of all settlement benefits.

The proposed settlement also contains injunctive relief that requires Spartan to change the labelling of the $14 fee. Spartan is still permitted, however, to continue profiting off of the very fee plaintiff alleged was deceptive. As a sign that this injunctive relief contains no value to class members, counsel does not value the labelling changes.

The disproportionate allocation of fees is coupled with other problematic signs indicating this was a lawyer-centric settlement. Counsel negotiated a clear-sailing clause with Spartan, and Spartan agreed not to challenge counsel’s fee request up to the $2.29 million. Counsel also structured the settlement so that any unawarded fees reverts back to Spartan, instead of the class.

Because of these problems Nolan requests that the settlement be rejected or, alternatively, that the court defer the fee award until after the coupon redemption period is over. The court held a fairness hearing on May 7, but ultimately approved the settlement.

Nolan did not appeal.

Case Documents