298 F.R.D. 1
D.D.C.2013Background
- Eight named plaintiffs sued LivingSocial and Jack's Boathouse on behalf of 10.9 million consumers alleging Deal Vouchers with expiration dates violated the CARD Act, CCPA, and state gift certificate laws.
- The parties reached a settlement providing a $4.5 million settlement fund, injunctive relief for three years, and a cy pres distribution, with claims to be paid to valid, expired, unredeemed vouchers.
- Class defined as all United States purchasers or recipients of Deal Vouchers prior to October 1, 2012; notice was mailed electronically to 10.9 million purchasers.
- Submitted claims totaled 26,830 with aggregate value about $1,894,803.70; settlement costs are about $53,951.44, leaving roughly $2.55 million for cy pres after monetary relief has been paid.
- Injunctive relief includes clearer disclosure of paid vs promotional values, expiration periods no shorter than CARD Act/state law minimums, seven-day refund rights, and a refund mechanism if a merchant goes out of business.
- The court preliminarily approved the settlement in October 2012, and the Final Approval motion sought class certification and attorneys’ fees; objections were filed by a handful of class members.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the class satisfies Rule 23 for settlement purposes | Forshey argues numerosity, commonality, typicality, adequacy, predominance, and superiority are met. | LivingSocial contends some states differ, but predominance and superiority still favor class treatment for settlement. | Yes; the class satisfies Rule 23(a) and (b)(3) for settlement certification. |
| Whether the settlement is fair, reasonable, and adequate | Settlement provides full monetary relief and injunctive improvements deemed beneficial and non-collusive. | Defendants contend the settlement is reasonable given risks of continued litigation and possible defeat on class certification or CARD Act arguments. | Yes; the settlement is fair, adequate, and reasonable and the result of arms-length negotiations. |
| Whether cy pres distribution is appropriate | Cy pres recipients (Consumers Union and National Consumers League) advance consumer protection aligned with CARD Act goals. | Cy pres should reflect direct class benefit and avoid overbroad distribution; some claim the amount is disproportionate. | Yes; cy pres awards to Consumers Union and National Consumers League are appropriate given alignment with the claims and complete direct relief to claimants. |
| Appropriateness of attorneys’ fees | Fees of $3 million (plus costs) justified by the settlement benefits and lodestar, with cross-check supporting reasonableness. | Court should scrutinize hours, rates, and the proportionality of fees to the direct relief to class members. | Yes; the court awards $1,350,000 in fees plus $43,297.18 costs, finding a smaller fee appropriate given limited direct benefits and substantial cy pres. |
| Notice adequacy to settlement class | Notice informed class members of the action, the terms, and exclusion rights; forms were adequate. | Notice was sufficient; objections were largely based on misreading terms or were unfounded. | Yes; notice to the class was adequate and properly directed. |
Key Cases Cited
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (Supreme Court 1997) (class action settlement must be fair, adequate, and not collusive)
- Cobell v. Salazar, 679 F.3d 909 (D.C. Cir. 2012) (commonality and predominance in settlement classes; manageability concerns)
- Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369 (D.D.C. 2002) (factors for evaluating settlement and attorney fees in class actions)
- Swedish Hosp. v. Shalala, 1 F.3d 1261 (D.C. Cir. 1993) (common fund fee structures; lodestar cross-check guidance)
- In re Department of Veterans’ Affairs Data Theft Litig., 653 F. Supp. 2d 58 (D.D.C. 2009) (cy pres considerations and fee awards related to data-privacy settlements)