Sulejman Nicaj v. Shoe Carnival Incorporated
2014 U.S. App. LEXIS 18181
| 7th Cir. | 2014Background
- Two consolidated FACTA class actions challenge merchants printing card expiration dates on electronically produced receipts, violating 15 U.S.C. § 1681c(g).
- RadioShack settlement: class notice to ~5 million, ~83,000 claimants; settlement offered a $10 coupon per claimant (single coupon per person, six-month expiry, up to 3 coupons per purchase) and $1,000,000 in attorneys’ fees (reduced by district court to ~$990,292); objectors appealed approval.
- Shoe Carnival suit: defendant omitted only the expiration year (left the month); district court found no willful violation and dismissed before class certification; appeal raised whether omission was a willful FACTA violation.
- Willfulness under FACTA determines eligibility for statutory damages ($100–$1,000 per willful violation); civil willfulness = recklessness (known or obvious high risk) as informed by Farmer and Safeco.
- The Seventh Circuit reversed RadioShack’s settlement approval (finding the fee/class benefit split and process inadequate) and affirmed dismissal for Shoe Carnival (finding a plausible, non-willful interpretation of the statute).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RadioShack settlement was fair given coupon structure and attorneys’ fees | Settlement provides meaningful relief via $10 vouchers to millions; fees reasonable relative to total payout | Coupon face value and company solvency justify modest coupon relief; fees reflect counsel effort and risk | Reversed: district court failed to value coupons properly, misallocated administrative costs, allowed clear-sailing and late fee motion; fees excessive relative to class recovery; remand for renegotiation/reevaluation |
| How to value coupon-only settlements for fee awards under CAFA §1712 | Use face value or voucher nominal value; fees may be justified by hours and risk | Coupons often worth less than face value; district court may estimate redemption value or appoint experts; avoid using admin costs in fee ratio | District court must assess economic value to class (not merely face value), may use experts, and must scrutinize fee allocation and procedural compliance with Rule 23(h) |
| Whether a clear-sailing clause and late fee motion undermine fairness | Class counsel: clause common; timing not prejudicial | Objectors: clause signals collusion; late fee filing prevented informed objections | Court criticized clear-sailing and late fee filing—subject to close scrutiny; procedural rule violation prejudiced class; weighed against approval |
| Whether Shoe Carnival’s omission of expiration year was willful under FACTA | Plaintiff: omission of year still exposes card data; willful statutory violation merits statutory damages | Shoe Carnival: plausible, non-frivolous interpretation (ambiguous “expiration date”) negates willfulness | Affirmed: reasonable interpretation of ambiguous statute precludes finding of willfulness (no reckless disregard) |
Key Cases Cited
- Farmer v. Brennan, 511 U.S. 825 (establishes civil willfulness/recklessness standard)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (relates willfulness to statutory damages context and civil recklessness)
- Staton v. Boeing Co., 327 F.3d 938 (court’s role in scrutinizing class settlements and fees)
- Eubank v. Pella Corp., 753 F.3d 718 (conflict-of-interest concerns in class-settlement approval)
- Long v. Tommy Hilfiger U.S.A., Inc., 671 F.3d 371 (interpreting “expiration date” to include parts thereof for FACTA purposes)
- In re HP Inkjet Printer Litig., 716 F.3d 1173 (discussion of CAFA §1712 and valuation methods for coupon settlements)