150 F. Supp. 3d 53
D. Mass.2015Background
- Plaintiffs sued Michaels under Massachusetts G.L. c. 93A and unjust enrichment for collecting zip codes to obtain addresses for marketing; the court certified questions to the Massachusetts SJC, which issued a favorable ruling (Tyler v. Michaels).
- Parties reached a class settlement providing in-store, nontransferable vouchers ($25 and $10) with restrictions (90‑day expiry, single in‑store use in Massachusetts, no online/gift‑card purchase).
- Counsel sought $425,000 in fees and costs to be paid in cash by Michaels separately from the voucher relief; Michaels consented to the fee request up to that amount.
- Court provisionally approved the settlement but withheld fee approval pending voucher redemption data; about one‑third of vouchers were redeemed, yielding $138,620 in retail value.
- The central legal question became whether the vouchers are "coupons" under CAFA, and if so, whether fees must be calculated by (a) percentage of redeemed coupon value or (b) lodestar/time‑based method.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether vouchers are "coupons" under CAFA | Vouchers are not coupons; Massachusetts law should govern fee reasonableness | Vouchers function like coupons because they require redemption at Michaels | Court: vouchers are coupons because class members must transact with defendant to obtain benefit; CAFA governs fees |
| Applicable law for fee award (state vs federal) | Apply Massachusetts law (citing state consumer statute fee principles) | Apply CAFA/federal law because settlement awards coupons | Court: Federal law/CAFA controls fee analysis for coupon settlements |
| Proper fee‑calculation method under CAFA | Counsel sought lodestar‑based fee (time x reasonable rates) | Defendant consented to counsel's requested amount; but CAFA requires scrutiny and may limit percentage recovery based on redeemed value | Court: CAFA permits either (1) percentage of coupons redeemed or (2) lodestar; it precludes basing percentage fees on face value of coupons redeemed but leaves method choice to district court |
| Reasonableness of requested rates / lodestar amount | Counsel billed partners at $650/hr, associates $250/hr, paralegals $90/hr, totaling a requested lodestar reduced to $410,994.70 | Michaels’ assent not dispositive; courts must independently assess reasonableness | Court: reduced partner rate to $350/hr, accepted associates/paralegal rates, computed lodestar of $312,895.00 and awarded that plus costs $14,005.30 |
Key Cases Cited
- Tyler v. Michaels Stores, Inc., 464 Mass. 492, 984 N.E.2d 737 (Mass. 2013) (state SJC holding zip code is personal identification information under c.93A)
- In re Online DVD‑Rental Antitrust Litig., 779 F.3d 934 (9th Cir. 2015) (narrow view: certain gift cards not "coupons" under CAFA)
- Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014) (broader view: vouchers can be "coupons" and CAFA scrutiny necessary)
- In re HP Inkjet Printer Litig., 716 F.3d 1173 (9th Cir. 2013) (treated e‑credits as coupons; panel split on fee methodology under CAFA)
- In re Sw. Airlines Voucher Litig., 799 F.3d 701 (7th Cir. 2015) (adopted approach allowing district courts a choice between lodestar or percentage of coupons redeemed)
- Nat’l Ass’n of Chain Drug Stores v. New England Carpenters Health Benefits Fund, 582 F.3d 30 (1st Cir. 2009) (Rule 23(e) fairness standard for class settlements)