AMELIA FOOS, individually and on behalf of all others similarly situated, Plaintiff,
ANN, INC., a Delaware corporation doing business as Ann Taylor Retail, Inc., Defendant.
ORDER GRANTING PLAINTIFF'S MOTION FOR ATTORNEYS' FEES [doc. #46]
M. JAMES LORENZ, District Judge.
I. Procedural Background
Prior to the final fairness hearing concerning the settlement of this class action, plaintiff's counsel filed a motion for attorneys' fees. [doc. #29] On November 20, 2012, Sarah McDonald filed an Ojection to the Settlement Agreement. After considering McDonald's Objection, the Court concluded, on balance, the relevant factors weighed in favor of a finding that the settlement was fair, reasonable and adequate. The Court further held that plaintiffs' counsel was entitled to attorneys' fees but did not award a specific amount because of the lack of documentation for the fees. [doc. #39] By agreement, defendant did not oppose the full amount of attorneys' fees sought by plaintiff, $192, 00.00. On January 7, 2013, plaintiffs' counsel provided supplemental information concerning the requested attorneys' fees and costs, [doc. #46] to which Objector McDonald filed a response. [doc. #55]
McDonald then filed an ex parte motion seeking disclosure of claims rate data which the Court granted. [doc. #71] The Court entered an Order requiring supplemental briefing by the parties concerning whether the Settlement Agreement in this action is a "coupon settlement" within the meaning of CAFA, [doc. #81] which the parties provided.
A. Whether the Settlement Agreement is a Coupon Settlement Under CAFA
The terms of the Settlement Agreement provide, inter alia, that class members would receive the choice of a voucher for either $15.00 in Ann Taylor merchandise with no minimum purchase required or a "voucher" for 20% off any merchandise purchase over $100.00, with no cap. Each class member would receive one, single-use, transferable voucher, regardless of the number of alleged violations, which would be valid for six months after issuance.
If a class member elected the $15.00 voucher, because there was no minimum purchase requirement, the class member would receive a monetary benefit under this settlement without needing to provide any money out-of pocket; however, if the purchase price was less than $15.00, no refund of the difference would be offered.
Whether this action is considered a "coupon" settlement rather than one that provides for what both plaintiff and defendant contend is a "voucher" settlement, became a significant issue while plaintiff's motion for attorneys' fees was pending. The Ninth Circuit Court of Appeals addressed the calculation of attorneys' fees in the context of a coupon settlement under CAFA, which was an issue of first impression. See In re HP Inkjet Printer Litigation, 716 F.3d 1173 (9th Cir. 2013). In HP Inkjet, objectors contended that the attorneys' fees award violated CAFA, specifically 28 U.S.C. § 1712(a)-(c), which controls the calculation of attorneys' fees when the settlement contains an award of coupons to class members or injunctive relief or equitable relief or both. Id. at 1179. Although the district court found the settlement was fair, reasonable and adequate, and by separate order, awarded attorneys' fees by applying the loadstar method to an estimated "ultimate value" of the settlement, the Court of Appeals reversed.
The HP Inkjet case noted that in the usual class action case,
courts try to ensure faithful representation by tying together the interests of class members and class counsel. That is, courts aim to tether the value of an attorneys' fees award to the value of the class recovery.... Where both the class and its attorneys are paid in cash, this task is fairly effortless.... But where class counsel is paid in cash, and the class is paid in some other way, for example, with coupons, comparing the value of the fees with the value of the recovery is substantially more difficult. Unlike a cash settlement, coupon settlements involve variables that make their value difficult to appraise, such as redemption rates and restrictions.
Id. at 1179. (citations omitted.)
Although CAFA defines various other terms, it does not define what constitutes a "coupon." See 28 U.S.C. § 1711. Courts have often blurred the distinction between "coupons" and "vouchers" and have considered, at times, that the terms are equivalent. They are not.
The distinction between a coupon and a voucher is that a coupon is a discount on merchandise or services offered by the defendant and a voucher provides for free merchandise or services. In the present case, class members could choose between 20% off a future purchase at Ann Taylor or a voucher in the amount of $15.00 for merchandise which allows class members to select items for free. In their Settlement Agreement, plaintiff and defendant call the 20% off a future purchase at Ann Taylor a voucher, when actually it is a coupon. A coupon requires a class member to purchase a product or services and pay the difference between the full price and the coupon discount. In the case of coupons, CAFA requires a heightened level of scrutiny to determine if the value of the coupon settlement is reasonable in relation to the value of the claims surrendered. A class action coupon settlement requires that attorneys' fees "attributable to the award of coupons" must be calculated using the redemption value of the coupons. § 1712(a). In contrast, a voucher is ...