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Ninth Circuit Rejects Lodestar Fees in Coupon Class Action Settlements
16 May 2013
A divided Ninth Circuit panel held that where class action settlement compensation takes the form of coupons, the plaintiffs’ counsel’s fee can only be calculated as a percentage of the value of the coupons actually redeemed, and cannot be based on that counsel’s “lodestar” of time spent on the case.
This decision, if it stands, may make it harder for defendants to settle even weak cases with coupon consideration, because plaintiffs’ counsel would not be able to recover as much of their investment of time in the case. Defendants should, however, still settle with free (as opposed to discounted) goods and services, without this decision applying.
The dissent, which persuasively argued that the Class Action Fairness Act did not preclude lodestar awards in coupon cases, may prompt the Ninth Circuit to review the decision en banc.
Maura Kathleen Monaghan
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