§1712 Coupon Settlements

Summary

When a class-action settlement gives coupons to class members, the part of the lawyers’ fee that comes from those coupons must be based on how much the redeemed coupons are actually worth to class members. If coupon value is not used to set fees, then the lawyer’s fee must be based on the reasonable time the lawyers spent on the case. Any fee award needs the court’s approval and can include a fee for getting non-money relief, like a court order (injunction). A combined settlement that gives coupons and non-money relief will split fees so the coupon portion follows the coupon rule and the rest follows the time-based rule. A court may hear expert testimony about the real value of redeemed coupons. The court can approve a coupon settlement only after a hearing and a written finding that the deal is fair, reasonable, and adequate. The court may also require that some value of unclaimed coupons go to agreed charities or government groups, but those amounts cannot be used to calculate lawyers’ fees.