June 21, 2013 Articles

Ninth Circuit Limits Fee Awards to Class Counsel in Coupon Settlement Context

The court interpreted the CAFA to restrain both the amount and timing of attorney-fee awards when class members receive coupons.

By Mark D. Taylor and Teresa H. Michaud

The United States Court of Appeals for the Ninth Circuit interpreted the 2005 Class Action Fairness Act (CAFA) in its recent decision in In re HP Inkjet Printer Litigation, No. 11-16097 (9th Cir. May 15, 2013) to restrain both the amount and timing of fee awards to class counsel when class members receive coupons. Prior to this decision, district courts in and outside the Ninth Circuit had applied either the “lodestar” or “common fund” methods of calculating reasonable attorney fees to class counsel based on the hours counsel reasonably expended on the action or an estimated value of the coupon settlements to class members at the final approval stage of the class action settlement. Following the Ninth Circuit’s May 15 decision, however, the fees attributable to a coupon award to the class may only be calculated on the total value of coupons actually redeemed by the class, which presumably could not occur until after the final approval hearing and the coupons’ expiration date. This opinion will, therefore, likely have great effect on class action practitioners’ perspectives on and use of coupon settlements.

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