Chicago Clearing Corporation (CCC) works with attorneys from the nation’s leading law firms to design class action coupon settlements and bring value to everyone involved. CCC helps in the design of coupons, the administration of coupon settlements, and will facilitate a secondary market so class members can sell their coupons if they do not wish to use them. With over 25 years in the class action industry, we are the most sought-after expert in class action coupon settlements. Post the 2005 Class Action Fairness Action (CAFA), coupon settlements continue to face scrutiny from judges, but luckily CCC puts forth affidavits, testifying to the merits or shortcomings of a coupon settlement. Equally important to discuss are the coupon settlements that are approved when the terms could be much stronger. 

The very design of a class action coupon is very important and has a significant impact on redemption rates. In this piece, we would like to bring up a few recent coupon settlements that can be significantly improved and encourage attorneys to reach out when dealing with coupon settlements. For starters let’s look at a case that still has an open claim filing period involving Molekule. Class counsel accused, Molekule, a maker of air purifier systems, of making a series of material representations about the nature and efficacy of their air purifiers. Molekule did not admit any guilt but settled the case by giving class member consumers the opportunity to receive cash and coupons. 

Unfortunately, the coupons are not valid for the purchase of a new purifier.  The coupons can only be redeemed towards the purchase of a filter or a filter subscription, and the face value of said coupon cannot exceed $250.The coupons are freely transferable, but there is no market maker in place like CCAs a result, people will likely not be able to easily sell their coupons. The dagger, in this case, is that unused coupons will be reverted to the defendant, and we suspect there will be quite a few left over. Ideally, we would want to see coupons that can be freely combined and used across all products sold by a company. Per CAFA, when attorneys settle in coupons some or all of their fees should be tied to the coupon redemption rate. This case was handled by Migliaccio and Rathod LLP (M&R) on the plaintiff side. Therefore, it is in M&R’s best interest to structure as marketable coupons as possible, which will have a direct impact on the value of their fees. 

To drive home this point on fees, an appellate court rejected a $10M coupon settlement where Massage Envy agreed not to challenge the $2.6M attorney fee. Given it was a non-cash settlement with a reversion provision, the appellate court decided that the district court should have looked at the proposed coupon settlement with added scrutiny. It seems Finkelstein & Krinsk, who represented the class, could have used our help in designing the coupons. Again, when coupons are transferable and there is a market maker in place the coupons have an immediate cash value for those that don’t want to use them, especially if the plaintiff’s attorney receives coupons as part of their fee. As a result, a judge is much more likely to approve a settlement where all parties receive value from the coupons such as class members, transferees, and class counsel. 

These are not the only coupon settlements in which we see opportunities to assist both the attorneys and class members to maximize their coupon values. M&R previously represented plaintiffs in a coupon settlement with the laptop manufacturer Asus in 2020.  However, the coupon terms were quite particular. For example, if the total amount of the purchase price of a new laptop was less than the amount of the Credit Certificate(s) issued in the case and redeemed during the transaction, the Credit Certificates would have no residual value. With these terms, you could be leaving significant value on the table and even though the Credit Certificates were freely transferable, they were not easy to sell for cash value. 

In the face of several coupon settlements being approved with what we think are deficient terms and conditions, we want attorneys to know CCC can help improve the terms of the settlement in such a way that the value of the coupons and overall settlement will be enhanced significantly. Attorneys and judges ultimately want to maximize the value of the recovery, and with us on your side, the class and everyone receiving coupons will see real value. Please reach out if you need any help with a coupon settlement and Omar would be happy to set up a time to speak. 

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