Department of Justice Files Amicus Brief Opposing Unfair Class Action “Coupon” Settlement
The Department of Justice filed an amicus brief today with the Court of Appeals for the Sixth Circuit opposing a class action settlement that would provide consumers coupons worth only part of the price of a new pressure cooker, while awarding class counsel millions of dollars in attorney’s fees and costs.
Plaintiffs in the case, Chapman et al. v. Tristar Products, Inc., alleged that a pressure cooker sold by Tristar Products contained a defect that could cause hot liquid to “erupt” out of the appliance. A settlement reached between the parties would provide class members with a limited warranty extension and a non-transferrable $72.50 credit toward the purchase of certain Tristar products, to be ordered directly from the company. At current prices, the credit would pay for less than half the cost of a new pressure cooker from Tristar. Under the settlement, class members would release all claims relating to alleged defects in the pressure cookers, including claims for personal injury or property damage. Out of the estimated 3.2 million consumers who purchased the pressure cooker at issue, only about 13,300 claimed the coupons. The settlement, as approved by the district court, would award plaintiff’s counsel more than $2 million in attorney’s fees and costs.
The Class Action Fairness Act of 2005 provides the Attorney General and state officials an opportunity to review federal class action settlements before district courts grant final approval. The United States filed a statement of interest in 2018 opposing the Chapman settlement in district court for the Northern District of Ohio. A coalition of 18 state attorneys general also filed a brief arguing that the settlement was unfair to consumers. The district court approved the settlement, which is now on appeal with the Sixth Circuit.
“Under the Class Action Fairness Act, the Department of Justice plays an important role in reviewing the reasonableness and adequacy of proposed class action settlements,” said Principal Deputy Associate Attorney General Jesse Panuccio. “Settlements such as this one raise serious fairness concerns by awarding class members only illusory relief while the lawyers bringing the lawsuit are awarded substantial fees. We will continue to scrutinize such proposed settlements to ensure they comport with the law and are fair, reasonable, and adequate.”
“Class action settlements that provide nothing of real value to consumers but award significant attorney’s fees to class counsel are precisely what Congress meant to curtail with the Class Action Fairness Act,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “We will continue to advocate on behalf of consumers when we see inappropriate class action settlements of this kind.”
Trial Attorney Kendrack Lewis of the Civil Division’s Consumer Protection Branch represents the United States in the matter. Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch.