Victory! Redman v. Radioshack

CCAF won a tremendous victory for class members in Redman v. Radioshack, just eleven days after oral argument!

Judge Richard Posner, a legal authority renowned worldwide, wrote an excellent and accessible opinion, explaining that class action plaintiffs' attorneys' fees must be proportionate to the benefit they've realized for their clients, and that a coupon is a coupon regardless of the percentage discount that it represents.

You can read more about the underlying case here. The oral argument made headlines last week, and is also a fun listen. (Ted Frank appears at 9:40 and 54:55.)

Redman v. RadioShack, Inc. / oral argument today

As we discussed earlier, class counsel agreed to a settlement over RadioShack credit-card receipt legality that would have paid themselves $1 million, but the 16-million-member class 83 thousand coupons with a face value of $10. The district court approved the settlement because (1) it held the $2.25 million spent to distribute those coupons was a class benefit and (2) the coupons weren't "coupons." Oral argument is scheduled this morning in the Seventh Circuit. Some time this afternoon or tomorrow, a recording of the argument will be available online.

• Opening brief
• Plaintiffs-appellees' brief
• Defendant-appellee's brief
• Reply brief

The reply brief was fun, as plaintiffs were forced to defend an indefensible argument. From pages 5-6:

1.                  Plaintiffs rely on a logical fallacy.

It is not unfair to summarize plaintiffs’ proposed syllogism as follows:

1.         There exist websites that offer coupons where each coupon provides only a partial discount. PB26.

2.         There exists legislative history that criticizes a coupon settlement where the coupons offered provided only partial discounts. PB24-25; PB28.

3.         Therefore all “coupons” provide only partial discounts.

4.         Therefore a voucher for a free product is not a “coupon.” PB29-31.

The formal fallacy in plaintiffs’ logic is even more apparent in the following analogy:

1.         There exists a dog racing track where each racing dog is a greyhound.

2.         Actor Leonard Nimoy owns a dog that is a greyhound.

3.         Therefore all dogs are greyhounds.

4.         Therefore a collie is not a dog.

Nimoy’s most famous character had a catchphrase for this.[5]

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[5] Cf. Leonard Nimoy, Highly Illogical on Two Sides of Leonard Nimoy (Dot Records 1968). Or, as Woody Allen once said, “All men are mortal. Socrates is a man. Therefore all men are Socrates.” Love and Death (United Artists 1975).

Opening brief in Redman v. RadioShack

RadioShack committed the sin of printing credit-card receipts with expiration dates on them, which exposed it to possible liability of $100 a receipt ($1000 if willful), a bankrupting sum. Class counsel settled for coupons. Our clients objected that the settlement did not comply with CAFA's limitations on coupon settlements, and was structured so that class counsel's benefit would outstrip that of the class. As is typical in coupon settlements these days, the settling parties denied that the coupons were coupons. For some reason, the district court bought the argument, and awarded $1M in attorneys' fees while the 16-million-member class will receive 83 thousand coupons with a face-value of $10, give or take. We've appealed, and filed our opening brief April 16.

Redman v. Radio Shack

Redman v. Radio Shack Corp., No. 11-cv-06741 (N.D. Ill.) is a class action alleging a right to statutory recovery for Radio Shack's practice of printing expiration dates on credit-card receipts. The settlement provides $1M in attorneys' fees and $10 coupons to the class, without any mechanism to track redemptions required to justify such a large fee. Of course, there will be nowhere near the hundreds of thousands of claims comprising "settlement value" given the difficulty of making a claim, so the settlement also provide cy pres of leftover coupons to the Boys and Girls Club. Except Section 1712(e) of the Class Action Fairness Act explicitly prohibits the use of cy pres coupons for calculating fee awards. The settlement class is defined as

All persons who, between August 24, 2010 and November 21, 2011, paid by credit or debit card for products or services and received an electronically-printed receipt from any Store that contained the expiration date of the person's credit or debit card.

Excluded from the Settlement Class are Defendant, its officers, employees, and attorneys; transactions conducted with business credit or debit cards; and transactions made with RadioShack-branded debit or credit cards, as those cards do not contain expiration dates.

One hopes a class member aggrieved by this lawyers-first settlement will contact a non-profit attorney willing to help them object to a settlement with such an unfair and illegal fee request.