Southwest Airlines drink voucher coupon settlement

Southwest gives away "premium drink" (i.e., "beer") coupons worth $5 to customers who buy a Business Select ticket. Of course, not everyone drinks, and half of the coupons are thrown away. After giving out 11 million or so of these coupons, Southwest changed its policy and held that the premium drink vouchers were only good on the day of the flight for which they were sold. A class action was born, alleging bait and switch. There's a lot of publicity over the settlement; Southwest Airlines is giving away new coupons, i.e., free beer. Press coverage accepts the claim of class counsel that the coupons, which will expire in a year, and are only good in flight, are worth "perhaps more than $29 million"; papers in support of the settlement go even further and ascribe a value of up to $58 million. Thus, the attorneys will ask for $7 million. [preliminary approval order; Chi Trib; L&S; h/t LAN3]

Thing is, we know from decades of history of coupon settlements that less than $1 million of these coupons are going to get used; heck less than $1 million are likely to be claimed. The settlement is worth "perhaps more than $29 million" only in the sense that "perhaps" the atoms in the chair you are sitting on will all simultaneously shift one foot to the left. Customers are getting notified by email, but the vouchers aren't being sent to them by email. That's because Southwest wants to limit its liability, but the attorneys want to maximize their payout; they both have the incentive to exaggerate the true value of the settlement. If they told the court the settlement was worth less than $1 million to the class, the court might ask questions why a disproportionate share is reserved for the attorneys; if they asked the court to follow the strictures of the Class Action Fairness Act, which requires attorney awards to be tied to the value of redeemed coupons, the attorneys would have no chance at $7 million.

One hopes a class member sees through this misleading unfairness, and finds pro bono counsel willing to object.

 The class consists of "All Southwest customers who purchased an Eligible Drink Voucher through the purchase of a Business Select ticket or otherwise, during the time period before August 1, 2010, but who did not redeem the Eligible Drink Voucher. The Class does not include Southwest customers who obtained drink vouchers or drink coupons through the Southwest Rapid Rewards program, unless those customers separately purchased, but did not redeem, Eligible Drink Vouchers through the purchase of a Business Select ticket or otherwise." The case is In re Southwest Airlines Voucher Litigation, No. 11-cv-8176 (N.D. Ill.).

Pearce v. Acosta

A class member contacted me to complain about the settlement in Pearce v. Acosta. At first glance, it seems troubling: as described to me, the attorneys will get $425,000, and class members will get somewhere between $55,000 and $110,000. But the objection deadline is January 22, it's in Washington state court, and my attorneys and I are more than booked up between now and March with existing cases and obligations. We can't take the case, and don't have any insights beyond what's in this post; but if you're an attorney who might be interested in having this class member contact you, please E-MAIL me; leaving a blog post comment gives me no way to contact you and makes me question your judgment.

(Update: thanks to counsel who volunteered. The class member has opted out and been directed to the appropriate attorney running a parallel opt-in federal class action.)

Other December doings

In addition to the objection to the Citigroup Securities settlement, we were busy in December:

• Another bad coupon settlement: In re EasySaver Rewards Litig., No. 09-cv-2094 (S.D. Cal.). The $20 face value of the coupons is illusory, because the coupons preclude the use of the normal 20% offers on the defendant's website. Of course, the class counsel is seeking fees based on the face value; the settlement has illegal cy pres, too. We objected on behalf of a class member.
• Pecover v. Electronic Arts, Inc., No. 4:08-cv-02820 (N.D. Cal.) involves a settlement that will pay about $1 million to the class, but the attorneys are seeking $9.2 million for themselves. I'm a class member in an unfair video-game class action settlement? Of course I'm objecting!
• On December 20, the Second Circuit issued a disappointing summary order affirming the $0 Blessing v. Sirius XM settlement where the attorneys walked away with $13 million. [Reuters] We'll be filing a petition for rehearing and rehearing en banc today, and are looking for pro bono Supreme Court counsel for a cert petition if the Second Circuit doesn't correct its legal error.

Southern District of New York assistance?

I've filed an objection in the Southern District of New York to an attorney-fee request that is excessive by tens of millions of dollars, and could use help in the Southern District of New York. Details at Point of Law.

Update: new postcard notice has gone out; there has been much press coverage. More details at Point of Law.

Birthday wishes

Frank Bednarz, who was with CCAF in the early going, and has since moved on to more lucrative intellectual property litigation, wins the Internet today by writing on my Facebook page:

As a member of the injured class of overlooked December birthdays, I have won for you a [voucher, certificate, valuable redemption offer] that entitles you to enjoy all of the Christmastime sales on or around your birthday in perpetuity. Although the face value of this victory is infinite, our expert economist calculated the value over the next 20 years (using aggressive growth rates and no time discount rate), finding that the class will gain approximately $200 billion over this period. However, I am only requesting lodestar for myself and my crack team of 30 paralegals, with a lodestar multiplier of 8. This is incredibly modest on cross-check; slightly less than 0.1% of class benefit over the next 20 years. Mathematically, fees approach 0% of the non-time discounted, boundless value of settlement. 

Happy 101st anniversary of Roald Amundsen reaching the South Pole!

October and November doings

In addition to our Supreme Court amicus and our MagSafe appellate brief, we've kept busy over the last two months.

• We had oral arguments in the Second, Sixth, and Ninth Circuits on the Blessing v. Sirius XM, Pampers Dry Max, and HP Inkjet appeals. Only Inkjet is available online.
• The district court ruled against us in Johnson & Johnson after some additional briefing; we've appealed, and (assuming that the court orders more than a token amount of attorneys' fees; the fee award has not yet been made) will raise the question of first impression of whether securities lawyers who regularly rely upon the efficient market hypothesis can ask a court to rely upon an expert opinion contradicting it when it is inconvenient for their theory of attorney-fee recovery.
• We filed our reply brief in the Online DVD appeal.
• We filed our reply brief in the Texas Frontier Oil appeal over a $0 settlement, which has gotten some press attention. Oral argument is scheduled in Houston in January 16. I was a Bellaire debater, but this is my first time in a Texas court.
• $2.7 million was paid to class members $3.93 at a time in the Classmates case. This is paltry, but more than the $56,000 or so class counsel was going to be happy with had we not successfully. objected. [Ars Technica]

We filed interesting objections in two new cases in California federal courts over the last few days, and I'll discuss over the course of the week.

Amicus brief in Standard Fire Ins. Co. v. Knowles

As I've previously written:

The Class Action Fairness Act was intended to protect consumers against the unfair class action settlements rubber-stamped in state courts by creating federal jurisdiction in nationwide class actions with more than the $5 million jurisdictional minimum at stake. Some plaintiffs' lawyers have attempted to avoid federal court by purporting to limit the rights of their absent clients to less than $5 million, notwithstanding any claims they might be able to make, with the idea of negotiating an attorney-friendly settlement in state court. Most courts reject this tactic, most notably Judge Easterbrook in the 2011 Back Doctors decision, noting that any such disclaimer violates Rule 23(a)(4)'s adequacy requirement. The Eighth Circuit, however, has honored such forum-shopping attempts, resulting in numerous remands to the judicial hellhole of Texarkana, Arkansas.

[On August 31], the Supreme Court granted certiorari to an Eighth Circuit denial of an appeal of such a remand, The Standard Fire Insurance Co. v. Knowles. The Center for Class Action Fairness filed an amicus brief in support of certiorari, making us one for three in cases where we've filed amicus briefs in support of certiorari.

Monday, we filed an amicus brief in support of the merits with the generous pro bono help of McGuire Woods. Further information will eventually be posted at SCOTUSblog.

In other Supreme Court / Andrew Trask news, the Supreme Court denied certiorari to our former client, Kimberly Craven, who unsuccessfully appealed our unfortunate loss in the D.C. Circuit in the Cobell litigation. We can expect a denial of the weaker Good Bear petition next week.