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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Judge Says, “Chew on This!” in Disapproving Settlement in Smokeless Tobacco Class Action

Posted in Case Summaries

In re Massachessets Smokeless Tobacco, 03-5038, 23 Mass. L. Rptr. 719, 2008 WL 1923063 (Mass. Super. April 9, 2008).

This case reflects the growing consensus among the courts that coupon-only settlements will be highly scrutinized for fairness. This consumer class action was brought against the defendants United States Tobacco Company (“UST”) for alleged antitrust violations.

Specifically, the plaintiffs alleged that UST engaged in unfair acts and practices to extend its near monopoly in the smokeless tobacco market. The parties eventually entered into a settlement agreement and filed a joint motion for settlement approval. 

While CAFA was not directly involved, the Court looked to section 1712(e) regarding coupon settlements under CAFA, and stated that “the passage of this provision reflects how ‘mainstream’ the concern with coupon settlements has become.” The court found that the coupons offered in the settlement were unfair because the actual value was far less than the face value of the coupons, class members could only use the coupons to purchase UST smokeless tobacco products, and similar coupons were actually available to the public with a free subscription to American Outdoor Lifestyle. Finally, the court found that the settlement was contrary to public interest in that it would increase the use of a cancer-causing substance.