The CAFA Law Blog "Guest Commentator Series," in which guest commentators submit posts or articles on issues of interest to those who practice in the class action area continues with the following guest commentary prepared by Victoria Pavlick of JP Morgan Chase Bank’s Bankruptcy and Settlement Services group on the topic of coupon settlements under the Class Action Fairness Act of 2005.
Coupon Settlements under CAFA
The Class Action Fairness Act (the “Act”) was signed into law as a means to protect the interests of class members in a settlement. One of the provisions within the Act revolves around coupon settlements. In this regard, the Act addresses the practice that allowed class action attorneys to receive substantial fees while class members received only coupons for products or services from the companies that they sued.
Prior to the implementation of the Act, counsel for the class, where its members received coupons from the settlement, would base its fee upon a percentage of the total gross amount of the settlement, irrespective of whether any of the coupons were redeemed by the members of the class. The Act has now made it so that the class counsel’s fee is based upon the amount of coupons that are actually redeemed by the class members as opposed to the value of all coupons issued. As a result, the fees cannot be calculated until the time for redemption of the coupons has expired. In addition, if the class counsels’ compensation is not based upon a contingency fee arrangement, then their fees must be based upon the time actually spent by them in litigating the case.
Furthermore, in a class action where the class members are to receive a distribution based upon coupon settlements, the court is to make a written finding of fact as to the fairness and adequacy of the proposed settlement, which takes place following a hearing by the court upon notice to the members of the class.
JPMorgan Chase’s Class Action and Litigation Services provides the experience necessary to meet the Act’s new coupon settlement requirements, including not only assisting in the valuation of the redeemed coupons but also providing the notice to the members of the class as to the settlement hearing that is required by the court to confirm that the settlement is fair, reasonable and adequate. Our professionals bring a wealth of class action experience and our ability to partner with you will ensure that the class action administration process is handled efficiently and accurately.
To learn more above JP Morgan Chase’s Class Action and Litigation Services, please contact:
Victoria Pavlick Owen Ellsworth
Vice President Vice President
JP Morgan Chase Bank JP Morgan Chase Bank
6525 West Campus Oval, Suite 200 4 New York Plaza – 17th Floor
New Albany, Ohio 43054 New York, New York 10004
Tel. 614.946.7942 Tel. 212.623. 5672
Editor’s Note: As we mentioned before, since all of the Editors of the CAFA Law Blog are lawyers, we have to do our disclaimer, which applies to all guest commentaries, in pure legalese (which is also listed below in our "Disclaimers" section below) — "The views and opinions expressed herein are exclusively the personal views of the authors only, unless otherwise attributed. Information and comments provided through CAFA Law Blog do not necessarily represent the views of McGlinchey Stafford, its attorneys or clients, or of the CAFA Law Blog Editors, and should not be attributed to them. The posting of an item on CAFA Law Blog does not mean that McGlinchey Stafford, its attorneys or clients, or CAFA Law Blog Editors approve or disapprove of the selection or contents of that item." We appreciate the efforts of JP Morgan Chase Bank’s Bankruptcy and Settlement Services Group in providing this post, and solicit readers’ comments on the subject matter. Let JP Morgan Chase or us hear from you.