Coupons, Clear Sailing, and Reverters: Another Settlement Bites the Dust in the 9th Circuit

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In another of what seems like a string of decisions reversing district court approvals of class action settlements, the 9th Circuit, applying a three-factor test, held that vouchers offered as consideration to class members were coupons within the meaning of the Class Action Fairness Act, and that any award of attorneys’ fees must be based on the redeemed value rather than the face value of the vouchers. In McKinney-Drobnis v. Massage Envy Franchising, LLC, the court also characterized a provision allowing a defendant to retain excess amounts it had been willing to pay for attorneys’ fees as a disfavored “kicker” or “reverter,” a characterization that is consistent with 9th Circuit precedent but that may be inconsistent with how those terms are understood in other venues. Co-host Adam Polk and I discuss the court’s decision in a new episode of the American Bar Association’s “Common Questions” podcast, which can be found here.