A class action settlement that gave class members, in addition to other consideration, a $20 credit against future purchases from the defendant’s website was a coupon settlement within the meaning of 28 USC 1712.  The websites offered a much more restricted list of merchandise than Walmart in the In re On-Line DVD Rental Antitrust Litig. (9th Cir. 2015) 779 F.3d 934 case.  The fact that the credit gave the class members nearly complete relief went to the settlement’s fairness, not whether the credit was a coupon.  Because the credit was a coupon, under 28 USC 1712, in valuing the settlement for purposes of awarding attorney fees, only the value of the credits actually used by class members could be counted.  Here, the district court had erroneously used the full value of all the credits available to class members in setting the attorney fee as a percentage of the total settlement value.  Though the district court “cross-checked” the percentage result by the lodestar method, it reverse-engineered that cross-check by adopting a multiplier that conveniently brought the lodestar of hours times rate up to the same number it had already computed by the percentage-of-recovery method.

Ninth Circuit Court of Appeals (Friedland, J.); October 3, 2018; 2018 U.S. App. LEXIS 28000