Complex Litigation: CAFA and Coupons

Abstract

Commentary and analysis of the coupon settlement provisions of the Class Action Fairness Act of 2005 (CAFA), and the emerging federal case law interpreting and apply these new provisions. Prior to congressional enactment of CAFA, so-called coupon settlements were a frequent device used in settling the claims of massive class actions, where claimants would receive a coupon or voucher (instead of monetary compensation) to be applied against the future purchase of a product or service. In order to curb the various abuses surrounding coupon settlement, CAFA incorporated several provisions limiting the use of such remedies in class action settlements. The article discusses a district court’s decision in Figueroa v. Sharper Image Corp. (S.D. Fla. Oct. 11, 2007), in which the district court emphasized the congressional intent that coupon settlements accomplished after CAFA’s enactment were to be subjected to heightened judicial scrutiny. The decision provides an in-depth analysis of the procedural and substantive fairness of coupon settlements in a post-CAFA world, and the role of objectors in policing settlement agreements.