Redman v. RadioShack Corp.

Dist. Ct. erred in approving proposed settlement in class action under Fair and Accurate Credit Transaction Act alleging that defendant provided receipts of credit card transactions that contained card’s expiration date, where, as part of settlement, individual class members received $10 coupon to be applied to future purchase at defendant’s store, and where counsel for class action received $1 million in attorneys’ fees. Settlement provided inadequate benefit to class action members, where record showed that agreed upon attorneys’ fees, plus $830,000 worth of coupons and administrative costs totaled $4.1 million, and Dist. Ct. erred in assigning $2.2 in administrative costs as sole benefit of class members when determining fairness of division of settlement proceeds. As such counsel’s fee equated to improper 55 percent contingency fee. Dist. Ct. also erred in: (1) failing to estimate discounted value of coupons to reflect actual use of said coupons by class members, as well as enhanced sales of defendant’s products through use of coupons. Moreover, Dist. Ct. should have used enhanced scrutiny regarding instant settlement where parties used “clear sailing” clause that prevented defendant from contesting amount of attorney fees, and class counsel improperly waited to file fee motion until after deadline for filing objections to settlement.