In a precedential opinion, the Third Circuit in Vodenichar v. Halcón Energy Properties, Inc., clarified the “home state” and “local controversy” exceptions to federal subject matter jurisdiction under the Class Action Fairness Act (“CAFA”). The decision provides guidance on two undefined terms within CAFA, adopting broader interpretations for what makes a defendant a “primary defendant” for purposes of the home state exception and what constitutes an “other class action” for purposes of the local controversy exception.
Author: J. Brugh Lower
Ninth Circuit Rules that Redemption Value of Coupons Cannot be Ignored in Calculating Attorneys’ Fees in Coupon Settlements
In In re HP Inkjet Printer Litigation, the Ninth Circuit reversed a District Court’s approval of a class action settlement providing “e-credits,” or coupons, to class members, on the ground that the class counsel fee award violated § 1712 of the Class Action Fairness Act (“CAFA”). The parties’ settlement agreement had provided for $5 million in coupons, as well as injunctive relief in the form of additional product disclosures. The District Court, recognizing that the coupons were worth significantly less than their face value, estimated that the “ultimate value” of the combined coupon and injunctive relief to the class was approximately $1.5 million, and awarded fees of $1.5 million based solely on the lodestar method, without calculating the actual redemption value of the coupons.
Third Circuit Makes Approval of Class Action Settlements Including Cy Pres Distributions More Difficult
In In re Baby Products Antitrust Litigation, the Third Circuit vacated a district court’s approval of a $35.5 million class action settlement, finding it unreasonable that only $3 million of the settlement fund was to be distributed to class members. This marked the first time the Third Circuit has addressed the issue of cy pres distributions in class action settlements, and will likely lead district courts to subject class action settlements involving cy pres distributions to greater scrutiny.