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Thomas A. Dickerson

Although subject to criticism, there are occasions when a non-cash settlement of coupons, in whole or in part, for the purchase of good and services from the defendant may be appropriate. See Thomas A. Dickerson, “Class Actions: The Law of 50 States,” Law Journal Press, Ch. 9 (Non-Cash Settlements) (2017); see also Williamson v. McAfee, 2017 U.S. Dist. LEXIS 15838 (N.D. Cal. 2017) ($11.50 “value certificate”; class could receive $11.50 in cash if completed form); Chambers v. Whirlpool, 2016 U.S. Dist. LEXIS 140839 (C.D. Cal. 2016) (“a full recovery of costs spent on repairs; $200 to $300 in cash for class members who replaced their dishwashers; $100 or a 30 percent rebate on the purchase of a new dishwasher; for class members who experienced an overheating event in the future; a rebate of 10 to 15 percent on the purchase of a new dishwasher to all class members); Redman v. Radioshack, 768 F.3d 622 (7th Cir. 20154) ($10.00 coupon; if purchase item costing less than $10.00 no change; transferable and cash convertible).

The reasons for allowing coupon settlements include: (1) recovery of de minimus damages (which makes the cost of distribution of each individual’s cash award higher than that individual’s claim); (2) the inability to identify class members; (3) the defendant’s inability to pay cash to the class; or (4) it makes good business sense from the standpoint of both the consumer and defendant. Since coupon settlements are generally worth less to consumer than cash, they must be carefully examined for adequacy. Yet coupon settlements are justified because they solve manageability problems, may reflect the defendant’s financial instability and require a defendant to disgorge improperly obtained monies. The courts must be particularly careful and make certain that a proposed coupon settlement is nearly as good as a cash settlement as possible.

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