SALT LAKE CITY, UTAH – After Attorney General Sean D. Reyes led a multistate amicus brief in Wawa v. Frank, the United States Court of Appeals for the Third Circuit sided with the coalition of attorneys general, giving the Utah Attorney General’s Office a legal victory in an important case involving a question of reasonable settlement awards to consumer class members and class counsel.
This challenge arose after Wawa’s settlement of a nationwide data breach case awarded more money to class counsel ($3.2 million in fees) than to the class members who were compromised ($80,000 cash and a potential for $2.8 million in low-value gift cards). The fees to class counsel were awarded based on the $9 million in gift cards Wawa initially made “available” to class members, instead of the relief actually delivered, which would likely be a 2-5% redemption rate of the $2.8 million in transmitted gift cards according to studies.
The States argued that attorneys’ fees should be awarded based on settlement relief that class members actually receive, and that class counsel would likely capture over 93% of the true settlement value because of the extremely low redemption rates of low-value gift cards. For example, if recipients of the delivered gift cards redeemed on the high end of the studies (5%), that would represent an award of $140,000 (in addition to the $80,000 in cash) to consumer class members compared to the $3.2 million designation to class counsel.
In the appeals court opinion, the panel of three judges agreed with the attorneys general, vacating the earlier determination of awarded fees and remanding the case to the district court for reconsideration. Judge Matey, writing the decision, directed the lower court “to consider whether ‘the funds made available to class members rather than the amount actually claimed during the claims process’ is the best measure of reasonableness; and whether the fee award is reasonable in light of any side agreements between class counsel and Wawa.”
General Reyes issued the following statement: “Throughout my time in office, I have worked to safeguard the economic interests of hard-working Americans. In this case, our team in Utah led a national coalition of states determined to fight for our citizens. I applaud the decision of the Court to stand with consumers and create sensible precedent for future class actions. Thank you to all of my AG colleagues who joined in our successful amicus brief.”
Joining Utah in the amicus brief were the States of Alabama, Arkansas, Indiana, Kentucky, Montana, South Carolina, Tennessee, Texas, and Virginia.
