Goodman v. American Express Travel Related Services Co., Inc.

In 2007, Kaufman filed a class‐action lawsuit based on Amex’s sale of prepaid gift cards. The packaging declared the cards were “good all over.” Kaufman alleged that these cards were not worth their stated value and were not “good all over” because merchants were ill‐equipped to process “split‐tender” transactions when a holder attempted to purchase an item that cost more than the value remaining on his card. After 12 months Amex automatically charged a “monthly service fee” against card balances. Kaufman alleged Amex designed the program to make it difficult to exhaust the cards' balances. Following the denial of Amex’s motion to compel arbitration, settlement negotiations, and the entry of intervenors, the court certified the class for settlement purposes but denied approval of a settlement, citing the inadequacy of the proposed notice. Response to notices of a second proposed settlement was “abysmal.” A supplemental notice program provided notice to 70% of the class; the court again denied approval. After another round of notice, the court granted final approval in 2016, noting the small rate of opt‐outs and objectors. The court awarded $1,000,000 in fees and $40,000 in expenses to the Plaintiffs’ counsel, $250,000 to additional class counsel, and $700,000 in fees to intervenors' counsel: attorneys would receive $1,950,000. The court concluded the total value of the claims was $9.6 million, that, considering the number of claims and the value of supplemental programs, the total benefit to the class was $1.8 million, and that recovering $9.6 million was unlikely. The Seventh Circuit concluded that the court did not abuse its discretion, despite the settlement’s “issues.” View "Goodman v. American Express Travel Related Services Co., Inc." on Justia Law