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ABSTRACT: The class action device is an important tool for injured consumers. It allows hundreds of consumers to aggregate their injuries and enables them to litigate their claims. However, the system is vulnerable to abuse. One form of alleged abuse is the class action coupon settlement. In many coupon settlements, the members of the class receive valueless coupons, while the class's attorney is paid millions. Congress sought to eliminate this practice by enacting section 1712 of the Class Actions Fairness Act ("CAFA"), which attempts to regulate how attorneys' fees are calculated in a coupon settlement. Unfortunately, section 1712 was poorly drafled, which has led to opposing interpretations from the Seventh and Ninth Circuits. This Note argues that the Seventh Circuit correctly interpreted the current version of section 1712 of CAFA, but that Congress should rewrite section 1712 in accordance with the Ninth Circuit's interpretation, to better protect future class members in coupon settlements.

I. Introduction

On August 20, 2015, in in re Southwest Airlines Voucher Litigation, the Seventh Circuit created a clear circuit split when the court decided that the lodestar method can be used to ascertain attorneys' fees in a coupon settlement under the Class Action Fairness Act of 2005 ("CAFA").1 This holding is contrary to the Ninth Circuit's approach in in re Hp inkjet printer Litigation, which held that the lodestar standard was prohibited in class action coupon settlements in some aspects.2 These countervailing interpretations highlight that the current version of CAFA is poorly written and ambiguous. Congress must act and reform the statute to better protect class members in coupon settlements. This Note suggests such a reform.

Part II of this note will discuss the importance of class action settlements and examine the history of Congress's attempts to reform the class action system. Part III will then explain and analyze the Seventh and Ninth Circuits' interpretations of CAFA. Lastly, this Note will offer a reformed version of section 1712 and discuss how the various changes to the statute would better protect class members in a class action coupon settlement.

II. Class Actions and Coupon Settlements: History, Benefits, Disadvantages, and Failed Reform

Part II will discuss the history of class actions and coupon settlements, why class actions are needed, the alleged abusive practices...

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