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July 30 — A federal district court July 29 granted preliminary approval of a settlement of a proposed class action alleging that women's apparel retailer Charming Charlie LLC violated California's Song-Beverly Credit Card Act by requiring customers to provide personal information when making credit card purchases.
Named plaintiffs Heidi Anderson-Butler and Paula Haug, who visited Charming Charlie stores in California, said the company required them to provide personal data to make credit card purchases. Charming Charlie, however, asserted that it makes clear to customers that it requests information for loyalty club purposes only.
Under the proposed no-fault settlement agreement tentatively approved by Judge William B. Shubb of the U.S. District Court for the Eastern District of California, the retailer would provide $350,000 in vouchers that could be used to get Charming Charlie merchandise at no cost. Class counsel would be awarded attorneys' fees in the amount of $140,000, and the named plaintiffs would receive enhancement awards of $5,000 each.
Court records show the parties' agreement further calls for Charming Charlie to provide the class members with instructions on how to request removal of their names from the defendant's e-mail list and opt out of future communications.
The court, however, had some questions regarding the adequacy of the settlement.
The court said “plaintiffs’ counsel should be prepared to explain to the court, either before or at the fairness hearing, why the settlement is adequate given the stark disparity between the settlement amount and the apparent value of the case.”
If the plaintiffs prevailed at trial, each of the members of the proposed class would receive $250, or $5 million, the court said. Under the proposed settlement, the maximum voucher value would be $20, and an individual's recovery would be limited to $1.75 if all 200,000 proposed class members submitted claims, it said.
For similar reasons, the court said the plaintiffs “do not provide a justification” for such a comparatively high incentive award of $5,000 to each of the class representatives.
“The settlement agreement vaguely notes that the awards are for financial risk and the time and effort spent on the litigation, without any further explanation,” the court wrote.
“While the incentive award is not dispositive of the named plaintiffs' adequacy of representation, the court will further explore the appropriateness of the award at the final fairness hearing,” it said.
Representatives for the parties didn't immediately return Bloomberg BNA's requests for comment July 30.
Lindsay Law Corp. represented the plaintiffs. Cooley LLP represented Charming Charlie.
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Full text of the court's opinion is available at http://www.bloomberglaw.com/public/document/AndersonButler_et_al_v_Charming_Charlie_Inc_et_al_Docket_No_214cv.
Full text of the proposed settlement agreement is available at http://www.bloomberglaw.com/public/document/AndersonButler_et_al_v_Charming_Charlie_Inc_et_al_Docket_No_214cv/1.
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