By Perry Cooper
The $1.7 million fee award to class counsel “far outweighs the meager offering to class members” in a settlement to resolve deceptive wine pricing claims, the Department of Justice said Feb. 16.
Consumers would have to buy more wine from the same company that allegedly wronged them to get the full value of their settlement award, attorneys from the Justice Department’s Consumer Protection Branch told the U.S. District Court for the District of New Jersey. It urged the court to deny final approval.
The attorney general has the power under the Class Action Fairness Act to participate in class settlements. But the DOJ hasn’t done so in over a decade, outgoing Assistant Attorney General Rachel Brand said Feb. 15.
Brand said the DOJ planned to take a more active role in monitoring class action settlements going forward. She hinted that this involvement would start soon, and this letter of interest is the first example.
Consumers allege Ashburn Corp. and its subsidiary Wines ‘Till Sold Out sell bottles of wine online using falsely inflated prices to give the appearance of steep discounts.
Under the terms of a settlement reached by the parties, WTSO would give customers discounts toward future bottles. They estimate the total value of the credits as $10.8 million. Class counsel would take home $1.7 million.
Assuming $10.8 million in credits and 243,789 potential class members, the average class member would get about $44 in credits, the DOJ said. But customers can only use $2 in credit per bottle, meaning they would have to buy at least 22 bottles from the same defendant who allegedly wronged them, the department said.
The settlement also caught the eye of the Competitive Enterprise Institute’s Center for Class Action Fairness, which frequently objects to class settlements.
CCAF objected Feb. 16, arguing the terms impermissibly make class counsel the “foremost beneficiaries” of the settlement.
Joshua D. Rothman and others represented the Justice Department
Carella Byrne Cecchi Olstein Brody & Agnello P.C. represents the consumers.
Manko, Gold, Katcher & Fox LLP represents the wine seller.
The case is Cannon v. Ashburn Corp. , D.N.J., No. 16-1452, statement of interest of the U.S. 2/16/18 .
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