Groupon MDL $8.5M Class Action Settlement Vacated by 9th Circ. 

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An $8.5 million class action settlement reached in a multidistrict litigation against Groupon was vacated by the Ninth Circuit Court of Appeals in a group of class action lawsuits, which claimed that Groupon allegedly sold gift certificates with expiration dates that are illegal.

Both the fairness of the distribution of funds needs to be reexamined by the lower district court as well as the attorneys’ fees, the appellate court said about the Groupon class action settlement.

The class action settlement was objected by Class Members Sean Hull and Padraigin Browne, who took issue with the notice settlement as well as other errors they believed that the California federal court had made such as giving the plaintiffs’ attorneys $2.1 million in attorneys’ fees.

The objectors alleged that the settlement fund is mere illusory relief and that it was increased in order to increase the amount of money that went toward attorneys’ fees.

The appellate court is sending the class action settlement back to the district court to perform a “more searching inquiry,” the judges wrote. However, it did not make any statements about whether or not it believed that the class action settlement fund was fair.

“Here, our review of whether the district court made an adequately searching inquiry on the settlement’s fairness is hampered by a lack of factual findings relating to this second settlement fund,” the appellate court said.

“The district court accepted the settling parties’ contention that second settlement fund was a dollar-for-dollar benefit to the class,” the panel added.

The approval of the Groupon class action settlement fund lacked findings by the district court on whether or not the settlement was adequate in terms of its size, scope and impact, the judges on the panel for the Ninth Circuit Court of Appeals said.

In addition, the lower court did not determine if the benefits of the Groupon class action settlement fund “were in any way duplicative of pre-existing relief available to class members via Groupon’s customer satisfaction policy, under which it conceded that it paid refunds to customers.”

The objectors took serious issue with these issues, the panel added.

The Groupon class action settlement was approved by U.S. District Judge Dana M. Sabraw in December 2012, once the Class Members had ditched a charitable contribution for non-class members, which the federal judge had said could go to additional Class Members.

The Groupon MDL stemmed from 16 class action lawsuits filed against the website for selling gift cards and gift certificates to various restuthat would expire in less than five years, which is a violation of the Electronic Funds Transfer Act, which was amended by the Credit Card Accountability Responsibility and Disclosure Act.

The class action lawsuits had also alleged that Groupon had violated several state consumer protection laws for selling the illegal gift certificates with illegal expiration dates and not making proper disclosures to its customers about the conditions which applied to the certificates.

A new class notice or fairness hearing will not be necessary as the district court makes changes, the appellate court said.

The Groupon class action settlement also requires that online discount company doesn’t offer more than 10 percent of its discounts with expiration dates that are less than 30 days, unless the discounts are under the categories of ticketed or time-limited events.

Hull and Browne are represented by themselves.

The plaintiffs are represented by Kevin Green of Robbins Geller Rudman & Dowd LLP.

Groupon is represented by Stanley Panikowski of DLA Piper.

The Groupon Illegal Gift Certificates Class Action MDL is In re: Padraigin Browne v. Groupon, Inc., et al., Case No. 13-55118 in the U.S. Court of Appeals for the Ninth Circuit.

UPDATE:  Claim filing instructions for the revised Groupon voucher class action settlement are now available! If you previously filed a claim for the 2012 Groupon settlement, you do not need to take any further action to receive benefits. Click here or visit www.GrouponVoucherSettlement.com for more information.