If you ever got sued for millions of dollars, wouldn’t it be nice if you could just pay the damages in coupons? That’s what a couple of retailers are currently doing – and the coupons aren’t even all that great.

Luxury handbag maker Coach has agreed to a settlement in a class action lawsuit, which accused it of asking for the contact information of customers who paid with a credit card. That violates California law. Coach has denied any wrongdoing, but on Friday, it agreed to hand out a bunch of 30% off coupons to make the whole thing go away. That means more than a million members of the class action whose rights were (allegedly) violated the last time they went to a Coach store, will now have the opportunity to go back.

Bed, Bath & Beyond recently settled a similar class action lawsuit, and offered 15% off coupons to the injured parties (read more about them here: “Bed, Bath & Beyond to Coupons: ‘We Hate You, But We Need You'”).

Imagine going through the hassle of a lawsuit to get your 15% off Bed, Bath & Beyond coupon, only to show up at the store to find that every single other person in there had a 20% off coupon. They’re not that hard to find, and you don’t have to sue anyone to get them. Similarly, Coach often sends its preferred customers coupons for $100 off a $300 purchase, and currently has a 30% coupon valid at its outlet stores through the end of September – and all you need is a printer, not a lawyer.


These two cases are just the latest examples of “coupon settlements” that have come under criticism. Even back in 2005, an article in the Georgetown Journal of Legal Ethics tried to point out how lousy they can be. In “Coupon Settlements: The Emperor’s Clothes of Class Actions”, authors Steven B. Hantler and Robert E. Norton describe a number of class action lawsuits that were settled with coupons, providing dubious value to those who “won”. In one case, “Poland Springs was sued for selling bottled water that allegedly was not ‘pure’… the ‘injured’ class received more of the bottled water.” In another case, filed “against the maker of Cheerios… consumers received coupons for a free box of Cheerios, but only if they had kept their grocery receipt to prove their previous purchase.”

More recently, the California-based discounter Grocery Outlet settled a class action suit by providing $3 off coupons that were “available on request”, or “printed on purchase receipts”. Turns out only 50,000 were available “on request”, and the rest – 566,000 more – were printed on the backs of receipts that were most likely tossed out by a majority of shoppers who didn’t even know they were there.

Still, the lawyers who helped negotiate settlements like these, insist they’re a good deal. “All of those class members, all 1,047,000, now have a chance to save 30% on all their purchases,” said Neil Fineman, the plaintiffs’ attorney in the Coach case. “They can go in, clean up the store if they want!” Or, more likely, Fineman can clean up the store if he wants. While the plaintiffs anxiously await their 30% coupons, Fineman earned a cool $225,000 fee himself. The attorney in the Bed, Bath & Beyond case who managed to get those 15% off coupons, earned up to $209,000. And in the Grocery Outlet case, the plaintiff’s attorney got $196,000.

“Rather than being a way to settle honest disputes between a company and its customers,” Hantler and Norton wrote, “most coupon settlements degenerated into another get-rich-quick scheme for plaintiffs’ lawyers.” And Fineman, the attorney in the Coach case, has earned a pretty penny from such lawsuits. Except in one case – where the judge mediating the case decided to issue a bit of poetic justice. In a class action case against the women’s dress store Windsor Fashions, members of the class action were awarded $10 gift cards, and Fineman was to receive a fee of $125,000. But the judge decided it would only be fair for Fineman to receive his compensation in the same form as his clients. So his fee was paid in $10 Windsor Fashion gift cards. 12,500 of them.

Pity the Coach settlement wasn’t paid out the same way, or Fineman might be able to get some nice Coach handbags to go with all of his evening gowns.

Image source: Toby Hudson (Wikimedia Commons)

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