Legal News

Credit Card Receipt Case Yields Sundaes, Soup . . . . Attorneys Fees

By Dan Slater

Remember those ‘credit card receipt’ class actions the Law Blog wrote about a few weeks ago? They’re the cases in which plaintiffs, though they admit to suffering no financial damage, sue retailers for putting too much info on receipts, thereby violating the Fair and Accurate Credit Transaction Act, or FACTA. We mentioned that, with statutory damages of between $100 and $1,000 per violation, defendant-retailers could potentially argue against class certification by invoking the “annihilation defense” — the theory that potential damages could annihilate their business.

Well, at least one retailer has managed to escape annihilation. In a settlement approved on Tuesday in the Western District of Pennsylvania, Kings Family Restaurant agreed to offer the plaintiff-class one of the following four options:

• a free ‘appeteaser’ and a free mini-sundae, with a retail value of up to $ 4.68; or

• a free homemade bowl of soup and a free slice of apple or pumpkin pie, with a retail value of up to $ 4.78; or

• a free cup of soup and a free ‘appeteaser,’ with a retail value of up to $ 4.38; or

• a free dinner salad and a free single scoop of Kings Premium Ice Cream, with a retail value of up to $ 4.38.

According to the opinion, defendant has further agreed to donate 500 gift certificates for kids’ soft drinks, with a retail value of $ 0.99 per drink, to First Tee, a non-profit organization which offers underprivileged children the opportunity to play golf. Defendant also agreed to pay plaintiffs attorneys fees and costs not to exceed $75,000.

With 291,000 transactions at issue in the case, which is only one of hundreds of FACTA class actions taking place around the country, the total settlement relief made available to the class was about $1,274,580.

LB’ers: We know that it’s a lot even when 10% of class members settle their claims, but, here, only 165 class members obtained coupons — less than 1% of the class. By LB fuzzy math, that means the attorneys fees outmatch the recovery by a ratio of nearly 100:1. What say you?

Full post as published by Law Blog - WSJ.com on April 25, 2008 (boomark / email).