Lawyers representing a purported class of customers who accused retailer OfficeMax North America Inc. (OfficeMax) of illegally recording their zip codes tried again this week to gain court approval of a settlement deal agreed to with OfficeMax. Dardarian v. OfficeMax Inc., case number 4:11-cv-009947 (N.D.Cal.) A previously submitted settlement was rejected by the US District Court for Northern California in July 2013, in part on the ground that attorney fees had not been properly calculated pursuant to the Class Action Fairness Act (CAFA) because the calculation was based on the issuance of merchandise vouchers that might never be redeemed. The new proposed settlement again was based on the issuance of vouchers to affected customers, but this time reserves a final decision on fees until after the vouchers have actually been redeemed.

The proposed settlement arises out of a claim by plaintiffs from two consolidated class actions, both of which alleged that OfficeMax's "Information Capture Policy, " which required cashiers to ask for zip codes from customers paying with credit cards, violated California’s Song-Beverly Credit Card Act (Song-Beverly). Song-Beverly generally prohibits requests for personal identification information from customers paying with credit card in California, imposing civil penalties up to $1,000 per violation.

In rejecting the parties' previously submitted voucher-based plan, the court stated, "In light of the uncertainty regarding the ultimate value of the settlement, and the factors showing that the settlement is based effectively on a coupon, the Court is not persuaded that it can ignore CAFA’s rules governing the award of attorneys’ fees. At a minimum, the intent of CAFA should be followed. Under § 1712 of CAFA, a district court may not award attorneys’ fees to class counsel that are ‘attributable to’ an award of coupons without first considering the redemption value of the coupons."

The unopposed revised settlement plan calls for distributing 120,0000 $5.00 vouchers to OfficeMax customers at the time they make a purchase in California. The plan also provides for payment of a $10.00 voucher to customers who file for a direct claim. All vouchers are subject to a defined redemption period. In an attempt to address the court's prior ruling that the fee calculation could not be based on anticipated voucher redemptions, the revised plan defers the calculation until after the voucher redemption period has expired. Under the revised plan, OfficeMax will file a report within 14 days after the expiration of the redemption period, documenting how many $5 and $10 vouchers were actually redeemed. The plan also provides a floor of $200,000 and a ceiling of $500,000 for attorney fees.

We will report here on whether or not the court grants preliminary approval of the revised settlement plan and if so, if the court actually bases the eventual fee award on the amount of voucher redemptions.