Lawyers behind a class action against daily deal company LivingSocial are hoping to collect $3 million in fees, the maximum amount that the two sides agreed to in a settlement. The fees are on top of the $4.5 million that LivingSocial agreed to pay to settle claims that its deal voucher expiration dates and other restrictions violated federal and state laws.
The fee arrangement was spelled out in an agreement (PDF) that U.S. District Judge Ellen Segal Huvelle gave preliminary approval to in October. Under the agreement, LivingSocial said it wouldn't contest a request for attorney fees up to $3 million. On January 18, the plaintiffs filed a motion for attorney fees (PDF), asking Huvelle to order the award.
Plaintiffs in the District of Columbia, Florida, California, Minnesota, and Washington filed class actions in early 2011 against LivingSocial, all alleging similar violations of the federal Credit Card Accountability Responsibility and Disclosure Act and state laws. The cases were consolidated into a single multi-district litigation in D.C. federal court.
The plaintiffs claimed that LivingSocial's daily deals should be considered the same as gift certificates or gift cards, which can't have an expiration date of less than five years under federal law. They accused the company of selling deals with illegally short expiration dates with the knowledge that consumers wouldn't use them.
In settling, LivingSocial denied any wrongdoing and maintained that its products were not gift certificates or gift cards. According to the settlement agreement, the company took into account the "uncertainty and risks inherent in litigation" and wanted to avoid the expense and time of mounting a defense.
Under the settlement, LivingSocial agreed to pay $4.5 million to reimburse consumers with expired deals. Any leftover funds would go to two nonprofits that work on consumer protection issues, the National Consumers League and the Consumers Union. The company also agreed to split and specify the expiration dates for the promotional value of a deal – $10 for $20 of services, for instance – and the actual paid value, so that the paid value expired in compliance with federal law or state law (whichever was longer).
A final fairness hearing on the settlement is scheduled for March 7.
In the motion for attorney fees filed last Friday, plaintiffs' lawyers said that $3 million was reasonable because of the time they put into the case and its complexity, claiming that the figure represented less than five percent of the value of the settlement: the $4.5 million cash payment, the estimated $80,000 that LivingSocial spent on administrative costs, and the estimated $54 million in savings for consumers, in light of the policy changes LivingSocial made as part of the settlement.
LivingSocial and its attorneys at Cooley declined to comment. Lead attorneys for the plaintiffs, Charles LaDuca of Washington's Cuneo Gilbert & LaDuca, and John Stoia Jr., of Robbins Geller Rudman & Dowd in San Diego, could not be reached for comment by deadline.