CAMDEN, N.J. (Legal Newsline) – A controversial class action settlement with a discount wine distributor has received attention from state attorneys general and the U.S. Department of Justice.
In the case of Cannon et al. v. Ashburn Corp. et al., the plaintiffs allege that Ashburn Corp., the company that ran an online discount wine retailer called Wines ‘Til Sold Out (WTSO) falsely advertised its wine prices.
However, the settlement that was proposed before U.S. District Court for the District of New Jersey Judge Renee Marie Bumb only awards consumers a maximum of a $2 coupon to be used at WTSO while class counsel will be compensated $1.7 million.
Opponents of the class action argue, additionally, that the proposed settlement violates the federal Class Action Fairness Act (CAFA) of 2005.
The Competitive Enterprise Institute's Center for Class Action Fairness represents a member of the class who objects to the settlement in a brief calling for the dismissal of the proposed settlement.
“While class members receive nominal benefits under the settlement, class counsel is seeking $1.7 million in fees and expenses, unopposed by Wines 'Til Sold Out, without regard to the actual recovery by class members,” a press release from the CCAF states. The result is a settlement that impermissibly allocates the bulk of the settlement benefit to the class attorneys rather than class members.”
Additionally, attorneys general for 19 states, led by Arizona Attorney General Mark Brnovich, have filed a joint amicus brief against the proposed settlement.
“The 'credits' here constitute coupons under CAFA because they are worth significantly less than their face value (the touchstone for determining that something is a CAFA coupon),” reads the brief. “[The coupons] come with a litany of restrictions: they expire in one year, are not transferable, are only useful for a restricted selection of wines on the defendant’s website, and can only be used in maximum increments of $2 per bottle of wine.”
Brnovich, with his colleague attorneys general from Alabama, Arkansas, Idaho, Indiana, Louisiana, Michigan, Mississippi, Missouri, Nevada, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Washington and Wyoming, signed the brief.
The Department of Justice Consumer Protection Branch filed a statement of interest, as well.
“The Consumer Protection Branch litigates consumer-fraud enforcement actions on behalf of the United States and thus has expertise in both identifying consumer frauds and crafting appropriate consumer remedies,” the DOJ statement of interest reads. “But this case seemingly has neither.”
The brief highlights that “Based on the allegations in the complaint, it is difficult to discern any actual harm to consumer class members from defendants’ alleged marketing practices. ... Whatever 'original price' was advertised, the actual price is what customers willingly paid.”
The brief also adds that the DOJ believes that the current settlement’s structure is more harmful to consumers than the alleged deceptive marketing and pricing scheme committed by Ashburn.