Class-action suit yields little more than discount codes for public

As Ticketmaster’s proposed class-action settlement of claims that it overcharged consumers with ticket-processing fees heads for final court approval, terms of the deal are drawing objections that consumers are left with discount codes while plaintiffs’ attorneys will reap $16.5 million in fees and costs.

Los Angeles Superior Court Judge Kenneth Freeman has scheduled a hearing for July 24, when he is expected to consider objections that have been filed by about 80 members of the class of more than 50 million ticket purchasers.

Two plaintiffs, Curt Schlesinger and Peter Lo Re, filed a class-action suit against Ticketmaster in 2003, claiming the firm’s ticket processing and delivery fees were excessive, and after years of legal wrangling their litigation teams reached a settlement with the company last year. It calls for Ticketmaster to provide “discount codes” of $1.50 that can be used for some future ticket purchases. A $5 discount code for UPS services would be available to a subclass of plaintiffs — expected to number about 4.5 million — as compensation for delivery overcharges. The discounts can be applied to up to 17 transactions, and cover ticket puraches made between Oct. 21, 1999, and Oct. 19, 2011.

Ticketmaster also agreed to pay $15 million in plaintiffs’ attorneys fees and $1.5 million in costs, as well as $20,000 each to the two lead plaintiffs.

Freeman gave preliminary approval to the terms of the settlement in November, but gave time for objections to be raised.

“As I read the settlement, I will get up to 17 coupons worth $1.50 each,” wrote Charles Dunton of Broomall, Penn. “Can you explain why the attorneys get more than $16 million for this?”

A Boston attorney, Matthew Cameron, created a Facebook group in opposition.

The suit has drawn the attention of the U.S. Chamber of Commerce, which has long supported tort reform and what they have seen as excessive compensation for trial attorneys. Matthew Webb, senior VP of Legal Reform Policy for the Chamber, noted that the class action was filed before the Class Action Fairness Act passed in 2005 giving federal courts greater jurisdiction over class-action suits and putting substantial limits on so-called “coupon” settlements and class attorneys fees. He argues that attorneys fees should be tied to the coupon redemption rates, which are traditionally very low.

“A number of state courts don’t take into account the redemption rate” of how much plaintiffs are really getting, he said. “They look at the fiction of what attorneys are putting together.”

But Robert Stein of Alvardo Smith, lead counsel of the class plaintiffs, defended the deal and the way that attorneys’ fees were calculated.

In court filings, he noted that the discounts stood to cost Ticketmaster $265 million, while the settlement had a minimum value of $61.5 million. That includes the attorneys’ fees and costs, as well as a “guaranteed redemption” and “cy-pres” payment of $45 million — which means that if less than $45 million in discount codes are redeemed, the remainder will go to charity.

Stein said that the attorneys’ fees — covering eight years of litigation and multiple firms — amount to 5.3% of the maximum settlement value and 25% of the $61.5 million minimum.

To those who have objected, he has noted that the discount codes were a more efficient way than cash payments, which would add additional costs or even require recipients to provide their bank information.

A Ticketmaster spokeswoman said the company had no comment. But their attorneys wrote in court filings that the objections were “unfounded” and the settlement “was vigorously negotiated and made at arm’s length.”

“They make no effort to understand the underlying facts or the procedural history and legal arguments in the case and to consider the risks and benefits of further litigation in that context,” Ticketmaster’s lawyers wrote.

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