Put A Picture Of This In The Dictionary Next To “Unethical Class Action Settlement”

Hewlett-Packard has been sued in a class action lawsuit, made up of a huge number of users of the company’s printers and ink cartridges, for a wide variety of problems. Here’s what the lawyers have come up with: a $5,000,000 settlement to be paid off in $2 and $7 coupons that can only be used at HP.com to purchase Hewlett-Packard products, and which can’t be transferred or combined, and will expire in six months. Consider:

1. This forces consumers to buy their HP ink cartridges at the HP.com, rather than Amazon. com, where they  cost $6 less.

2. HP actually makes money on the deal, which transforms damages into a marketing device for the defendant.

3. As with all coupon settlements, most class members will never claim the coupons, much less use them, and

4. To cap it all off, the class’s lawyers are claiming $2.9 million in fees for negotiating this joke of a settlement, in which it is estimated that the class members will receive average benefits of five cents a piece.

Coupon settlements are almost always ethical abominations, and many judges refuse to certify them. This one is being challenged by The Center for Class Action Fairness, in the Northern District of California.

[Thanks to Point of Law for the story.]

5 thoughts on “Put A Picture Of This In The Dictionary Next To “Unethical Class Action Settlement”

  1. More than one wag has pointed out, in the wake of one of these suits or other with coupon payouts, that we can take them seriously when the lawyers who brought the suit take their share of the damages in coupons. A good rule of thumb, it would seem.

  2. If it is just to make sure the guilty party gets off easy…tough! I can see where coupon settlements would be beneficial to the injured party, but the coupon has to be for FREE STUFF. Imaging the Ford Explorer settlement. If the settlement had been $15,000/person and Ford said “Look, the Explorer costs us $17,000 to build, but we will just give you one because we are paying workers right now not to work and it works out better for us in the long run”. This is a win-win. It might end up costing Ford a little less than $15,000/person after they factor in labor issues and the injured party gets property worth more than $15,000 that they can sell. In other words, I don’t think it is bad to settle for merchandise as long as:

    (1) The merchandise costs the company a similar amount of money as the settlement

    (2) The street value of the merchandise is much more than the settlement

    For example: I would have taken a 427 crate motor in lieu of a $2000 settlement.

      • That is the same as coupons everywhere. When I get my monthly coupon from Lowe’s that gives me $5 off a $50 purchase, I use it if I need something that expensive from Lowe’s that month. When I get my $10 off any purchase $10 or more at Stage, I go get socks, whatever for free (ok, $0.30). I always use that coupon. I have that one in my wallet right now and it won’t be there by Monday.

        If HP had been forced to send all those people a coupon for 2 FREE printer cartridges if they just entered the code at hp.com (free shipping), a lot more people would have done it. It then would have cost HP some money. As it is, this lawsuit will increase their revenues. They need to require math for judges who hear cases like this.

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