Case Study: Korean Air Antitrust LitigationCertificate Clearing Corporation
Mon Feb 08, 2016
Price-Fixing Across the Pacific
Moving forward, a successful redemption rate from the In Re Korean Air Passenger Antitrust Litigation will give plaintiff’s attorneys and defendants the confidence to settle class actions with coupon settlements that abide by CAFA.
Coupon settlements are an effective way of settling class actions when done right. However, they were constantly the targets of criticism before the passage of Class Action Fairness Act (CAFA) in 2005 ⎯ for not bringing the value to the class, for allowing the plaintiff’s attorneys walk away with sizable fees, and for letting defendants off the hook without paying much.
Now, CAFA establishes that “if a proposed settlement in a class action provides for a recovery of coupons to a class member, the portion of any attorney’s fee award to class counsel that is attributable to the award of the coupons shall be based on the value to class members of the coupons that are redeemed.” In other words, a class counsel’s fee is directly tied to the realized value of the coupons to the class. Thus, CAFA has effectively forced into line the interests of plaintiff’s attorneys and the class, seemingly solving all the existential problems.
Yet not having the adequate experience in creating and designing coupons that can bear high redemption rates, plaintiff’s attorneys are often dissuaded from resolving class actions with coupon settlements in fear of failure to conform to the conditions of CAFA.
With CCC's extensive experience in creating redemption processes, and administering and making markets in coupon settlements, such settlements have evolved to become the best non-monetary resolution in a post-CAFA world. For a quarter century, CCC has brought actual value to class members in numerous class actions. For instance, CCC recorded an exceptionally high redemption rate of 93% in the Linens Antitrust Litigation.
The defendants have agreed to pay all persons and entities who purchased tickets during the class period a total of $50 million in cash and $36 million in coupon codes for future travel.
CCC is currently preparing to distribute coupons for the recent In Re Korean Air Passenger Antitrust Litigation. The case involves an alleged conspiracy between Korean Air Lines Co., Ltd and Asiana Airlines Inc. (“defendants”) to fix the prices of air passenger tickets between the U.S and the Republic of Korea from January 1, 2000 through August 2007. Filed in 2007 in the Southern District of California, the case reached a distribution order in early 2016. The defendants have agreed to pay all persons and entities who purchased tickets during the class period a total of $50 million in cash and $36 million in coupon codes for future travel.
Some 86,000 class members will be provided with $25.7 million in travel vouchers, which are redeemable towards flight tickets on Korean Air and Asiana for the three years. The coupons did pose some logistical questions, but CCC successfully consulted the plaintiffs’ attorneys and defendants to create an acceptable coupon settlement. Had coupons not been on the table, the already lengthy litigation would likely have drawn out much longer.
As the Coupon Consultant, CCC proposed the rules and means of redemption and transfer for each defendant’s coupon codes. Then, as the Coupon Administrator, CCC will facilitate the redemption of coupons. This process required detailed discussions and negotiations with defendants, as well as creating an English and Korean language coupon website for class members. This administration will also include staffing, training, and managing a call center to respond to inquiries regarding coupons and the secondary market.
CCC anticipates the creation of a series of two-sided auctions where large amounts of coupons can be sold and bought at one price. As the Market Maker, CCC will also keep a transparent book displaying the best bids and offers in the marketplace where a buyer and seller can transact.
Once again, CCC is endeavoring to bring benefits to everyone. CCC will ensure that the class and the plaintiffs’ attorneys receive the compensation they deserve. The Defendants will regain the trust of their customers through simple and effective coupon redemption processes. Moving forward, a successful redemption rate from the In Re Korean Air Passenger Antitrust Litigation will give plaintiff’s attorneys and defendants the confidence to settle class actions with coupon settlements that abide by CAFA.