CHICAGO – A Chicago federal judge has ended a long-running lawsuit involving Southwest Airlines premium drink coupons, after Southwest agreed to give members of the class triple damages and attorneys for the plaintiffs agreed to reduce their demand for fees by $200,000.
The litigation has a long and tortured history. In November 2011, Chicago attorney Joseph Siprut filed suit on behalf of Joseph Levitt, a Cook County resident, against Southwest Airlines. The matter arose from a dispute over drink vouchers. Southwest had a policy of distributing free $5 drink vouchers to customers in its Business Select program. Some travelers would hold on to the coupons to use on future flights. The coupons had no expiration date. After issuing the vouchers for years, Southwest decided to stop honoring them. The 2011 class action suit sought to force Southwest to pay customers for the vouchers they held.
In 2013 a settlement was reached and replacement coupons, worth a collective face value of $29 million, were given to class members. Siprut asked the court to award him $3 million in fees. The judge awarded $1.3 million to Siprut initially, and increased the fee award to $1.6 million several months later, at Siprut’s request. The case was appealed, but the settlement was upheld.
The settlement also included class members who had filed claims, who would get drink vouchers good for one year. Levitt and another lead plaintiff, Herbert C. Malone, were awarded $15,000 each.
At that point, the Washington, D.C.-based Competitive Enterprise Institute’s Center for Class Action Fairness joined class members in objecting to the fees and appealing the ruling, saying they believed the fee award was unfair. The judge in the case had upheld the award, noting it fell well below the $3 million that Southwest had set as a limit to what they would pay in attorney fees.
The appeals court remanded the case back to District Court Judge Matthew Kennelly, who deemed the fees to be appropriate.
Center for Class Action Fairness attorney Melissa Holyoak said the Center sought to redirect some of those attorney fees to the class members. In June 2016 the district court partially denied the Center’s request and another appeal was filed. Following that appeal, Southwest and the plaintiffs agreed to rework the settlement deal to end the litigation and appeals.
“The settlement was unfair because the attorneys' fees award was grossly disproportionate to the relief actually delivered to the class, Holyoak said. "Before the Center for Class Action Fairness objected, the plaintiffs’ attorneys were to receive $2.11 million, while the class members would have received $412,815 in coupons.”
Holyoak told the Cook County Record the judge had upheld the fee awards, even though he “never knew how much the class was actually receiving."
"It wasn't until on appeal that plaintiffs revealed the number of claims that were submitted," Holyoak said.
Two appeals later, Holyoak defends the hard-fought case.
Under the original settlement, she said, class members would have received $412,815 in coupons - 137,605 coupons with $3 market value - compared to attorneys' fees of $2.11 million.
Under the new settlement, class members will receive $1.23 million in coupons and attorneys' fees were reduced to $1.88 million.