Taylor v. Shutterfly, Inc.

Background

Megan Taylor sued Shutterfly, Inc., individually and on behalf of similarly situated people. The case concerned Shutterfly’s advertising and sale on Groupon.com of “General Spend Groupons” sold from June 1, 2015, through April 30, 2018. A Groupon could be purchased for a “Paid Value” and redeemed for a larger “Promotional Value” toward a purchase on Shutterfly’s website. The allegations concerned, among other things, whether the marketing clearly disclosed that customers could not use other Shutterfly promotional codes or free-shipping codes on the same order.

Settlement Terms

The settlement provides different benefits depending on whether a class member redeemed the Groupon. A person who purchased a Groupon that was never redeemed receives a free-shipping code and a promotional code worth 110% of the Groupon’s original Promotional Value. A person who redeemed a Groupon receives a free-shipping code and a promotional code worth 20% of the original Promotional Value, or may instead claim a cash refund equal to 10% of that value plus 50% of the amount paid for shipping on the order where the Groupon was redeemed. Cash refunds require a claim; the shipping and promotional codes are distributed automatically.

The settlement also requires Shutterfly, beginning 90 days after the settlement’s effective date, to prominently disclose that the offer provides a promotional code; that another Shutterfly promotional code cannot be used on the same order; and that a Shutterfly free-shipping code cannot be used on the same order. Those disclosure obligations remain in effect for two years from the date of the order, unless a stated fact is untrue for a particular offer.

Notice and Class Response

The claims administrator provided notice by email, postcard, and a settlement website. The opinion states that more than 225,000 notices were estimated to have been delivered, including email notices to 96,177 people and postcard notices to people without valid email addresses or whose emails were undeliverable. The deadline to object or opt out was November 9, 2021. The opinion reports three opt-outs and no objections. It also reports 2,425 valid claims, $39,740.02 in cash refunds, and additional promotional and free-shipping benefits for other class members.

Class Certification and Final Approval

The court found that the requirements for class certification under Federal Rule of Civil Procedure 23 were satisfied for settlement purposes. It found that the class was sufficiently numerous, that common legal and factual questions existed, that Taylor’s claims were typical, and that Taylor and class counsel adequately represented the class. The court also found that common questions predominated and that a class settlement was superior to individual litigation.

The finally certified class consists of United States residents who, in the United States during the class period, either purchased a covered Shutterfly General Spend Groupon that was never redeemed or redeemed one. The order excludes specified persons and entities, including the judge and certain family members, government entities, Shutterfly-related persons and entities, and people who timely opted out.

The court found that the notice plan satisfied due process and that the settlement was fair, reasonable, and adequate under Rule 23(e)(2). It relied on the risks and costs of continued litigation, the need for expert evidence, the experience of counsel, arm’s-length negotiations assisted by a mediator, the absence of evidence of collusion or self-dealing, the benefits provided, the distribution process, and the favorable response from class members.

Attorneys’ Fees, Costs, and Incentive Award

Class counsel requested $350,000 in attorneys’ fees and expenses, and Shutterfly did not oppose the request. The court used the “lodestar” method, which calculates fees by multiplying reasonable hours by reasonable hourly rates. Counsel’s documented lodestar was $656,154. The court found the requested award reasonable because it represented approximately 51% of the lodestar and because the settlement’s injunctive relief was not easily assigned a monetary value. The court also approved $10,616.33 in litigation costs, to be paid separately from class-member recoveries.

The court approved a $5,000 incentive award for Taylor based on her work for the class, including responding to discovery, communicating with counsel, attending mediation, and accepting the risks of litigation.

Disposition and Effect

The court GRANTED final approval of the settlement, finally certified the settlement class, approved Taylor as class representative and Gutride Safier LLP as class counsel, approved the fees, costs, and incentive award, and ordered the settlement’s benefits and advertising changes. Upon the effective date, class members release the covered claims described in the order, while retaining the right to enforce the settlement and to challenge the validity or enforceability of any arbitration agreement with Shutterfly.

The order states that the litigation is “dismissed on the merits and with prejudice” and that final judgment shall be entered. The court retained jurisdiction over implementation of the settlement.