This article describes the Class Action Fairness Act and resulting judicial scrutiny of so-called coupon settlements that provide discount coupons or certificates as compensation to class members in class action lawsuits. Before enactment of the Class Action Fairness Act (CAFA), defendants were able to settle nuisance suits with coupon settlements, avoiding costly litigation. Post-CAFA, alternative forms of class compensation are being used, but these alternatives are not without their own complications, including how they are to be handled from an accounting perspective. Corporate defendants should carefully consider various forms of class compensation early in the settlement process.

This article appeared in the Andrews Class Action Litigation Reporter (16 No. 1 ANCALR 1) in 2009 and is reprinted with permission of Thomson Reuters.