The Franchise Memorandum - Issue #271

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Ninth Circuit Reverses Class Action Settlement Approval and Fee Award -

The Ninth Circuit Court of Appeals has reversed the approval of a $10 million voucher settlement and a $2.6 million attorneys’ fee award in a class action over increased membership fees charged by Massage Envy franchises. McKinney-Drobnis v. Oreshack, --- F.4th ---, 2021 WL 4890277 (9th Cir. Oct. 20, 2021). The plaintiffs claimed the franchisor of the Massage Envy franchise system told customers their Massage Envy membership rates would not change after they signed up, and that they could cancel their memberships at any time. However, the company allegedly raised membership rates and intentionally made it hard for customers to cancel their memberships. The parties reached a settlement before a class was certified. Under the settlement, in exchange for the release of all claims against Massage Envy, class members could submit claims for vouchers for Massage Envy products and services. The trial court approved the settlement over the challenge of one objector, who appealed.

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