Muehlberger and Lingwall Highlight the Role of Refunds in Avoiding Class Actions

Shook, Hardy & Bacon Partner Jim Muehlberger and Associate Jeff
Lingwall assert in an April 29, 2015, Law360 analysis that offering
refunds to dissatisfied consumers can benefit companies by lessening the
impact of a class action or averting one altogether.

“If many refunds are claimed, a court may find that named plaintiffs are
not adequately protecting class interests and that a class action is not the
superior method for resolving the dispute. If few refunds are claimed,
this is evidence that plaintiffs’ counsel is creating litigation when none
existed, again strengthening superiority arguments. If the named plaintiffs
receive refunds, this can defeat their standing to bring a lawsuit and
end the class action before a motion for class certification,” they argue.
“In each circumstance, a refund policy provides valuable preemptive
insurance that can help stop a class action in its tracks.”

Muehlberger and Lingwall provide examples for each proposition, citing
cases in which courts looked to refund policies to determine whether
a class action was the appropriate method of resolving the dispute and
ultimately denied class certification. “Whether a company’s refund
policy is widely used by consumers, largely ignored by consumers or only
affects the named plaintiffs in a lawsuit, it can provide a valuable tool for
combating class actions,” they conclude.

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