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class action settlements Tag

Risk Settlements > Posts tagged "class action settlements"

Viral Settlements are Unpredictable, but More Common Than You Think

Viral settlements—which are neither uncommon nor predictable—present a clear danger to the financial health of settling companies. For example, the recent Naked Juice settlement was a typical settlement involving labeling claims. Unfortunately, the media picked up on the settlement, running numerous multimedia news stories that generated a groundswell of interest which turned into a tidal wave....

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Notifying Consumers of the Settlement Isn’t the “Easy Part”

A common misconception of class action settlements is that notifying consumers of the settlement is the “easy part,” when in fact, it is one of the hardest things to get right. Alerting the correct class members while simultaneously reducing fraud can be a challenge, and if not done correctly, it can cause the court to decline the settlement – forcing the defendant to start over and wasting valuable time and money. Working with a third-party administrator (TPA) who has a qualified media expert with a long, successful track record of approved notice programs helps prevent these problems, and finding the right third-party administrator can be key to success. Before deciding on a TPA, consider these tips: Avoid TPAs that attempt to “white-label” expertise. Ask the right questions to save you a big headache: Be sure to find out if the media person the TPA works with is in-house, or if they...

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Guest Post: Are Class Action Settlements Tax Deductible?

Guest Post by Peter Robbins, CPA, Partner at Corbett & Robbins, LLP With the exponentially rising role that litigation plays in today’s business world, one might consider the costs associated with settling lawsuits to be “ordinary and necessary” business expenses, rendering them tax deductible under §162 of the Internal Revenue Code (IRC). However, as experienced tax professionals know, there are always exceptions and restrictions to the rules—factors that can leave the unwary with an unexpected and hefty financial burden to bear. To determine whether payments to the settlement class are tax deductible, settling parties must bear in mind the provisions of IRC §162(c)(2) and §162(f), which prohibit deductions for payments that are: 1. Deemed to be illegal under U.S. or state law 2. For a fine or similar penalty paid to a government for the violation of any law Therefore, the ability to receive tax deductions on class action settlements is entirely dependent on tracing...

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Settling Class Actions, from the Defending Company’s Perspective

While class counsel has its own objectives when it comes to settling class action lawsuits, the defending company has fundamentally different analyses. First is whether it should settle the case at all, as there are often business reasons not to do so. For example, the company may not want the reputational hit, to invite regulatory scrutiny or to set a bad precedent by settling....

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