REFILE-COLUMN-Why the DOJ sees problems with blind consumers’ class action deal

By Jenna Greene

Feb 4 (Reuters) - The year is young, but this may already be the biggest settlement snafu of 2026.

A clothing retailer was sued by a class of legally blind consumers who said they could not access its website using screen reading software, in violation of federal and state disability rights laws. The case tentatively settled last year — except that the website created so class members could seek compensation is itself allegedly inaccessible to the visually impaired.

It's a reminder of the risks that remain even after a settlement is reached — and a sign that the federal government's scrutiny of class actions may be rising.

No class members lodged objections to the preliminary $5.15 million deal. But on Monday, the U.S. Justice Department filed a rare “statement of interest” in the case, urging U.S. District Judge Jon Tigar in Oakland, California, to reject final approval of the settlement, which is scheduled for consideration next week.

Lead plaintiffs' lawyer Thiago Coelho of the Wilshire Law Firm in Los Angeles did not respond to requests for comment, nor did the DOJ or defendant Fashion Nova, which primarily operates online selling an array of trendy apparel.

The Los Angeles-based company denies wrongdoing and contends that its website has always provided reasonable access.

It’s unusual for the DOJ to weigh in on the settlement of a class action between private parties. During President Donald Trump’s first administration, however, the department filed statements of interest in several cases, with mixed results.

In a press release on Monday, Assistant Attorney General Harmeet Dhillon of the Civil Rights Division hinted at a return to the practice. “Congress intended the Department and Courts to be skeptical of settlements” that enrich plaintiffs’ counsel rather than benefiting class members, she said.

The government in its court filing said Coelho between 2019 and 2023 filed more than 500 near-identical class actions alleging accessibility barriers for the visually impaired, and that the “vast majority” ended in non-disclosed individual settlements.

The DOJ’s concerns in the Fashion Nova settlement go beyond the claims website — a portal typically overseen by plaintiffs’ lawyers and settlement administrators, without involvement by the defendants. Here, a DOJ accessibility expert said the site had “significant barriers” that would make it difficult for a blind person to file a claim — though the plaintiffs reported receiving 5,838 valid submissions (and more than 700,000 bogus ones).

The government also objects that plaintiffs’ lawyers are seeking $2.52 million in combined fees and costs — more than the $2.43 million remaining to pay class members. In addition, the DOJ says the settlement lacks teeth to ensure Fashion Nova takes steps to make its retail website fully accessible going forward.

The plaintiffs sued the company in 2020, alleging violations of Title III of the Americans with Disabilities Act and California’s Unruh Civil Rights Act. After Tigar certified the case as a class action in 2022, the two sides battled over discovery, expert witnesses and other issues before hammering out a settlement with the aid of a mediator last year.

Coelho, who told the court that lawyers at his firm put in more than 2,000 hours of work on the case, wrote that the payout “is believed to be the second-highest ADA class settlement in the country.” As for the attorneys’ fees, he noted that the amount represents 25% of the total settlement — which he said is well within norms.

The case seemed to be on a glide-path to final resolution — until the DOJ weighed in.

Congress in 2005 gave the U.S. attorney general and state officials the right to express their views of proposed class action settlements when it passed the Class Action Fairness Act.

In practice, that authority has been sparingly used. In the first 12 years after the law took effect, the DOJ filed statements of interest just twice — despite receiving more than 700 class action settlement notices each year.

That changed in 2018, when then-Assistant Attorney General Rachel Brand said in a speech that the department would be on the lookout for class action settlements that were not “fair or reasonable.”

A handful of filings followed in short order — though the impact varied by case.

For example, DOJ lawyers in 2019 filed a statement of interest objecting to a proposed $7.4 million settlement involving a deceptively marketed hand soap, claiming the deal over-paid plaintiffs’ lawyers and offered “little meaningful consumer benefit.”

But U.S. District Judge Steven McAuliffe in New Hampshire was unmoved, finding that the proposed settlement was reasonable, fair to class members and just. “Quibbling about the fee properly awarded for the injunctive relief obtained will not, in this case, result in more being paid to already fully compensated class members,” he wrote.

The government made a bigger splash when it weighed in on a class action in Chicago federal court over cookie labeling. There, the plaintiffs’ lawyers agreed to cut their fees from $1.1 million to $410,000 and the defendant agreed to give $35 worth of free cookies to individual class members, up from $30.

Whether Tigar will be swayed by the DOJ’s concerns about the Fashion Nova settlement remains to be seen. In a case about barriers to access, the question now is whether the biggest obstacle was the defendant’s website — or the settlement meant to fix it.