Friday, December 23, 2011

Festivus update

  • In the Toys "R" Us baby products antitrust case, the E.D. Pa. approved a settlement and fee request that pays $14M to attorneys and $8.1M to class members over our objection. describes it as a "24% recovery for the class"; if that's accurate, that raises the question why there will be another $13 million of payments to cy pres recipients not disclosed to the class instead of to the class. Aside from the fact of attorneys getting nearly twice as much as class members.
  • We also lost in the Franklin Templeton Mutual case, where the judge approved a settlement and fee request where the attorneys are getting $2.142 million and the class $2.27 million. To me, that effectively reads the attorneys' fees restrictions directly out of the PSLRA, but we'll wait for a more egregious abuse to take that legal question up on appeal.
  • With all that bad news, we'll take a small partial victory in the Fogel v. Farmers case, where the court reduced an outrageous fee request of $90 million (for a $159 million class recovery) to a merely ginormous $73.7 million award. The judge praised our objection as helpful and invited us to make a fee request. We requested between $10,500 and $33 thousand in fees and expenses, and the court awarded us over $47 thousand. Awkward. We'll try to put the money to good use for class members in other cases, though with appeals, we aren't going to see it for some time. The settlement had Bluetooth problems and the fee disposition is a gigantic windfall that could have been more appropriately directed at the class, but it's in California state court (a legacy pre-CAFA case), there are other objectors who will appeal, and we'll defer to what they're doing, with perhaps an amicus instead of a direct appeal; the long-term precedential value of this case, with even a successful appeal, is pretty close to zero.
  • I forgot to mention a similar small partial victory in the HP Laserjet case back in August; the court approved the settlement after valuing the coupon relief at zero, but did reduce the attorney award from $2.75M to $2M. Close enough for government work; we didn't appeal.
  • We've been invited to make a fee request in another case where we objected in the District Court of Maine a while back, the New Vehicles Canadian Export Antitrust Litigation, MDL No. 1532; our objection resulted in an improper $500,000 cy pres being returned to the class common fund. We haven't decided whether to request a token amount of that. 
  • Appellee briefs are in in the Inkjet case in the Ninth Circuit. I'll post about that after the new year if you don't want to look it up on PACER yourself.

Friday, December 16, 2011

mid-December update

  • Wednesday, we filed our Second Circuit brief in Blessing v. Sirius XM Radio, Inc. 
  • Appellees are filing response briefs in Cobell v. Salazar today. We'll put them up in our Cobell appeal update post when they make it onto the web. Oral argument is scheduled for February 16. If you're going to be in the DC area at the beginning of February, and I know you personally, let me know if you're interested in attending a moot.
  • The district court approved the settlement in Barber Auto Sales v. UPS. I'm unhappy with the ruling, which I think is very wrong, but the case is both too small and too narrow to be worth appealing; we already have the larger Sirius case and pending HP Inkjet case in appellate courts to raise the Class Action Fairness Act issues that would have been central to this case. Devoting resources to appealing this case would preclude us from objecting in a couple of other cases, and stretch us pretty thin with the existing appellate schedule. Can't win 'em all, even if we only bring cases that should be won.
  • The district court approved the settlement and the fee request in Trombley v. National City Bank. If it's not an abuse of discretion to approve a 28% fee and $3000/hour-of-paralegal recovery when a case settles without any risk on Docket Entry No. 5, it never is, so we're thinking long and hard about whether to appeal this one; one objector has already appealed, so our appeal wouldn't have any effect on when payouts occurred.
  • The appalling refusal of Missouri appellate courts to do anything about the coupon settlement ripoff in Bachman v. AG Edwards earlier this year resulted in that state receiving attention in the annual Judicial Hellholes report earlier this week.
  • It's not all bad news. Yesterday was the hearing in the second settlement. The parties agreed to modify the settlement to remove the Bluetooth kicker, and the court indicated it would reduce the $1.05M fee request, meaning that money will go to the class. The fee reduction alone might outstrip the original $117,000 settlement, which is now worth over $2.5M. If you're keeping track, that's the fifth time in a row we've won a case and/or fee reduction against Kabateck Brown Kellner; one hopes that this discourages them from continuing to bring bad class actions just to negotiate self-serving settlements. This time, they refrained from abusive ad hominem attacks against us in their briefs; they're learning.

Friday, December 2, 2011

Yes, the Ticketmaster class action settlement is appalling

Yes, we know about the Ticketmaster class action settlement, which over a dozen class members have emailed us about. There's no question that this coupon settlement (complete with questionable cy pres) would be illegal in federal court. Unfortunately, the case is pending in California state court. This limits the precedential value of the case (it's only a jurisdictional accident that it's not in federal court; if it were brought today it would be), and I'm sufficiently discouraged by the last few ventures into state court that I'm reluctant to devote limited resources to it. Including objections and a notice of appeal we've committed to file but haven't yet, we have nineteen cases pending, including eight appeals where the briefing isn't finished.

However, many of the class members who have written us are attorneys. So a possibility is that sufficiently angry attorney class members volunteer to write the briefs (working off of briefs we've previously filed on these issues). Then someone based in California (or me) could attend the fairness hearing. Other class members could submit their objections saying they're joining that one. We're going to try to coordinate that over the course of this month; if you've written to me, and I haven't emailed you yet on this, I will this weekend.

Thursday, December 1, 2011

Cobell v. Salazar Indian trust appeal of Kimberly Craven, No. 11-5205 (DC Circuit)

Update, September 1: The plaintiffs moved for an $8.3 million appeal bond to create a procedural barrier to prevent Ms. Craven from exercising her appellate rights. Unfortunately for them, such an excessive appeal bond is illegal. Their motion inexplicably failed to cite binding precedent and court rules that contradicted their position, and we have requested sanctions.
Update, September 9: The website has been updated with the plaintiffs' September 7 reply brief on the appeal bond briefing, but omits any link to Ms. Craven's response brief.

Update, September 14: We've reached an agreement with the appellees to expedite the briefing schedule for the appeal. Ms. Craven's opening brief will be due October 17; the appellees' response briefs will be due December 16; our reply brief will be due January 6. This will, one hopes, shave several months off the time for resolution of the appeal. The D.C. Circuit has agreed to this schedule. Coverage at BLT.

Update, October 6: class counsel's motion for appeal bond denied. Class counsel is ordered to produce a declaration explaining how its brief failed to cite binding precedent and misrepresented the law. Let's see how long it takes to get the district court opinion on the website.

Update, October 17: Craven's opening brief was filed today. The appellees' briefs are due December 16. I expect some amicus briefs to be filed October 24.

Update, October 26: The Competitive Enterprise Institute filed an amicus brief this week in support of Ms. Craven's appeal. More coverage at BLT.

Update, December 1: We've moved for judicial notice of a government motion to dismiss a $400 million lawsuit over Indian trust mismanagement based on the Cobell settlement. The existence of this motion supports our argument that the class certification of (and settlement distribution for) the Trust Administration class was illegal. The website took down all the briefing for the appeal bond issue rather than acknowledge the district court's ruling denying the bond and criticizing their briefing strategy, so this appears to be the first appearance of the affidavit required by the court that class counsel was required to file in November. The website also fails to identify that the briefing schedule for the 11-5270 appeals has not been set yet; the settling parties have requested that that be expedited to conclude in March, well after Ms. Craven's appeal briefing concludes. Finally, the DC Circuit granted CEI's leave to file an amicus brief.

Update, December 15:
  • Oral argument is scheduled for February 16, with a panel of Rogers/Tatel/Brown. 
  • Plaintiffs' opposition to the motion to judicial notice.
  • Monday, the government has filed a brief in Two Shields v. United States that essentially argues that class certification of the Trust Administration Class under Rule 23 was illegal for the same reasons we argued that it was illegal. We've made a second motion for judicial notice of that filing. That brief contradicts the position that the government took at the fairness hearing, so I'm curious to see what they do when they file their briefs tomorrow. Certainly, however, the Two Shields case demonstrates that this illegal settlement adversely affects more than just Kimberly Craven.
Update, December 16:
Interestingly, the plaintiffs' appendix was 446 pages. In their motion for the appeal bond, they had told the district court that they would incur $33,523.02 of photocopying costs, which appears to be off by a factor of at least 50.

Update, January 6. We filed our reply brief today. Oral argument is scheduled for February 16. Oral argument in the Good Bear appeal is scheduled May 15.

Update, August 22. On June 27, Kimberly Craven replaced us as counsel in this litigation. We are no longer counsel to Kimberly Craven in this case. We could not respond to inquiries about the litigation under normal circumstances, but there's even less reason to contact us now that we have nothing to do with it.

Monday, November 28, 2011

Wherein CCAF is "justly lauded"

More coverage of the AOL victory in a Washington Examiner op-ed. And Reuters Legal does a lengthy story.

AOL's attorney's comment is revealing: all they cared about was whether they were able to get rid of the frivolous claims against them in a nuisance lawsuit. But the Center cares more about establishing precedents and rules governing the long-term fairness of class actions than any individual result. That larger issue was irrelevant to AOL, so they think they have a victory, but we do, too. Reuters, through Professor Brian Fitzpatrick, questions whether it makes a difference: it does. Class actions are supposed to benefit the class first, rather than the attorneys. When the attorneys have carte blanche to choose cy pres recipients, they effectively get double-payment. To the extent Professor Fitzpatrick cares about defendant deterrence as a reason for class actions, he should be pleased that the defendant would not be allowed to dictate illusory cy pres that goes to their preferred charitable donee.

Interestingly, Kabateck Brown Kellner, whose attorneys had written a dishonest op-ed criticizing CCAF's defense of class members in cy pres settlements without revealing they were adverse to us in four cases (all four of which have now resulted in CCAF court victories), couldn't even be bothered to file a Ninth Circuit brief making a public-policy argument for their preferred tactic of abusive cy pres.

Wednesday, November 23, 2011

Some updates

  • Coverage of Monday's Nachsin v. AOL cy pres victory for CCAF, some of which is even accurate. I was also interviewed by Reuters and the Daily Journal, but I don't see their stories yet. [Zywicki @ Volokh; Fisher @ Forbes; BLD;; Metropolitan News-Enterprise; Litigation Daily ($); Law360 ($); Wolfman]
  • In Blessing v. Sirius XM, Judge Baer denied the request for a punitive appeal bond. Thanks to Adam Schulman, who took the lead in drafting the successful opposition brief.
  • The Dewey v. VW oral argument in the Third Circuit looks like it will be scheduled in late March.
  • We filed our objection to the fee request and structure in the second Classmates settlement. Dan Greenberg will argue at the fairness hearing December 15.
  • Yes, that Apple Magsafe class action settlement you've gotten an email for is likely unfair given the artificial restrictions on the claims process. We have one class member as a client, perhaps two.

Tuesday, November 22, 2011

Ninth Circuit cy pres victory in Nachshin v. AOL

We've been at the forefront of noting the problem of abusive cy pres; originally intended as a last resort "second-best" way to benefit the class after resolution of a case where there is leftover money, too many class actions use cy pres as a first resort to exaggerate the class benefits, or to siphon some of those benefits to the class attorneys or the defendants or, shockingly, the judge. A couple of recent decisions speak out against free-flowing cy pres. In Klier v. Elf Atochem, the Fifth Circuit struck down cy pres given to local charities instead of to undercompensated class members; Alison Frankel has good coverage.

And yesterday, in a case I argued, Nachshin v. AOL, Inc., the Ninth Circuit adopted much of the reasoning of our briefs in striking down cy pres to local Los Angeles charities unrelated to the class or the claims of the lawsuit:
When selection of cy pres beneficiaries is not tethered to the nature of the lawsuit and the interests of the silent class members, the selection process may answer to the whims and self interests of the parties, their counsel, or the court. Moreover, the specter of judges and outside entities dealing in the distribution and solicitation of settlement money may create the appearance of impropriety.
Thanks to Darren McKinney for being willing to stand up to abusive class action settlements, even it meant publicly admitting that he had an AOL account. Additional coverage at

Wednesday, November 16, 2011

Online DVD Rental Antitrust Litigation / Wal-Mart/Netflix Settlement

Class members (including me) are getting email notice of a class action settlement with Wal-Mart in the Online DVD Rental Antitrust Litigation, No. M 09-2029 PJH (N.D. Cal.). Wal-Mart will pay $27,250,000, in "cash and gift cards" to a settlement fund to be distributed to the class and lawyers.

Of course, there are 40 million class members. That's 68 cents a class member. And you can only get cash if you spend 44 cents on a stamp to submit your claim, though it's possible to ask for a gift card on line.

But wait, there's more. The attorneys and class representatives are asking for $8,592,500 of the $27 million. And "notice and administration costs"—the amount of which is entirely undisclosed—will be deducted from the $27 million before the class will get anything. (This contradicts what the parties told the court in the motion for preliminary approval, which said the entire amount after attorneys' fees and expenses would go to the class.) In reality, the attorneys are asking for over a third and perhaps as much as half of the money available for the class.

That would be bad enough, but the "gift-card" aspect makes this a coupon settlement (the coupons cannot be sold and are good only at Wal-Mart—again, contradicting the motion for preliminary approval, which falsely called them "fully transferable"), and there seems to be no plan to have a fee request that complies with the Class Action Fairness Act's restrictions on coupon settlements.

Lots of class members have contacted us, and, yeah, we're going to be objecting to this one.

Update: a class member writes me to point out that I was misled by the notice. Though the notice says "Wal-Mart gift card," it is not a Wal-Mart gift card, because the gift card is only good at, where prices are often higher when shipping is included.

Wednesday, November 9, 2011

Barber Auto Sales v. UPS

The Center has objected to a settlement that would pay $2 million to class members (without even telling them how much of their claims are likely to be paid pro rata) and $4 million to the attorneys. Details at Point of Law. The case is Barber Auto Sales, Inc. v. United Parcel Service Co., Inc., No. 5:06-cv-04686-IPJ (N.D. Ala.).

Tuesday, November 8, 2011

Working through the email

As you might expect, I got a lot of email from the October 31 Wall Street Journal story. Between an October 31 Ninth Circuit deadline, a November 4 deadline for an objection for two clients, preparing for a three talks and a couple of hearings in the first ten days of the month, and a 1000-mile road trip to help a friend move, I haven't had the opportunity to respond to some of the more detailed emails. I'm not ignoring you, and hope to answer a lot of these over the next few days.

I'll be speaking about some of the Center's work at the Federalist Society's National Lawyers Convention Thursday afternoon. Come say hi.

Tuesday, November 1, 2011

Some updates

  • Yesterday, we filed the opening brief in our HP Inkjet Ninth Circuit appeal. Details at Point of Law.
  • The district court approved the $0 settlement in Pampers. The attorneys will receive $2.7 million. We've appealed to the Sixth Circuit.
  • The district court approved the Brazil v. Dell settlement. There have been about $0.5 million of claims, and the attorneys are to receive $6 million. We're going to appeal to the Ninth Circuit, since this pretty clearly contradicts Bluetooth. Thanks to Kyle Graham for covering the fairness hearing.
  • The plaintiffs have asked for a $200,000 appeal bond in Blessing v. Sirius XM, the case we've appealed to the Second Circuit where the attorneys got $13 million and the class got worthless coupons that the court refused to call coupons. We filed an opposition to the motion for appeal bond. The motion is entertaining: the plaintiffs complain that I've previously objected in several other cases, but if you look at their list, we won most of those objections. 

Sunday, October 30, 2011

Welcome, Wall Street Journal readers

Welcome to those of you who found this page after reading the Wall Street Journal profile. The Journal also discussed our Sirius XM objection. Other articles about CCAF can be found on my personal website. Join our Facebook page to stay updated on what we're up to. (Later today, I'll be posting our Ninth Circuit brief on the HP Inkjet printer coupon settlement, where the attorneys got $2.1 million, and the class got coupons only usable at—which charges far more than other Internet vendors, making it more expensive to use the coupons than not to use the coupons.)

I should note the story does not give enough credit to the attorneys working with me; for example, Frank Bednarz (now a much better-paid patent litigator in BigLaw) argued the Honda case, and Dan Greenberg argued the West Publishing, Kellogg, and Hertz cases. Adam Schulman, a 2010 Georgetown Law grad, just got his first district-court argument a month ago in the Pampers case, which, after a district-court approval, will generate an interesting Sixth Circuit appeal on the scope of Rule 23(b)(2) and the permissibility of big attorney-fee awards in $0 settlements.

Thursday, October 20, 2011

Franklin Templeton mutual fund settlement

The attorneys have asked the court to approve a settlement that would give the attorneys $2.142 million and the class $2.27 million. (Good luck finding out that information anywhere on the settlement website.) This violates the plain language of the PSLRA; Fred and Fran Smith have objected, and I have agreed to represent them at the fairness hearing in Baltimore October 25.

In this case, as in so many PSLRA settlements, the parties have structured notice so that there is next to no way for most class members to have time to object. I'm interesting in hearing from people who get postcards or other mailings about bad class action settlements that arrive less than a week before (or, often after) the objection deadline.

Tuesday, October 4, 2011

Brazil v. Dell

The class attorneys in Brazil v. Dell are asking for $6 million for themselves, but it is a claims-made settlement that will almost certainly pay a small fraction of that amount to the class. The parties are attempting to hide that from the court by scheduling the claims deadline after the fairness hearing, but this is where objectors come into play, and the Center has filed an objection on behalf of a class member in advance of the October fairness hearing. The settlement also suffers from several of the self-serving features identified as problematic in Bluetooth.

Wednesday, August 31, 2011

Pampers Dry Max class action settlement objection

This week, we objected to a $0 settlement of the Pampers Dry Max class action that proposes paying $2.7 million to the lawyers. More details at Point of Law. Adam Schulman will argue at the fairness hearing in federal court in Cincinnati next month.

Thursday, August 25, 2011

Sirius XM settlement approved

Judge Baer approved the $0 Blessing v. Sirius XM settlement and $13 million fee award yesterday. The decision contradicts (and ignores) Bluetooth, Aqua Dots, and the Class Action Fairness Act (which applies to "coupons" and not just "coupons 'to purchase something [class members] might not otherwise purchase'"), and applied the wrong standard of law in creating an essentially irrebuttable presumption of fairness for the settlement. So we'll have an interesting appeal to the Second Circuit, which will either have to reverse or create a circuit split.

Tuesday, August 23, 2011 class action settlement (again)

I'm getting lots of emails about the class action settlement notice. We're aware of it, because we're already in the case: we earlier successfully objected to the first version of the settlement where the attorneys were asking for $1.05 million while the class received only $117,000. The new settlement is certainly improved—$2.5 million is better than $117,000, though it still reflects a nuisance settlement—but, as many of you of noted, the fees are excessive (and violate Bluetooth standards). We'll be objecting again.

Monday, August 22, 2011

CCAF wins in Ninth Circuit

WASHINGTON, DC - The Center for Class Action Fairness LLC announced today its victory in the U.S. Court of Appeals for the Ninth Circuit objecting to a valueless class action settlement. On Friday, the appellate court vacated a district court's 2009 approval of a settlement of a lawsuit alleging that Bluetooth headset manufacturers committed fraud when they failed to give more prominent warnings that listening to headsets continually at loud volumes might cause hearing damage. (A similar class action over Apple iPods was dismissed.) The settlement would have provided no cash to the class, but $850,000 to the attorneys. The Center believes that this is the first time the Ninth Circuit has vacated approval of a class action settlement since 2003.

"This is a landmark decision," said Ted Frank, the founder of CCAF who argued the appeal. "The Court explicitly upheld the principle that the absence of explicit collusion is not enough for a court to approve a settlement when the attorneys have negotiated a self-serving settlement at the expense of their clients. It is important because the Court identified as problematic several tactics attorneys use to protect proposed fee awards from scrutiny such as 'clear sailing' clauses that prohibit defendants from challenging proposed fee awards and 'kickers' that preclude the class from receiving any reduction in the fee award. The decision further emphasizes that any fee request based on 'lodestar' rates has to be cross-checked against benefits actually received by the class. It will now be much more difficult for attorneys to abuse the class action system to negotiate low-value settlements that provide handsome compensation for themselves."

The case is In re Bluetooth Headset Products Liability Litigation, No. 09-56683.

The Center for Class Action Fairness, founded in 2009, is a not-for-profit program that provides pro bono representation to consumers and shareholders aggrieved by class action attorneys who negotiate settlements that benefit themselves at the expense of their putative clients. It has won millions of dollars for class members over the last two years.

Georgia investigation into judge's use of cy pres

I'm quoted in a newspaper's investigation into a Georgia judge's seemingly self-serving use of cy pres awards. More details at Point of Law.

Saturday, August 20, 2011

I'm kind of annoyed at the Los Angeles Daily Journal

CCAF, a non-profit project unaffiliated with and unsupported by any corporate funding, does not lobby. But the LA Daily Journal says that they don't need to run a correction for a sentence beginning with the phrase "Corporate lobbyists and advocacy groups such as CCAF" because, according to them, they're not claiming that CCAF is a lobbyist. It seems to me that the only people who could make that sort of sophistic argument are convicted child molesters and editors such as David Houston of the Los Angeles Daily Journal.

The LA Daily Journal op-ed critical of CCAF was written by a Kabateck Brown Kellner attorney; at no point does it disclose that we've objected to four of Kabateck's settlements (all of which paid substantially more to the attorneys than the class), resulting in one settlement rejection and another ruling reducing their fee request by nearly a million dollars, with two other cases still pending.

(At the risk of killing the joke, I wish to make clear that I have no basis to think that David Houston has been convicted of child molestation or any other sex offense.)

Friday, August 12, 2011

Opening brief filed in appeal of Volkswagen class action settlement approval

We filed our opening brief last Friday. Details at Point of Law.

It's still unclear to me why the Third Circuit waited a year before our briefs were due from our appeal of a class action settlement approval. (Dewey v. Volkswagen is reported at 728 F. Supp. 2d 546.)

Wednesday, July 27, 2011

Objection in Trombley v. National City Bank

The D.C. Circuit is correct, I think, in holding that an attorneys' fee in a class action should be calculated as a percentage as the common fund. But does that mean that class counsel in a class action that settles immediately upon the filing of a complaint without any contested litigation is entitled to the same 25% that is the benchmark for a fully-litigated case where class counsel is actually facing risk? This month, we argued no at a fairness hearing in a class action over overdraft fees. More details at Point of Law.

Tuesday, July 19, 2011

CCAF objection in Blessing v. Sirius XM Radio

The Center for Class Action Fairness LLC objected today to a valueless class action settlement: the objection, filed in the Southern District of New York on behalf of a class member, underscores that the proposed Sirius XM Radio settlement would provide valueless injunctive relief to the class but $13 million to class attorneys.

"Certainly, parties to a class action can agree to settle a case for $13 million," said Ted Frank, the lead attorney on the objection and the founder of CCAF. "But if they do, it is inherently unfair and unreasonable for the attorneys to extract 100% of the settlement benefit for themselves. Class actions should be prosecuted on behalf of the class members, not self-serving class counsel."

The settlement of the antitrust class action against Sirius XM requires only that the defendant agree to not raise prices for five months. But this is an entirely valueless promise, given that Sirius XM, facing admittedly heavy competition from Internet music services and MP3 players, has been lowering prices and engaging in deep discounting to keep customers. Yet class counsel (including the Milberg law firm) implausibly claims that the settlement is worth $180 million to the class.

The CCAF objection also targets Judge Harold Baer's class certification order. For several years, Judge Baer has controversially required class counsel to meet racial quotas as a condition of appointment. CCAF has requested that Judge Baer vacate that part of his class certification order as unconstitutional.

The case is Blessing v. Sirius XM Radio Inc., No. 09-cv-10035 (S.D.N.Y.).

The Center for Class Action Fairness, founded in 2009, is a not-for-profit program that provides pro bono representation to consumers and shareholders aggrieved by class action attorneys who negotiate settlements that benefit themselves at the expense of their putative clients. It has won millions of dollars for class members over the last two years.

Friday, June 24, 2011

June 20 was a busy day

The growth of the Center for Class Action Fairness LLC can be shown just by the breadth of its activities on Monday, June 20:
  • There were twelve objectors at the Cobell v. Salazar fairness hearing, and I was the only attorney representing an objector. Unfortunately, the district court overruled our objections, and approved the $3.4 billion settlement. There was some good news: if one takes the plaintiffs' request for $224 million in a fee and expense award seriously, rather than as a tactical maneuver to give the judge room to award high fees while appearing to cut the request, then the judge's decision to award $99 million in fees (and reject another $11 million in expense requests by the class representatives) means that there will be another $136 million available for class members when and if distribution takes place.
  • Dan Greenberg was at the fairness hearing in the Central District of California for Stetson v. West Publishing which drew some extra blogosphere attention because it involved BarBri expenses for many many recent law-school graduates. The court, from the bench, rejected the coupon settlement, which entailed over $1.8 million in attorney-fee requests. It's the second win from the bench in a row for Dan; we're still waiting for the official opinion in the coupon settlement rejection in Sobel v. Hertz (D. Nev.).
  • And Adam Schulman, our local counsel Chris Arfaa, and I helped file Dan's reply brief in the McDonough v. Toys "R" Us (E.D. Pa.) baby products class action settlement, where the attorneys are requesting about $14 million though the class is likely to receive less than $20 million. The fairness hearing will be July 6 in Philadelphia.
The Center for Class Action Fairness represents class members pro bono when they are treated unfairly by class action settlements. Please contact me if you get notice of a class action settlement that you are concerned might be unfair, and I will evaluate it for free.

Thursday, June 16, 2011

Weeks v. Kellogg - Rice Krispies class action settlement

In 2009, the state of Oregon complained to Kellogg that they said Rice Krispies and Cocoa Krispies were fortified with antioxidants, and Kellogg changed the description of the boxes of the cereal—though the cereal is fortified with antioxidants. Almost immediately, several plaintiffs' lawyers filed lawsuits on the basis of Kellogg's announcement, and after several amended complaints, Kellogg's agreed to a nuisance settlement of $2.5 million. Class members can request $5 refunds for up to three boxes of cereal purchased between June 1, 2009 and March 1, 2010, an amount that will be reduced pro rata if the settlement money runs out, though one might expect that there will only be a few thousand claims. Though the class is nationwide, Kellogg is giving another $2.5 million (retail value, so it's really costing them half as much) in food to two local charities in Santa Monica and Atlanta. The class representatives will seek $5000 each.

How much are the attorneys asking for? I don't know: it's not in the notice or settlement agreement, but it comes out of the $2.5 million settlement fund. (The attorneys will announce on July 18; objections must be received by July 25—a Monday. This abbreviated and substandard notice is arguably a violation of Rule 23(h) and Ninth Circuit procedure in In re Mercury Securities Litig.. The notice is otherwise substandard, as there are several hoops one must jump through to object that are not listed in the notice.) Anything left over after the class is paid will go to the two local charities and a trial-lawyer group.

The case is Weeks v. Kellogg, Case No. CV 09-08102(MMM)(RZx) (C.D. Cal.).

Monday, June 13, 2011

Bankruptcy creditor objections: "Hipster Battles Funds"

A bankruptcy court reorganization approval has some similarities to a class action settlement fairness hearing, as the court engages in an equitable inquiry to determine whether unrepresented parties are being fairly treated by a proposal. And, as we know from the fairness hearing context, courts often disregard the concerns of lay parties who can't afford to retain attorneys to protect them. So Nate Thoma faced long odds when he filed a pro se objection to the reorganization proposal of bankrupt Washington Mutual, complaining about a structure that failed to treat similarly-situated creditors equally and "gerrymandering" by favored bondholders to buy up a smaller-valued class of securities that would be frozen out to create the artificial appearance of an impaired class favoring the reorganization. Three cheers to him for winning. [WSJ (h/t L.O.); Thoma objection; In re Washington Mutual, Inc., 442 BR 314 (Bankr. D. Del. 2011)]

Baby products objection

As discussed at Point of Law, CCAF has filed an objection to the Babies "R" Us settlement in McDonough v. Toys "R" Us, Inc., No. 06-cv-242 (E.D. Pa.).

Saturday, May 14, 2011

AOL cy pres Ninth Circuit appeal oral argument set

I'll be arguing the AOL cy pres case June 7 in Pasadena. (My record in Ninth Circuit oral arguments to date: 2-0, with one pending.) Come watch if you're interested in cy pres issues. If you're not interested in cy pres, but are interested in trademarks and pornography (and who isn't?), they're also arguing Roxbury Entertainment v. Penthouse Media ("The content of the film is primarily graphic sex scenes; however, the 'story line' to the extent there is one, concerns a young couple fleeing some unfortunate or unlawful event.") the same session.

Friday, May 13, 2011

Stetson v. West Publishing Corp. - BarBri Class Action Settlement

Because the 170,000 class members are law students and lawyers, I've been getting a lot of inquiries about this case and its coupon settlement. Stay tuned: we will be objecting, and early enough that you can read the objection and choose to write in to the court to join it if you wish.

Note that the notice not only fails to disclose precisely how much the attorneys will be asking for, but disingenuously offers a May 30 deadline for receiving objections. Of course, May 30 is Memorial Day, so the real deadline is possibly as early as May 27. More details at Point of Law.

Monday, May 2, 2011

Court rules for NVIDIA

Details at the Point of Law blog. I'm sorry, as well as angry.

Update: I won't be filing an appeal, though my clients are of course free to find an attorney willing to do that for them.

I won't personally be filing a malpractice action, but I'm happy to consult with an attorney who is considering doing so if a class member finds one.

Update 2: Please don't email me asking for individual legal advice about what you can or should do with your computer, or what other legal options you may pursue. I don't have the resources to provide free advice to a million different class members beyond my five clients. You'll need to consult with your own attorney. I'm rooting for someone to bring a malpractice suit, but I'm not advising you one way or the other on that, either as a class action or as a small-claims case against Milberg.

I will note that I believe that, because NVIDIA failed to provide a computer of "like or similar kind" as the settlement notice promised, and because Judge Ware failed to enforce the settlement as written and noticed to the class (his opinion mistakenly says that the CQ-56 was "designated in the settlement"), the class notice is constitutionally invalid and cannot be considered to bind absent class members besides my five clients who got a ruling from Judge Ware. Someone who sues HP and/or NVIDIA in small-claims court and persuades the judge that the class notice does not bind them could possibly recover cash in small-claims court. Of course, HP and NVIDIA will argue that the notice was constitutionally valid and that the small-claims court does not have jurisdiction, so I am not giving you legal advice to pursue your claim in small-claims court; you could win, you could lose. Check with a lawyer.

Friday, April 29, 2011

Illegal coupon settlement in Nevada

Daniel Greenberg of the Center for Class Action Fairness LLC has filed an objection on behalf of two class members to a coupon settlement where the attorney-fee request does not even begin to comply with the basic Class Action Fairness Act requirements of 28 U.S.C. § 1712. We are mystified how the plaintiffs intend to justify the settlement; perhaps they will contend that the $10 discount "certificates" issued to the class are not coupons. The attorneys and class representatives are asking for $1.46 million without even an attempt to predict the redemption rate of these certificates.

The case is Sobel v. Hertz Corp., No. 06-cv-545 (D. Nev.), and the fairness hearing will be in Reno May 17.

Thursday, April 28, 2011

Reply brief in Bachman v. A.G. Edwards coupon settlement appeal

Milberg and several other law firms collected $21 million in quick-pay fees for a Missouri state-court class action settlement that provided face value of $39 million to the class, most of which was in $8.22 coupons. The Center for Class Action Fairness appealed the rubber-stamp approval, and, on Friday, filed a reply brief in the case. Oral argument is set for May 4 in St. Louis.

Tuesday, April 26, 2011

Gittin v. KCI USA and Calloway v. CashNetUSA class action settlements

In these two California class action settlements over debt-collection practices, one strongly suspects the attorneys are trying to rip off their clients: notwithstanding the clear requirement of Rule 23(h) and In re Mercury Interactive Securities Lit., notice is going to the class without any disclosure of the requested attorneys' fees. But in Calloway v. Cash America Net of California LLC, No. 09-CV-4858, 2011 WL 1467356 (N.D. Cal. Apr. 12, 2011), the Court ruled that the fact that the attorneys' fees were being paid separately from a common fund meant that the class would not be affected by the fee award. This is economic nonsense: the fact that a denial of a fee request will revert to the defendant instead of the plaintiff is reason to give a settlement more rather than less scrutiny. And, indeed, the settlements in these cases pay a grand total of $212,500 to class members (compared to $6,000 for the two class representatives), a tiny fraction of the statutory damages available. So how can a court say that attorneys who settle for pennies on the dollar for their clients but reserve the right for a full fee award by insisting an admission from the defendant that the plaintiffs are "prevailing parties" aren't potentially depriving the class? Imagine a hypothetical settlement where every class member gets a penny but the attorneys ask for a multiplied lodestar and get clear sailing: by Judge Seeborg's reasoning, class members have no complaint because the fees aren't coming from the class's pockets. But class members do have a complaint when attorneys settle class actions with self-serving agreements that benefit the attorneys at the expense of the class: that prevailing-party clause surely comes at a cost to class recovery.

If there's a member of one of these two classes who would like to timely object to this potential rip-off, the Center would be happy to represent them pro bono to vindicate the protections of Rule 23(h) in all class settlements. The second case is Gittin v. KCI USA, Inc., No. C-09-5843 RS (N.D. Cal.).

Wednesday, April 20, 2011

Cobell v. Salazar

Today the Center for Class Action Fairness filed an objection to the $3.4 billion taxpayer-funded Cobell Indian trust settlement on behalf of Sisseton-Wahpeton Ovate tribe member and class member Kimberly Craven.

Congress recently held hearings in response to the class attorneys' fee request of $223 million, which was over twice the $99.9 million they promised Congress they would limit their request to. [BLT]

The fee request includes one $925/hour attorney who claims to have billed over 28,000 hours in seven years, including a 28.5-hour day. The class representatives have also requested an unprecedented $13 million payment for themselves, raising conflict-of-interest questions that could preclude settlement approval.

Ms. Craven's objection, among other issues, challenges the "upside-down" allocation methodology, where class members who have suffered the most mismanagement of their trust accounts will receive less money than equally situated class members whose trust accounts were administered appropriately.

The settlement and objection present interesting legal issues of whether Congress can constitutionally abrogate class action certification requirements and whether a mandatory class action for injunctive relief can involuntarily waive class members' rights to relief already won in court in exchange for one-size-fits-all cash payments.

The case is Cobell v. Salazar, No. 1:96-cv-1285 (TFH) (D.D.C.).

Tuesday, April 19, 2011

April 18 press release


WASHINGTON, DC - Today the Center for Class Action Fairness LLC announced multiple victories in class action objections it filed in five class action settlements that will result in class members receiving over $5 million more than what their class attorneys were willing to negotiate.
  • In a securities class action over options backdating by Apple executives, the Center's objection to the diversion of $2.5 million of shareholder money to unrelated third parties affiliated with the lead class counsel resulted in a modification of the settlement to ensure that class members would be given first dibs on that money. In March, the parties confirmed that class members had fully claimed the additional $2.5 million, meaning that the class would receive over $16.5 million instead of $14 million. The Center's motion for an incentive payment to the objector and a share of the $2 million of attorneys' fees requested by class counsel is pending in the district court. The case is In re Apple Inc. Securities Litigation, No. C-06-5208-JF (N.D. Cal.).
  • The Center successfully objected to a settlement of a consumer fraud class action against that would have paid $117 thousand in cash and coupons to class members, but $1.05 million to the class attorneys. As a result, the parties renegotiated the settlement last month to make it easier for class members to make claims and ensure that $2.5 million in cash will be paid to the class. Preliminary review of the modified settlement is pending in the district court. The case is In re Consolidated Litigation, No. 09-cv-0045-RAJ (W.D. Wash.).
  • The Center successfully objected to a diversion of $500,000 cy pres to unrelated third parties in a class action settlement with Toyota over antitrust allegations when the district court ordered this month that that money instead be distributed to the class. The Center's objection to an excessive attorney-fee request from the common fund is pending, which could result in additional millions of dollars being distributed to class members. The case is In re New Motor Vehicles Canadian Export Antitrust Litigation, No. MDL 03-1532 (D. Me.).
  • The Center objected to a settlement that would have distributed $1.5 million in nearly worthless coupons to millions of class members, but paid the attorneys $2.9 million. In In re HP Inkjet Printer Litigation, 2011 WL 1158635 (N.D. Cal. Mar. 29, 2011), the district court agreed with the Center that class counsel's economic expert had wildly exaggerated the value of the proposed injunctive relief, and reduced the award to the class attorneys to $2.1 million. The Center is pleased with the favorable language in the opinion, but is deciding whether to appeal to ask the U.S. Court of Appeals for the Ninth Circuit to adopt a bright-line rule that it is inappropriate for attorneys to receive more than their putative class clients.
  • In a case alleging that Costco Fuel and other gasoline retailers committed consumer fraud when they failed to disclose to consumers the law of physics that gasoline, like other liquids, expands with temperature, the parties announced a modified settlement that would provide $0 to the class while the class attorneys made a $10 million fee request. The Center renewed its objection to the settlement, presenting testimony from an economic expert, Dr. David Henderson, that class counsel's economic expert had inappropriately overvalued the worthless injunctive relief provided by the settlement. The Center further argued that it was inappropriate for the parties to expand the class without giving new notice to the new class members who had not previously had an opportunity to object. This month, the district court agreed with the last proposition, and ordered the parties to propose new notice and schedule a new fairness hearing. The case is In re Motor Fuel Temperature Sales Practices Litig., No. 07-MD-1840 (D. Kan.).
The Center for Class Action Fairness, founded in 2009, is a not-for-profit program that provides pro bono representation to consumers and shareholders aggrieved by class action attorneys who negotiate settlements that benefit themselves at the expense of their putative clients. 

Press coverage of the Center's work is available at

The Center's lead attorney, Theodore H. Frank, is available for comment on these cases and other issues relating to class actions, lawsuit abuse, and the civil justice system.

Monday, April 18, 2011

Babies "R" Us baby products antitrust class action settlement: McDonough v. Toys "R" Us

A class action against Babies "R" Us and manufacturers of upscale baby products—BabyBjorns, Britax car seats, Kids Line and Peg Perego products, Maclaren strollers, Medela breast pumps—over allegedly anticompetitive vertical price restraints has resulted in a $35.24 million settlement after the district court certified a class of consumers who purchased particular products from Toys "R" Us or Babies "R" Us since 1999 (and, occasionally, shorter time windows).

But the attorneys reserve themselves the right to ask for one third of that amount plus "expenses" plus fees for administering the settlement; the notice provides no upward bound for that amount, so for all we know class counsel (including Spector Roseman and Hagens Berman) will be asking for a majority of the fund. And notice and administration expenses come from the settlement fund, so the attorneys are seeking a commission on the notice. There is a cy pres provision entitling moneys to be used for third-party charities that the class counsel and defendants like; the notice provides no information who those third-party charities are. Because the class counsel is also seeking a third of those moneys, they have no incentive to ensure the money goes to their clients rather than to the charities that they themselves have selected. The settlement itself has a "clear sailing" agreement (¶ 26) prohibiting the defendants from challenging the fee request, so unless there are objectors, the court will be faced with an ex parte request for this skimming of millions of dollars that should be going to the class. There's also a quickpay provision: the attorneys' fees are paid immediately, but there's no obligation for the settlement fund to ever disburse to the class members. But who has the incentive to hire an expensive attorney to object?

Sunday, April 17, 2011

Objectors and fee requests

We recently had two victories in two cases in front of the same judge; the question then becomes whether to submit a fee request. There's good precedent for us asking for fees in both cases on the theory that the objection "improved the process," but we take the position that class attorneys should only recover fees rationally related to the size of the class benefit achieved, so, to remain cleaner than Caesar's wife, we only ask for fees when we actually achieve a pecuniary benefit for the class, and our fee request is always on a percentage basis of the benefit. (Moreover, we only accept fees that are court-ordered, and we do not "settle" our objections unless the settlement results in a fix of the issues we objected to, i.e., we don't make quid quo pro extortionate objections for settlement money.)

A lodestar calculation is a bad idea for objections, because it encourages technical objections that don't benefit the class, and encourages wasteful litigation over fishing-expedition discovery. It's too easy to manipulate lodestar: we see this often in the class action context, where lots of low-paid temp attorneys request and review millions of pointless documents and then get "billed" at over $300/hour. Nor is it a good use of court resources to scrutinize the hourly bills for waste and duplication (which is bound to happen given the number of cases unnecessarily involving multiple law firms). The right way, and most efficient way, to align incentives is, in my view, a reasonable percentage of the recovery.

So, in one case, our only accomplishment was to reduce the exorbitant fee request; we didn't ask for fees for ourselves because the class didn't see a penny of that reduction (though a for-profit objector did request fees, as was their right). In the other case, the parties responded to our objection by modifying the settlement to partially address our concerns, and, as a result, the class received an additional $2.5 million in recovery that would have otherwise instead gone to unrelated third parties (including two schools affiliated with lead class counsel).

A year ago I said we wouldn't seek more than 4.4% in a fee request, but that was when we consisted of one attorney and one part-time volunteer; I was indifferent if we were short on cash flow in any given month, because I live a frugal life and could support myself out of my own savings and occasional poker-playing Las Vegas trips if I had to (as I did for several months). Now that I have other attorneys doing work for CCAF who do depend on CCAF for an embarrassingly below-market income, and who would suffer financially if we ever ran out of money; and now that I find CCAF having to turn down legitimate cases because of lack of resources, I'm hurting my cause by being so noble-minded. And because we only ask for fees to be deducted from class counsel's fee request, the only beneficiary of that noble-mindedness are the trial lawyers who were happy to shortchange their putative clients to begin with.

In the case where we won $2.5 million, the plaintiffs' attorneys made lots of frivolous arguments and filings that raised our costs and time-commitment substantially, and created risk that we wouldn't get any fees at all. We would have been willing to stipulate for a joint application for 3.5% of what we had won, but the plaintiffs' attorneys, embarrassed by our success, insisted on scorched-earth litigation tactics instead (including the standard offensive ad hominem name-calling), so, given the increased risk we were facing, and the increased hassle of having to collaterally litigate attorneys' fees instead of other class action settlements, we saw no reason not to request the full extent of what the law permits—a proportionate share of attorneys' fees, reflecting our contribution to the class recovery. 15% of the class recovery was directly attributable to our objection: why shouldn't we get 15% of the total amount of attorneys' fees? In this case, it works out to an 11.9% contingent-fee request, still well under the 25% benchmark for settlements of this size or the 35%+expenses we see some class attorneys abusively request.

Nevertheless, we operate largely on the basis of the generosity of our donors. If you gave us money between May 30 and today because you thought we were only going to ask for 4.4% of attorneys' fees, and do not believe you have gotten fair charitable value from your donation or are otherwise offended by our fee request, let me know, and we can discuss a refund or a modification of our request.

Friday, April 15, 2011

EA Sports Litigation (Pecover v. Electronic Arts Inc.)

Class members getting a notice for this case have been writing me. Dudes: I made my name in the Grand Theft Auto class action, of course I bought Madden and am a class member here.

This is a class action certification, rather than a settlement, so there isn't an easy way for me to get involved at this stage. At the moment, the problem is one of antitrust law, rather than class action law: as the defendant, Electronic Arts already has every incentive to litigate for a reasonable interpretation of antitrust law (and, more particularly, law geeks, the Aspen Skiing or bottleneck doctrine) without me butting in. Given my limited resources and heavy caseload (five cases have filings due in the next seven days!), I prefer to save my powder for cases—like class action settlements—where none of the parties before the court have the proper incentive to ensure the right questions get before the court unless I speak up. I would like to see more courts consider Rule 23(a)(4) in antitrust cases, since many class actions involve legal theories that would make the putative clients/consumers worse off, and a class certification is effectively a merits decision that a class member would prefer to endorse the class attorney's theory of the case. And some day in some case where the conflict is clearer and the defendant hasn't alienated me with poor customer service and buggy products, I'll make that argument. But given that courts have never considered this question before, I want the first time I make the argument to be a better test case than this one.

Rest assured, however, that I'm monitoring the case, and will not hesitate to get involved if class counsel tries to pull a fast one on their clients. (I'm naively hoping that, if I'm doing my job right, my vocal presence in the class will deter class counsel from negotiating a settlement I would object to in the first place.) If you're asking me what you should do, I can't give you individual legal advice if we don't have an attorney-client relationship, but I would note that there is no reason to ever opt out of a class action unless you plan to be suing the defendant yourself. If you're still in the class when it settles, you can always object later if the lawyers turn out to be settling the case for their benefit rather than yours.

The case number is 08-cv-2820-CW (N.D. Cal.).

Monday, April 11, 2011

Court reduces fees after CCAF objection to HP settlement

In January, we discussed a Center for Class Action Fairness objection to a coupon settlement involving HP inkjet printers. That settlement turned out to be even worse than the pathetic one advertised: $5 million in coupons were offered, but the multi-million member class only bothered to file claims for $1.5 million worth of the coupons, with the rest reverting to HP. And of course, a claim for a coupon is not an actual redemption of the coupon: my $2 coupon will likely go unused, since there's nothing HP sells on its website that isn't more than two dollars more expensive than what I can get it for elsewhere.

The attorneys asked for $2.9 million in fees and expenses, justifying it with a quack economic expert report valuing some token injunctive relief as being worth tens of millions of dollars. In a March 29 opinion, Judge Fogel rejected that valuation, held that the settlement was worth only $1.5 million to the class, and reduced the award of fees and expenses to $2.1 million.

Some of the language in the opinion is very good: all too often, courts divorce the fee inquiry from the relief actually won. As Russell Jackson points out, this court said, "To allow an award of attorneys' fees to outstrip the benefit to consumers in such cases would undermine the importance of focusing the efforts of class action counsel on issues that most affect consumers."

So why did the attorneys get $2.1 million? Because of the economic fiction of "fees" and "expenses," which are calculated differently. See, "expenses" cover things like travel, experts, and copying costs. But "fees," that covers things like rent and other overhead, attorney salaries, and paralegals. Attorneys will allocate a dollar received into one bucket or the other, and for some reason, courts will scrutinize the buckets differently, though at the end of the day, the attorneys get a single check for money that they can spend any way they want: the rent and the airlines are going to get paid either way. So the court held that the $2.9 million requested, consisting of $2.3 million in fees and $0.6 million in expenses, was unreasonable with respect to the fees, and reasonable with respect to the expenses—even though the fee request also includes money that goes to expenses, just a different category of expenses. So the attorneys got all of their "expense" request, and just had the "fee" request reduced—but still ended up with more than the class.

That's just business as usual, but there were a couple of other troubling things about the decision. The Class Action Fairness Act requires coupons to be valued by their redemption rate, not by the claim rate. Many of these coupons (such as the one I am scheduled to receive) are not going to be used; one institutional party received tens of thousands of unusable coupons because the terms of the settlement require a claimant to use only one coupon per order, and it would be infeasible for the company to split up its bulk orders to tens of thousands of individual orders.

Second, the court opinion says that there were only three objections, but this is false: there were hundreds of objections, but, because of a confusing notice, 99% of the objectors (including the institution discussed earlier) sent their objections to the claims administrator, the parties never passed along those objections to the court, and the court disregarded my complaint about the procedure in its opinion. Ironic for a consumer fraud case that the plaintiffs' attorneys successfully took advantage of a misleading notice they provided.

Should CCAF appeal this decision? An attorney commenting at Jackson's site suggests that the plaintiffs' attorneys will appeal, and if they do, we'll certainly cross-appeal. At some point CCAF will ask the appellate courts to create a bright-line rule forbidding attorneys from recovering more than their clients. Is this the case to do it?

Friday, April 1, 2011

April Fools Day and the New York Times

I recently treated myself to the new iPad, which arrived this week, and was looking forward to reading the NY Times this morning with that pretty iPad app, only to learn that everything is behind a paywall. The Times has been good to me over the years, but they keep getting fooled by the likes of my former client Eric Turkewitz every April 1, as his 2010 prank demonstrates. The paywall hasn't changed anything: it's totally unbelievable, but it happened again in 2011 and Popehat has the details of the hilarious prank.

Alas, I won't be able to track how the blogosphere reacts, because I'm speaking at the University of Cincinnati today: check out the webcast.

Wednesday, March 30, 2011

Speaking at University of Cincinnati April 1

I'm apparently a "leading advocate for class action reform." An impressive roster of speakers is going to have to sit through my lunchtime talk, which is part of the symposium entitled "The Principles and Politics of Aggregate Litigation: CAFA, PSLRA, and Beyond." The event will be webcast.

Tuesday, March 29, 2011

NVIDIA hearing held March 28

As I discussed on our Facebook page yesterday, I wasn't given our full ten minutes to argue in the hearing, while Milberg and NVIDIA took well over ten minutes each to argue against the motion. This could mean Judge Ware didn't care what I had to say, or it could mean that he wanted to give the other side the chance to exhaust every argument before ruling against them, or it could mean nothing at all or anything in between. The judge acknowledged the difference between a 17-inch screen and the smaller replacement computer screen. Judge Ware said he'd review the technical reports, so it seems that it will come down to which experts he believes. Will the judge see that Nader Bagherzadeh's conclusions are dishonestly inconsistent with his own data or that Jon Peddie applied the wrong legal standard and contradicted his non-litigation positions? I don't know, and I don't know when the judge will rule. I have one case in Chicago where we've been waiting since October for a ruling, and a recent case in New Jersey where a ruling came in less than 24 hours.

Update: Court rules for NVIDIA. If you're a class member with questions about the case, and why your attorneys argued against your own recovery, you need to talk to your attorneys at Milberg; I cannot help you.

Monday, March 14, 2011

Reply brief filed in NVIDIA case

Our earlier post continues to update the docket, most notably with our reply brief filed today.

It's hard to believe that multiple millionaire lawyers from multiple law firms all asked the court to apply the wrong legal standard for deciding a dispute over a consent decree accidentally. I'll take it as a good sign that they didn't think they could win if the court applied the correct legal standard and that their only hope was to obfuscate. It is of some concern that lawyers think they can obfuscate like that and get away with it without getting sanctioned.

What is most remarkable is the shamelessness of the contrasting claims by NVIDIA and Milberg. When asking the court to disregard objections to the settlement, the settling parties argued that there would be hundreds of thousands of claims worth at least tens (and probably hundreds) of millions of dollars. (Milberg actually argued that there would be "exponentially" more than hundreds of thousands of claims, but I presume that was because they don't know what "exponentially" means rather than because they were arguing that there would be tens of billions of claims.)

But push has come to shove, and only 30 thousand class members have taken the preliminary steps of asking for relief—and the Settling Parties have the gall to argue that this response rate (which will correspond to less than $10 million of class benefit, less than the $13 million attorney fee) demonstrates the popularity of the settlement administration, because one couldn't reasonably expect any more claims than that. We didn't even ask for those numbers: NVIDIA shamelessly volunteered them as evidence of the success of the settlement.

This case is a poster child for why courts should not award attorneys' fees until after the claims period has ended. If we hadn't intervened in this case, no one would have ever disclosed that Milberg exaggerated class recovery twenty- to fifty-fold, and this would be recorded in some empirical study as evidence of attorneys generously restricting themselves to fees of less than 10% of class recovery, rather than 130% of class recovery.

Update: Court rules for NVIDIA. If you're a class member with questions about the case, and why your attorneys argued against your own recovery, you need to talk to your attorneys at Milberg; I cannot help you.

Wednesday, March 2, 2011

NVIDIA class action settlement: Milberg declares war on its clients

If there was ever any question of whether Milberg was going to side with its putative clients or its putative adversary, we now have an answer from this Litigation Daily story (behind a subscription wall, but now available for free):
Lead class counsel Jeff Westerman of Milberg said in a statement that Frank is "working against the interests of consumers who deserve to get their computers replaced."

"This settlement is providing class members with repairs and replacement computers, and thousands have already submitted claims," Westerman said in the statement. "When it comes to the replacement computers, we hired an independent expert who confirmed that we were adhering to the terms of the settlement. [Frank's] claims to the contrary reveal an anti-consumer agenda aimed at stopping the settlement from proceeding."
Three obvious points:

1. Millions of HP owners were subject to the settlement; "thousands have already submitted claims." Or, in other words, less than 1% of the class has submitted claims. And that's aside from the fact that "submitting a claim" doesn't indicate approval of the settlement administration, just an understanding that half a loaf is better than none. All of my clients have "submitted claims"; none are happy with the settlement.

2. In case it wasn't clear from my briefs, I fully support "consumers [getting] their computers replaced." One can readily look at my proposed order, and see that I am not trying to "stop[] the settlement from proceeding." There is already an existing court order for the settlement to proceed, and no one has moved to stay that order.

3. I've heard of spin, but it's remarkable that demanding that consumers get what their attorneys promised them in a class action settlement and notice is considered "an anti-consumer agenda." To review: it's the tort reform advocate who has filed papers with the court asking for consumers to get what they were promised; it's the trial lawyers who have announced their intent to file papers with the Court siding with the defendant and alleged wrongdoer insisting that the consumers—their clients—get less than what the Court has already ordered.

Leading tech blog Engadget caught wind of our motion:
Ted Frank of the Center for Class Action Fairness says that NVIDIA has no business passing off cheap laptops, and we think he might have a case -- after all, the judge ordered that NVIDIA provide "a replacement computer of like or similar kind and equal or similar value," and it doesn't take a lawyer to see that the $400 [sic] Compaq Presario CQ56-115DX that the company's offering doesn't come close to compensating owners of faulty machines. We joked that you might be better off selling your old laptop for parts on eBay, and that might not be far from the truth.
So did leading law blog Above the Law.

Update: Court rules for NVIDIA. If you're a class member with questions about the case, and why your attorneys argued against your own recovery, you need to talk to your attorneys at Milberg; I cannot help you.

Friday, February 25, 2011

In re HP Laserjet and the question of injunctive relief

On February 14, there was an hour-long fairness hearing before Judge Guilford in the Central District of California, and anyone who practices in federal court in California knows how rare hour-long arguments are. One certainly appreciates the attention paid to the case. The Laserjet settlement was pretty much identical to the Inkjet settlement (with the twist that the lead plaintiff in Laserjet filed an objection accusing his attorneys, Kabateck Brown Kellner, of fraud). The Court gave the opportunity for additional briefing, and Tuesday we provided this brief with a short summary on the question of injunctive relief and answering some of the Court's questions.

Tuesday, February 22, 2011

The return of the $0 Costco fuel settlement

You will recall that a class action is pending in Kansas over gasoline retailers' failure to disclose the laws of physics to customers, i.e., gasoline, like all other liquids, expands in higher temperatures. Since a "gallon" is a measure of volume rather than power, someone buying gasoline when it's warm is getting less mileage than someone who buys the same volume of gasoline when it's cool. To some extent, the retailers are being hoist by their own petard, because they pulled the same class-action nonsense on wholesalers, but it's still socially wasteful litigation that benefits no one but the lawyers; when I argued at a fairness hearing in Kansas City last April, I had several dozen witnesses, likely each billing an average of over $400/hour. Costco decided to get the uncertainty off of its books, and agreed to pay the lawyers to go away. But the class members, the ones putatively injured by Costco's conduct, got nothing. The plaintiffs had the chutzpah to claim that Costco's agreement to "temperature-adjust" their fuel sales was a benefit to consumers, but that's clearly not so. If Costco's average "gallon" happens to increase in size a cubic inch or two, that doesn't mean that consumers are getting free gas any more than it would mean that consumers would get free eggs if the government suddenly mandated that a "dozen" was now equal to eighteen.

The court threw out the settlement on a technicality, and the parties are now back with an amended settlement that fixes the technicality, but still doesn't do anything for the class. So my clients renewed their objection to the settlement. Last time around, we challenged the quack economic report that plaintiffs submitted that claimed changing the size of a gallon would magically result in consumers getting tens of millions of dollars of free gasoline; the other side protested that I was just a mere lawyer who wasn't qualified to use big words like "cross-subsidization." Over the last few months, I've discussed this case with several economists, many of whom fell over laughing as I described the testimony of Dr. Andrew Safir; the distinguished Dr. David Henderson was kind enough to charge us a reduced rate to provide a simple rebuttal on short notice this time around.

When is injunctive relief a benefit to the class? So many plaintiffs' lawyers seem confused about this issue: they forget that they represent clients, and the injunctive relief needs to benefit their clients if one is to count it towards determining the fairness of the settlement. Few courts consider the issue because few objectors raise it, but the ones that do consider it consistently distinguish between retrospective injunctive relief (say, a recall that fixes an automobile or a computer) and prospective injunctive relief (a company agrees to change its business practices). Even when there is consumer fraud, prospective injunctive relief doesn't benefit consumers unless they engage in new business with the vendor. And even then, the consumers will not benefit if the vendor simply raises its prices to account for the new costs in the change in business practices.

Saturday, February 12, 2011

Merger lawsuits

I'm quoted in a Reuters story about merger lawsuits and their quick settlements:
Settlements often come fast, and plaintiffs' lawyers share in the spoils -- $500,000 in a typical lawsuit, Advisen said.

"The real problem, I think, is in cases where lawyers win a few extra sentences of disclosure and walk away with $1 million of fees," said Ted Frank, who founded the Center for Class Action Fairness and often challenges proposed settlements.

Lawyers and researchers say the proliferation of lawsuits reflects increased competition among firms.

"There are some bottom feeders on the plaintiffs' side," said Adam Savett, a director at the Claims Compensation Bureau LLC, which monitors class-action claims for investors. "Their modus operandi is throw up a lot of stuff on the wall and try to get a quick settlement, and move on."


Typically, an individual or institutional investor sues a target company or its directors, seeking class-action status and alleging a breach of fiduciary duty to shareholders.


"Defense lawyers benefit from this game," Travis Laster, a vice chancellor in Delaware Chancery Court, said at a December hearing. "They get to bill hours without any meaningful reputational risk from a loss. They then get to get a cheap settlement for their client. Disclosures are cheap."

Frank, of the Center for Class Action Fairness, said it was up to judges to decide if these settlements have much benefit.

"Judges should consider whether these provisions actually create value for shareholders," he said, "or amount to a rearranging of the deck chairs to create the illusion of value to justify attorneys' fees."

Wednesday, February 9, 2011

Friday, January 21, 2011

Apple backdating litigation update

We opposed preliminary approval of the Apple settlement because there was a possibility that money would go to third parties at the expense of class members. The settling parties assured the court that that wouldn't happen, but have not disclosed the number of claims made on the settlement fund to date. So today we filed an objection to the settlement contingent upon whether the settlement fund goes to the class members or to third-party cy pres. If the settlement fund does end up in the hands of the class, we're going to ask for a token amount of attorneys' fees to reflect the $2.5 million we won for the class.

The case is In re: Apple Inc. Securities Litigation, No. 06-5208 (N.D. Cal.); the fairness hearing is scheduled before Judge Fogel on February 18 in San Jose.