Center for Class Action Fairness, LLC

Ninth Circuit briefing in In re HP Inkjet complete

2012-01-18T10:54:00.000-05:00

We filed our reply brief today.

See if you can spot the big math error in the HP brief before you read the reply brief.

Reply brief filed in Cobell v. Salazar

2012-01-06T11:05:00.000-05:00

Today, we filed our reply brief in the Cobell v. Salazar appeal (No. 11-5205 (D.C. Cir.)). Oral argument is scheduled for February 16.

Festivus update

2011-12-23T16:58:00.000-05:00

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. Law.com 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.

mid-December update

2011-12-16T14:49:00.001-05:00

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 Classmates.com 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.

Yes, the Ticketmaster class action settlement is appalling

2011-12-02T07:45:00.000-05:00

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.

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

2011-12-01T14:07:00.006-05:00

(bumped with December 1 update)

August 25: I'm getting a lot of questions about the appeal in Cobell v. Salazar. For obvious reasons, I can't talk to class members individually about the appeal. If you want to know why Ms. Craven appealed, you should read Ms. Craven's filings. (Perhaps you should ask your attorneys why you had to find this out on my website rather than on the Indian trust website; they're quick to update the website with their own filings; it's not like any of this is secret. Why are your attorneys hiding this from you? What are they afraid of?) Please do not call or write me or Ms. Craven: we cannot answer your questions.

Kimberly Craven objection
Craven Opposition to Final Approval (stricken by court)
Fairness Hearing Transcript (pp. 70-82)
No. 11-5205 Amended Statement of Issues
No. 11-5205 Certificate of Parties, Rulings, and Related Cases

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 6: The plaintiffs have accused Ms. Craven of only seeking delay. This is plainly false: at every step of the appellate proceedings, Ms. Craven has acted to expedite matters. She filed her notice of appeal on August 6, the first week that the federal rules permitted that filing; Ms. Craven had the right to wait until October to file her notice of appeal (which in turn would have extended the deadline for other objectors to file their notices of appeal), so she avoided up to three months of delay by filing early. Ms. Craven filed her FRAP 12 papers with the D.C. Circuit on September 2, well ahead of the September 12 deadline. And today, Ms. Craven served opposing counsel with her FRAP 30 notice, several weeks ahead of the deadline to do so. Ms. Craven has offered to expedite the briefing schedule for the appeal if the plaintiffs agree to act reasonably in the appellate process and not engage in unnecessary delay tactics. We shall see whether the plaintiffs are really interested in minimizing delay, or whether their real interests are in maximizing potential attorneys' fees.

September 6 FRAP 30 letter from Frank to opposing counsel

Update, September 9: The indiantrust.com 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. One wonders why class counsel is so afraid to let their clients see Ms. Craven's argument, even as their clients are inundating the settlement administrator's hotline with calls asking for details about her appeal. (And I bet you didn't know that the First Circuit could reverse D.C. Circuit binding precedent! Remarkable the things lawyers are willing to claim when they have up to $111 million of fees at stake.)

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.

As we have additional filings and correspondence, I will update. We are a small nonprofit and do not have the resources to return phone calls or emails to class members.

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 indiantrust.com 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 indiantrust.com 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 indiantrust.com 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. It's a little disturbing that the D.C. Circuit would announce a panel before briefing is done, but after some briefing has been filed, but I'm told by local practitioners that the court has done this before.
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.

Wherein CCAF is "justly lauded"

2011-11-28T09:04:00.030-05:00

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.

Some updates

2011-11-23T08:31:00.000-05:00

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; law.com; 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.

Ninth Circuit cy pres victory in Nachsin v. AOL

2011-11-22T09:22:00.008-05:00

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, Nachsin 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 law.com.

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

2011-11-16T14:49:00.003-05:00

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 walmart.com, where prices are often higher when shipping is included.

Barber Auto Sales v. UPS

2011-11-09T09:04:00.000-05:00

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.).

Working through the email

2011-11-08T08:00:00.001-05:00

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.

Some updates

2011-11-01T10:24:00.000-04:00

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.

Blogosphere coverage of yesterday's Wall Street Journal article: Ribstein; Overlawyered; Mass Tort Litigation Blog; WSJ Law Blog.

Business Law Daily covers the CEI amicus in Cobell v. Salazar.

Welcome, Wall Street Journal readers

2011-10-30T22:46:00.001-04:00

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 HP.com—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.

Franklin Templeton mutual fund settlement

2011-10-20T09:40:00.001-04:00

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.

Brazil v. Dell

2011-10-04T13:52:00.000-04:00

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.

Pampers Dry Max class action settlement objection

2011-08-31T13:27:00.001-04:00

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.

Sirius XM settlement approved

2011-08-25T09:15:00.017-04:00

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.

Classmates.com class action settlement (again)

2011-08-23T08:58:00.000-04:00

I'm getting lots of emails about the Classmates.com 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.

CCAF wins in Ninth Circuit

2011-08-22T08:40:00.017-04:00

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.

Coverage: Forbes, Point of Law, NLJ, Law 360 ($), Business Law Daily, LNL, Lawyers USA Online, Toothman, Trial Insider.

Georgia investigation into judge's use of cy pres

2011-08-22T07:52:00.000-04:00

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.

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

2011-08-20T17:42:00.000-04:00

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.)

Opening brief filed in appeal of Volkswagen class action settlement approval

2011-08-12T08:41:00.000-04:00

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.)

Objection in Trombley v. National City Bank

2011-07-27T09:33:00.001-04:00

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.

On KOGO (San Diego) 1:05 pm today

2011-07-25T10:28:00.000-04:00

I will be on the LaDona Live program on KOGO (San Diego), 600 AM at 1:05 PM Pacific, talking about CCAF's objection in the Rice Krispies case.

CCAF objection in Blessing v. Sirius XM Radio

2011-07-19T12:45:00.000-04:00

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.

June 20 was a busy day

2011-06-24T10:18:00.000-04:00

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.

Weeks v. Kellogg - Rice Krispies class action settlement

2011-06-16T09:02:00.005-04:00

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.).

Bankruptcy creditor objections: "Hipster Battles Funds"

2011-06-13T11:36:00.000-04:00

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

2011-06-13T08:43:00.000-04:00

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.).

Briefing in Cobell v. Salazar Indian trust class action

2011-06-01T09:24:00.002-04:00

Details at Point of Law.

AOL cy pres Ninth Circuit appeal oral argument set

2011-05-14T13:44:00.000-04:00

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.

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

2011-05-13T14:21:00.000-04:00

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.

Court rules for NVIDIA

2011-05-02T14:29:00.003-04:00

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. But if you wait a week, I will post an expert report that someone who sues in small-claims court can use as evidence that the class notice is invalid.

Illegal coupon settlement in Nevada

2011-04-29T09:31:00.003-04:00

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.

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

2011-04-28T08:29:00.001-04:00

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.

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

2011-04-26T15:05:00.000-04:00

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.).

Cobell v. Salazar

2011-04-20T14:40:00.000-04:00

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.).

April 18 press release

2011-04-19T00:12:00.000-04:00

CENTER FOR CLASS ACTION FAIRNESS

ANNOUNCES MULTIPLE VICTORIES

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 Classmates.com 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 Classmates.com 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 http://tedfrank.com/press.

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.

FOR MORE INFORMATION:
http://centerforclassactionfairness.blogspot.com

http://tedfrank.com

Follow the Center on Facebook!

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

2011-04-18T08:48:00.001-04:00

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?

Objectors and fee requests

2011-04-17T12:59:00.000-04:00

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.

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

2011-04-15T23:31:00.001-04:00

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.).

Court reduces fees after CCAF objection to HP settlement

2011-04-11T16:14:00.000-04:00

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?

April Fools Day and the New York Times

2011-04-01T07:00:00.020-04:00

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.

Speaking at University of Cincinnati April 1

2011-03-30T10:01:00.001-04:00

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.

NVIDIA hearing held March 28

2011-03-29T14:39:00.000-04:00

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.

Note that HP owners still have hope for eventual justice if we lose this motion. I've been talking to plaintiffs' lawyers about Milberg's conduct in this case, and Milberg's malpractice insurer ought to be hoping that Judge Ware rules against NVIDIA. Bringing a malpractice class action isn't something CCAF is equipped to do, but it seems class members will have a good chance of finding a contingency fee lawyer willing to represent them.

Reply brief filed in NVIDIA case

2011-03-14T14:59:00.001-04:00

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.

Interview with the American Lawyer

2011-03-05T07:46:00.001-05:00

There's a pretty nice interview of me on the American Lawyer website.

NVIDIA class action settlement: Milberg declares war on its clients

2011-03-02T08:07:00.002-05:00

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.

In re HP Laserjet and the question of injunctive relief

2011-02-25T08:03:00.018-05:00

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.

Motion made in the NVIDIA GPU class action settlement

2011-02-24T07:56:00.026-05:00

Our January 13 post on the NVIDIA GPU settlement, where class members were promised a “replacement HP notebook computer … of similar kind and value as their eligible malfunctioning notebook computer" as part of a settlement, but are instead getting a $330 Compaq CQ56 notebook, has generated several updates and over 100 comments. Though class counsel suggested to me that patience would result in a fix to the settlement, it did not for the vast majority of aggrieved class members, and we ended up losing five weeks. I've started this post now that the court filings have started, and will update as new filings come in. The court granted our motion to expedite the hearing schedule, but expediting means a March 28 hearing. Over 100 HP owners have asked for the opportunity to provide a declaration to the court. One of my clients has a website with more information: fairnvidiasettlement.com.

343. HP Owners' emergency motion to shorten time
344. Frank declaration in support of emergency motion
345. Plaintiffs' status report and response to emergency motion
346. NVIDIA response to emergency motion (Note: NVIDIA says I was not authorized to represent their non-opposition. That's my fault: I incorrectly assumed that when Robert Varian of Orrick e-mailed me to say that there was an "Agreement not to oppose" the motion, that meant there was an agreement not to oppose the motion. Similarly, plaintiffs surprised me when they sat on my proposed schedule for over 24 hours without telling me they changed their minds not to oppose. Live and learn.)
347. Court order scheduling briefing and hearing
348. Motion to enforce settlement
349. Memorandum in support of motion to enforce settlement
349-12. Proposed order
350. Frank declaration in support of motion to enforce settlement
351. Ram/Edelson objectors kibitz on motion
352. Brown class members' response to Ram/Edelson objectors
353. [Transcript ordering relating to objectors' appeal; not relevant to this motion]
354. NVIDIA response to [348] motion
355. Jon Peddie (NVIDIA) declaration
356. Keith Katchor (NVIDIA) declaration
357. Dan Rosenthal (NVIDIA/settlement administrator) declaration
358. Milberg response to [348] motion
358.1. Westerman declaration
358.2. Bagherzadeh declaration
358.4. Laratro declaration
359. Certificate of service
360. Unrelated docket entry regarding procedural step in objector appeal
361. Lichterman (NVIDIA/Orrick) declaration
362. Reply brief in support of motion to enforce settlement
363. Zilles declaration
364. Frank supplemental declaration
365. Vlastone supplemental declaration and report
366. Notice of settling parties' alteration of settlement website
367. NVIDIA response to notice of settling parties' alteration of settlement website
368. Supplemental Bagherzadeh declaration
369. Supplemental Laratro declaration
370. Certificate of service
371. Supplemental Zilles declaration
372. Supplemental Frank declaration
373. Docket entry noting hearing and motion under submission
374. Horton declaration

I have a separate post listing press coverage.

Update, March 4. A reminder: While my motion requests relief for all of the HP class members, I am not your attorney. There are millions of class members (and countless HP owners who aren't class members), and I cannot provide individualized personalized legal advice about each of their computers. Your email or phone call or comment asking for that advice just gums up the works for everybody else. Consult your own lawyer for legal questions, or ask around at one of several message boards of HP computer owners for technical questions.

The return of the $0 Costco fuel settlement

2011-02-22T06:01:00.000-05:00

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.

Merger lawsuits

2011-02-12T08:22:00.000-05:00

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."

REARRANGING DECK CHAIRS

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."

Oral argument in the Bluetooth case

2011-02-09T14:54:00.001-05:00

The audio file of Monday's oral argument in the Ninth Circuit in the Bluetooth case is now on line. The panel consisted of circuit Judges Hawkins and Fisher and N.D. Ohio district court Judge Zouhary.

Briefing:

Apple backdating litigation update

2011-01-21T12:09:00.000-05:00

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.

Additional briefing in the HP Inkjet Printer coupon settlement case

2011-01-21T11:31:00.000-05:00

The briefing by the settling parties in support of final approval seemed exceptionally poor, though I admittedly have never been in a position where I've tried to defend an indefensible settlement. We see another quack economic expert report inventing tens of millions of dollars of "benefit" from a worthless settlement. We filed our opposition today, with references to Seinfeld, Bart Simpson, The Great Gatsby, and the legal tradition of table-pounding—as well as an article written by lead class counsel for the trial-lawyers' lobby where he admits to the worthlessness of the settlement.

The case is In re HP Inkjet Printer Litigation, No. 05-3580 (N.D. Cal.), and the fairness hearing will be before Judge Jeremy Fogel on January 28 in San Jose.

NVIDIA GPU Settlement - HP replacement computers

2011-01-13T17:05:00.013-05:00

In the NVIDIA GPU settlement, owners of HP notebook computers affected by a defective chip had to be thrilled: the settlement notice promised them that, with proper documentation, they would receive a “replacement HP notebook computer … of similar kind and value as their eligible malfunctioning notebook computer.” But after the settlement was approved, they learned,much to their displeasure, that their class counsel, Milberg LLP, negotiated that they could only receive an entry-level Compaq CQ50, often worth over a thousand dollars less than the computer they would be replacing. Let's hope this is an oversight, rather than a deliberate attempt to deceive the class and the court: I senta letter to the settling parties' counsel today asking for clarification.

Update, January 16: I'm getting dozens of emails from class members because of a couple of posts on HP-related message boards from class members suggesting that I be lobbied. Please understand that I am not in a position of power to unilaterally do anything about the settlement. I am an attorney who represents consumers pro bono in similar situations where attorneys try to rip off class members in settlements. I am certainly interested in this case based on what I've heard, and I am investigating at the request of a class member. I agree that the current settlement claims process is inconsistent with the notice given the class; you don't need to try to convince me of that fact. If the settling parties don't do anything to fix the problem, and can't satisfy me that they have a legal basis to do what they did, and research determines that legal intervention has a chance of fixing the matter, I'll write back a few of you to see if you can generate a signed declaration for the court proceedings to help the court understand the extent of the breach of the class counsel's promise to the class. But I amnot your attorney unless you and I agree to a signed retention agreement that I am your attorney. The fact that I wrote a letter to the class counsel about this question does not mean that you should not investigate the possibility of legal representation for yourself.

Update, January 18, 4:15 PM Eastern: I have not received anything in writing as of this afternoon. I called the Milberg firm, and they claim that the information on the website is "premature" and not the "final" version of the settlement. This is mysterious, given that Milberg has control over the website. Worse, Milberg refuses to provide anything in writing that the website will be updated with different information, so Milberg can deny that they told me this later. Still, there is a claim that there will be a "meeting" tonight to discuss modifications to the claims process. One would hope that any such modifications includes corrective notice to the class and an extended claims process to make up for the inaccurate information previously given. I will check the settlement website next week. The low level person I spoke to did not seem to understand the difference between an objection to a judge's decision and asking Milberg to comply with the judge's order, and kept asking me if I thought the judge had made a mistake. Class members thinking of writing me should instead politely call Milberg at 213.617.1200 and get an answer about whether and when the Milberg NVIDIA settlement website is up to date, and why inaccurate or "premature" information has been posted to the website. If Milberg tells you something different than they told me, leave a comment here.

Update, January 26, 7 PM Eastern: I finally spoke with Mr. Westerman at Milberg. He's asked me for more time to negotiate with NVIDIA to work through some of these issues. Depending on whether the settlement administration procedure changes, at the end of the day, we may or may not agree whether the parties are in compliance with what the settlement and the class notice promised, but I'm willing to give him the chance: my preference is for the parties to make this right without me getting involved by filing papers with the court. If I sign up clients, I will not be signing up dozens of clients: I will be working with two to five people who have very clear-cut cases where the CQ50 or the Asus EEE T101MT-EU17-BK is self-evidently to a layperson not a “replacement HP notebook computer … of similar kind and value as their eligible malfunctioning notebook computer” and ask for classwide relief; I may contact a few other class members and ask for them to provide declarations supporting the argument. That said, you should not view my participation in the case as a reason not to retain a lawyer on your own: I am not your lawyer unless we have a signed retention agreement. While I am happy to receive spec sheets describing the model of your computer and comparing it to the replacement computer, please do not contact me asking me for updates or for personalized legal advice: I will update this blog post as new information comes in; if you've read the blog post, you know everything I know and can tell you.

Update, February 1: After another conversation with Mr. Westerman today, I will reevaluate the situation on February 9.

Update, February 10. The settlement website has been finally modified: claimants deemed ineligible between January 10 and January 22 are encouraged to resubmit claims; the replacement computer remedy for HP notebook computers will be a Compaq Presario CQ56 computer, rather than a CQ50. That still doesn't address the tablet problem; leave your comments on your thoughts about the CQ56. Mr. Westerman has asked me to refrain from action this week (and, frankly, the press of other commitments in existing cases would mean that I would need to do that anyway). Please remember that I am not your attorney and cannot provide individualized advice on how to respond to the settlement, and please do not rely upon me as your only recourse; there may be other attorneys willing to look into this. In particular, I encourage you to contact the consumer division of your state attorney general's office (and city/county office as well, if you have one). I will check back in with Mr. Westerman February 15.

Update, February 16 - The settlement has been modified, though in ways that do not solve the grievances earlier discussed for most class members. A number of class members have formally retained me; we'll be filing some sort of papers with the court before the end of the month asking for the court to intervene to enforce the promises made to the class, though I'm still doing research as to what form those papers will take, and whether we're proceeding against just NVIDIA or both NVIDIA and class counsel. (NVIDIA counsel never responded to my letter.) I did not speak to Mr. Westerman on February 15, and he's in court today, but I'll try to reach him tomorrow to determine class counsel's position on our petition to the court, and whether they'll cooperate with us or oppose us. (I would view any opposition as a breach of fiduciary duty to the class.) One thing I know we'll want is declarations in support of our motion. If you're interested in submitting such a declaration (under oath, under penalty of perjury) to the court expressing your thoughts on why the computers are not of like kind and value, leave information in this thread with a way to contact you, and someone may be in touch with you next week (though we probably will not have the chance to get declarations from everyone who offers to issue one). Please continue to note: (1) if we do not have a retainer agreement, I am not your attorney in this case; (2) I cannot offer individualized advice about how to respond to the settlement; and (3) if you do submit a declaration to the court, you do so voluntarily to help the cause of your fellow HP owners: it does not make me your attorney.

Update, February 22 - One of my clients has established the website http://fairnvidiasettlement.com/ to summarize what's happening and collect potential declarations from other class members. While he is doing the declaration data collection on my behalf, he is not speaking for me, but the site is a useful compendium of information. We may end up with dozens of declarations, but I am not going to want to overwhelm the court, and will likely only use six to twelve of them. I am currently negotiating a briefing schedule with the settling parties in the hopes of getting a hearing date with the court before the claims period expires; without court approval for expedition, there wouldn't be a hearing before April.

Update, February 24 - We filed papers with the court yesterday. Further updates will be in this post.

Victory: court rejects Classmates.com settlement

2011-01-13T16:37:00.000-05:00

We'd like to think our objection had at least a little to do with the end result.

This decision is not a big surprise after the court was severely critical of the settlement during the December 16 fairness hearing. We won't know for a while why the court rejected the settlement, but Judge Richard Jones today issued an order stating that he did so, that the parties should return to litigation, and that a formal opinion would be forthcoming. (The parties might reasonably murmur that they're hard pressed to have productive settlement negotiations until they know where they fell short in the court's eyes.)

Press coverage of the Bachman case

2011-01-11T20:51:00.001-05:00

In Litigation Daily, Forbes.com, and the Washington Times. Also Amy Alkon's blog.

Bachman v. A.G. Edwards coupon class action settlement appeal

2011-01-10T20:26:00.000-05:00

Our unsuccessful objection to the Bachman v. A.G. Edwards settlement, which consisted almost entirely of time-restricted non-transferable $8.22 coupons, received press coverage at the time. The question of whether to value a coupon at full face value or at the actual (or reasonably anticipated) redemption rate is a question of first impression in Missouri state courts; our appellate brief was filed Monday.

Oral argument scheduled in the Bluetooth case

2011-01-05T20:16:00.000-05:00

The Ninth Circuit has scheduled oral argument in the Bluetooth case for Monday, February 7, 9 a.m., in the federal courthouse in Pasadena. (Five other cases are on the calendar, so I probably won't get my fifteen minutes until after 10 a.m.) I'm undefeated (well, ok, 1-0) in that courthouse.

The first time I ever visited the Pasadena courthouse was in the fall of 1992, when a memorable young law clerk in Alex Kozinski's chambers named Eugene Volokh quizzed me about the issue of toughening evidentiary standards for expert witnesses in what I think was the first law-clerk interview of the season for 1994-95. (That was the first attempt of the judiciary and the legal academy to create a cartel for the hiring of law clerks, and I unwittingly caused it to break down when I sent my resume out without consulting with the law school, and Judge Kozinski started calling people in for interviews, causing a chain reaction that unraveled everyone's plans.) Eugene, of course, went on to bigger and better things.

If you're in the DC area, and you're interested in putting in a few hours reading briefs and throwing questions at me on a moot court later this month, please drop me an email. (Friends from Kirkland & Ellis: sorry, you're adverse to me in this case, so you're not invited.)

In re HP Inkjet Printer Litigation class action settlement objection

2010-12-30T18:52:00.001-05:00

If I were to buy a three-pack of color ink for my inkjet printer today, it would cost me $42.99 at HP.com and $36.99 at Amazon.com. That's not a big deal—unless HP is trying to settle a class action by giving class members $2 coupons that can only be used at HP.com (and can't be transferred or stacked, and expire in six months). And even if the coupon was larger (some class members get $7 coupons) HP makes much more money selling ink at HP.com than at Amazon.com, all else being equal: this is a marketing program for them. And the attorneys are claiming that they're entitled to $2.9 million for such a lame settlement because the coupons are "worth" $5 million. And even if one attributed full face value to the coupons (which the parties try mightily hard to not call coupons), I strongly suspect far less than $5 million of coupons will be claimed or redeemed.

The Center filed an objection today in the Northern District of California. Kabateck Brown Kellner, who we've seen before in the $0 AOL settlement and the $117k Classmates.com settlement, are among the lead attorneys in this ripoff as well.

Objections are due January 3. If you're a class member (and most people who purchased HP inkjet printers in the last nine years are, and there are tens of millions of them out there), you can file a claim or object at the settlement website; this settlement nicely permits emails if you prefer objecting that way.

Objection in Ercoline v. Unilever (Breyers Smooth & Dreamy) class action

2010-12-13T08:30:00.000-05:00

We had to mail it to the court rather than electronically file it so it may not immediately show up in the docket, but today the District of New Jersey will receive my objection to the $0 settlement in Ercoline v. Unilever, No. 10-cv-1747. Earlier.

Kellogg's Frosted Mini-Wheats class action settlement

2010-11-29T09:01:00.002-05:00

In the Kellogg's Frosted Mini-Wheats class action settlement, class members (those who purchased the cereal on certain dates in 2008 and 2009) who submit claims will receive $5/box for up to three boxes of purchased Frosted Mini-Wheats, with claims pro-rated if there are more than $2.75 million in claims. If there is less than $2.75 million in claims, money goes to a charity that has yet to be named. In addition, Kellogg's will donate "$5.5 million" in food to charity (that also has yet to be named), though there is no indication how that valuation will be determined. For this, six law firms are requesting $2 million in fees, though:

That amount of fees is disproportionate to the class relief;
the settlement provides for cy pres relief even though there might be more than $8.25 million in claims, demonstrating that the attorneys put the interest of the third-party charities ahead of their clients' interest; and
the class notice is defective for failing to identify the charitable recipients of the cy pres, giving the class no opportunity to object to an improper recipient.

If you're a class member and you're unhappy with attorneys improperly making millions in your name, do contact me at the Center for Class Action Fairness to discuss your options.

Press coverage

2010-11-23T08:44:00.000-05:00

Not often that you see class actions discussed on ESPN.com, but Tuesday Morning Quarterback gave us a shout-out for our objection in the Classmates case.
Karen Lee Torre (of Ricci fame) writes a very complimentary piece in the Connecticut Law Tribune about CCAF's work in the Apple settlement.
We're even getting praise from the trial-lawyer site "Lawyers and Settlements."

In re Classmates.com class action settlement objection

2010-11-19T04:13:00.000-05:00

We filed our objection late Thursday, and submitted ten other pro se objections that people took the trouble to send us for forwarding. Is a settlement that pays class members $117 thousand worth $117 thousand or, as the plaintiffs claim, $9.5 million? We invoke Wile E. Coyote in exploring what seems to be an obvious answer. The attorneys are asking for $1.05 million for a settlement that Gregg Easterbrook describes as "shafting the plaintiffs."

Records on appeal

2010-11-17T19:49:00.000-05:00

Under Fed. R. App. Proc. 30(b), appellants and appellees are to coordinate the production of a joint record on appeal, the appendix of the relevant filings and transcripts from the lower court proceedings to assist the appellate court in their review of the case. A number of courts of appeal, including the Seventh and Ninth Circuits, have very common-sense approaches to this: they've established local rules whereby each side submits their own appendix. Others haven't caught on to the game-playing that can go on, and go with the default federal rule. So, I, as an appellant, negotiate with the appellee settling parties about what appears in the record.

Time after time, I see the appellees asking to kill countless trees by burying the record on appeal with paper from the lower court. One might think they're doing this to just increase the costs of litigation for the other side, since the appellants are required to prepare the record on appeal—except Rule 30(b)(2) permits the appellant to take the position that the additional material is unnecessary, and ask the other side to advance the costs of providing the designated material. The real reason is, I would imagine, an insulting one: to persuade the judge that there's so much work to be done that the judge should just be lazy and throw up their hands and ignore the issues rather than dig through all the paper. This certainly never fooled the judges I clerked for, but it must work often enough to be worth the death of all these trees. There aren't any real sanctions with any bite for making appellate judges' lives harder like that, notwithstanding the clear command of Rule 30(a)(2) not to be pointlessly including material, so we have this wasteful game.

I'm seeing this now in one of my pending appeals; the appellees are trying to bury the record in meaningless paper that has nothing to do with the issues on appeal. I can't stop them, so I shrug my shoulders and ask for the payment that Rule 30(b)(2) requires. That should be the end of it, but for some reason the lawyers—often the same lawyers that have made me write a check to post an appeal bond to ensure they could recover their costs in the unlikely event they won on appeal—want to argue with me that the material is essential to the record on appeal and it's up to me to pay for including the material in the record on appeal. I generally don't play this game, but I recently had cause to write the following paragraph in a letter to defense counsel regarding the copying costs of one small three-page slice of the hundreds of pages they wanted included (material redacted to protect the guilty):

Docket No. [yyy]. [This docket entry] applies to the 10-[xxxx] cross-appeal and is not relevant to [my appeal]. I agree that if you decide to prosecute the cross-appeal, you will be required to advance the costs for us to include this docket entry in Volume 1 of the Record. Should you prevail in [the cross-appeal], you can petition to receive the approximately $5 to $20 in costs from the plaintiffs' appeal bond, but I understand if you wish to bill another $100 to your client to argue about this some more.

In re Apple Inc. Securities Litigation: parties modify settlement

2010-11-16T13:45:00.001-05:00

You may recall that I was not pleased with an Apple settlement that provided for $2.5 million to go to a series of universities and law schools with "corporate governance" programs (two of which were affiliated with the lead plaintiffs' counsel) instead of to the purportedly injured class members. (See also coverage from Ira Stoll, Jim Copland, John Carney, and Lyle Roberts.) Such "cy pres" awards are a breach of class counsel's fiduciary duty to the class by putting the interests of unrelated third parties ahead of their putative clients.

After I sent a letter to class counsel and counsel for Apple notifying them that I had a client who was going to object, the parties quickly rushed to court and submitted a modified settlement. Now, class members have first bite at the $2.5 million, an approximately 15% increase in what shareholders can recover in the settlement; Harvard, Columbia, and the University of Delaware will not get any of it.

This is definitely a material improvement (and one that would entitle the Center to attorneys' fees), but it's still not good enough; I've asked the court to refuse preliminary approval until the settlement guarantees that the class gets the entirety of the $16.5 million settlement fund.

Google Buzz class action settlement

2010-11-02T18:16:00.000-04:00

Notice went out today, and five separate people have emailed me in the last hour about the Google Buzz settlement, which I've been tracking since it was first announced a couple of weeks ago. It flunks Rule 23, but, believe it or not, is not the worst settlement in the world (we have four cases pending in Ninth Circuit courts alone that are worse, including one in in Judge Ware's court). In addition, this case is going to attract attention from a lot of privacy advocates whether or not the Center for Class Action Fairness gets involved, so I don't know how much value-added we provide by being the n-th objection. And I'm a class member, so if we do get involved, I can do so pretty quickly.

Anyway, this is just to say that yes, CCAF is aware of the Google Buzz settlement; we haven't decided yet whether to get involved because we have six or seven other briefs due between now and Christmas; if you're interested in getting involved without waiting for that decision, take a look at our Ninth Circuit briefs in the Bluetooth (09-56683) and AOL (10-55129) cases that we filed earlier this year.

"Cy Pres: A Not So Charitable Contribution to Class Action Practice"

2010-10-27T12:02:00.000-04:00

I'm honored that Skadden's John Beisner, one of the world's leading class action attorneys, Jessica Miller, and Jordan Schwartz today released a new paper on cy pres that heavily relies upon my work and the work of the Center for Class Action Fairness in the AOL case, even singling out that case as an example of abusive cy pres. We'll be sure to cite it in a couple of upcoming objections involving improper cy pres. (And welcome to all the O'Melveny attorneys reading this site since my letter to counsel for Apple regarding the improper cy pres settlement in that case!)

The illegal Apple backdating class action settlement

2010-10-21T06:57:00.000-04:00

Did you buy Apple stock between 2001 and 2006?

Ira Stoll and Jim Copland have discussed the outrageous Apple backdating lawsuit resulting in the outrageous Apple backdating settlement. The magnitude of the settlement compared to the original claims demonstrates that it is an extortionate nuisance settlement, being made because it would cost more to defend the suit than to pay the attorneys to go away.

But it should be noted: the settlement is not just outrageous, it is illegal. Under the Ninth Circuit's Six Mexican Growers precedent, a court should not be issuing cy pres that is not likely to benefit the class members. And as the Center for Class Action Fairness noted in recent Ninth Circuit briefing, the American Law Institute has said that cy pres is inappropriate where class members are readily identifiable. Given that the class attorneys are negotiating money for third parties instead of their own putative clients (for their own benefit, no less), there is also a breach of fiduciary duty that raises questions whether the class attorneys meet the Rule 23(a)(4) standard. The settlement is further problematic in that the vast majority of class members are entitled to zero compensation; it is far from clear that the sole lead plaintiff is a member of this subclass.

The Center for Class Action Fairness would love to object to such a blatantly illegal settlement. But it can't do so in a vacuum: it can only do so on behalf of a class member who is being ripped off by these attorneys. Class members are those who bought Apple stock (AAPL) between August 24, 2001 and June 29, 2006—but only people who bought the stock between November 2005 and May 2006 are entitled to recover any money under the settlement, and their recovery is being diluted by the diversion to cy pres. We'd be happy to represent you pro bono if you agree that the settlement is objectionable and wish to object: please contact me. If you're not in the class, but know people or institutions who might be, spread the word. (Update: we have one objector, and are talking to a couple of others. Isn't crowd-sourcing great?)

The case is In re Apple Inc. Securities Litig., No. C-06-5208-JF (N.D. Cal.).

$0 settlement in Breyers "Smooth & Dreamy" class action

2010-10-14T11:24:00.000-04:00

Russell Jackson adds to my workload by drawing my attention to Ercoline v. Unilever United States, Inc., Civ. A. No. 2:10-cv-01747-SRC-MAS (D.N.J.), a settlement of $0 for the class, and $200,000 for the attorneys. This runs into the Murray v. GMAC problem we've repeatedly discussed in other objections.

Because I'm a member of the class of purchasers of Breyers Smooth & Dreamy ice cream products, I will be objecting; to deter objections, the attorneys have threatened objectors with intrusive depositions and require illegal hoops before permitting objectors to object, despite the plain statement of Rule 23 that class members are permitted to object, period. If you're a class member, and you're willing to risk a deposition, and you independently think this settlement is unfair, you're welcome to contact me; you are also welcome to contact me if you're a class member and don't wish to risk a deposition, and we can discuss your options.

Appeal bond briefing in Dewey v. Volkswagen

2010-10-12T06:36:00.000-04:00

Trial lawyers often say that they care about access to justice, but that principle seems to go out the window when it comes to objectors to unfair class action settlements that might interfere with attorneys' fees.

In Dewey v. Volkswagen, currently pending on appeal in the Third Circuit (10-3618, consolidated with 10-3506, 10-3617, 10-3798, and cross-appeals 10-3651 and 10-3652), the plaintiffs' attorneys have asked for an oversized appeal bond explicitly to prevent the appeal from taking place.

Plaintiffs claim that such an appeal bond is necessary to prevent "extortion" on appeal, the problem where a "professional objector" seeks to hold up the payment of the settlement attorneys' fees with a meritless appeal in the hopes that the class attorney will pay some fraction of the time value of money to get the objector to drop the appeal.

The Center for Class Action Fairness took the plaintiffs at their word, and, in our brief opposing the appeal bond, cross-moved for a different remedy: an injunction against extortionate settlements of the objection. Such an injunction, by requiring court approval of any withdrawal of the appeal, would do far more than an appeal bond to deter the attempt to settle a case for a quid pro quo payment to the objector without any benefit to the class. We suggested, however, that the plaintiffs' attorneys weren't really concerned about extortionate appeals (which permit them to escape appellate scrutiny at relatively low cost) so much as the fact of appeal.

Sure enough, the class counsel opposed the Center's cross-motion for injunction, though on remarkably flimsy grounds that insultingly presuppose a lack of intelligence on behalf of the magistrate; surely they don't expect that the judge will be confused by the difference between a merits injunction and an injunction regarding the conduct of the parties on appeal? You'll also note that the plaintiffs completely changed their theory behind the reasoning of the appeal bond without ever addressing the Center's arguments in their reply brief, but one hopes the district court isn't so easily fooled by sandbagging.

Relatedly, on September 22, the Third Circuit decided In re Community Bank of N. Va., which all but guarantees that we will win our appeal, given that the Dewey settlement suffers from the same fatal defect of a prejudiced subclass being unrepresented.

The Classmates.com class action settlement rip-off

2010-10-09T07:49:00.001-04:00

You may have been one of the millions of people to receive a settlement notice regarding a class action against Classmates.com; the settlement notice implied that class members would receive $9.5 million (though only $2-$3 per person, and that mostly in coupons) and the attorneys would ask for $1.3 million.

You then probably received a supplemental notice saying that the attorneys were generously only asking for $1.05 million, and that, if you sent four letters to four different addresses, you could object to the fee request.

You probably didn't object: it's hardly worth your time to spend $1.76 in postage over a $2 or $3 settlement.

What you won't see on either of the settlement notices or the settlement website is how much the class is actually recovering: out of millions of class members, there were fewer than 50,000 claims made. The class will receive only $117,374 (see page 4 of PDF). The attorneys are asking for a 895% contingency fee.

Professor Michael Krauss of George Mason Law School will be objecting to the fee award (and an attempt to rip off the class by diverting $500,000 to an unrelated charity instead of to class members); the Center for Class Action Fairness is proud to represent him.

The fact that an Internet company didn't make it possible to object over email is just an attempt to limit the number of objections. But CCAF is willing to help: we won't represent you, but if you submit a conforming objection to me over email to classmates.objection@gmail.com in a pdf by November 15, CCAF will do the mailing for you. Here is an MS Word document to make the process easier; fill in the blanks, keep or delete or add to the paragraphs as you see fit, sign, scan, e-mail (or mail yourself to the addresses indicated). (CCAF is not your attorney if you choose to have us mail your objection for you; we reserve the right not to mail any pdf that is offensive or seems to be fake.)

The trial lawyers are arguing that the low number of objections means that this is a good settlement. That's clearly false given how hard they made it to object and the fact that class members weren't told the full truth about how bad the settlement was, but let's try to take away that argument by sending the court a few dozen more objections. And tell your friends.

Note that the class attorneys in this case are Kabateck Brown Kellner, who were the attorneys in the $0 AOL Footer settlement; in that case, they took the position that it was okay to hide conflicts of interest to the court and to the class in a class notice. So we're not just objecting, we're asking for the discovery that KBK said we should have done in the AOL case.

Update, September 4: Google is leading lots of people to this page, but this post is referring to a 2010 settlement, which we successfully objected to. If you came to this page from a search engine, you are probably looking for the revised 2011 settlement.

Watch the Center on "Stossel" tonight

2010-09-23T07:14:00.000-04:00

The Center for Class Action Fairness will be featured on "Stossel" tonight: Fox Business News, 9 PM and midnight Eastern. I talk with John Stossel about some of the Center's cases, and, in the show's final segment, appear at a roundtable with Mark Lanier and Marie Gryphon.

Some case updates

2010-09-20T03:16:00.000-04:00

In Lonardo v. Travelers Insurance, our objection resulted in a $2 million improvement in the settlement. We maintained the objection, and the court approved the settlement; we straightforwardly acknowledged that the court "could" approve the improved settlement (where the attorneys got nearly as much as the class as opposed to more than twice as much) under its discretionary powers, but "shouldn't," and the court found that offensive for some reason. To add insult to injury, the court preemptively made findings that we weren't entitled to even ask for attorneys' fees for our role in improving the settlement. On a motion to reconsider, the court begrudgingly awarded attorneys' fees, and then proceeded to come up with bad dicta that suggests that objectors are obligated to engage in expensive discovery about settlement negotiations before they are completed. (The scenario where a settlement is improved by 71% on the eve of the fairness hearing is rare enough that one hopes that does not matter; it's pretty clear that settling parties would object to the discovery that would produce the evidence that the Lonardo court says is required.) The $40,000 in fees is nice, but it was unfortunate that the court felt the need to insult us along the way; we made it clear that there was substantial work we performed on the case for which we were not seeking fees, and the court repeatedly implied that the only thing we did were the few dozen hours we requested fees for. We did get the court to acknowledge that Perdue v. Kenny A. applies to class-action attorney-fee requests (though that does not explain why the court awarded a 1.4 multiplier to the plaintiffs' attorneys). If those opinions were issued today, when we have a diversified donor base, we would have appealed. At the time, we were low on funds, and had to make a triage decision to save our powder for more egregiously bad decisions. Judging by Google hits, class members have started to receive their checks, which are 71% larger than they would have been without our objection.
In the Sears case, the court denied our motion to dismiss and our motion to intervene, the latter because we sought to appeal, and therefore were "obstructive." That reasoning begs the question when one is entitled to move to intervene for purposes of appeal; the court did not cite the leading Seventh Circuit case on the issue. We will appeal: we believe Devlin gives us standing to do so, and, in any event, the denial of the motion to intervene was clearly erroneous. I am excited about this appeal, as it will give the Seventh Circuit the chance to clarify the law of derivative shareholder lawsuits and whether it is appropriate to bring them for the primary purpose of extracting attorneys' fees.
I'm also enthused about our chances in the Dewey v. Volkswagen appeal to the Third Circuit. The plaintiffs have requested a punitive appeal bond, and the district court will rule on that in October. I'll have a post about that later in the week.
Alas, I will not be participating in another appeal I was confident about, the Ninth Circuit Yahoo! appeal. As you know, the Center for Class Action Fairness refuses to settle a class action objection unless the withdrawal of the objection results in a settlement that is fair, adequate, and reasonable. Our clients disagreed with that approach, and we have withdrawn as counsel. We did not ask for and will not accept any fees in that representation.

"The Trouble with Coupons"

2010-09-19T10:37:00.000-04:00

"Coupons are not a valid substitute for money in many situations outside grocery shopping."

But I probably can't cite to that in a brief.

One more Sears brief

2010-09-09T23:55:00.000-04:00

Plaintiffs and defendants filed three briefs Tuesday and Wednesday before the Friday fairness hearing in the Sears Holding derivative action. And I had a plane to Baton Rouge to catch at 6 am Thursday. So I got to relive my Stakhanovite days at a law firm by writing a brief in response to the one I received at 5 pm on Wednesday in the limited time I had available. Apologies for the typo on page 3, and thanks to the students and professors at LSU Law for their hospitality.

Stockholm Syndrome in the Nachsin v. AOL case

2010-09-02T16:20:00.000-04:00

CCAF filed its reply brief today in the Nachsin v. AOL appeal.

The principal-agent problem does not just affect class action plaintiffs' attorneys enriching themselves at the expense of their putative clients. I see it far too often in the case of class action defense attorneys beholden to the billable hour at the expense of their clients. I've had securities defense attorneys admit to me sotto voce that they don't want to see securities law reformed, because they're making money off the status quo. If I were a defense client, I'd worry about attorneys like that; they might prefer to lose their 12(b)(6) motion in the hopes of churning some billable hours in discovery disputes. In a notorious example, attorneys from defense firms lobbied the ABA to release a statement opposing preemption—something that would hurt their clients, though would certainly increase the demand for lawyers' services. (I once had a lunch date with a pharmaceutical defense attorney who made a disparaging comment to me about "you people" believing in federal preemption. That second-person-plural mystified me: she was making a lot more money arguing in favor of preemption in court on behalf of her clients than I was making writing about preemption on public-policy grounds. If one's that offended by preemption, one should go work for a plaintiffs' firm where one can make more money in the long run: it's stupid to be selling out one's principles for less than one's opportunity cost of adhering to them.)

I've long felt that general counsels should do more to insist that their outside defense firms are really defense firms that believe in their clients' rights, rather than mercenary law firms that happen to represent defendants because their lawyers don't have the entrepreneurial courage to be contingent-fee plaintiffs' attorneys. Top-of-the-line plaintiffs' attorneys are the best trial lawyers in the business: they don't get paid if they don't win, but they're the ones with the Gulfstream jets and 5000-person Christmas parties. If a defendant responds by hiring a coddled Ivy-League defense attorney that's afraid of the inside of a courtroom and goes home at night feeling vaguely guilty that he's working for The Man, that defendant is going to get his head handed to him nine times out of ten. That sort of ideological accounting is surely more important to the bottom line than the racial-diversity accounting many Fortune 500 companies insist upon in their outside law firms, but it happens far less than it should.

Anyway, in response to CCAF's opening brief in the Nachsin v. AOL case, the settling parties apparently agreed that AOL's defense attorneys would do all the briefing, and the plaintiffs' attorneys would simply free ride off the finished product:

The plaintiffs couldn't even be bothered to cite their roman numerals in consecutive order.

For the life of me, I can't imagine why a defense attorney with the best interests of his client in mind wouldn't simply say: "You sued us, you defend the settlement. We're paying you hundreds of thousands of dollars to go away. My client shouldn't have to pay another penny into this case." But that would mean foregoing some fees. And why would a defendant's brief say something as vapid as "Both class actions and legal aid funds facilitate the supply of justice to those who cannot otherwise afford it" (p. 25)? Trial lawyers, come sue AOL! According to AOL's brief, you're just facilitating the supply of justice when you do! (I was similarly amused that AOL of all parties would snark about the supposed fact that our opening brief would cite "online articles." That was especially ironic given that AOL pays writers to produce online articles for them.) I briefly worked at the same firm as Paul Cappuccio, a hard-nosed lawyer's lawyer who went on to become the general counsel of AOL before he escaped on a life-raft to keep the Time Warner general counsel job. I cannot begin to imagine a general counsel's office supervised by Cappuccio permitting a brief like this to be filed, but perhaps I'm being naive.

As you can tell for yourself, these were exceedingly weak response briefs that never really engaged with our opening brief's argument against the conflict-of-interest problems in cy pres distribution, so I'm feeling good about our reply brief and about our chances.

Professor John Palmer on the Center for Class Action Fairness

2010-08-30T13:29:00.000-04:00

Professor John Palmer has some very generous things to say about me and the Center for Class Action Fairness on his excellent economics blog. Though I should note that we've never intervened on behalf of defendants; all of our work is plaintiff-side on behalf of consumers or shareholders.

Update on Sears Holding Corp. derivative shareholder suit

2010-08-27T09:12:00.000-04:00

Plaintiffs filed an opposition; I filed a reply. The hearing has been moved from today to September 10, 9:30 AM.

Appeal bond struck down

2010-08-26T09:21:00.000-04:00

Imagine our surprise when we checked the docket in the Bachman case in late July (after checking it weekly since we filed our appeal) and learned that the judge had backdated an order requiring us to file a $325,000 appeal bond and then never served it on us or had it placed in the docket until a month later. We moved the Missouri appellate court to vacate the bond; plaintiffs cross-moved to dismiss our appeal for failure to pay the bond. Friday, the Missouri appellate court followed the law and struck down the illegal bond: there was no request for a stay of execution, and plaintiffs cannot self-impose a stay of execution by ripping off the class and then demand a bond to prevent an appeal of their own failure to look out for the class's interests. We're looking forward to the appellate court considering the problems with this class action settlement.

Against derivative shareholder strike suits: Sears Holding Corporation, Robert F. Booth Trust v. Crowley

2010-08-17T09:00:00.000-04:00

In the 1998 case of Felzen v. Andreas, the Seventh Circuit suggested that it was looking for an opportunity to take action against derivative shareholder strike suits, suits where a shareholder purportedly sues on behalf of the corporation, but in reality is seeking legal extortion to drop the suit:

Rule 23.1 provides for notice to shareholders only in the event of dismissal or settlement, so that other investors may contest the faithfulness or honesty of the self-appointed plaintiffs; we do not doubt that this monitoring is often useful and that intervention to facilitate an appeal could be justified. Many thoughtful students of the subject conclude, with empirical support, that derivative actions do little to promote sound management and often hurt the firm by diverting the managers' time from running the business while diverting the firm's resources to the plaintiffs' lawyers without providing a corresponding benefit. Janet Cooper Alexander, Do the Merits Matter? A Study of Settlements in Securities Class Actions, 43 Stan. L.Rev. 497 (1991); Reinier Kraakman, Hyun Park & Steven Shavell, When are Shareholder Suits in Shareholder Interests?, 82 Geo. L.J. 1733 (1994); Roberta Romano, The Shareholder Suit: Litigation Without Foundation?, 7 J.L. Econ. & Org. 55 (1991); Mark L. Cross, Wallace N. Davidson & John H. Thornton, The Impact of Directors' and Officers' Liability Suits on Firm Value, 56 J. Risk & Insurance 128 (1989); Daniel R. Fischel & Michael Bradley, The Role of Liability Rules and the Derivative Suit in Corporate Law: A Theoretical and Empirical Analysis, 71 Cornell L.Rev. 261 (1986). The two shareholder-appellants in this case believe that the modest settlement, half of which will be paid to counsel, exemplifies this problem.

Unfortunately, the appeal in Felzen was thrown out on technical grounds, and no one has taken up the challenge, perhaps because it's more lucrative to agree to be paid off for withdrawing an objection to a bad settlement than for successfully challenging the bad settlement.

Until now. Plaintiffs brought a meritless derivative-shareholder suit over an alleged technical violation of the Clayton Act; the corporation found it cheaper to pay the plaintiffs' attorneys $925,000 to go away than to defend the suit. But the shareholders get nothing, so they're worse off because of the litigation.

Unfortunately for the plaintiffs, not only did they sue in the Northern District of Illinois, they sued a corporation where I own shares. After attempting to foreclose objections by mailing out notice three days before objections were due, the parties agreed to a new notice schedule, and I have moved to intervene and dismiss the action for failure to meet the Rule 23.1(a) standard for shareholder representation. The case is Robert F. Booth Trust v. Crowley, No. 09-5314 (N.D. Ill.) and the fairness hearing is August 27 in Chicago.

Court rejects settlement in Costco fuel case

2010-08-16T16:45:00.000-04:00

Today's a busy day (there were filings in three different pending objections and appeals, two of them by us), but we'll have to postpone discussion of those cases to note that, on Friday, the U.S. District Court in Kansas rejected the $0-for-the-class/$10M-for-the-attorneys settlement in the Costco Fuel case that we argued in April. Alas, the court ruled on narrow technical grounds and punted on some critical economic questions, so we might see substantially the same settlement again in a couple of months if the parties can jump through the hoops the court established—but if the settlement remains unfair and unreasonable, I'm sure the objectors involved will want to object again.

Our associate, M. Frank Bednarz (Chicago '09), did much of the work on the Costco briefing, so I'm sure Friday was special to him—not least because it was also his wedding day! Mazel tov to Frank and Meridith. Go buy them some light bulbs before Frank starts at his BigLaw job in Boston in a couple of months. When Frank gets to Boston, I bet he'll be the only person there who already has a winning $10-million brief under his belt.

Amicus brief in AT&T Mobility v. Concepcion

2010-08-10T05:53:00.000-04:00

The Ninth Circuit’s holding in Concepcion v. AT&T Mobility, barring an arbitration clause that prohibits class actions as "unconscionable," rests upon a belief in the exceptionalism of class actions, namely, that they are a uniquely superior form of dispute resolution the availability of which is necessary to vindicate consumer rights. But, as the Center’s experience indicates, class actions are far from an exceptional vehicle for providing consumers with meaningful access to justice. Yesterday, the Center filed an amicus brief in the Supreme Court case of AT&T Mobility v. Concepcion (No. 08-893) in support of the petitioners. O'Melveny & Myers attorneys Brian Brooks, Charles Borden, and R. Seth Davis did a phenomenal job with the brief, and we're grateful for their help. Public Citizen, which ironically represents the anti-consumer/anti-arbitration/pro-trial-lawyer side in the name of paternalism, has a page devoted to the case with links and resources, though the weight of those links and resources is pro-paternalism; the left side of the blogosphere has paid far more attention to this case than the right side. Among the briefs is one filed by a number of law professors I know and admire, including (but not limited to) Randy Barnett, Henry Butler, Richard Epstein, Michael Krauss, Geoff Manne, Michael Moreland, Larry Ribstein, and Josh Wright; it raises important points about unconscionability and freedom of contract.

In re Yahoo! Ninth Circuit appeal

2010-08-09T18:33:00.000-04:00

Today the Center filed the opening brief in the appeal of the In re Yahoo! settlement approval. We make a process argument—the district court gave no reasoning for its decision, which by itself requires remand—but we also argue the substantive issue that no court could reasonably approve a $0-for-the-class/$4.3 million-for-the-attorneys settlement. Don't miss pp. 39-43, where we cite Seinfeld.

Settlement approved in Dewey v. Volkswagen

2010-08-06T09:52:00.000-04:00

Wednesday, August 4, Judge Patty Shwartz (D.N.J.) approved the Dewey v. Volkswagen settlement to which the Center for Class Action Fairness had objected.

In one sense, the decision is a partial victory for CCAF: one reason the proposed settlement was unreasonable was because of the plaintiffs' attorneys's unreasonable request for $22.5 million in fees. The court adopted some of our arguments that the plaintiffs' attorneys claim that the settlement was worth $141 million overvalued the settlement by assuming 100% class participation and double- or even triple-counting many of the class benefits. The court approved only $9.2 million in fees, a $13.3 million reduction, though still a very healthy pay day of over $1100/hour for some of the self-appointed lawyers that negotiated a settlement that left a million of their putative clients in the cold.

Yet I still feel disappointment: though the opinion was 101 pages long, the court did not address our arguments that a million class members received nothing under the settlement, did not address our arguments that the settlement structure created impermissible intra-class conflicts, and did not address our arguments about the validity of the economic testimony finding value. We argued that the settlement structure was impermissibly self-dealing; the court rejected that argument with a cite to a Third Circuit opinion that did not consider the argument we made. The court's ultimate finding that the settlement was worth $69.3 million still reflects enormous inflation, given that only $8 million of the settlement reflects pecuniary benefits to class members; the court confused expense to the defendant with benefit to the class, encouraging future settlements that are structured inefficiently to maximize attorneys' fees at the expense of the both the class and defendants. We were hamstrung by a jaw-dropping ruling by the court that there was no need for an objector to a settlement to cross-examine the plaintiffs' expert witness because the direct examination and the court's own questions had already asked the expert what he thought about our objection. The cross-examination would have demonstrated severe contradictions between basic economic principles and the methodology used by the expert to calculate damages. That the court went on to entirely ignore our argument for why the expert report flunked Daubert was disturbing. All of this is reversible error in the Third Circuit: if nothing else, an appellate court cannot decide whether the rejection of an objection was an abuse of discretion unless the trial court expresses its reasons for rejecting the objection.

We have thirty days to decide whether to appeal, a decision we will make in conjunction with the four class members we represented in our objection. Our decision may be made easier if the plaintiffs' attorneys appeal the fee decision, in which case we would cross-appeal at a minimum.

Want to be a pro bono economic expert? In re Apple & ATTM Antitrust Litig.

2010-07-30T11:02:00.000-04:00

When Apple introduced its iPhone into a smartphone market where it had 0% market share, it cut a deal with AT&T Mobility to make it the exclusive provider of cell phone service. In exchange, ATTM subsidized the price of every iPhone by $450, thus ensuring that more consumers would be able to purchase iPhones, and introducing additional competition into the smartphone market.

Nonetheless, trial lawyers sued, bringing a class action alleging that this basic business arrangement violated the antitrust laws because it threatened to monopolize the previously non-existent market for "iPhone telephone service."

This is ludicrous on its face. The smartphone market is more competitive than ever: in addition to the longstanding Blackberry, there's new entrants Droid and HTC Evo (and vis-a-vis the latter, see this NSFW, but very funny, video). Without the phone carrier subsidization, many iPhone owners (including me) would be unable to afford an iPhone, and are clearly better off because of the exclusivity deal. Nonetheless, the Northern District of California has certified a class action over the practice—and not just any class, but a Rule 23(b)(2) mandatory class, meaning that every iPhone owner with an AT&T Mobility two-year contract is now involuntarily represented by attorneys that apparently care more about the possibility of extortionate settlement profit than the clients they purportedly represent.

The Center for Class Action Fairness is in talks with a number of iPhone owners who are concerned about being represented by class counsel who don't have their best interest at heart, and considering filing papers moving to intervene and decertify the class. But economic experts willing to go on the record to refute quack antitrust analysis are not cheap; before we blow a good chunk of our annual budget on one, we're curious if there's anyone out there willing to work for a discount rate or, better yet, pro bono. (In the alternative, if there's another public-interest law firm out there who'd like to take the lead role on this, I am happy to serve pro bono as both the client class member iPhone owner and as the expert witness, as well as assist on the legal side. Unfortunately, legal rules prohibit me from serving as both lead attorney and as a witness.)

Dewey v. Volkswagen, Water Ingress Settlement fairness hearing

2010-07-29T07:06:00.000-04:00

A tiny percentage of Volkswagen and Audi sunroofs will leak into the vehicle unless care is taken to keep the plenum clear of debris; a class action was brought over this. Let's assume for the moment that plaintiffs are correct that this is something that Volkswagen is liable for, and that there are contractual remedies for VW not foolproofing the cars against this problem. What's remarkable is how the parties settled the case in such a way so that wildly inefficient remedies would maximize attorneys' fees at the expense of the class. The settlement is structured as follows:

A million class members will get nothing but a letter telling them to check the plenum when they go for their 40,000-mile service.
VW will perform an expensive preventative service action on some, but not all, VWs that might suffer this problem.
An $8 million settlement fund is set up to pay damages for some, but not all, VWs that have suffered damage

The economic expert for the plaintiff made some remarkable calculations. For example, he valued the letter at over $29 million. After all, if you get a letter informing you of a potential benefit, that letter is worth just as much as the benefit itself—never mind that Volkswagen dealers charge $400 to $800 for 40,000-mile service, and can easily choose to raise the price $30 to account for the extra labor in performing the extra task during the maintenance service. So if Apple ever settles a class action by sending you a letter telling you you can buy a $700 iPad for $700, that is, according to the expert, indistinguishable from Apple writing each consumer a check for $700.

Let's look at #2 for a second. According to the plaintiff's own expert, VW will spend $55 million on that service action. According to the same expert, if VW does not perform the maintenance, those vehicles will suffer $24 million in damage. (The expert then remarkably triple-counts this as a benefit to the class: the $24 million in damage avoided, plus $55 million in VW expenses for the service action, plus another $24 million for the avoided diminution of value of the vehicle that would have occurred if the vehicles suffered damage and then weren't repaired. Thus, according to the expert, this component of the settlement is worth over $103 million.) Spending $55 million to avoid $24 million in damage is the very definition of economic inefficiency.

But consumers lose out. Some of the class members who are getting nothing but a letter—including one of my clients—have suffered actual damage from sunroof leakage. They're not getting paid under this settlement and are being forced to release their claims, which are no less meritorious than the claims that are getting paid.

The only possible reason for plaintiffs' attorneys to insist upon this convoluted remedy is to increase attorneys' fees. By making Volkswagen engage in wasteful spending, they pump up the alleged value of the settlement and then argue that they're entitled to over $23 million in attorneys' fees and costs, to be paid separately by Volkswagen.

It would have been very easy to structure a settlement so that Volkswagen created a $48 million fund to cover repairs to every vehicle that suffered water damage from a sunroof leak. Every VW owner who had the problem in the past or in the future would be able to collect; Volkswagen would be out of pocket $48 million instead of $70-$90 million; the attorneys could have made a plausible claim for $10 million in attorneys' fees and costs from the fund, which would still be close to twice an exaggerated lodestar. Instead, the parties negotiated a settlement that made everyone—consumers and Volkswagen—worse off. Well, everyone except the attorneys, if Judge Patty Shwartz buys the quack economic testimony and awards the full fee request.

Under Rule 23(e), a judge is not to approve a settlement unless it is "fair, adequate, and reasonable." It is hard to see how this settlement is fair or reasonable; and it demonstrates the failure of legal ethics that the class attorneys could structure this settlement and make that fee request without fear of sanction, even as they put their own interests ahead of their clients.

The four-hour fairness hearing, consisting mostly of the economic expert rationalizing his calculation and the attorneys arguing over fees, was last Monday in a Newark federal courtroom. I look forward to seeing how the judge will rule.

Ninth Circuit appeal over cy pres: Nachsin v. AOL

2010-07-21T03:01:00.000-04:00

Tuesday, the Center filed its opening brief appealing the approval of a class action settlement against AOL. We focused our appeal on the problematic cy pres award in that case:

This appeal presents a straightforward application of the Ninth Circuit precedent Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir. 1990)—a precedent that the district court entirely failed to apply. For a cy pres award to a third party to be permissible it must actually be “cy pres”—as near as possible to actual class recovery. Id. at 1308. Here, there was a nationwide class of tens of millions of AOL members allegedly victimized by AOL practices, but the vast majority of the cy pres distribution went to local charities in the Los Angeles and Oklahoma areas; all of the cy pres was entirely unrelated to the class and unrelated to the claims of the case.

The potential of cy pres to create conflicts of interest and ethical dilemmas for the judiciary have garnered increasing attention in recent years. See, e.g., Adam Liptak, Doling Out Other People’s Money, N.Y. TIMES (Nov. 26, 2007) (available at http://www.nytimes.com/2007/11/26/washington/26bar.html); Martin H. Redish, et al., Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis, 62 FLA. L. REV. __ (forthcoming 2010) (available at SSRN: http://ssrn.com/abstract=1485047); Sam Yospe, Cy Pres Distributions in Class Action Settlements, 2009 COLUMBIA BUS. L. REV. 1014 (available at SSRN: http://ssrn.com/abstract=1492105); Amanda Bronstad, Cy pres awards under scrutiny, NAT’L L. J. (Aug. 11, 2008) (available at http://is.gd/dyFk0-). If courts are going to countenance cy pres distributions in class actions settlements at all, such distributions must be strictly tethered to the standard of class benefit, lest cy pres become a slush fund for plaintiffs, defendants, attorneys, and judges that creates the appearance of impropriety—or worse, actual impropriety.

The problems of potential conflicts of interest are not just a hypothetical concern in the case at bar. Neither the court nor the class was informed of the conflict of interest that one of the plaintiffs was the assistant director of development for one of the cy pres recipients. And yet still another cy pres recipient was a local charity where the spouse of the district court judge sits on the board. It is not exaggerating to say that this case is a poster child for the problem of cy pres abuse: indeed, in a story on the issue, the Wall Street Journal singled out the very settlement in this case as an example. Nathan Koppel, Proposed Facebook Settlement Comes Under Fire, WALL ST. J. (Mar. 2, 2010) (available at http://is.gd/dyl7A-).

For both precedential and sound public-policy reasons, this court should reverse the approval of the proposed class action settlement as an abuse of discretion.

A post for Fed Jur buffs only

2010-07-13T23:17:00.000-04:00

Parties in a class action agree to submit to the jurisdiction of an Article I magistrate under 28 U.S.C. § 636(c). Then they settle the case. Objectors show up, but have not consented to have the case heard by a magistrate. Does the magistrate still have jurisdiction or does an Article III judge have to weigh in?

Section 636(c) requires consent by "parties." Are unnamed class members parties under § 636(c)? One can't just give the answer of a blanket "no"; the statute and federal rules are silent, and Devlin v. Scardelletti, 536 U.S. 1 (2002), says that class members are sometimes "parties," and sometimes not.

The problem, of course, is the possibility of heads-I-win/tails-you-lose gamesmanship, with an objector throwing a wrench into the proceedings by protesting after the fact that the court didn't have jurisdiction. See, e.g., Mark I, Inc. v. Gruber, 38 F.3d 369, 370 (7th Cir. 1994) (vacating final decision of magistrate made after two years of litigation on jurisdictional grounds). To a certain extent, the Mark I problem has been eliminated by Roell v. Withrow, 538 U.S. 580, 590 (2003), which allows a court to infer consent by acquiescence. More worrying is the possibility that an objector in good faith appeals a magistrate's ruling to an appellate court, only to learn that the appellate court does not have jurisdiction and she missed the deadline for appealing to the district court.

It's an interesting academic question, but litigants don't like the uncertainty of academic questions. It's come up in an objection CCAF made, and we've asked the court for clarification—since no one else seems to have even thought of the issue.

Well, perhaps someone did think of it. A so-called professional objector has the incentive to sandbag, since the business model is to lose at the district court level and then threaten a colorable appeal that would delay the class counsel payday unless paid off; a defendant is likely indifferent to delay. What astonishes me most, however, is that plaintiffs' attorneys asking the court for $2900/hour, and presumably concerned about "professional objectors" coming in and holding up the settlement and their attorneys' fees, didn't anticipate this potentially fatal flaw. If the attorneys who think they're worth $2900/hour are missing this basic issue-spotting that I caught, maybe I'm worth $3000/hour and even more underpaid than I thought. (And in that case, you, loyal reader, have just benefited from $1500 worth of my time.)

Dewey v. Volkswagen, Water Ingress Settlement objection response briefing

2010-07-12T21:49:00.000-04:00

Today we filed our response brief; plaintiffs largely ignored the arguments we made earlier and instead made ad hominem complaints about some quotes that I gave a legal newspaper—when they weren't simply lying about what relevant Third Circuit precedent said.

The Dewey case presents an excellent example of the misuse of economic expert testimony to falsely exaggerate class benefit. Double-count a class benefit here, ignore an offsetting cost there, presume 100% class response, and before you know it, you can tell the court that an $8 million settlement fund is really worth over $140 million and that you're entitled to a $2900/hour fee award totaling over $23 million. (And before you do the math and calculate the over-$5M/year the plaintiffs' lawyers seem to think they're entitled to, consider that they're also asking for over $1000/hour for their associates, whom they are most certainly not paying $2M/year.)

Robert Booth Trust v. William Crowley, Sears Holding Corporation shareholder derivative lawsuit

2010-07-10T11:34:00.000-04:00

If you're a Sears Holding Corporation (SHLD) shareholder like me, there's a pretty big chance that you got a letter in the mail informing you of a derivative shareholder settlement where the attorneys got $925,000 and the shareholders got the privilege of paying the attorneys $925,000. The deadline for objecting was June 25.

All well and good, except that my particular notice letter arrived on June 28. That's because, though the settlement occurred on April 28, and the court approved notice on May 11, the parties didn't bother to ask brokers to provide a list of shareholders until June 1, and then, after receiving the list, didn't bother to mail the notice to tens of thousands of shareholders until June 22 or June 23.

I was in Chicago yesterday to object to the problematic notice. While there I met another shareholder who didn't object to the appalling settlement because she also got her notice after the deadline.

The parties initially argued that it was alright to structure notice so that half the shareholders would receive it only after the fact, but after they gauged the judge's reaction to my argument, the parties volunteered to send new notice. The http://www.searsholdingsderivative.com/ website has not been updated as of Saturday morning, but the new deadline will be August 20, with a new fairness hearing August 27.

The law firm involved, Vianale & Vianale, brings zero-damages lawsuits against corporations alleging technical violations of Section 8 the Clayton Act antitrust law but seeking injunctive relief, and threatens to cost the defendants millions of dollars in litigation expenses if they don't settle. This is of no benefit to shareholders, because the law in question, when it is enforced, results in the FTC politely requesting a corporation to correct the technical violation; there has not been a government fine issued for "interlocking directorates" in my adult lifetime, and for at least several years before. The Center will be objecting to this settlement: how can attorneys claim to represent the shareholders when rational shareholders would never agree ex ante to bring a lawsuit that is guaranteed to make them worse off, win or lose?

It generally seems that the majority of my readers are plaintiffs' law firms checking up on me, but if you happen to stumble across this post and happen to own SHLD, you might get a postcard letting you know that you have another opportunity to object. Of course, unless you own hundreds of thousands of dollars worth of stock, it might be economically irrational to spend two 44-cent stamps to object; and if you did own that much stock, the opportunity cost of the time you spend objecting is probably pretty high, even if it's just to say "My name is X, my address and phone is Y, I own Z shares of stock, and I join in the objection of Theodore H. Frank." But unfortunately, plaintiffs' attorneys regularly ask courts to view the rational silence of class members or shareholders as acquiescence in their extortionate theft of shareholder money.

Good reporting, bad reporting

2010-06-25T09:00:00.001-04:00

Compare and contrast the excellent analysis of Forbes.com's Dan Fisher with the shallow softball St. Louis Business Journal on the A.G. Edwards case—though the latter coaxes from Robert Blitz of Blitz Bardgett and Deutsch an admission that his lawsuit would have been deemed meritless if it had been in federal court.

Ninth Circuit appeal in Bluetooth - reply brief

2010-06-24T09:07:00.000-04:00

CCAF filed its reply brief in the Bluetooth case yesterday.

"Oddly enough, I admired one of the lawyers."

2010-06-23T05:19:00.000-04:00

Bill McClellan of the St. Louis Post-Dispatch writes about the Bachman v. A.G. Edwards case and settlement in today's paper.

Bachman v. A.G. Edwards update

2010-06-22T08:25:00.000-04:00

You may recall the $60 million settlement that wasn't to which CCAF objected. Judge Angela T. Quigless approved the settlement and approved the $21.6 million award of attorneys' fees and costs without addressing any of the objections.

And if you ever hear a class action attorney tell you that what they really care about is "access to justice," you have my permission to laugh sardonically. The Bachman attorneys have asked the court to require any objector-appellants (each of whom have about $20 at stake) to post a $325,000 appeal bond—despite the fact that Missouri law does not permit such a thing. CCAF filed an opposition to the request (citing Professor Fitzpatrick's recent article disapproving of excessive appeal bonds), and I was in St. Louis yesterday to argue at the hearing. We will see whether CCAF gets to appeal the judgment or has to appeal an illegal appeal bond order.

Ninth Circuit appeal in Bluetooth - opposition briefs

2010-06-20T23:50:00.001-04:00

Earlier this month, plaintiffs and defendants each filed appellees' briefs defending the district court's approval of the Bluetooth settlement against our appeal. We'll be filing our reply brief later this week; stay tuned.

Dewey v. Volkswagen, Water Ingress Settlement objection

2010-06-15T14:18:00.000-04:00

The Dewey v. Volkswagen settlement where attorneys are asking for over $23 million for recovering an $8 million reimbursement fund for a small subset of the class (but attributing tens of millions of dollars to a valuation of injunctive relief where VW and Audi send a letter to class members) has gotten a lot of reaction around the Internet. (E.g., Major, Olson (and commenters), Pero, CJAC, Passat World.)

Today, the Center for Class Action Fairness filed an objection on behalf of four class members, including one who gets nothing despite water leakage into the passenger compartment that required over $1000 of repairs. The fairness hearing is July 26. Oddly (but all too typically), objections are due before the parties make their filings and present their evidence for the fairness of the settlement, so we'll need to make a supplemental filing July 12 to address the expert report's valuation of the injunctive relief.

The case is Dewey v. Volkswagen AG, No. 07-CV-2249 (D.N.J.).

Update, June 16: see also Public Citizen.

Coupon settlement in DC approved in Envision EMI case

2010-06-10T10:12:00.000-04:00

"Some 15,000 students paid between $2,380 and $2,729 to attend" 2009 inauguration conferences organized by Envision EMI, which class action attorneys claimed, quite plausibly, was a ripoff. So the class members get... two $625 coupons for two more conferences from the same substandard vendor. And those coupons have several limitations, including the fact that only ten percent of seats at any given conference are eligible for coupon use. The settlement is characterized as a "$17 million settlement" in the press, though in fact claims will certainly be much lower. (If fewer than $8 million is awarded, the remainder will go to cy pres, but the settlement does not specify the cy pres recipient.) The lawyers, including the Hausfeld LLP firm, will get over $1.4 million. Several state attorneys general objected, but the court approved the settlement anyway, while holding the fee award in abeyance. Looks like the students will be getting ripped off twice.