Friday, December 14, 2012

Birthday wishes

Frank Bednarz, who was with CCAF in the early going, and has since moved on to more lucrative intellectual property litigation, wins the Internet today by writing on my Facebook page:
As a member of the injured class of overlooked December birthdays, I have won for you a [voucher, certificate, valuable redemption offer] that entitles you to enjoy all of the Christmastime sales on or around your birthday in perpetuity. Although the face value of this victory is infinite, our expert economist calculated the value over the next 20 years (using aggressive growth rates and no time discount rate), finding that the class will gain approximately $200 billion over this period. However, I am only requesting lodestar for myself and my crack team of 30 paralegals, with a lodestar multiplier of 8. This is incredibly modest on cross-check; slightly less than 0.1% of class benefit over the next 20 years. Mathematically, fees approach 0% of the non-time discounted, boundless value of settlement. 
Happy 101st anniversary of Roald Amundsen reaching the South Pole!

Monday, December 10, 2012

October and November doings

In addition to our Supreme Court amicus and our MagSafe appellate brief, we've kept busy over the last two months.
  • We had oral arguments in the Second, Sixth, and Ninth Circuits on the Blessing v. Sirius XM, Pampers Dry Max, and HP Inkjet appeals. Only Inkjet is available online.
  • The district court ruled against us in Johnson & Johnson after some additional briefing; we've appealed, and (assuming that the court orders more than a token amount of attorneys' fees; the fee award has not yet been made) will raise the question of first impression of whether securities lawyers who regularly rely upon the efficient market hypothesis can ask a court to rely upon an expert opinion contradicting it when it is inconvenient for their theory of attorney-fee recovery.
  • We filed our reply brief in the Online DVD appeal.
  • We filed our reply brief in the Texas Frontier Oil appeal over a $0 settlement, which has gotten some press attention. Oral argument is scheduled in Houston in January 16. I was a Bellaire debater, but this is my first time in a Texas court.
  • $2.7 million was paid to class members $3.93 at a time in the Classmates case. This is paltry, but more than the $56,000 or so class counsel was going to be happy with had we not successfully. objected. [Ars Technica]
We filed interesting objections in two new cases in California federal courts over the last few days, and I'll discuss over the course of the week.

Tuesday, October 30, 2012

Amicus brief in Standard Fire Ins. Co. v. Knowles

As I've previously written:

The Class Action Fairness Act was intended to protect consumers against the unfair class action settlements rubber-stamped in state courts by creating federal jurisdiction in nationwide class actions with more than the $5 million jurisdictional minimum at stake. Some plaintiffs' lawyers have attempted to avoid federal court by purporting to limit the rights of their absent clients to less than $5 million, notwithstanding any claims they might be able to make, with the idea of negotiating an attorney-friendly settlement in state court. Most courts reject this tactic, most notably Judge Easterbrook in the 2011 Back Doctors decision, noting that any such disclaimer violates Rule 23(a)(4)'s adequacy requirement. The Eighth Circuit, however, has honored such forum-shopping attempts, resulting in numerous remands to the judicial hellhole of Texarkana, Arkansas.
[On August 31], the Supreme Court granted certiorari to an Eighth Circuit denial of an appeal of such a remand, The Standard Fire Insurance Co. v. KnowlesThe Center for Class Action Fairness filed an amicus brief in support of certiorari, making us one for three in cases where we've filed amicus briefs in support of certiorari.
Monday, we filed an amicus brief in support of the merits with the generous pro bono help of McGuire Woods. Further information will eventually be posted at SCOTUSblog.

In other Supreme Court / Andrew Trask news, the Supreme Court denied certiorari to our former client, Kimberly Craven, who unsuccessfully appealed our unfortunate loss in the D.C. Circuit in the Cobell litigation. We can expect a denial of the weaker Good Bear petition next week.

Monday, October 29, 2012

Opening brief in Ninth Circuit MagSafe appeal

In the In re Apple MagSafe Power Adapter Litigation, the attorneys walked away with $3.1 million, while the class got less than $1 million, and likely less than a quarter of what the attorneys got. The district court (Judge Ware in the N.D. Cal.) not only rubber-stamped the settlement while ignoring the Bluetooth precedent, but then issued an order to protect the illegitimate settlement, requiring a punitive appeal bond or the dismissal of any appeals. This deterred three of the five appellants, with a fourth being sanctioned for failing to dismiss his appeal. But Marie Newhouse, represented by me and attorneys with the Center for Class Action Fairness, held firm in her objection, and, after some delaying tactics by the plaintiffs, the opening brief was filed today, as we test whether the Bluetooth principles have teeth or can be ignored by district courts and trial lawyers with impunity. To this add another few questions: when is it permissible to have a "claims-made" settlement that pays the attorneys regardless of whether class members make claims or, as in this case, are deterred from making claims by artificial hoop-jumping requirements? Can class counsel take credit for "injunctive relief" that has the defendant doing what it was already doing before the complaint was filed? Is class counsel entitled to a commission on payments to the settlement administrator? Earlier: objection; appeal bond hypocrisy. The case is Kitagawa v. Apple, Inc., No. 12-15782 (9th Cir.).

Tuesday, October 2, 2012

September doings

  • Groupon settlement rejected on cy pres grounds last week after our objection. The attorneys would have received $2.125 million, the class maybe a twentieth of that.
  • I argued the Baby Products case in the Third Circuit, and am cautiously optimistic for a good precedent in a case where the attorneys collected over $14 million and the class was due less than $3 million. Briefing.
  • The fairness hearing in Johnson & Johnson has been postponed until October 18. We filed two expert reports demonstrating that the plaintiffs had failed to present Daubert-satisfactory expert evidence in support of a claim that the $0 settlement provided "substantial benefit" to shareholders.
  • The Ninth Circuit, relying on opinions from two CCAF victories, struck down a settlement on cy pres grounds in Dennis v. Kellogg September 4, also holding that an attorneys' 38.9% share of a settlement ($2 million in this case) would be "clearly excessive."
  • The Center filed with the IRS for stand-alone 501(c)(3) status. I'd like to express tremendous gratitude to everyone at Donors' Trust for all they did to incubate us.

Monday, September 10, 2012

In re Johnson & Johnson Shareholder Derivative Litigation

Alison Frankel recently asked whether it's the end of "money-for-nothing" class actions; Ronald Barusch asks a similar question. The Center for Class Action Fairness is putting that question to the test in In re Johnson & Johnson Shareholder Derivative Litigation by asking the District of New Jersey to dismiss shareholder litigation that makes cosmetic changes to corporate governance, and then presents a $10.45 million bill to shareholders—150% of the already high "lodestar"—for the involuntary consulting arrangement. As in Robert F. Booth Trust v. Crowley, the suit "serves no goal other than to move money from the corporate treasury to the attorneys' coffers.... It is an abuse of the legal system to cram unnecessary litigation down the throats of firms ... and then use the high costs ... to extort settlements (including undeserved attorneys' fees) from the targets." As I noted then:
Under FRCP 23.1(a) and its state-law equivalents, a shareholder derivative suit isn't supposed to proceed unless the shareholders bringing the suit adequately represent the shareholders. If the suit is meant to profit the plaintiffs' lawyers at the expense of the corporation (and thus the shareholders), how can the bringers of a strike suit be adequate representatives of the shareholders? I've thus argued that the correct role for courts in such situations is to throw these cases out entirely (or approve the settlement but award only a token amount in attorneys' fees).
Good coverage at (noting that the lawsuits themselves are free-ride piggybacking off of J&J self-disclosure and government investigations) and Reuters (quoting plaintiffs' lawyers calling the motion "frivolous").

Thursday, August 23, 2012

Two July 31 wins for the Center

On July 31, district courts substantially reduced attorney fees in two class action settlements where Center for Class Action Fairness attorneys objected.

In the Nutella litigation in the District of New Jersey, Judge Wolfson agreed with our objection that the parties overstated the value of the injunctive relief, and reduced the fee award from $3,725,000 to $1,125,000. More discussion at Point of Law.

And in the remand of the Bluetooth class action settlement in the Central District of California, the court reduced the requested fee award from $850,000 to $282,729.05. The National Law Journal covered without asking me for a quote. The precision of the nickel seems a poor use of court resources, and demonstrates why we argue for recovery based on benefit to the class with lodestar to be used only as a cross-check ceiling. We also think that the court erred in failing to consider the substantial evidence that the injunctive relief was not only worthless but harmful to the class. But we're obviously less dissatisfied with a $282 thousand mistake than a $850 thousand mistake.

Unfortunately, both courts disagreed with us that the "kicker" provision in the settlement combined with the reversion to the defendant meant that the settlement was unfair because of the class attorneys' breach of fiduciary duty to the class, and granted settlement approval. We think this is legal error. When defendants are willing to put $6 million on the table complete a "clear sailing" clause to settle a lawsuit, but only have to pay a little more than half of that because of self-dealing by the class counsel, the unfairness to the class seems fairly clear to us. As the Ninth Circuit said in our Bluetooth win, there is "no apparent reason" for such a reversion. But the Center already has an appeal pending in the Ninth Circuit addressing just this issue, so will likely forgo appeals here unless a cross-appeal is necessary.

Related: district court citing Bluetooth throws out $0 Fraley v. Facebook settlement.

Tuesday, August 21, 2012

In re Online DVD Rental Antitrust Litigation

The Class Action Fairness Act puts limitations on coupon settlements. In In re Online DVD Rental Antitrust Litigation, however, the district court approved a settlement that would pay $5.2 million in cash and $8.9 million in coupons to the class and held CAFA did not apply because the parties called the coupons "gift cards." Does the Class Action Fairness Act regulate semantics or something more? I argue the latter in a Ninth Circuit opening brief filed today.

The district court also awarded a disproportionate $8.512 million to the attorneys. Our appeal addresses that issue as well. And because I miss Lionel Hutz, the brief cites the classic case of Homer Simpson v. The Frying Dutchman Restaurant.

Monday, July 30, 2012

Groupon Marketing class action settlement

There was a lot of publicity about the "$8.5 million" Groupon will pay to settle a class action over expiration dates; several class members complained about the settlement to me, mostly because they viewed the lawsuit as silly. (So did Groupon, before their lawyers made them take down the original blog post criticizing the first of the many class actions brought against them.) But the settlement is even worse than it looks. Before the settlement, if a Groupon customer had a problem with a Groupon, they contacted customer service, indicated dissatisfaction, and got a full cash refund. After the settlement, if a Groupon customer has a problem with a Groupon that they purchased during the class period, they contact customer service, and customer service refers them to the class action settlement website, where they can fill out a claim form; after several months (and perhaps years), the class action settlement administrator will give the class member a pro rata share of the settlement fund—which, though the publicity says is $8.5 million, less than $6 million of it will be likely available to the class. In other words, the class action attorneys have negotiated a settlement that makes their clients—who had suffered no damages because of the availability of refunds—worse off, and are asking for millions of dollars for their efforts. I discovered this the hard way: I purchased a Groupon Voucher for a restaurant that closed, and tried to get my money back from Groupon. They told me to file a claim form. Fortunately, when I suggested that this was subpar customer service, they gave me a credit—which goes to show further that this is not a marginal benefit to the class of $8.5 million, but a change in accounting entries to rationalize a $2.125 million request for attorneys' fees. Today I filed an objection. The case is In re: Groupon, Inc., Marketing and Sales Practices Litigation, No. 3:11-md-2238-DMS-RBB (S.D. Cal.), and the fairness hearing is scheduled for September 7. Lead class counsel is Robbins Geller.

Monday, July 9, 2012

Tuesday, June 19, 2012

Next steps

Over the years, we have gotten lots of inquiries about objecting to bad shareholder derivative settlements. We'd largely passed, because we had high hopes for our pending case in the Seventh Circuit, and wanted to have that precedent in hand before we asked courts to recognize the issue of Rule 23.1 adequate representation. Now that we do, we are very interested in expanding our work objecting to bad shareholder derivative settlements. However, we face two barriers to entry that make objecting difficult.

First, the law has developed in a bad way so as to give very substandard notice to individual shareholders who hold their certificates through brokers. The settling parties typically wait until the last minute to notify brokers, asking them to comply with unrealistic deadlines, and the individual shareholders who work with Schwab or Merrill Lynch or the like don't get notice until a few days before the objection deadline, and sometimes after the objection deadline. That's often not enough time to investigate and handle the logistics of representation, especially if one needs to hire local counsel and request pro hac vice status. One of our long-term goals is to move the precedent in this area, but, until that happens, we need institutional-investor clients—hedge funds, pension funds—who get notice well in advance of objection deadlines and would like to work with us to end the problem of rent-seeking shareholder-derivative strike suits that hurt shareholders.

The second problem is that local-counsel requirement we just mentioned. I'm licensed in California, Illinois, D.C., and a couple of other federal courts that offer reciprocity, but many of these shareholder suits are in state courts or federal courts with burdensome local counsel requirements. (I also suspect we'll be seeing many fewer shareholder suits in Illinois federal courts as plaintiffs forum-shop.) Large law firms are frequently unwilling to represent us for conflicts reasons; many other firms don't want to alienate the powerful shareholder-plaintiffs' bar. We could very much use attorneys licensed in Delaware and D. Delaware to assist us. We'd obviously prefer pro bono help, but budget to pay reasonable fees for local counsel where necessary.

Monday, June 18, 2012

Victory in the W.D. Washington:

When attorneys affiliated with CCAF first objected on behalf of Professor Michael Krauss in the settlement, that case paid $52,000 to class members and over a million dollars to the attorneys and the class representatives (while falsely characterizing it as a $9.5 million settlement); Gregg Easterbrook of ESPN called it the worst class action settlement of the year. We objected, and the court struck down the settlement. The parties went back to the drawing board without including us in the process, and they came back with a settlement that guaranteed $2.5 million for class members, while still paying the attorneys over a million dollars. The settlement, as we pointed out in a second objection, still overpaid the attorneys and had Bluetooth reversion problems to boot: any fee reduction, notwithstanding clear sailing, would go to the defendant rather than the class. The parties quickly eliminated the kicker: now any fee reduction would go to the class, and the judge agreed with us at the fairness hearing that there should be a fee reduction.

Given that we had won over $2 million for the class, we thought we might be entitled to a token fee award; given our non-profit status, we planned to ask for something in the $40,000 to $50,000 range, reflecting both the benefit to the class and a sub-lodestar amount for multiple rounds of briefing, two trips to Seattle for fairness hearings, and the cost of hiring local counsel. But before we even put pen to paper on the fee request briefing, class counsel retaliated against us for our success in objecting by hitting us with super-burdensome fishing-expedition subpoenas, on, inter alia, a conspiracy theory of cross-referencing our donors with donors to institutions where Professor Krauss had performed work, such that someone paid Cato ten years ago to have Krauss write a paper so that he would successfully object ten years later represented by attorneys affiliated with CCAF to a settlement of a lawsuit against a company that didn't even exist yet. (Dozens of class members contacted us about this bad settlement. As we were figuring out who would be the best objector, Professor Krauss contacted us, and we agreed to represent him within minutes because he taught legal ethics, which added a modicum of ethos to our objection.) We were already overextended with appellate briefing schedules, so we had a choice: we could spend tens of thousands of dollars on outside counsel to resist facially invalid subpoenas requiring a response over the Christmas holidays, and be faced with an additional discovery bill of tens of thousands of dollars if we lost (and thus be put in a position where we might be worse off for requesting fees) or drop the fee request rather than prejudice our other clients. Professor Krauss was generous enough to give us permission to drop the fee request, and we did so. But we asked the court to award sanctions against class counsel on behalf of the class for the abuse of the discovery process to deter future abuses against objectors.

The court did so, deducting $100,000 from the class counsel's fee request and awarding it to the class. So if you're keeping score, class counsel tried to abuse the discovery process to prevent us from collecting a $40,000 fee, and ended up costing themselves $100,000 (plus whatever attorney time they wasted having to defend themselves in the sanctions motion and on their own discovery) in the process. The class will get $2.753 million in cash instead of $0.052 million in cash. The opinion by Judge Richard Jones generously praises us for being the attorneys most interested in class recovery. Congratulations to our patient client, Professor Krauss, and to attorney Dan Greenberg, who argued at the second fairness hearing.

Thursday, June 14, 2012

Victory in the Seventh Circuit

As both Daniel Fisher and the Economist documented recently, the percentage of M&A transactions worth over $500 million that result in shareholder derivative suits has risen from 39% to 96%. [Fisher; Economist; Reuters (quoting me); OL; see also Johnson @ SSRN]

It's surely not the case that every merger is the result of a breach of fiduciary duty. What's happening is that entrepreneurial lawyers have discovered a profitable means of rent-seeking: with the help of a cooperative shareholder, bring a meritless shareholder derivative suit on some technical ground or the other, threaten to impose millions of dollars of discovery expenses and hassle on the officers and directors of the company, and collect an attorneys' fee for settling the case for a token change of no benefit to the shareholders. As I told Reuters in 2011, "Judges should consider whether these provisions actually create value for shareholders, or amount to a rearranging of the deck chairs to create the illusion of value to justify attorneys' fees."

Under FRCP 23.1(a) and its state-law equivalents, a shareholder derivative suit isn't supposed to proceed unless the shareholders bringing the suit adequately represent the shareholders. If the suit is meant to profit the plaintiffs' lawyers at the expense of the corporation (and thus the shareholders), how can the bringers of a strike suit be adequate representatives of the shareholders? I've thus argued that the correct role for courts in such situations is to throw these cases out entirely (or approve the settlement but award only a token amount in attorneys' fees).

I found myself the "beneficiary" of one of these $0 strike-suit settlements in Robert F. Booth Trust v. Crowley; the settlement would have paid the attorneys $925,000 under a clear-sailing clause, and, when the district court rejected my attempt to intervene to dismiss the suit, I appealed to the Seventh Circuit

Yesterday, I won a complete victory with a landmark Frank Easterbrook opinion that I hope will provide protection for shareholders against future shareholder derivative strike suits. The suit, the Court said, "serves no goal other than to move money from the corporate treasury to the attorneys’ coffers.... It is an abuse of the legal system to cram unnecessary litigation down the throats of firms ... and then use the high costs ... to extort settlements (including undeserved attorneys’ fees) from the targets." It thus reversed the district court's denial of my motion to intervene, and remanded with instructions to dismiss the case, as I had asked below. [Reuters; Fisher @ Forbes; analysis by Wolfman; WSJ Law Blog (failing to recognize that the case involves a lawyer they profiled in October); Bashman; Overlawyered; Litigation Daily ($) ("Ted Frank, the indefatigable scourge of underwhelming class action settlements, scored a remarkable win on Wednesday"); Volokh on a punctuational quirk

This is the fifth federal appellate opinion in a CCAF case; CCAF is now 4-1 in federal appeals, which is remarkable, given that CCAF-affiliated attorneys represent the appellant in each case and there are rarely as many as four reversals of class action settlement-related district court opinions in a single year from all objectors combined.

CCAF is assisting an objector in a Texas-state-court strike suit currently on appeal, and we hope to extend this precedent to other state courts. The main difficulty we face is that individual investors rarely get adequate notice of these bad settlements: courts condone notice provisions that virtually guarantee that an investor who uses a broker will not get notice in time to file an objection. (In the Sears case, I benefited because of a rare agreement to extend notice at the district court level.) We would like to work with institutional investors to promote this precedent and put an end to the practice of rent-seeking strike suits that hurt shareholders. Please contact me if this describes and interests you.

Thursday, May 31, 2012

Victory in Dewey v. Volkswagen!

WASHINGTON, DC - The Center for Class Action Fairness LLC announced today its victory in the U.S. Court of Appeals for the Third Circuit objecting to a class action settlement that arbitrarily froze out over a million class members from meaningful recovery while paying the attorneys over $9.2 million. On Thursday, the appellate court vacated a district court's 2010 approval of a settlement of a lawsuit over allegedly defectively leaky Volkswagen and Audi sunroofs. While the settlement permitted many class members to submit claims for water damage, an uncertified and unrepresented “subclass” of over a million car owners received no financial compensation. The settling parties defended this unjust result by arguing that the settlement provided these owners with a letter notifying them of the need for additional maintenance, and submitted an implausible economic expert report (adopted by the trial court) that this letter was worth millions of dollars. The Third Circuit rejected the proposition that class members in the same class with the same claims could receive such disparate treatment.

Ted Frank, who argued the appeal in March, has now won three out of the four challenges to class action settlement approvals federal appellate courts have decided since he founded CCAF in 2009.  This case is particularly important because, in late 2011, an en banc panel of the Third Circuit decided in Sullivan v. DB Investments to reduce the scrutiny given to intra-class conflicts in class action settlements; today's decision confirms that Sullivan does not given carte blanche to unfair treatment of class members.

The case is Dewey v.Volkswagen  AG, No. 10-3618.

The Center for Class Action Fairness 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. With a skeleton staff, it has won millions of dollars for class members over the last three years; it has won rejections of unfair settlements, pecuniary benefits for the class, and over $150 million in fee reductions in eighteen different cases. Attorneys affiliated with the Center have eight cases pending on appeal in the federal courts, and a ninth in Texas state court.
Press coverage of the Center's work is available at

Mr. Frank is available for comment on this case and other issues relating to class actions, lawsuit abuse, and the civil justice system.


Follow the Center on Facebook!

May update

Thursday, April 26, 2012

Cy pres in the First and Third Circuits

On Tuesday, the First Circuit issued a landmark decision on cy pres, In re Lupron Marketing. Though odd litigation decisions by the objectors led to affirmance in that case, the First Circuit (quoting CCAF's victory in Nachshin v. AOL) made clear that it had "unease" with cy pres, and set a precedent generally requiring compliance with §3.07 of the ALI Principles of the Law of Aggregate Litigation. [Legal Newsline; FindLaw]

Coincidentally, the same day, the Center for Class Action Fairness filed its opening brief relating to the yet-to-be-proposed multi-million-dollar cy pres distribution in In re Baby Products, asking the Third Circuit to adopt §3.07; the district court held that the class wasn't even entitled to an opportunity to object to the as-yet-to-be-proposed recipients. Baby Products presents the additional problem of the sort of settlement where class members were artificially deterred from making claims to expand the amount available for cy pres; indeed, under the district court's order, the class counsel will walk away with over $14 million of the $35.5 million fund, and the class millions of dollars less, likely less than half of what the attorneys got.

Wednesday, March 28, 2012

March updates

  • If you listen to one oral argument from March 27, well, I have to say that you need to listen to Paul Clement's performance in HHS v. Florida. But if you have time for a second oral argument, and you have a hankering for Third Circuit class action action, I'd be curious about your thoughts of the argument in Dewey v. Volkswagen. See also.
  • Following up on our earlier post, the Third Circuit denied the motion for sanctions without comment, or permitting us to file a reply brief. (Mazie Slater had no explanation for the misquote; they used the passive voice in describing its mysterious appearance in the brief, and didn't explain how citecheckers missed it.) Having been given such carte blanche, Mazie Slater then proceeded to lie to the court about the terms of the settlement and settlement notice during the oral argument. I simply don't understand why courts aren't willing to do more to police the attorneys who appear before them. If the only consequence for inventing a citation out of whole cloth is the need to file an errata deleting an invented citation (i.e., the brief that should have been filed in the first place), what incentive does the Holmesian "bad actor" have to get the law right in the first place? After all, if there's a 5% chance that the fictionalized version will swing the case, 5% times $9 million in fees is a $450,000 incentive to lie to the court. If the bad actor isn't facing a proportionate downside, you can expect the bad actor to act badly.
  • We renewed our objection in Bluetooth. Details at Point of Law.
  • The Apple MagSafe settlement—$600,000 for the class, $3.1 million for the attorneys—was rubber-stamped by the district court. We plan to appeal to the Ninth Circuit.
  • In the Online DVD Rental Antitrust Litigation settlement with Wal-Mart for a class of Netflix customers, the district court agreed with the settling parties that a coupon isn't a coupon if they call it a "gift card" instead, and that the restrictions on coupon settlements in the Class Action Fairness Act didn't apply, and rejected my objection. We believe this contradicts CAFA, as well as Seventh Circuit precedent, and plan to ask the Ninth Circuit to address this problem.

Wednesday, March 21, 2012

Deposition fun in the Bluetooth case

It had been a few years since I took a deposition, so it was refreshing to see that I wasn't as rusty as I was worried I'd be. Here's the plaintiffs' expert testifying about the value of the injunctive relief.
Q: So it is your opinion that only a trained audiologist with experience knows whether or not it is unsafe to listen to a device at a high volume level?

MR. HART: I object to the form of the question.

A: It’s my opinion that outside of those rare individuals who are able to educate themselves to such a high degree that no one would be able to determine whether the level at which they’re listening is relatively safe or relatively unsafe.

Q: So even after you’ve warned your patients, they might be listening to the Bluetooth device at unsafe levels?

A: No, because I would be able to provide them with detailed enough information to help them to use the device in a safe manner.

Q: What is that detailed information that is required for them to use the device in a safe manner?

A: The actual output level of the device in their ear at a given volume control setting, which is something that I can measure with my equipment and my -- in my clinic.

Q: And do the warnings provided in this settlement provide that detailed information?

A: To my knowledge, they don’t.

Wednesday, March 14, 2012

Two important appellate briefs filed this week

  • Shareholder derivative suits present interesting conflicts of interest. The suit is purportedly brought on behalf of shareholders, but when the case settles, the corporate defendant—i.e., the plaintiff shareholders—are the ones paying the bill. Thus, if the suit does not actually extract any wealth from directors or officers for their supposed breaches of duty, shareholders are frequently worse off. This is the case in Robert F. Booth Trust v. Crowley, a derivative suit against Sears Holding Corp. where the alleged breach was failure to recognize the risk of Clayton Act litigation. The irony, of course, is that the actual shareholder derivative suit is far more expensive than the possibility of Clayton Act litigation. I objected; the posture is muddied by some procedural issues relating to the Seventh Circuit's intervention requirement, as you can see, but the fundamental point—shareholder derivative suits should not be permitted to be maintained when they are designed to benefit the attorneys, rather than the shareholders—remains valid, and we believe this is the first case to present this principle in the shareholder derivative context. The case is No. 10-3285, Robert F. Booth Trust v. Crowley (7th Cir.).
  • Claims-made settlements are the successor to coupon settlements in structuring settlements to divert the lion's share of relief to the attorneys, rather than the class. The parties typically structure a claims process that will reward less than a tenth of the class (in this case, less than 3% of the class), hide the claims rate from the lower court by scheduling the fairness hearing well before the claims deadline (though that evasion didn't happen in this case), and then ask for attorneys' fees on the illusion that the entire class got relief. Thus, we have cases like Brazil v. Dell, where the class got less than $500,000, but the attorneys received $7 million. We think that is per se unfair, and have asked the Ninth Circuit to weigh in. The case is No. 11-17799, Brazil v. Dell (9th Cir.).

Monday, February 27, 2012

Mazie Slater misquotes a case

In Dewey v. Volkswagen, the parties negotiated and the district court approved a settlement that violates Supreme Court and Third Circuit precedent, which makes reversal likely. What's a class counsel to do? Make up new precedent! After talking the clerk's office into letting them include a sur-reply to the lead appeal's reply brief in their cross-appeal's reply brief, class counsel invented a quote in a recent Third Circuit en banc decision that, if accurate, would have all but dictated affirmance in this case.

We noticed the fictional quote, which required literary creativity rather than mere mistyping, and invited class counsel to do the honorable thing and withdraw the brief. Remarkably, they refused, so we have moved for sanctions, given class counsel's previous misrepresentations in the case and the evidence of bad faith in this particular misquote. (I'd be curious to see what Matthew Butterick thinks of the typographical smoking gun, identified on page 5 of our brief.)

Friday, February 3, 2012

Sixth Circuit brief in Pampers Dry Max class action

Details at Point of Law. Fortunately, Procter & Gamble is not my client, as they will be exceedingly unimpressed that we mortifyingly spelled their name wrong throughout the brief. At least the law is right.

Wednesday, January 18, 2012