Urban Active Fitness class action settlement

The class in Gascho v. Global Fitness Holdings LLC, Case No. 2:11-cv-436 (S.D. Ohio), consists of the 606,246 individuals who signed a gym membership or personal training contract with Urban Active Fitness between January 1, 2006 and October 26, 2012. You might be one of the people who received a postcard.

The fact that the parties can identify the number with specificity suggests that a settlement is simple: give money to the allegedly injured class members. But instead one must make a claim (by mail or by the settlement website, www.urbanactivelawsuit.com). The reasoning for that is simple: class counsel would rather that the money to go to settle the lawsuit go to themselves and their friends, the settlement administrator company, rather than the class.

Earlier this year, the Sixth Circuit in In re Dry Max Pampers Litigation condemned sham settlements that allocated a disproportionate sum of money to class counsel. This settlement will pay $2.4 million to class counsel (from a segregated fund that reverts to the defendant) and, most likely, only $1.3 million to the putative clients—exactly the sort of thing the Sixth Circuit said was impermissible.

One hopes that a class member who received a postcard investigates the unfairness of the settlement and retains qualified counsel to object. The claims deadline and the objection deadline is December 30.

November 4 Press Release

US SUPREME COURT DENIES FACEBOOK USERS

CY PRES SETTLEMENT CHALLENGE OPPORTUNITY

OPENS DOOR FOR FUTURE CHALLENGES

WASHINGTON, D.C. – The US Supreme Court (SCOTUS) has declined to hear arguments in Marek v. Lane, (No. 13-136) a case challenging the fairness, reasonableness and adequacy of a $6.5 million cy pres settlement where the only concession Facebook made to settle the claims of millions of users was to establish a new foundation to educate the public about “user control” over Internet privacy.

However, in a separate statement, Chief Justice Roberts acknowledged the need for the Court to address the increasing use of cy pres settlements. He wrote, “…review of this case might not have afforded the Court an opportunity to address more fundamental concerns surrounding the use of such remedies in class action litigation, including when, if ever, such relief should be considered….In a suitable case this Court may need to clarify the limits on the use of such remedies.”

“We’re hopeful the Court in a future case will address abuse of the cy pres doctrine which has become an increasingly serious problem that cheats consumers of fair settlements in class action cases,” said Ted Frank, founder of the Center for Class Action Fairness and one of the lawyers challenging the Facebook settlement.

Cy pres awards in class action settlements provide awards be given to charities or foundations instead of individual consumers. According to legal scholars these awards “create the potential for conflicts of interest by ensuring that class counsel are able to reap exorbitant fees regardless of whether the absent class members are adequately compensated.”