In re Apple MagSafe Power Adapter Litigation oral argument in the Ninth Circuit Tuesday

Class counsel collected $3.1 million in the Apple MagSafe Power Adapter Litigation, but their putative clients received less than $900,000, and perhaps even less than $500,000—the district court never bothered to make findings. The settlement was structured to pay the attorneys double their lodestar but make it difficult for class members to make claims, and few of them did. We represent objector Marie Newhouse, who received $0 under the settlement, and appeals the approval of the self-dealing settlement and the district court's imposition of a punitive appeal bond. We've also moved for sanctions in response to class counsel Mehri & Skalet's Rule 28(j) letter that claimed Newhouse had never made an argument that was in her first issue presented.

• Newhouse opening brief
• Newhouse reply brief
• Newhouse Rule 28(j) letter
• Newhouse motion for sanctions

The oral argument will be webcast live starting sometime between 10:15 and 11 am Pacific time Tuesday on the San Francisco Courtroom 1 camera; the link will be on the front page of the Ninth Circuit website, and we'll update this post with a link to the podcast of the argument after the Ninth puts it on the site.

Update: oral argument is online.

Interested in co-authoring a law review article?

I keep a list of law review articles I'd like to write. That list has grown to thirteen, ten of which are about class action settlements. The problem is that the time it would take me to write a law review article by myself would take away from my litigating time, and I'm already in a position where I can't prosecute every appeal I would like to prosecute. There are hundreds of professors writing law review articles, and only one non-profit focusing on enforcing the law of class-action settlement fairness, so comparative advantage suggests that I shouldn't change my mind about this. But perhaps you're an academic or an aspiring academic who'd like to build upon the skeleton of my outlines and ideas and jump through the hoops of submitting to law reviews. Happy to have your name go first so long as you take the laboring oar on the second draft. Drop me a line if you're interested.

"Muscle Milk Magnificence"

A former CCAF intern files an entertaining objection to a bad lawyer-driven settlement that doesn't comply with Ninth Circuit Law, and Above the Law is ON IT.

Wherein thousands of insomniacs watching C-SPAN learn my thoughts about class action settlements

Ninety minutes of panel discussion about class-action-settlement conflicts of interest? Who could possibly resist?

Abusive appeal bonds

(This post is by both Adam Schulman and Ted Frank.)

Over at Public Citizen's blog, Scott Michelman posts about the attempt by class attorneys in the Facebook Sponsored Stories settlement to impose $32,000 appeal bonds against each of the 15 appealing objectors in that case. (As you'll recall, CCAF represented objectors in this case, but chose not to appeal when the settlement was improved and the district court substantially cut attorneys' fees. The improvements made the settlement somewhat less objectionable, and given that we have limited resources and can only take on so many appeals each year, we'd rather devote them to a case where we can make more of a marginal difference than where there are fifteen other appellants.)

Michelman is correct that $32,000 is far beyond what the law allows under Federal Rule of Appellate Procedure 7. In multiple cases, even when the appellees violate FRAP 30 to bloat the appendix, we have yet to see a cost order greater than $3,000.  Sadly, however, this $32,000 request is not unique. In the Center's short history we have seen several attempts to abuse Rule 7, some even successful:

• Cobell v. Salazar, 816 F. Supp. 2d 10 (D.D.C. 2011) (appeal bond request of $8.3 million denied);
• Blessing v. Sirius XM Radio, Inc., No. 09-cv-10035-HB, 2011 WL 5873383 (S.D.N.Y. Nov. 22, 2011) (appeal bond request of $200,000 denied);
• In re MagSafe Apple Power Adapter Litig., No. C 09-01911 JW (N.D. Cal. 2012) (appeal bond request of $200,000 against each appealing objector; court orders illegal $15,000 bond on each of five appellants); currently on appeal at the Ninth Circuit; and
• In re EasySaver Rewards Litig., No 09-cv-2094-AJB-WVG (S.D. Cal. 2013) (appeal bond request of $60,000 before the settlement had even been approved, let alone appealed!) (court issued illegal $15,000 bond); currently on appeal at the Ninth Circuit.

Unlike a criminal bond, where one can find a bondsman to post bond in exchange for a small deposit, the cheapest way to post a $15,000 bond in a civil case is to deposit $15,000 with the district court. In both MagSafe and EasySaver, that's what we did. We posted half of a $25,000 appeal bond in Dewey v. Volkswagen after the district court decided that we had a low chance of success on appeal, and got our money back over a year later when we won at the Third Circuit.

Fortunately, most judges get it right. See, e.g., the non-CCAF case In re Navistar Diesel Engine Prod. Liab. Litig. (N.D. Ill. Aug. 12, 2013).

A particularly abusive appeal bond is pending before the 10th Circuit. Two objectors appealed an abusive settlement that the district court approved over the objection of several state attorneys general, after which the district court imposed a $1 million appeal bond. Tenille v. Western Union, 2013 U.S. Dist. LEXIS 130962 (D. Colo. Sept. 10, 2013); the Tenth Circuit will hear argument next week.

Michelman worries that "[such strong-arm tactics] play into the negative stereotype about class actions and class counsel." They certainly do—but the fact that class counsel so frequently engages in them show that the stereotypes have much truth. For all the plaintiffs' bar talks about "access to justice," many trial lawyers will not hesitate to run roughshod over a class member's right of appeal if they think it will short-circuit a meritorious appeal that would jeopardize an excessive fee award. Given that Fraley class counsel (who claims his time is worth $975/hour) will be expending more than $32,000 of lodestar to brief and argue the appeal bond motion (and any collateral litigation caused if the bond is granted), the motion is clearly a bad-faith attempt to improperly deter appeals, rather than a legitimate concern over recovering appellate costs.

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.”