Experian class action settlement

by Walter Olson on February 28, 2007

Attorney Donald Caster writes from Cincinnati:

OK, I’ll admit it: I’m a “trial lawyer,” and I usually disagree with Overlawyered’s point of view. (In fact, usually when I read the blog, I’m thinking about what a great job a particular lawyer did to get the result that you’re now protesting.) But I get nearly as agitated as you folks do over the abusiveness of coupon settlements in class action cases, and I just got notice of such a settlement myself.

Below I’ve cut and pasted the exact text of the email message I received notifying me of the settlement. The class action has its own website at www.browningsettlement.com. As you can see, the defendant is Experian, and the plaintiffs claim that they made some sort of representations on a website that violated the “Credit Repair Organizations Act.”

Class counsel is set to take over $2.5 million in fees. The “benefit” to the class? A settlement in which class members get either (a) a free credit score, or (b) free credit monitoring for two months. And oh, by the way, if you take the latter option, you have to remember to cancel the monitoring, or you’ll automatically start getting billed $9.95/month for credit monitoring after sixty days. That reeks of a lack of arms-length negotiation between class counsel and the defendant (what a great deal for the defendant–they get new customers in exchange for settling a class action lawsuit!).



NOTICE FROM FEDERAL COURT. PLEASE READ.

You may be eligible to receive a benefit from a class-action settlement if you purchased and paid for a credit score or credit monitoring from ConsumerInfo.com or an Experian Entity between June 17, 1998 and December 27, 2006.

A federal court has directed that this notice be sent to inform you of a proposed class-action settlement. Records show that you entered into an agreement over the Internet with ConsumerInfo.com or an Experian Entity to purchase any Credit Check or Credit Check Monitoring (which were formerly known as CreditCheck® Monitoring Service), Credit Manager (including Yahoo! Credit Manager), Triple Alert, or Triple Advantage credit-monitoring product, or you paid for a credit score sold on a website that also sold one of these credit-monitoring products, between June 17, 1998 and December 27, 2006. If so, you may be eligible to receive a benefit under the proposed settlement.

The settlement will resolve a lawsuit over whether Defendants violated the federal Credit Repair Organizations Act or are liable for claims where the stated basis is about improvement of a consumer’s credit record, history, or rating. Under the settlement, Defendants deny that they are liable, but have agreed not to make certain statements on particular websites and to provide all Settlement Class Members with the opportunity to obtain their choice of a settlement benefit: either (i) a credit score or (ii) 60 days of credit monitoring, as described below and on the settlement website. To see if you are a Class Member and to obtain full notice of the proposed Settlement, the required procedures, the Effective Date, the deadlines, your obligations, and your options, you must visit www.browningsettlement.com. This email is only a brief summary of the full notice that is posted on the website.

If you are an eligible Settlement Class Member, you have rights, obligations, and options under the proposed settlement. You have until May 15, 2007 to make your decision. Your legal rights are affected whether you act or not.

1. Submit A Registration Form Online Or By Mail

This is the only way to get a settlement benefit of either a credit score or 60 days of credit monitoring. You will choose your benefit, and you must keep all of your registration information updated. If you choose credit monitoring, and you don’t cancel your credit-monitoring membership after using your code to obtain the credit monitoring benefit but prior to the expiration of the 60 day, settlement benefit period, you will be billed at the then-applicable rate, which is currently $9.95, for each month that you continue your membership. Beginning on the Effective Date of the settlement, you will be able to register online or by mail. If you register online, your registration must be completed no later than sixty (60) days after the Effective Date, and submitted online by midnight Pacific Time. If you register by mail, your registration must be mailed and postmarked on or before sixty (60) days after the Effective Date. For more information on these deadlines, the Effective Date of the settlement, the registration procedures, and the settlement benefit, you must visit www.browningsettlement.com. Do not contact the Court.

2. Exclude Yourself

This is the only option that allows you to ever be part of any other lawsuit about the claims in this case. You will not be eligible for a settlement benefit. Your request for exclusion must be mailed and postmarked on or before May 15, 2007. Any request for exclusion must be mailed to the Browning Settlement Administrator. Do not contact the Court.

3. Object

Write to the Browning Settlement Administrator in order to tell the Court about why you don’t like the settlement. Your objection must be mailed and postmarked on or before May 15, 2007. Do not contact the Court.

4. Go to a Hearing

Write to the Browning Settlement Administrator to ask to speak in Court about the fairness of the settlement. Your request to speak at the hearing must be mailed and postmarked on or before May 15, 2007. The final fairness hearing is set for July 31, 2007, at which time the Court will consider whether to finally approve the settlement and a request by the lawyers representing all Class Members for no more than $2,550,000 in attorney’s fees and costs.

5. Do Nothing

You will automatically be included in the Settlement Class and give up your right to be part of any other lawsuit about the claims in this case, but you will not be eligible to receive a settlement benefit unless you submit a registration form.

To get complete information about the proposed settlement, the required procedures, the Effective Date, the deadlines, your obligations, and your options, you must visit www.browningsettlement.com. Do not contact the Court.

Please do not reply to this message. We are unable to respond to inquiries sent in reply to this email. To contact us, please access the official settlement website at www.browningsettlement.com.

{ 10 comments }

1 billb 02.27.07 at 11:01 pm

Can someone help a non-lawyer out?

When did explicit rejection of class membership become an enforcable part of class-action settlements? Why doesn’t acceptance of the award/benefit from the settlement constitute joining the class with the default being non-membership?

I seek answers from a legal perspective not the obvious benefit to class plaintiffs’ attorneys. I.e., is there case law or statute that enables the status quo?

2 Peter Nordberg 02.27.07 at 11:55 pm

It’s part of the settled law of class action procedure, for classes certified under Fed. R. Civ. P. 23(b)(3), that members of the class receive pre-trial notice of class certification and an opportunity to opt out. Failure to opt out generally means you’re in and will be bound by the outcome. Fed. R. Civ. P. 23(c)(2)(B) explicitly provides for this procedure.

Meanwhile, I’m a plaintiffs’ class action lawyer myself, but I’m not a big fan of coupon settlements. They may be appropriate in some circumstances, but there’s a greater than usual potential, with coupon settlements, that the settlement will better serve the interests of the lawyers and the defendants than it will those of the class.

It bears remarking, though, that the courts are required to approve any class action settlement, and the rules do provide that class members must receive notice of the settlement, which generally includes notice of the right to object to it. The question that needs asking may be why such objections are not more common.

3 C.Chalmers 02.28.07 at 12:55 am

The FTC last year challenged the “continue unless you remember to quit” feature in a settlement involving Netflix in a California court. I have their brief, which would be useful here. The parties in Netflix took out the offending provision rather than go to the mat with the FTC.

As for the question about class membership, the long established approach is that you are in unless you optout. There are arguments for “optin” classes, but that is not the present law. The “law” is basically Rule 23, Federal Rules of Civil Procedure and state counterparts.

4 billb 02.28.07 at 8:49 am

Peter and CChalmers: Thanks so much. That was very helpful. I’ll check out those references when I get a chance. Can either of you speak to the history of these rules/laws (or Ted or Walter)? How did they come about, etc.?

re why not more objections: I’ve “been a class member” in half a dozen or so class action suits. In all of these cases I’ve: a) not been interested in the settlement (usually because it’s some stupid coupon to buy a product from a company I’ll never do business with again), and b) had no interest in actually suing the the defendant myself because my losses were so small as to generally be laughable. Given that, the effort required to opt out (even if all I have to do is go fill out a form on a website) is generally not worth it just to uphold my position on principles.

That being said, it still bothers me in my heart of hearts that I’ve been represented in court without specifically asking to be. It seems to me that I should not have to take affirmative steps to not have my free association rights infringed. (OK, maybe that’s overstating things a bit :)

5 Deoxy 02.28.07 at 10:24 am

“(OK, maybe that’s overstating things a bit :)”

Not much.

Actually, the part that I find most disturbing is that it is essentially like those old credit card offers (they gave you a card without your permission, and you had to cancel the account) that were judged to be so abusable… oh, look! Class actions get abused, too. How very surprising.

6 Peter Nordberg 03.01.07 at 2:36 pm

A textualist might say that “freedom of association” is nowhere mentioned in the Bill of Rights, but it’s true that the Supreme Court has construed the First Amendment to include such a right. It has even applied the concept in connection with organizations (e.g., the NAACP) who broker relationships between lawyers and their members (e.g., for purposes of bringing civil rights litigation).

What the Supreme Court hasn’t done, so far as I know, is hold in clear fashion that the right of association directly applies, in any full-blooded way, to attorney-client relationships in civil litigation. If it did, then all manner of fascinating questions might arise, up to and including the constitutionality of attorney licensure. (Full disclosure: Over twenty years ago, I published a law review piece suggesting that such a holding is implicit in such decisions as NAACP v. Button, and that attorney licensure is constitutionally suspect on that ground. See Comment, The Petition Clause and Unauthorized Practice Rules, 132 U. Pa. L. Rev. 1515 (1984). But for some reason my arguments haven’t caught on.)

In class cases under Rule 23(b)(3), the question doesn’t really seem implicated, because the rules do give the class member an opportunity to opt out with only very minimal effort (mailing back the opt-out form). As suggested in my first comment, existing rules and legal doctrines do meanwhile afford class members substantial opportunities to assert their rights and protect their interests. These typically include not only the rights to opt out and to object to a settlement, but also the right to bring a separate suit of one’s own notwithstanding the pendency of the class claims. If class members do none of these things, they still have the right, of course, to refrain from cashing the settlement check.

7 billb 03.01.07 at 6:04 pm

Peter: In all but one of the classes of which I’ve been a member, I was never contacted directly by the class counsel. Instead, I’d see a post on Slashdot or BoingBoing or somewhere else on the web and only then realize that I was a member of the class (e.g. affected by the Sony CD Rootkit (though I’m actually not a member of that class)). However, looking at the settlement agreements, it was clear that I was still covered by the opt-out requirement even though I had never been contacted by class counsel, the defendant, or the court.

So, the effort is often somewhat more than minimal. One has to know about the class (in time), find the website or phone number to call to opt out, and then send a letter or fill out the form. Plus, if the US Mail is involved, one has to pay for the envelope and stamp! Admittedly, that’s all likely to be a pretty small burden, but it seems like any burden to prevent someone from representing you is too much. This is especially true when you not only believe that the settlement is silly but believe that it is actively harmful or at least against good publicy policy (e.g I’m firmly against settlements that give the plaintiffs more of the defendant’s products. That’s just nonsensical.).

8 Peter Nordberg 03.02.07 at 5:01 am

I’m with you on disfavoring settlements that give you more of the defendant’s product — especially where the defendant wants to charge you for the privilege.

I’m not with you on the proposition that “any burden” is “too much.” The law strikes all sorts of balances between the competing interests of different parties. These comments are not a context in which a full-throated defense of class actions is possible, but among other justifications for them, they do often make it possible to prosecute claims for real wrongs in situations where individual suits would not be economically viable. That’s a legitimate interest that should weigh in the balance — enough of one by itself, in my view, to justify the relatively minimal burden of opting out.

It may be that notice is sometimes deficient in practice (a circumstance that can sometimes relieve a class member from the binding effect of the judgment). But for that, it seems to me the obvious first remedy of choice would be better notice.

9 David Nieporent 03.02.07 at 6:00 am

Peter, I don’t know if your question is rhetorical, but having done some work on behalf of class action objectors, I think the answer to why there aren’t more objections is pretty clear. (Particularly in coupon cases, which are likely to be cases which involve consumer class members rather than, say, institutional investor class members.)

First, given its format, few people are even likely to take the time to read the notice of proposed settlement, let alone to get to the part which describes the procedure for objecting.

Second, individual consumers don’t have much incentive to object; individual recoveries are often so small (that is, after all, one of the justifications for class action in the first place) as to make it not worth anybody’s time, and the difference between a “good” settlement and a “bad” one is even smaller.

Third, there’s not a lot of point, because, despite all the public complaints over bad settlements, most judges rubber stamp them, regardless of objections. No judge wants to send class counsel and defendants back to the drawing board by the time the fairness hearing takes place.

So who objects? A couple of individual cranks, and professional objectors. Judges don’t give much credence to either.

10 Peter Nordberg 03.04.07 at 5:07 am

David,

I don’t know if my question was partly rhetorical or wholly in earnest. Let’s try to figure that out.

I’ll start with coupon settlements. In billb, for example, we seemingly have someone who frequently finds himself in coupon settlement classes, and who is quite capable of putting substantial energy into composing articulate posts on the web discussing what he perceives as their demerits. I don’t certainly don’t fault him for that. Public debate is a good thing, and maybe billb feels it’s a more effective vehicle than filing objections would be. Or maybe he just views litigation, or some particular kinds of litigation, with distaste, and doesn’t want to involve himself with it.

But I’ve seen *enough* posts on the web by disgruntled coupon-class members — many of those posts the product of substantial effort and art — that I have to wonder why more of that energy isn’t channeled into objecting. One well-crafted objection can make some judges think twice. Even if the judge approves the settlement anyway, the objection may spark the judge to exert his or her influence to move the settlement terms in a more consumer-friendly direction. I don’t say that’s necessarily a likelihood. But if no one ever objects, how are judges to know that anyone objects? In my experience, judges mostly try to be conscientious. But that rubber stamp presumably starts to look more tempting, if no one has shown any sign of giving a hoot.

Meanwhile, departing now from the coupon context, I wonder the following about consumer class actions where the individual class members’ returns are low. I wonder if there isn’t something resembling a marketplace logic at work here. If class members don’t feel it’s worth the time to opt out or object then maybe that’s a rational assessment, given what they perceive as their very low stakes in the matter. If that’s so, then what’s the harm, exactly, in a settlement that makes a culpable defendant pay, thereby encouraging adherence to law, and which also compensates the lawyers who spent time, when nobody else felt it was worth their trouble, to bring the culpable party to account? To me, that all sounds like a salutary check on commercial misbehavior in connection with transactions too small to find other paths to the civil justice system.

You weren’t saying the contrary, of course. But the contrary is sometimes said.

Regards,

Peter

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