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coupon settlements

Class action roundup

by Walter Olson on November 19, 2012

  • Ted Frank on Whirlpool front-loading washer class action [PoL] $1.5 million for attorneys, $41,510 for class? Judge balks at Amex gift card settlement [same] EasySaver coupon settlement “conservatively” values coupons at 85% of face value [same]
  • Cy pres: Roger Parloff on tech-defendant class-action cy pres [Fortune] Privacy groups nominated for cy pres windfall in Facebook settlement [Wired, PoL]
  • “Class-Action Lawyers Face Triple Threat At Supreme Court” [Daniel Fisher at Forbes; related, Michael Bobelian]
  • Georgia high court: company could be on hook for $456 million for sending junk faxes [UPI] Will unwanted text-message class actions be the sequel to junk-fax litigation? [Almeida, Sedgwick via WLF]
  • “Class action summer camp” series from Andrew Trask includes refreshers on key concepts such as typicality, adequacy, etc.
  • “Supreme Court Hears Arguments in Comcast” [Wajert, earlier]
  • City of Des Moines class action: we owe it to ourselves [Iowa Appeals] For another case where there was high overlap between plaintiff class members and those expected to pay damages, see Sept. 2, 1999 [Milwaukee tainted municipal water system]

“Texas has a unique solution to the problem of coupon settlements: if the lawyers settle for coupons or non-cash relief, they have to be paid in coupons or non-cash relief.” Some scoffed at this as a gimmick, but it seems to have had an effect for the better, most notably in a recent case where the court “prohibited a $1.1 million fee in a $0 settlement over immaterial merger disclosures.” [Ted Frank, Point of Law]

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Saturday Night Live has this lawyer-ad parody (via Lowering the Bar). Note the disturbing prevalence of coupon settlements. More on the troubled production from The Onion.

January 28 roundup

by Walter Olson on January 28, 2011

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Today is the last day for class members to object in the Classmates.com class action settlement —$117 thousand for the class, $1.05 million for the attorneys. For more details on how to file, see my post at the Center for Class Action Fairness (which is not affiliated with Overlawyered).

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February 3 roundup

by Walter Olson on February 3, 2010

January 5 roundup

by Walter Olson on January 5, 2010

  • Other motorist in fatal crash should have been detained after earlier traffic stop, says widow in suit against Kane County, Ill. sheriff’s office [Chicago Tribune]
  • Now with flashing graphic: recap of Demi Moore skinny-thigh Photoshop nastygram flap [Xeni Jardin, BoingBoing, Kennerly]
  • Blawg Review #245 is hosted by Charon QC;
  • Expensive, unproven, and soon on your insurance bill? State lawmakers mull mandate for autism therapy coverage [KY3.com, Springfield, Missouri]
  • “NBC airs segment on Ford settlement: Lawyers get $25 million, plaintiffs get a coupon” [NJLRA]
  • “Drawing on emotion”: high-profile patent plaintiff’s lawyer Niro writes book on how to win trials [Legal Blog Watch]
  • “Virginia Tech faces lawsuit over student’s suicide” [AP/WaPo]
  • Maryland lawmaker’s Howard-Dean-style candor: “you take care of your base… It’s labor and trial lawyers that get Democrats in office” [Wood, ShopFloor]

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Objectors, including the offices of Texas Attorney General Greg Abbott and 25 other AGs, say the coupons, free instructional DVD and other benefits to the class aren’t very valuable. Lawyers are slated to get $2.95 million. [Christopher Jensen, NYT "Wheels" blog; Center for Class Action Fairness (h/t Ted in comments)]

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Before asking a federal judge to grant preliminary approval for a class action settlement with Ameritrade over alleged privacy breaches, make sure that your “client,” the class representative, isn’t going to tell the court he opposes the settlement. In re TD Ameritrade Account Holder Litigation, Case No. C 07-2852 VRW (N.D. Cal.) ($1.87M for the attorneys, coupons for the class.).

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Among the many reactions to our item last week on a Los Angeles judge who ordered that class action counsel be paid in gift cards (having negotiated only a gift-card settlement for the class) was one from Politics Across the Pond: “This should happen a lot more often, which would make it happen a lot less often.”

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The client class members were to receive only gift cards, not cash, in the settlement with Windsor Fashions, a clothing retailer, so Los Angeles Superior Court Judge Brett Klein thought it only fair to provide that Yorba Linda attorney Neil B. Fineman be paid his fee with “12,500 ten-dollar Windsor Fashions gift cards.” (Metropolitan News-Enterprise via California Civil Justice Blog) (& welcome Megan McArdle readers).

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I never thought I’d be involved in a hot-coffee lawsuit, but Gamepolitics covers my intervention and objection to the Grand Theft Auto: San Andreas class action settlement, which I predicted before the suit was even filed.

(I corrected a mistake in the earlier post; I said I purchased GTA:SA for the Xbox 360 when, of course, I purchased it for the Xbox. Fortunately, my affidavit to the court was correctly phrased.)

April 29 roundup

by Walter Olson on April 29, 2008

  • “Dog owners in Switzerland will have to pass a test to prove they can control and care for their animal, or risk losing it, the Swiss government said yesterday.” [Daily Telegraph]
  • 72-year-old mom visits daughter’s Southport, Ct. home, falls down stairs searching for bathroom at night, sues daughter for lack of night light, law firm boasts of her $2.475 million win on its website [Casper & deToledo, scroll to "Jeremy C. Virgil"]
  • Can’t possibly be right: “Every American enjoys a constitutional right to sue any other American in a West Virginia court” [W.V. Record]
  • Video contest for best spoof personal injury attorney ads [Sick of Lawsuits; YouTube]
  • Good profile of Kathleen Seidel, courageous blogger nemesis of autism/vaccine litigation [Concord Monitor*, Orac]. Plus: all three White House hopefuls now pander to anti-vaxers, Dems having matched McCain [Orac]
  • One dollar for every defamed Chinese person amounts to a mighty big lawsuit demand against CNN anchor Jack Cafferty [NYDN link now dead; Independent (U.K.)]
  • Hapless Ben Stein whipped up one side of the street [Salmon on financial regulation] and down the other [Derbyshire on creationism]
  • If only Weimar Germany had Canada-style hate-speech laws to prevent the rise of — wait, you mean they did? [Steyn/Maclean's] Plus: unlawful in Alberta to expose a person to contempt based on his “source of income” [Levant quoting sec. 3 (1)(b) of Human Rights Law]
  • Hey, these coupon settlements are giving all of us class action lawyers a bad name [Leviant/The Complex Litigator]
  • Because patent law is bad enough all by itself? D.C. Circuit tosses out FTC’s antitrust ruling against Rambus [GrokLaw; earlier]
  • “The fell attorney prowls for prey” — who wrote that line, and about which city? [four years ago on Overlawyered]

*Okay, one flaw in the profile: If Prof. Irving Gottesman compares Seidel to Erin Brockovich he probably doesn’t know much about Brockovich.

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February 11 roundup

by Walter Olson on February 11, 2008

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The Washington Legal Foundation announces a new paper by Brian Anderson and Mel Schwing: “Two leading class action defense
attorneys utilize a federal court judge’s recent rejection of a settlement as a case study of how CAFA can deter defendants’ ability to ‘buy peace’ through settlements” in cases where the claim is so meritless that it is only worth a small amount of money for the defendant to settle:

While CAFA surely benefited class action defendants more than plaintiffs by transferring more cases to federal courts that offer more fairness and predictability in the adjudication of class actions, it is not a “free-pass” for targets of class action lawsuits.

The quid pro quo of giving class action defendants greater access to federal courts is that CAFA expects defendants to vigorously litigate, not settle via coupon settlements, frivolous class actions. The message of Figueroa is that class action defendants in federal court who try to escape all litigation risk by proposing low-value coupon benefits in exchange for global releases of claims (especially where competing lawyers and attorneys’ general are involved in the controversy) will have a difficult time persuading the federal courts to approve such settlements.

Figueroa was the first time in the three-year history of CAFA that state attorneys general used their CAFA right to intervene in a settlement hearing. Last year, I also took a look at CAFA.

September 13 roundup

by Walter Olson on September 13, 2007

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No, not $2,402 each. The $2,402 represents the total redemption of coupons by a 1,500,000-member class, or $0.0016 per class member. The Illinois state court (in the judicial hellhole of Cook County) awarded plaintiffs’ attorneys Gary K. Shipman of Shipman & Wright $1,000,000, presumably because they represented the face value of the unlikely-to-be-redeemed coupons to be in the millions of dollars. A North Carolina state judge was not impressed after he forced the forum-shopping attorneys (and defendants) to reveal the results of the settlement before dismissing a parallel lawsuit. (Moody v. Sears, Roebuck, & Co.) (via Nick Pace of RAND Institute at CL&P Blog).

Note that the widely-publicized Eisenberg/Miller class-action study, regularly cited for the proposition that state courts were no worse than federal courts in terms of awarding attorneys’ fees, would have erroneously calculated this attorney fee as 14% or so of the total settlement value, rather than the actual number of 100%. Garbage in, garbage out.

Pace mistakenly thinks that the class members were deprived of a remedy. Not really, though consumers are certainly worse off because of such litigation. Problems like this arise because a Sears is only willing to settle a frivolous consumer-fraud suit for nuisance amounts, and the plaintiffs’ attorneys just want a paycheck, so Sears is willing to pay the protection money to make the meritless lawsuit go away, since it will cost more in litigation expense to defend itself. When neither the plaintiffs’ attorneys nor the judge cares about the class members, plaintiffs’ attorneys can extract, as here, 99.9% of the settlement amount. If, on the other hand, a court ensures that the majority of a nuisance settlement must go to the ostensible plaintiffs, the plaintiffs’ attorneys will be less likely to find it profitable to bring the meritless suit and try to extort a settlement, because defendants will be more likely to find it worthwhile to defend against the suit, and the suit won’t happen in the first place. Which does make consumers better off, because then they realize a substantial part of the savings of doing business when there’s less protection money paid off to plaintiffs’ lawyers like Gary Shipman.

The Class Action Fairness Act fixes these matters—or at least it does in the cases where federal judges apply its rules and accept jurisdiction. First, CAFA effectively consolidates national class actions into a single federal jurisdiction, defendants are unable to play one plaintiffs’ attorney off of another, as happens when plaintiffs file several dozen identical and parallel class actions. Second, CAFA requires federal judges to apply meaningful scrutiny to class-action settlements and the award of attorneys’ fees, especially coupon settlements like this one. A $2402 coupon redemption with a million-dollar attorneys’ fee would have been impossible under CAFA.

When, however, judges misread the jurisdictional provisions of CAFA and remand legitimate removals back to the state courts that routinely approve such travesties, they undo the whole point of the legislation, and hurt consumers in the bargain. That Public Citizen regularly argues for such narrow readings of CAFA suggests their true interests lie with trial attorneys, rather than consumers, and that the true consumer advocates are those who support civil justice reform. (Cross-posted to Point of Law)

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