A San Francisco nonprofit named Consumer Action is in the habit of pocketing cy pres moneys — leftover funds that are supposed to go “as nearly as possible” to class relief — from class actions against credit card companies and other mass marketers. Does Consumer Action have any connections to lawyers who file class action suits, and if so, are those connections significant? [Ted Frank, Point of Law] (Bad link fixed now; text edited August 5 per discussion below.)

[A Consumer Action executive has been in touch to take issue with this post, pointing out, among other things, that the two personages mentioned in the Point of Law post are no longer married to each other, and arguing that the group’s work is independent of class action lawyers. I have reworded the post to reflect these concerns.]

August 6 update: Letter from Consumer Action’s Linda Sherry follows, continued after jump:

Dear Mr. Olson,

I am writing to you to clarify certain points made in your recent blog post, “Consumer Action, chez Sturdevant” (http://overlawyered.com/2012/08/consumer-action-chez-sturdevant/) based on a post by PointofLaw.com (http://www.pointoflaw.com/archives/2012/07/damned-if-you-do-files-chase-bank-credit-card-class-action.php).
Patricia Sturdevant, currently the president of Consumer Action’s Board of Directors, is employed as Deputy Commissioner for Policy and Planning at California Department of Insurance. She has been divorced from attorney James Sturdevant since 1996. Mr. Sturdevant’s firm has no formal connection to Consumer Action, however we admire of Mr. Sturdevant’s track record as a consumer attorney and consider him one of many valued supporters. These supporters also include corporations, foundations, public interest groups and individuals.

Consumer Action is fortunate to have been chosen by the courts and attorneys on both sides of the table (defense and plaintiffs counsel) to receive class action residuals and to be able to use these funds for consumer education and empowerment in the area of the original litigation. None of the cy pres awards we have received have come to us as a result of any effort by our Board of Directors or through any particular advocacy by our management. We have no input into how the restitution is made to a class, and in fact Consumer Action has been critical of agreements and settlements that provide vouchers or coupons for future services from the company being required to disgorge ill-gotten gains.

As a 501c3 non-profit organization, we use cy pres awards to great advantage in offering free direct services to consumers: printed multilingual educational pamphlets, community train the trainer events, an advice and referral hotline and a service to help consumers of every political stripe reach and write to their lawmakers on any topics they desire. All these services are provided at no cost to consumers.

I find it unfortunate that quotation marks have been placed around the name of Consumer Action. This appears to be a rather snarky attempt to belittle our long and honorable 41 years of education and advocacy on behalf of consumers. Consumer Action strives for fiscal transparency, and posts our annual Form 990s on our website, publishes annual reports containing information about our activities, provides a monthly e-newsletter updating the public and our supporters on the activities we are involved in. In our publications and web content we strive to see all sides of an issue and to present a balanced picture so that consumers will have the information they need to make their own choices.

Consumer Action believes strongly in the right of collective redress for consumers. We fully recognize that the system allows for ill-founded litigation, but our position is that in the often imperfect world of consumer protection and an environment of limited resources for civil and criminal law enforcement, class action attorneys play a vital role in representing and delivering justice for consumers in the courts and by establishing legal precedent that improves and clarifies consumer protections for the benefit of all consumers.
Linda Sherry
Director, National Priorities (DC Office Director)
Consumer Action

Filed under: cy pres, San Francisco