The Illinois Trial Lawyers Association has installed as its president none other than Swansea, Ill. class action lawyer Judy Cates, known to longtime Overlawyered readers for her venture into columnist-suing (Feb. 29, 2000) following the controversial Publisher’s Clearing House settlement. For one of Cates’s more recent suits, see May 4, 2004. (“She’s our poster-lawyer”, St. Clair Record, Jun. 18).
Posts Tagged ‘class action settlements’
Newspaper circulation scandal: lawyers get $40K, clients $15K
“The Minneapolis-based Star Tribune has agreed to pay $55,000 to end a lawsuit accusing it of cheating advertisers by inflating circulation numbers, according to a lawyer for two plaintiffs. The settlement agreement says that the two plaintiffs, Masterson Personnel and Alternative Staffing, will receive $15,000 in rebates from the newspaper for advertising in 2007. The bulk of the settlement, up to $40,000, goes to attorneys representing the plaintiffs.” (Tim Huber, “Star Tribune to pay $55,000 to settle circulation lawsuit”, St. Paul Pioneer Press, Dec. 20)(via Romenesko).
Frank Chavez v. Netflix Class Action settlement
Netflix has settled a purported class action in California state court complaining about alleged false advertising over “unlimited” DVD rentals. One is reminded of Lionel Hutz:
“Mr. Simpson, this is the most blatant case of false advertising since my lawsuit against the movie The Neverending Story!”
Class members get a free one-month upgrade in service level (e.g., those who have a subscription entitling them to eight DVDs rented at a time may now rent nine DVDs at a time)—but will be billed for the upgrade for future months unless they remember to ask for a downgrade before the free month expires. The plaintiffs’ attorneys will ask for $2.5 million, money well spent by Netflix since a court-ordered settlement will permit them to engage in upselling marketing tactics that might not be permissible otherwise. Precisely how the class is better off remains (at a minimum) questionable. (Chavez v. Netflix, Inc. (San Francisco Superior Court No. CGC-04-434884)) (hat-tip to D.F.). More from Baude, 3YOH, and Hit & Run.
The settlement remains subject to the court’s approval, and two class members have had discussions with me about representing them in filing an objection; I’m considering it, as are they. (Threatening to take away $2.5 million from a lawyer might get him angry enough to retaliate with harassing discovery.) Of course, the Class Action Fairness Act will help to act to prevent abuses like this in the future; will the California courts protect class members from their attorneys’ neglect of fiduciary responsibilities in the present?
Update, Thursday morning: This site has links to printable opt-out forms. Note that a 5% opt-out rate doesn’t necessarily keep the settlement from being approved (and the lawyers from being paid); it just gives Netflix the option of backing out of the settlement if they think there will be further litigation from the opt-outs. If Netflix attorneys believe that, even with a high opt-out percentage, there is unlikely to be further litigation and it will be cheaper to go forward with this settlement than continuing to litigate against Frank Chavez, they will proceed with the settlement. The 5% clause is there to protect Netflix from having to deal with a second class action. Opting out may just cost you 37 cents, and lead to a new class action settlement that you probably won’t like much better.
The Netflix Fan site (via Boing Boing (hat-tip A.T.)) notes that Netflix is budgeting for $3.0 to $4.0 million in settlement expenses—which implies $2.5 million for the plaintiffs’ lawyers, a few hundred thousand in legal and administrative expenses for Netflix, and negligible benefit to class members.
Class members as a whole are clearly worse off from this settlement: if they’re happy with the company, it’s financially injured by having to pay protection money to plaintiffs’ lawyers; if they’re unhappy with the company’s service, their recovery is illusory—even if the company had done something illegal, which it doesn’t appear that it has. Worse, consumers as a whole are worse off, because the ability of the plaintiffs’ lawyers to recover millions from a meritless lawsuit will encourage them to file other meritless lawsuits, diverting money from useful endeavours to lawyers’ pockets, and raising costs for everybody.
Note that one can only object to the settlement (or join in a filed objection) if one does not opt out of the settlement. Opt-outs are no longer members in the class, and will not have “standing” to object.
Here’s the settlement website. Geektronica post and comment thread. Bond comments.
And a trenchant observation from the Metafilter comments page:
I do wonder why the plaintiffs’ attorneys agreed to it.
‘Cuz they got paid $2.5 million.
(This post is expanded and bumped from Nov. 2, 10:32 am, when it was titled “Lawyers Imitate Lionel Hutz Department.” Post title changed to be friendlier to Google searches.) Update Jan. 11, 2006 (FTC objects); Jan. 21 (settlement delayed because of large number of objections).
Update: Sony pays $1.5 million to settle ghost-blurber suit
Another triumph of our class-action system: Sony Pictures has agreed to pay out $1.5 million to settle a class action on behalf of filmgoers allegedly persuaded to attend the films “Vertical Limit,” “A Knight’s Tale,” “The Animal,” “Hollow Man” and “The Patriot” by Sony’s use of a nonexistent reviewer, “David Manning”, to say nice things about the films in blurbs. “Manning” was listed in the blurbs as working for the Ridgefield Press, a genuine newspaper in Connecticut which however has never employed any such reviewer (Jun. 12, 2001, Mar. 13, 2004).
Class lawyer Norman Blumenthal said moviegoers would be able to collect $5 rebates by affirming that they attended the original runs of the movies; remaining moneys will go to charity. The AP’s coverage does not discuss how if at all the attendance claims are to be verified, nor the question of how much the lawyers are going to get in fees. When the California courts agreed to let the suit go forward as a class action, a dissenting judge called it a “farce” and “the most frivolous case with which I have ever had to deal”, saying: “We should be occupying ourselves with resolving legitimate disputes instead of laughable cases designed not to gain anything for the plaintiffs, but rather to generate fees for the only true beneficiaries of this disgrace, the attorneys.” (Alex Veiga, “Sony to Pay $1.5M Over Fake Movie Critic”, AP/Tuscaloosa (Ala.) News, Aug. 3).
Update: judge OKs tire settlement
Despite objections from rival plaintiff’s lawyers and others, state district judge Donald Floyd in Beaumont, Texas, has approved the settlement of a class action on behalf of consumers who own or owned recalled Firestone tires allegedly prone to tread separation. The settlement excludes anyone who has filed actual claims of personal or property injury related to the tires. Class members (other than 45 named plaintiffs who will receive $2,500 each) will get no monetary compensation, but will have the right to trade in the tires if they did not respond to the earlier recall, and Firestone has pledged another $65 million for education and safety programs. The class action lawyers, meanwhile, which include Beaumont’s Provost Umphrey, will get $19 million. See our reports of Sept. 19 and Oct. 8. (Brenda Sapino Jeffreys, “Judge Approves $149 Million Firestone Tire Settlement”, Texas Lawyer, Mar. 22).
Remedy for sending coupons: send more coupons
In the latest from the world of junk fax litigation (see Jul. 19, 2003, and links from there; Dec. 8), the bowling company AMF Bowling Centers has agreed to give out up to $1 million cash and $1.5 million in coupons to settle a class action alleging that it sent out as many as 352,000 unsolicited faxes. In addition, attorneys Lance McMillian and Stephen Camp of McMillian & Camp in Newnan, Ga. “will get a total of $250,000, while the lead plaintiff, James Michael Moore of Satellite Specialists in Jonesboro, will get $15,000.” AMF agreed to pay $500 to class members who actually kept a copy of an offending fax, while those who merely swear in an affidavit that they received one will get a less exhilarating prize, $250 in bowling coupons. Critics of the settlement say AMF is getting off too easily: under the terms of federal law, the company might have been liable for fines of between $176 million and $528 million if the charges were proven (see Oct. 22, 1999 for more on this calculus). Another Georgia attorney who had settled lawsuits with AMF over 141 junk faxes sent to his clients was also critical of the coupon aspect: “Sending similar coupons through junk-faxing is the conduct that got AMF in trouble. This is a settlement that enriches AMF and doesn’t provide a meaningful benefit to the consumer.” (Steven H. Pollak, “Junk Faxes Could Cost Bowling Co. $1 Million”, Fulton County Daily Report, May 2).