Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘cy pres’

“A Lawyer Who Tries to Block Settlements”

The Sep. 21 issue of Forbes magazine, now on newsstands, has a lengthy profile by Dan Fisher of my founding of the Center for Class Action Fairness, complete with a photo of my ugly mug gracing the story.

Of interest is a new revelation in the infamous Toshiba class action:

After few consumers availed themselves of a $2 billion settlement over supposedly defective laptop computers in 2000, for example, Toshiba America handed $353 million to a Beaumont charity whose chairman was plaintiff attorney Wayne Reaud, the lawyer on the case. Six years later the charity was still sitting on $250 million and the Texas attorney general sued for breach of fiduciary duty, including paying its president, W. Frank Newton, $560,000 in 2004. Newton is the former president of the State Bar of Texas.

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Furor over Ford Explorer class action settlement

The settlement discussed in this space July 17 — in which lawyers nabbed more than $25 million in fees and expenses, while fewer than 100 consumers redeemed Ford coupons worth $37,500 — was covered by the Associated Press last week, which stirred outrage in many quarters [Krauss/PoL, Greenfield, Cal Biz Lit]. As Cal Civil Justice notes, the settlement was purportedly on behalf of owners who suffered no rollover or other mishap. Instead, it sought damages for losses in the vehicle’s resale value due to adverse publicity, a nicely circular theory, since the adverse publicity was in good measure propelled by various allies of the plaintiff’s bar. Interestingly, several groups that had opposed the settlement dropped their objections after it was rejiggered to require Ford to provide a $950,000 donation to what are described as nonprofit auto-safety groups (which ones?). Plaintiff’s firm Lieff Cabraser, in a letter to AP, cited that and changes in Ford advertising as reasons why the settlement provided more benefit to the customer class than can be measured by the coupons alone.

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Bluetooth class action update; new blog

Those of you who remember my earlier posts about the settlement and my brief on behalf of objectors might be interested in seeing the briefs that putatively settling plaintiffs and defendants submitted in support of the settlement.

So as not to clutter Overlawyered with these posts, I have started a new weblog focusing on my class action work. You can also keep up with this work by becoming a Facebook supporter of the Center for Class Action Fairness.

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Bluetooth Headset Settlement Update

Readers may recall our discussion of the Bluetooth Headset class action settlement, which remarkably granted zero to the class while asking for substantial attorneys’ fees. I asked if anyone was interested in objecting, and the response was overwhelming. Today I’ve filed an objection on behalf of seven clients.

There were more objectors out there than I could feasibly represent. If you wanted to object, but I was unable to represent you, you can still join this objection. Follow the instructions for notifying the court and attorneys of your objection, and simply state, in addition to your name and address and phone number, that you join the objection of William J. Brennan et al., docket number 107. I won’t be your attorney, but you can have the pleasure of “voting” for the objection I wrote.

And anyone in Los Angeles July 6 who wants to watch the hearing, please join in the fun. I’ve got my plane ticket.

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The Bluetooth Headset Class Action settlement: Consumers $0, Lawyers $850,000

“If you bought a Bluetooth headset between June 30, 2002 and February 19, 2009, the settlement of a class action lawsuit may affect your rights.” And if you want to know why your instruction manuals are overwhelmed with worthless wacky warnings, the settlement of this class action lawsuit may explain why.

We’ve covered other ridiculous failure-to-warn-of-hearing-loss consumer-fraud lawsuits, but somehow missed this one filed by the Garcia Law Firm, which was eventually consolidated with twenty-six other lawsuits against Motorola, Plantronics, and GN Netcom (which makes “Jabra” headsets) alleging that the insufficiently advertised risk of hearing loss from turning the volume up too high on a Bluetooth headset was consumer fraud meriting damages, yadda yadda, because, without a wacky warning, people might not know that loud sounds can cause hearing loss.

The settlement is remarkable: the defendants are spending approximately $1.2 million to give notice of the settlement that offers $0 to the class. That’s, right $0. There’s a total $100,000 cy pres award to four charities selected by the plaintiffs, and the manufacturers agree to provide a wacky warning that “Exposure to loud noise from any source for extended periods of time may temporarily or permanently affect your hearing.” Only lawyers like warnings like this. Such warnings make the rest of us worse off; when people see so many warnings “crying ‘wolf,'” it inures them to meaningful warnings.

In return, the trial lawyers are going to ask for up to $850,000 in fees and costs—a remarkable infinite-percentage attorneys’ fee. Nine representative plaintiffs will ask the court for a total of $12,000 in “incentive” payments.

Walter and I often get inquiries on what readers can do when they get notice of a class-action settlement that benefits lawyers to the expense of consumers and businesses. The answer all too often is nothing: asking for exclusion doesn’t prevent the lawyers from cashing in; objecting without the help of an attorney will almost always be brushed off by the court; there is no financial incentive for an attorney to get involved, unless an objector wants to pay their tremendous fees–and there is certainly not an incentive for an objector to spend thousands of dollars to hire an attorney to object to a settlement like this.

The lawsuit is plainly meritless; but it costs Motorola and the other defendants a lot of money to have Kirkland & Ellis and Arnold & Porter litigators dealing with the case. Without a loser pays rule, it’s cheaper for the defendants to pay trial lawyers protection money to go away. Because no one has an incentive to object, the settlements get rubber-stamped, and the trial lawyers go on to file the next extortionate lawsuit. And we all pay higher prices as a result: the $2 million being spent on notice and plaintiffs’ attorneys doesn’t include the hundreds of thousands (and very likely over a million) spent by these companies on defense and in-house attorneys on three years of litigation to date.

In the Grand Theft Auto case, I was a class member, so could file an objection on behalf of myself. I don’t own a Bluetooth headset, so I can’t do that here. But the fairness hearing is in Los Angeles, I’m a member of the California bar and Central District of California bar, and I wouldn’t mind having an excuse to be in California on July 6.

I’m going to float a trial balloon here (and perhaps get my friends at Kirkland mad at me). If you are a reader, and you are one of the tens of millions of members of the class (and please read the notice to ensure that you are), and you find this settlement objectionable, I may be willing to represent you pro bono to file an objection similar to the one I filed in the Grand Theft Auto case, where I argued that the settlement was evidence that the case was meritless and should be dismissed, and in no event should the attorneys get paid off. Please understand that:

  • Such an objection, if fully successful in decertifying the class, will preclude you from receiving any money in the class action settlement; you would get zero financial benefit from the objection and would be doing this solely to keep these particular attorneys from stealing $850,000 from consumers, and to be some small deterrent to future trial lawyers against bringing this type of lawsuit;
  • There is a non-zero chance that the trial lawyers will ask for your deposition in an attempt to intimidate or harass you, though I suspect that they wouldn’t want to spend the time or money to engage in a fruitless one-hour deposition;
  • There is a chance that the judge will ignore the objection and approve the settlement anyway, though we would have the right to appeal to the Ninth Circuit.

What say you, readers? Have you bought a Bluetooth headset, are you sick of extortionate lawsuits, and are you mad enough to go on the public record to say that you don’t think these attorneys should get $850,000?

This is not an April Fools’ joke; this is not an AEI-approved project. This is me, willing to spend my own spare time and money to do some real pro bono work in the original sense of pro bono publico if there is a disgruntled class member out there. (Of course, if there is a outpouring of readers who also want to donate money to defray expenses, let me know, and I’ll set up an Amazon or Paypal donation button.)

(Update: Thanks for the overwhelming response. I’ve selected five volunteers who will be the objectors, which will be more than enough.  Stay tuned to Overlawyered for updates on the case.)

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August 19 roundup

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“Cy pres awards under scrutiny”

I’m quoted at length in a National Law Journal story about criticisms of cy pres awards, the ostensibly charitable contributions demanded in class-action settlements that actually serve to inflate attorneys’ fee awards without requiring actual payments to actual class members. Plaintiffs’ attorneys are using the device to try to get around the requirements of the Class Action Fairness Act, which made it more difficult for attorneys to inflate the nominal value of settlements through coupons, the pre-CAFA means by which plaintiffs’ attorneys inflated settlements. (I’m actually misquoted in one sentence: I said “putative class” to the reporter, and it was written in the article as “punitive class.”  Update: corrected in on-line edition.) (Amanda Bronstad, National Law Journal/law.com, Aug. 11).

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Grand Theft Auto: Class Action – The Frank Brief

Full proof that I don’t think all pro se representation is a bad thing: Following up our previous discussion of the GTA class action settlement and my objection: This morning, Friday, June 6, I filed this brief (which unlike the previous brief, I wrote myself), in opposition to the plaintiffs’ motions for court approval of the settlement and attorneys’ fees, in the Southern District of New York and served it upon counsel. With luck, I didn’t file the wrong brief.

Read On…

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Grand Theft Auto: Class Action Settlement – $26,505 for the unrepresented class, $1 million fee request

We now know how many people signed up for the Grand Theft Auto: San Andreas class action settlement out of the millions of members in the purported class.

Tier 1 (up to $35.00) (no exchange required): 416
Tier 2 (up to $17.50) (exchange required): 22
Tier 3 ($10.00) (exchange required): 131
Tier 4 ($5.00) (no exchange required): 2,050
Disc Exchange w/o cash: 57

2676 total claimants, receiving a total cash value of at most $26,505, though likely even less than that, given that the plaintiffs’ attorneys record no actual cash distribution.

The seven “representative” class members are asking for approval to receive another $24,500, or nearly half of the total cash recovery.

Of course, as we’ve discussed, none of these people had a legitimate cause of action or suffered any legally cognizable injury. But how much are the plaintiffs’ attorneys (from thirteen different offices of twelve different law firms!) asking for for this travesty of a lawsuit and settlement–one that was entirely redundant of the taxpayer-funded investigation conducted by the Los Angeles district attorney? They claim their time devoted to the litigation was worth $1,317,433, but are “generously” claiming a 28% discount for a total fees-and-costs request of $1 million.

Recognizing that this 3774% contingent fee looks fishy to the least scrutinizing of judges applying Rule 23 review, the plaintiffs have sought to inflate the appearance of accomplishment through a $870,000 cy pres award to the National PTA and ESRB. (As I’ve discussed, cy pres awards that do not directly benefit class members should not be used to justify fee awards.) They also inflate the award by claiming that the costs of notice, administration and disk replacement should be attributed to the size of the accomplished result, thus puffing matters up to over $2 million, consisting nearly entirely of empty calories for the plaintiffs they purport to be representing.

Alas, I was the only class member to docket a formal objection to this rip-off. (While it was my idea to object, I can take no credit for the objection brief, which was written by my attorney, Larry Schonbrun.) On Thursday, the plaintiffs’ attorneys filed a brief defending the settlement, with many cites to Overlawyered as ad hominem attacks on the objection. The court’s hearing is June 25.

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