class actions settlements

• If you listen to one oral argument from March 27, well, I have to say that you need to listen to Paul Clement's performance in HHS v. Florida. But if you have time for a second oral argument, and you have a hankering for Third Circuit class action action, I'd be curious about your thoughts of the argument in Dewey v. Volkswagen. See also.
• Following up on our earlier post, the Third Circuit denied the motion for sanctions without comment, or permitting us to file a reply brief. (Mazie Slater had no explanation for the misquote; they used the passive voice in describing its mysterious appearance in the brief, and didn't explain how citecheckers missed it.) Having been given such carte blanche, Mazie Slater then proceeded to lie to the court about the terms of the settlement and settlement notice during the oral argument. I simply don't understand why courts aren't willing to do more to police the attorneys who appear before them. If the only consequence for inventing a citation out of whole cloth is the need to file an errata deleting an invented citation (i.e., the brief that should have been filed in the first place), what incentive does the Holmesian "bad actor" have to get the law right in the first place? After all, if there's a 5% chance that the fictionalized version will swing the case, 5% times $9 million in fees is a $450,000 incentive to lie to the court. If the bad actor isn't facing a proportionate downside, you can expect the bad actor to act badly.
• We renewed our objection in Bluetooth. Details at Point of Law.
• The Apple MagSafe settlement—$600,000 for the class, $3.1 million for the attorneys—was rubber-stamped by the district court. We plan to appeal to the Ninth Circuit.
• In the Online DVD Rental Antitrust Litigation settlement with Wal-Mart for a class of Netflix customers, the district court agreed with the settling parties that a coupon isn't a coupon if they call it a "gift card" instead, and that the restrictions on coupon settlements in the Class Action Fairness Act didn't apply, and rejected my objection. We believe this contradicts CAFA, as well as Seventh Circuit precedent, and plan to ask the Ninth Circuit to address this problem.

It had been a few years since I took a deposition, so it was refreshing to see that I wasn't as rusty as I was worried I'd be. Here's the plaintiffs' expert testifying about the value of the injunctive relief.

Q: So it is your opinion that only a trained audiologist with experience knows whether or not it is unsafe to listen to a device at a high volume level?

MR. HART: I object to the form of the question.

A: It’s my opinion that outside of those rare individuals who are able to educate themselves to such a high degree that no one would be able to determine whether the level at which they’re listening is relatively safe or relatively unsafe.

Q: So even after you’ve warned your patients, they might be listening to the Bluetooth device at unsafe levels?

A: No, because I would be able to provide them with detailed enough information to help them to use the device in a safe manner.

Q: What is that detailed information that is required for them to use the device in a safe manner?

A: The actual output level of the device in their ear at a given volume control setting, which is something that I can measure with my equipment and my -- in my clinic.

Q: And do the warnings provided in this settlement provide that detailed information?

A: To my knowledge, they don’t.

• Shareholder derivative suits present interesting conflicts of interest. The suit is purportedly brought on behalf of shareholders, but when the case settles, the corporate defendant—i.e., the plaintiff shareholders—are the ones paying the bill. Thus, if the suit does not actually extract any wealth from directors or officers for their supposed breaches of duty, shareholders are frequently worse off. This is the case in Robert F. Booth Trust v. Crowley, a derivative suit against Sears Holding Corp. where the alleged breach was failure to recognize the risk of Clayton Act litigation. The irony, of course, is that the actual shareholder derivative suit is far more expensive than the possibility of Clayton Act litigation. I objected; the posture is muddied by some procedural issues relating to the Seventh Circuit's intervention requirement, as you can see, but the fundamental point—shareholder derivative suits should not be permitted to be maintained when they are designed to benefit the attorneys, rather than the shareholders—remains valid, and we believe this is the first case to present this principle in the shareholder derivative context. The case is No. 10-3285, Robert F. Booth Trust v. Crowley (7th Cir.).
• Claims-made settlements are the successor to coupon settlements in structuring settlements to divert the lion's share of relief to the attorneys, rather than the class. The parties typically structure a claims process that will reward less than a tenth of the class (in this case, less than 3% of the class), hide the claims rate from the lower court by scheduling the fairness hearing well before the claims deadline (though that evasion didn't happen in this case), and then ask for attorneys' fees on the illusion that the entire class got relief. Thus, we have cases like Brazil v. Dell, where the class got less than $500,000, but the attorneys received $7 million. We think that is per se unfair, and have asked the Ninth Circuit to weigh in. The case is No. 11-17799, Brazil v. Dell (9th Cir.).