Senin, 14 Maret 2011

Reply brief filed in NVIDIA case

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Our earlier post continues to update the docket, most notably with our reply brief filed today.

It's hard to believe that multiple millionaire lawyers from multiple law firms all asked the court to apply the wrong legal standard for deciding a dispute over a consent decree accidentally. I'll take it as a good sign that they didn't think they could win if the court applied the correct legal standard and that their only hope was to obfuscate. It is of some concern that lawyers think they can obfuscate like that and get away with it without getting sanctioned.

What is most remarkable is the shamelessness of the contrasting claims by NVIDIA and Milberg. When asking the court to disregard objections to the settlement, the settling parties argued that there would be hundreds of thousands of claims worth at least tens (and probably hundreds) of millions of dollars. (Milberg actually argued that there would be "exponentially" more than hundreds of thousands of claims, but I presume that was because they don't know what "exponentially" means rather than because they were arguing that there would be tens of billions of claims.)

But push has come to shove, and only 30 thousand class members have taken the preliminary steps of asking for relief—and the Settling Parties have the gall to argue that this response rate (which will correspond to less than $10 million of class benefit, less than the $13 million attorney fee) demonstrates the popularity of the settlement administration, because one couldn't reasonably expect any more claims than that. We didn't even ask for those numbers: NVIDIA shamelessly volunteered them as evidence of the success of the settlement.

This case is a poster child for why courts should not award attorneys' fees until after the claims period has ended. If we hadn't intervened in this case, no one would have ever disclosed that Milberg exaggerated class recovery twenty- to fifty-fold, and this would be recorded in some empirical study as evidence of attorneys generously restricting themselves to fees of less than 10% of class recovery, rather than 130% of class recovery.

Update: Court rules for NVIDIA. If you're a class member with questions about the case, and why your attorneys argued against your own recovery, you need to talk to your attorneys at Milberg; I cannot help you.

Rabu, 02 Maret 2011

NVIDIA class action settlement: Milberg declares war on its clients

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If there was ever any question of whether Milberg was going to side with its putative clients or its putative adversary, we now have an answer from this Litigation Daily story (behind a subscription wall, but now available for free):
Lead class counsel Jeff Westerman of Milberg said in a statement that Frank is "working against the interests of consumers who deserve to get their computers replaced."

"This settlement is providing class members with repairs and replacement computers, and thousands have already submitted claims," Westerman said in the statement. "When it comes to the replacement computers, we hired an independent expert who confirmed that we were adhering to the terms of the settlement. [Frank's] claims to the contrary reveal an anti-consumer agenda aimed at stopping the settlement from proceeding."
Three obvious points:

1. Millions of HP owners were subject to the settlement; "thousands have already submitted claims." Or, in other words, less than 1% of the class has submitted claims. And that's aside from the fact that "submitting a claim" doesn't indicate approval of the settlement administration, just an understanding that half a loaf is better than none. All of my clients have "submitted claims"; none are happy with the settlement.

2. In case it wasn't clear from my briefs, I fully support "consumers [getting] their computers replaced." One can readily look at my proposed order, and see that I am not trying to "stop[] the settlement from proceeding." There is already an existing court order for the settlement to proceed, and no one has moved to stay that order.

3. I've heard of spin, but it's remarkable that demanding that consumers get what their attorneys promised them in a class action settlement and notice is considered "an anti-consumer agenda." To review: it's the tort reform advocate who has filed papers with the court asking for consumers to get what they were promised; it's the trial lawyers who have announced their intent to file papers with the Court siding with the defendant and alleged wrongdoer insisting that the consumers—their clients—get less than what the Court has already ordered.

Leading tech blog Engadget caught wind of our motion:
Ted Frank of the Center for Class Action Fairness says that NVIDIA has no business passing off cheap laptops, and we think he might have a case -- after all, the judge ordered that NVIDIA provide "a replacement computer of like or similar kind and equal or similar value," and it doesn't take a lawyer to see that the $400 [sic] Compaq Presario CQ56-115DX that the company's offering doesn't come close to compensating owners of faulty machines. We joked that you might be better off selling your old laptop for parts on eBay, and that might not be far from the truth.
So did leading law blog Above the Law.

Update: Court rules for NVIDIA. If you're a class member with questions about the case, and why your attorneys argued against your own recovery, you need to talk to your attorneys at Milberg; I cannot help you.

Kamis, 24 Februari 2011

Motion made in the NVIDIA GPU class action settlement

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Our January 13 post on the NVIDIA GPU settlement, where class members were promised a “replacement HP notebook computer … of similar kind and value as their eligible malfunctioning notebook computer" as part of a settlement, but are instead getting a $330 Compaq CQ56 notebook, has generated several updates and over 100 comments. Though class counsel suggested to me that patience would result in a fix to the settlement, it did not for the vast majority of aggrieved class members, and we ended up losing five weeks. I've started this post now that the court filings have started, and will update as new filings come in. The court granted our motion to expedite the hearing schedule, but expediting means a March 28 hearing. Over 100 HP owners have asked for the opportunity to provide a declaration to the court. One of my clients has a website with more information: fairnvidiasettlement.com.
  • 343. HP Owners' emergency motion to shorten time
  • 344. Frank declaration in support of emergency motion
  • 345. Plaintiffs' status report and response to emergency motion
  • 346. NVIDIA response to emergency motion (Note: NVIDIA says I was not authorized to represent their non-opposition. That's my fault: I incorrectly assumed that when Robert Varian of Orrick e-mailed me to say that there was an "Agreement not to oppose" the motion, that meant there was an agreement not to oppose the motion. Similarly, plaintiffs surprised me when they sat on my proposed schedule for over 24 hours without telling me they changed their minds not to oppose. Live and learn.)
  • 347. Court order scheduling briefing and hearing
  • 348. Motion to enforce settlement
  • 349. Memorandum in support of motion to enforce settlement
  • 349-12. Proposed order
  • 350. Frank declaration in support of motion to enforce settlement
  • 351. Ram/Edelson objectors kibitz on motion
  • 352. Brown class members' response to Ram/Edelson objectors
  • 353. [Transcript ordering relating to objectors' appeal; not relevant to this motion]
  • 354. NVIDIA response to [348] motion
  • 355. Jon Peddie (NVIDIA) declaration
  • 356. Keith Katchor (NVIDIA) declaration
  • 357. Dan Rosenthal (NVIDIA/settlement administrator) declaration
  • 358. Milberg response to [348] motion
  • 358.1. Westerman declaration
  • 358.2. Bagherzadeh declaration
  • 358.4. Laratro declaration
  • 359. Certificate of service
  • 360. Unrelated docket entry regarding procedural step in objector appeal
  • 361. Lichterman (NVIDIA/Orrick) declaration
  • 362. Reply brief in support of motion to enforce settlement
  • 363. Zilles declaration
  • 364. Frank supplemental declaration
  • 365. Vlastone supplemental declaration and report
  • 366. Notice of settling parties' alteration of settlement website
  • 367. NVIDIA response to notice of settling parties' alteration of settlement website
  • 368. Supplemental Bagherzadeh declaration
  • 369. Supplemental Laratro declaration
  • 370. Certificate of service
  • 371. Supplemental Zilles declaration
  • 372. Supplemental Frank declaration
  • 373. Docket entry noting hearing and motion under submission
  • 374. Horton declaration
I have a separate post listing press coverage.

Update, March 4. A reminder: While my motion requests relief for all of the HP class members, I am not your attorney. There are millions of class members (and countless HP owners who aren't class members), and I cannot provide individualized personalized legal advice about each of their computers. Your email or phone call or comment asking for that advice just gums up the works for everybody else. Consult your own lawyer for legal questions, or ask around at one of several message boards of HP computer owners for technical questions.

Update: Court rules for NVIDIA. If you're a class member with questions about the case, and why your attorneys argued against your own recovery, you need to talk to your attorneys at Milberg; I cannot help you.

Selasa, 22 Februari 2011

The return of the $0 Costco fuel settlement

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You will recall that a class action is pending in Kansas over gasoline retailers' failure to disclose the laws of physics to customers, i.e., gasoline, like all other liquids, expands in higher temperatures. Since a "gallon" is a measure of volume rather than power, someone buying gasoline when it's warm is getting less mileage than someone who buys the same volume of gasoline when it's cool. To some extent, the retailers are being hoist by their own petard, because they pulled the same class action nonsense on wholesalers, but it's still socially wasteful litigation that benefits no one but the lawyers; when I argued at a fairness hearing in Kansas City last April, I had several dozen witnesses, likely each billing an average of over $400/hour. Costco decided to get the uncertainty off of its books, and agreed to pay the lawyers to go away. But the class members, the ones putatively injured by Costco's conduct, got nothing. The plaintiffs had the chutzpah to claim that Costco's agreement to "temperature-adjust" their fuel sales was a benefit to consumers, but that's clearly not so. If Costco's average "gallon" happens to increase in size a cubic inch or two, that doesn't mean that consumers are getting free gas any more than it would mean that consumers would get free eggs if the government suddenly mandated that a "dozen" was now equal to eighteen.

The court threw out the settlement on a technicality, and the parties are now back with an amended settlement that fixes the technicality, but still doesn't do anything for the class. So my clients renewed their objection to the settlement. Last time around, we challenged the quack economic report that plaintiffs submitted that claimed changing the size of a gallon would magically result in consumers getting tens of millions of dollars of free gasoline; the other side protested that I was just a mere lawyer who wasn't qualified to use big words like "cross-subsidization." Over the last few months, I've discussed this case with several economists, many of whom fell over laughing as I described the testimony of Dr. Andrew Safir; the distinguished Dr. David Henderson was kind enough to charge us a reduced rate to provide a simple rebuttal on short notice this time around.

When is injunctive relief a benefit to the class? So many plaintiffs' lawyers seem confused about this issue: they forget that they represent clients, and the injunctive relief needs to benefit their clients if one is to count it towards determining the fairness of the settlement. Few courts consider the issue because few objectors raise it, but the ones that do consider it consistently distinguish between retrospective injunctive relief (say, a recall that fixes an automobile or a computer) and prospective injunctive relief (a company agrees to change its business practices). Even when there is consumer fraud, prospective injunctive relief doesn't benefit consumers unless they engage in new business with the vendor. And even then, the consumers will not benefit if the vendor simply raises its prices to account for the new costs in the change in business practices.

Sabtu, 12 Februari 2011

Merger lawsuits

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I'm quoted in a Reuters story about merger lawsuits and their quick settlements:
Settlements often come fast, and plaintiffs' lawyers share in the spoils -- $500,000 in a typical lawsuit, Advisen said.

"The real problem, I think, is in cases where lawyers win a few extra sentences of disclosure and walk away with $1 million of fees," said Ted Frank, who founded the Center for Class Action Fairness and often challenges proposed
Settlements.
Lawyers and researchers say the proliferation of lawsuits reflects increased competition among firms.

"There are some bottom feeders on the plaintiffs' side," said Adam Savett, a director at the Claims Compensation Bureau LLC, which monitors Class Action claims for investors. "Their modus operandi is throw up a lot of stuff on the wall and try to get a quick Settlements, and move on."

REARRANGING DECK CHAIRS

Typically, an individual or institutional investor sues a target company or its directors, seeking Class Action status and alleging a breach of fiduciary duty to shareholders.

...

"Defense lawyers benefit from this game," Travis Laster, a vice chancellor in Delaware Chancery Court, said at a December hearing. "They get to bill hours without any meaningful reputational risk from a loss. They then get to get a cheap settlement for their client. Disclosures are cheap."

Frank, of the Center for Class Action Fairness, said it was up to judges to decide if these Settlements have much benefit.

"Judges should consider whether these provisions actually create value for shareholders," he said, "or amount to a rearranging of the deck chairs to create the illusion of value to justify attorneys' fees."

Kamis, 13 Januari 2011

NVIDIA GPU Settlement - HP replacement computers

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Update: Court rules for NVIDIA. If you're a class member with questions about the case, and why your attorneys argued against your own recovery, you need to talk to your attorneys at Milberg; I cannot help you. Please do not contact me about this case asking how you can get your computer fixed.

In the NVIDIA GPU settlement, owners of HP notebook computers affected by a defective chip had to be thrilled: the settlement notice promised them that, with proper documentation, they would receive a “replacement HP notebook computer … of similar kind and value as their eligible malfunctioning notebook computer.” But after the settlement was approved, they learned,much to their displeasure, that their class counsel, Milberg LLP, negotiated that they could only receive an entry-level Compaq CQ50, often worth over a thousand dollars less than the computer they would be replacing. Let's hope this is an oversight, rather than a deliberate attempt to deceive the class and the court: I senta letter to the settling parties' counsel today asking for clarification.

Update, January 16: I'm getting dozens of emails from class members because of a couple of posts on HP-related message boards from class members suggesting that I be lobbied. Please understand that I am not in a position of power to unilaterally do anything about the settlement. I am an attorney who represents consumers pro bono in similar situations where attorneys try to rip off class members in settlements. I am certainly interested in this case based on what I've heard, and I am investigating at the request of a class member. I agree that the current settlement claims process is inconsistent with the notice given the class; you don't need to try to convince me of that fact. If the settling parties don't do anything to fix the problem, and can't satisfy me that they have a legal basis to do what they did, and research determines that legal intervention has a chance of fixing the matter, I'll write back a few of you to see if you can generate a signed declaration for the court proceedings to help the court understand the extent of the breach of the class counsel's promise to the class. But I amnot your attorney unless you and I agree to a signed retention agreement that I am your attorney. The fact that I wrote a letter to the class counsel about this question does not mean that you should not investigate the possibility of legal representation for yourself.

Update, January 18, 4:15 PM Eastern: I have not received anything in writing as of this afternoon. I called the Milberg firm, and they claim that the information on the website is "premature" and not the "final" version of the settlement. This is mysterious, given that Milberg has control over the website. Worse, Milberg refuses to provide anything in writing that the website will be updated with different information, so Milberg can deny that they told me this later. Still, there is a claim that there will be a "meeting" tonight to discuss modifications to the claims process. One would hope that any such modifications includes corrective notice to the class and an extended claims process to make up for the inaccurate information previously given. I will check the settlement website next week. The low level person I spoke to did not seem to understand the difference between an objection to a judge's decision and asking Milberg to comply with the judge's order, and kept asking me if I thought the judge had made a mistake. Class members thinking of writing me should instead politely call Milberg at 213.617.1200 and get an answer about whether and when the Milberg NVIDIA settlement website is up to date, and why inaccurate or "premature" information has been posted to the website. If Milberg tells you something different than they told me, leave a comment here.

Update, January 26, 7 PM Eastern: I finally spoke with Mr. Westerman at Milberg. He's asked me for more time to negotiate with NVIDIA to work through some of these issues. Depending on whether the settlement administration procedure changes, at the end of the day, we may or may not agree whether the parties are in compliance with what the settlement and the class notice promised, but I'm willing to give him the chance: my preference is for the parties to make this right without me getting involved by filing papers with the court. If I sign up clients, I will not be signing up dozens of clients: I will be working with two to five people who have very clear-cut cases where the CQ50 or the Asus EEE T101MT-EU17-BK is self-evidently to a layperson not a “replacement HP notebook computer … of similar kind and value as their eligible malfunctioning notebook computer” and ask for classwide relief; I may contact a few other class members and ask for them to provide declarations supporting the argument. That said, you should not view my participation in the case as a reason not to retain a lawyer on your own: I am not your lawyer unless we have a signed retention agreement. While I am happy to receive spec sheets describing the model of your computer and comparing it to the replacement computer, please do not contact me asking me for updates or for personalized legal advice: I will update this blog post as new information comes in; if you've read the blog post, you know everything I know and can tell you.

Update, February 1: After another conversation with Mr. Westerman today, I will reevaluate the situation on February 9.


Update, February 10. The settlement website has been finally modified: claimants deemed ineligible between January 10 and January 22 are encouraged to resubmit claims; the replacement computer remedy for HP notebook computers will be a Compaq Presario CQ56 computer, rather than a CQ50. That still doesn't address the tablet problem; leave your comments on your thoughts about the CQ56. Mr. Westerman has asked me to refrain from action this week (and, frankly, the press of other commitments in existing cases would mean that I would need to do that anyway). Please remember that I am not your attorney and cannot provide individualized advice on how to respond to the settlement, and please do not rely upon me as your only recourse; there may be other attorneys willing to look into this. In particular, I encourage you to contact the consumer division of your state attorney general's office (and city/county office as well, if you have one). I will check back in with Mr. Westerman February 15.




Update, February 16 - The settlement has been modified, though in ways that do not solve the grievances earlier discussed for most class members. A number of class members have formally retained me; we'll be filing some sort of papers with the court before the end of the month asking for the court to intervene to enforce the promises made to the class, though I'm still doing research as to what form those papers will take, and whether we're proceeding against just NVIDIA or both NVIDIA and class counsel. (NVIDIA counsel never responded to my letter.) I did not speak to Mr. Westerman on February 15, and he's in court today, but I'll try to reach him tomorrow to determine class counsel's position on our petition to the court, and whether they'll cooperate with us or oppose us. (I would view any opposition as a breach of fiduciary duty to the class.) One thing I know we'll want is declarations in support of our motion. If you're interested in submitting such a declaration (under oath, under penalty of perjury) to the court expressing your thoughts on why the computers are not of like kind and value, leave information in this thread with a way to contact you, and someone may be in touch with you next week (though we probably will not have the chance to get declarations from everyone who offers to issue one). Please continue to note: (1) if we do not have a retainer agreement, I am not your attorney in this case; (2) I cannot offer individualized advice about how to respond to the settlement; and (3) if you do submit a declaration to the court, you do so voluntarily to help the cause of your fellow HP owners: it does not make me your attorney.

Update, February 22 - One of my clients has established the website http://fairnvidiasettlement.com/ to summarize what's happening and collect potential declarations from other class members. While he is doing the declaration data collection on my behalf, he is not speaking for me, but the site is a useful compendium of information. We may end up with dozens of declarations, but I am not going to want to overwhelm the court, and will likely only use six to twelve of them. I am currently negotiating a briefing schedule with the settling parties in the hopes of getting a hearing date with the court before the claims period expires; without court approval for expedition, there wouldn't be a hearing before April.

Rabu, 05 Januari 2011

Oral argument scheduled in the Bluetooth case

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The Ninth Circuit has scheduled oral argument in the Bluetooth case for Monday, February 7, 9 a.m., in the federal courthouse in Pasadena. (Five other cases are on the calendar, so I probably won't get my fifteen minutes until after 10 a.m.) I'm undefeated (well, ok, 1-0) in that courthouse.

The first time I ever visited the Pasadena courthouse was in the fall of 1992, when a memorable young law clerk in Alex Kozinski's chambers named Eugene Volokh quizzed me about the issue of toughening evidentiary standards for expert witnesses in what I think was the first law-clerk interview of the season for 1994-95. (That was the first attempt of the judiciary and the legal academy to create a cartel for the hiring of law clerks, and I unwittingly caused it to break down when I sent my resume out without consulting with the law school, and Judge Kozinski started calling people in for interviews, causing a chain reaction that unraveled everyone's plans.) Eugene, of course, went on to bigger and better things.

If you're in the DC area, and you're interested in putting in a few hours reading briefs and throwing questions at me on a moot court later this month, please drop me an email. (Friends from Kirkland & Ellis: sorry, you're adverse to me in this case, so you're not invited.)
 

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