class actions settlements

The Center for Class Action Fairness, founded in 2009, is a not-for-profit program that provides pro bono representation to consumers and shareholders aggrieved by class action attorneys who negotiate settlements that benefit themselves at the expense of their putative clients. It has won millions of dollars for class members over the last two years.

CCAF, a non-profit project unaffiliated with and unsupported by any corporate funding, does not lobby. But the LA Daily Journal says that they don't need to run a correction for a sentence beginning with the phrase "Corporate lobbyists and advocacy groups such as CCAF" because, according to them, they're not claiming that CCAF is a lobbyist. It seems to me that the only people who could make that sort of sophistic argument are convicted child molesters and editors such as David Houston of the Los Angeles Daily Journal.

The LA Daily Journal op-ed critical of CCAF was written by a Kabateck Brown Kellner attorney; at no point does it disclose that we've objected to four of Kabateck's settlements (all of which paid substantially more to the attorneys than the class), resulting in one settlement rejection and another ruling reducing their fee request by nearly a million dollars, with two other cases still pending.

The Center for Class Action Fairness LLC objected today to a valueless class action settlement: the objection, filed in the Southern District of New York on behalf of a class member, underscores that the proposed Sirius XM Radio settlement would provide valueless injunctive relief to the class but $13 million to class attorneys.
"Certainly, parties to a class action can agree to settle a case for $13 million," said Ted Frank, the lead attorney on the objection and the founder of CCAF. "But if they do, it is inherently unfair and unreasonable for the attorneys to extract 100% of the settlement benefit for themselves. Class actions should be prosecuted on behalf of the class members, not self-serving class counsel."

The settlement of the antitrust class action against Sirius XM requires only that the defendant agree to not raise prices for five months. But this is an entirely valueless promise, given that Sirius XM, facing admittedly heavy competition from Internet music services and MP3 players, has been lowering prices and engaging in deep discounting to keep customers. Yet class counsel (including the Milberg law firm) implausibly claims that the settlement is worth $180 million to the class.

The CCAF objection also targets Judge Harold Baer's class certification order. For several years, Judge Baer has controversially required class counsel to meet racial quotas as a condition of appointment. CCAF has requested that Judge Baer vacate that part of his class certification order as unconstitutional.

The case is Blessing v. Sirius XM Radio Inc., No. 09-cv-10035 (S.D.N.Y.).

The Center for Class Action Fairness, founded in 2009, is a not-for-profit program that provides pro bono representation to consumers and shareholders aggrieved by class action attorneys who negotiate settlements that benefit themselves at the expense of their putative clients. It has won millions of dollars for class members over the last two years.

The growth of the Center for Class Action Fairness LLC can be shown just by the breadth of its activities on Monday, June 20:

• There were twelve objectors at the Cobell v. Salazar fairness hearing, and I was the only attorney representing an objector. Unfortunately, the district court overruled our objections, and approved the $3.4 billion settlement. There was some good news: if one takes the plaintiffs' request for $224 million in a fee and expense award seriously, rather than as a tactical maneuver to give the judge room to award high fees while appearing to cut the request, then the judge's decision to award $99 million in fees (and reject another $11 million in expense requests by the class representatives) means that there will be another $136 million available for class members when and if distribution takes place.
• Dan Greenberg was at the fairness hearing in the Central District of California for Stetson v. West Publishing which drew some extra blogosphere attention because it involved BarBri expenses for many many recent law-school graduates. The court, from the bench, rejected the coupon settlement, which entailed over $1.8 million in attorney-fee requests. It's the second win from the bench in a row for Dan; we're still waiting for the official opinion in the coupon settlement rejection in Sobel v. Hertz (D. Nev.).
• And Adam Schulman, our local counsel Chris Arfaa, and I helped file Dan's reply brief in the McDonough v. Toys "R" Us (E.D. Pa.) baby products class action settlement, where the attorneys are requesting about $14 million though the class is likely to receive less than $20 million. The fairness hearing will be July 6 in Philadelphia.

The Center for Class Action Fairness represents class members pro bono when they are treated unfairly by class action settlements. Please contact me if you get notice of a class action settlement that you are concerned might be unfair, and I will evaluate it for free.

In 2009, the state of Oregon complained to Kellogg that they said Rice Krispies and Cocoa Krispies were fortified with antioxidants, and Kellogg changed the description of the boxes of the cereal—though the cereal is fortified with antioxidants. Almost immediately, several plaintiffs' lawyers filed lawsuits on the basis of Kellogg's announcement, and after several amended complaints, Kellogg's agreed to a nuisance settlement of $2.5 million. Class members can request $5 refunds for up to three boxes of cereal purchased between June 1, 2009 and March 1, 2010, an amount that will be reduced pro rata if the settlement money runs out, though one might expect that there will only be a few thousand claims. Though the class is nationwide, Kellogg is giving another $2.5 million (retail value, so it's really costing them half as much) in food to two local charities in Santa Monica and Atlanta. The class representatives will seek $5000 each.
How much are the attorneys asking for? I don't know: it's not in the notice or settlement agreement, but it comes out of the $2.5 million settlement fund. (The attorneys will announce on July 18; objections must be received by July 25—a Monday. This abbreviated and substandard notice is arguably a violation of Rule 23(h) and Ninth Circuit procedure in In re Mercury Securities Litig.. The notice is otherwise substandard, as there are several hoops one must jump through to object that are not listed in the notice.) Anything left over after the class is paid will go to the two local charities and a trial-lawyer group.

Details at the Point of Law blog. I'm sorry, as well as angry.

Update: I won't be filing an appeal, though my clients are of course free to find an attorney willing to do that for them.

I won't personally be filing a malpractice action, but I'm happy to consult with an attorney who is considering doing so if a class member finds one.

Update 2: Please don't email me asking for individual legal advice about what you can or should do with your computer, or what other legal options you may pursue. I don't have the resources to provide free advice to a million different class members beyond my five clients. You'll need to consult with your own attorney. I'm rooting for someone to bring a malpractice suit, but I'm not advising you one way or the other on that, either as a class action or as a small-claims case against Milberg.

I will note that I believe that, because NVIDIA failed to provide a computer of "like or similar kind" as the settlement notice promised, and because Judge Ware failed to enforce the settlement as written and noticed to the class (his opinion mistakenly says that the CQ-56 was "designated in the settlement"), the class notice is constitutionally invalid and cannot be considered to bind absent class members besides my five clients who got a ruling from Judge Ware. Someone who sues HP and/or NVIDIA in small-claims court and persuades the judge that the class notice does not bind them could possibly recover cash in small-claims court. Of course, HP and NVIDIA will argue that the notice was constitutionally valid and that the small-claims court does not have jurisdiction, so I am not giving you legal advice to pursue your claim in small-claims court; you could win, you could lose. Check with a lawyer.

In these two California class action settlements over debt-collection practices, one strongly suspects the attorneys are trying to rip off their clients: notwithstanding the clear requirement of Rule 23(h) and In re Mercury Interactive Securities Lit., notice is going to the class without any disclosure of the requested attorneys' fees. But in Calloway v. Cash America Net of California LLC, No. 09-CV-4858, 2011 WL 1467356 (N.D. Cal. Apr. 12, 2011), the Court ruled that the fact that the attorneys' fees were being paid separately from a common fund meant that the class would not be affected by the fee award. This is economic nonsense: the fact that a denial of a fee request will revert to the defendant instead of the plaintiff is reason to give a settlement more rather than less scrutiny. And, indeed, the settlements in these cases pay a grand total of $212,500 to class members (compared to $6,000 for the two class representatives), a tiny fraction of the statutory damages available. So how can a court say that attorneys who settle for pennies on the dollar for their clients but reserve the right for a full fee award by insisting an admission from the defendant that the plaintiffs are "prevailing parties" aren't potentially depriving the class? Imagine a hypothetical settlement where every class member gets a penny but the attorneys ask for a multiplied lodestar and get clear sailing: by Judge Seeborg's reasoning, class members have no complaint because the fees aren't coming from the class's pockets. But class members do have a complaint when attorneys settle class actions with self-serving agreements that benefit the attorneys at the expense of the class: that prevailing-party clause surely comes at a cost to class recovery.

If there's a member of one of these two classes who would like to timely object to this potential rip-off, the Center would be happy to represent them pro bono to vindicate the protections of Rule 23(h) in all class settlements. The second case is Gittin v. KCI USA, Inc., No. C-09-5843 RS (N.D. Cal.).