Class Action Settlements

Subscribe to Class Action Settlements

As readers of the blog by now know, I’m always on the lookout for examples of class-action settlements that pay off the lawyers while providing little or no benefit to the members of the putative class. The most recent example is Galloway v. Kansas City Landsmen, LLC (pdf), in which Judge Greg Kays of the U.S. District Court for the Western District of Missouri rejected a coupon-only settlement.

The claim in the case is that the defendants, a number of Budget rental car outlets, violated the Fair and Accurate Credit Transactions Act (FACTA) by failing to truncate credit card numbers and expiration dates on electronically printed receipts. The parties entered into a “claims made” settlement under which class members who submitted claims would receive coupons for use in future car rentals. The coupons would have a 120-day expiration date, be subject to blackout periods, and could not be combined with other coupons, discounts, or promotions. Meanwhile, the defendant agreed to pay $175,000 in attorneys’ fees to class counsel.

Judge Kays concluded that “few class members will likely file claims because the benefit of doing so is not worth the effort.” That was so for two reasons.Continue Reading Galloway v. Kansas City Landsmen, LLC: Court Rejects Coupon Settlement After Finding That Few Class Members Would Be Likely To File A Claim

Past posts have noted that federal courts have become increasingly skeptical of class-action settlements that contain a cy pres component.  Another recent example is In re Groupon, Inc., Marketing & Sales Practices Litigation (S.D. Cal.).  The plaintiffs in this case alleged that Groupon violated various federal and state consumer-protection statutes by marketing vouchers with allegedly improper restrictions on usage.  In settling the case, Groupon agreed to create a settlement fund of $8.5 million, of which $2.125 million would be paid to class counsel as attorneys’ fees.  The remaining funds would be used to provide settlement vouchers (good for 130 days)…
Continue Reading In re Groupon, Inc., Marketing & Sales Practices Litigation: Judicial Skepticism Of Cy Pres Dooms Another Settlement

Antitrust class actions differ in a number of respects from the ordinary run of consumer class actions. Perhaps most notably, they frequently involve classes made up, not of individual consumers, but of highly sophisticated businesses with potentially enormous sums of money on the line. These class members sometimes take an active role in the litigation, using innovative tactics to advance their individual interests within the broader context of the class action.

It doesn’t always work. In Precision Associates, Inc. v. Panalpina World Transport (pdf), a class action under Section 1 of the Sherman Act, several large class members intervened and…
Continue Reading Can Class Members Opt Out of a Class Settlement But Not the Action? No, Says E.D.N.Y.

In recent years, courts generally have cast a more skeptical eye on fee requests made by plaintiffs’ counsel who have negotiated a class action settlement. In the past, courts often rubberstamped outlandish fee requests. In fact, settlements awarding class counsel “excessive attorneys’ fees with little or no recovery for the class members themselves” were the very first “abuse” identified in the findings accompanying the Class Action Fairness Act (pdf).

But even today, courts do not always slash the fees requested by counsel for the settlement class. In one recent wage-and-hour class action, Lemus v. H&R Block Enterprises LLC (pdf) (N.D.
Continue Reading What Are Courts Doing With Fee Requests Made in Connection with Class Settlements?

On September 26, California Superior Court Judge Kenneth Freeman rejected a proposed class settlement of allegations that Ticketmaster had misled ticket buyers by implying that fully disclosed charges for an Order Processing Fee and delivery by U.P.S. represented its actual costs.

Before commenting on the grounds for rejecting the settlement, though, I can’t resist observing that this is still another illustration of a lawyer-driven class action that attacks a practice that causes no actual harm to consumers. While at first blush it might appear unseemly to charge delivery fees that exceed the amount actually charged by UPS, it is a…
Continue Reading Schlesinger v. Ticketmaster: California Trial Court Rejects “Pure” Coupon Settlement As Well As “Clear Sailing” Agreement To Pay Class Counsel $15 Million In Attorneys’ Fees

The Supreme Court will be hearing oral arguments in Comcast Corp. v. Behrend, No. 11-864, on November 5. In a nutshell, the issue is whether a federal district court must resolve challenges to an expert witness’s testimony concerning whether damages can be awarded on a class-wide basis before deciding whether to certify a class. Please see our previous report for more information about the case.

Soon after certiorari was granted, the plaintiffs sought to derail Supreme Court review, arguing that the parties had reached an enforceable settlement before the Supreme Court had granted certiorari by signing a “terms…
Continue Reading Comcast v. Behrend Remains Live: District Court Thwarts Plaintiffs’ Effort To Moot Case By Invoking Unconsummated Settlement

There should be little wonder why many plaintiffs’ lawyers hate CAFA: By and large, federal district courts take their obligation under Federal Rule of Civil Procedure 23(e) to police class settlements seriously, which generally means lower fee awards for plaintiffs’ lawyers. The most recent example is Ko v. Natura Pet Products, Inc. (N.D. Cal. Sept. 10, 2012).

Ko is a putative nationwide class action alleging that a pet-food maker misrepresented that the ingredients it uses are fit for human consumption. The parties eventually reached a settlement under which the defendant would alter its advertising and pay the class…
Continue Reading Ko v. Natura Pet Prods., Inc.: District Court Approves Settlement, But Slashes Attorneys’ Fees And Incentive Award

The Second Circuit’s recent decision in Hecht v. United Collection Bureau, Inc., No. 11-1327 (2d Cir. Aug. 17, 2012), should sound alarm bells for any business that attempts to settle a class action.  The takeaway from the decision is to make sure that  notice of the settlement to absent class members is adequate. Under some circumstances, a single notice in the USA Today won’t cut it. And if it doesn’t, the release in the settlement won’t be worth the paper it’s printed on, and other plaintiffs will be free to bring the exact same class action against you.
Continue Reading Second Circuit: Insufficient Notice of Class Action Settlement Means That Class Members Can Bring Copycat Class Actions

As part of our ongoing series covering class actions in which the only real beneficiaries are the plaintiffs’ lawyers, here is the Missouri Court of Appeals’ decision in Berry v. Volkswagen Group of America, Inc. (pdf), No. WD73974 (Mo. Ct. App. June 12, 2012).

The plaintiff alleged a defect in the window regulator of certain vehicles manufactured by Volkswagen.  Under the settlement, the Missouri class members were eligible for payments of $75, plus repairs of the alleged defect (or reimbursement for past repairs).  But only 177 members of the 22,304-member class—0.79 percent!—actually submitted claims.  Thus, the total amount of…
Continue Reading Berry: Another Class Settlement Benefiting Class Counsel But Not Class Members Approved

One of the keys to our victory in AT&T Mobility v. Concepcion (the Supreme Court case holding that courts can’t refuse to enforce arbitration provisions on the ground that they preclude class actions) was our ability to pull back the curtain on the consumer class action racket and show that often the only ones who benefit from class actions are the lawyers.  Citing evidence we submitted  showing that in many class actions only a minuscule number of consumers bother to file claims and those that do typically receive only pennies on the dollar, U.S. District Court Judge Dana Sabraw found…
Continue Reading Federal District Court: Attorneys Get Paid Even Though No Class Members Submitted Claims