class action take rates

On November 1, 2018, the U.S. District Court for the Northern District of California published updated procedural guidance for class action settlements (the “Guidance”). While the court made changes to align its rules with the December 1, 2018 amendments to Federal Rule of Civil Procedure 23, the court also sought to provide better information for parties and courts in negotiating and approving settlements. It became the first federal district court to require parties to class action settlements to publicly disclose a broad range of detailed settlement information. The following is an overview of key changes.
Continue Reading Northern District of California adopts guidance for class action settlements

iStock_000027020861_DoubleWe’ve often argued that when the principal rationale for approving a low-value class settlement is that the claims are weak, that is a signal that the case should not have been filed as a class action in the first place. The Second Circuit recently reached that exact conclusion when considering a proposed class settlement in a Fair Debt Collection Practices Act (FDCPA) case, holding that the putative class couldn’t be certified and that the FDCPA claims should be dismissed.
Continue Reading Second Circuit holds that class action seeking “meaningless” relief shouldn’t be certified

Proponents of class actions often contend that these lawsuits deliver substantial benefits to class members. But while media coverage of class actions often suggests that class members are receiving millions of dollars in relief, most practitioners in the class action arena know that the reality is quite different. That said, to date there has been little empirical information on the practical results of class actions.

My colleagues and I have sought to change that. At the request of the U.S. Chamber’s Institute for Legal Reform, a team of Mayer Brown lawyers (including Andy Pincus and me) have produced a study detailing how consumer and employee class actions filed in 2009 actually fared in practice. The bottom line: of the class actions we studied, only a few cases delivered tangible benefits to more than a small fraction of class members.

A copy of the study is available here. It has already received press coverage in Forbes and Reuters’ On the Case blog.Continue Reading New Study Finds That Class Members Rarely Benefit From Class Actions

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

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