One of the more alarming recent developments in the class-action arena is the increase in actions by state attorneys general that mirror private class actions. These state AG actions aren’t like the typical enforcement action, in which the government pursues claims for civil penalties that are distinct from the relief sought in the private class action. Instead, these are copycat actions in every sense of the word. The state AG seeks restitution or disgorgement that is equivalent to the remedies requested in the private class action. And increasingly, the state AG is handing over the reins entirely to class-action plaintiffs’
Continue Reading You’ve Settled the Class Action—Can the State AG Demand Another Payout?

For the second time in two weeks, the Supreme Court’s denial of certiorari in a class action case—this time, Martin v. Blessing—has garnered significant attention because of a separate statement by a Justice concerning the denial of review.

In Martin, the petitioner challenged the policy of one federal judge in the Southern District of New York to condition appointment of class counsel on the agreement by that counsel to “make every effort to assign * * * this matter [to] at least one minority lawyer and one woman lawyer with requisite experience.” Specifically, in Martin—an antitrust class action
Continue Reading Justice Alito Addresses A Federal District Judge’s Policy Of Requiring Race- and Gender-Conscious Selection of Class Counsel

It’s always worth a look when a federal judge steps down from Olympus the bench to act as an ordinary mortal litigant.  Class action aficionados in particular should not  miss Alison Frankel’s report for Reuters, discussing a remarkable objection by Chief Judge Kozinksi and his wife to approval of a class settlement in a case in which he happens to be a class member.
Continue Reading Ninth Circuit Chief Judge Alex Kozinski Objects to Class Settlement

The federal courts of appeals continue to scrutinize class-action settlements closely when the direct benefits to class members are overshadowed by the attorneys’ fees that flow to plaintiffs’ counsel. The most recent example is Greenberg v. Procter & Gamble Co. (pdf), No. 11-4156 (6th Cir. Aug. 2, 2013). In its decision, the Sixth Circuit provided guidance to practitioners regarding the fee awards and incentive payments to named plaintiffs.
Continue Reading Sixth Circuit Rejects Class Settlement Over Excessive Payments to Class Counsel and Named Plaintiffs

Social media can be a game-changer for class actions.

I was recently reminded of this when reading news coverage of a proposed class settlement of claims involving chicken that a fast food restaurant allegedly had improperly described as halal. A Michigan lawyer, who wasn’t involved in the case, had taken to Facebook to complain that the settlement would distribute the $700,000 class fund to plaintiff’s counsel and two charities rather than to class members. (We’ve previously blogged about the emerging backlash against settlements with large cy pres components.)

Plaintiff’s counsel, apparently fearing that the Facebook posting would stir up objectors,
Continue Reading Will Your Class Action Go Viral?

A new paper by Fordham law professor Howard Erichson, entitled “The Problem with Settlement Class Actions”—and a blog post about it by Andrew Trask—caught my eye.

The paper uses two recent class settlements, In re AIG and Sullivan v. DB Investments, Inc., as the springboard to discuss settlement class actions. Erichson argues that the problem with class settlements isn’t that the would-be class counsel will collude with defendants to reach a deal that sells out the rights of absent class members. Instead, he says that plaintiffs’ lawyers simply lack sufficient leverage to negotiate a fair deal because
Continue Reading Is There A Problem With Settlement Class Actions?

It’s rare for a court to appoint its own expert in a class action. But Judge Gleeson of the Eastern District of New York is poised to do precisely that in order to help him decide whether to grant final approval to the $7.25 billion proposed class settlement of antitrust claims by retailers challenging Visa’s and MasterCard’s interchange fees. Some observers say that the proposed class settlement in the case—In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, No. 1:05-md-01720—would be the largest class settlement of private antitrust claims in U.S. history.

In November,
Continue Reading Judge Mulls Appointment of Own Expert to Evaluate What Could Be the Largest-Ever Class Settlement of Private Antitrust Claims

We’ve blogged before about federal courts’ increasing reluctance to approve class settlements that involve a significant cy pres component. The Third Circuit’s recent decision in In re Baby Products Litigation (pdf) is the latest example of this trend.

Class counsel often use the distribution of funds to handpicked charities in order to disguise the percentage of the class recovery that’s actually going right into class counsel’s pocket. That may have been what was going on in In re Baby Products Litigation. In that case, class counsel got almost five times as much money ($14 million in fees and expenses)
Continue Reading Third Circuit Rejects Class Settlement Because Class Fund Went to Class Counsel and Cy Pres Rather than Class Members

A recent decision from the Delaware Supreme Court is a reminder that the members of a mandatory class—one in which the class isn’t guaranteed opt-out rights—sometimes may be given the right to opt out in order to pursue their own individual actions.

The decision, In re Celera Corp. Shareholder Litigation (pdf), addressed a class settlement of claims that the directors of Celera Corp. had breached their fiduciary duties in agreeing to a merger with Quest Diagnostics. The settlement promised “therapeutic benefits” to the class of Celera shareholders, such as additional disclosures and changes to the merger agreement that made it
Continue Reading Can Members of a Mandatory Class Action Opt Out?

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