The Sixth Circuit agreed with CCAF that the district court should not have given credit to imaginary and illusory valuations of class relief. The landmark decision acknowledged that the fairness of a class settlement must be analyzed by how it treats class members versus class counsel-a distinction that far too many judges fail to make.
In August 2013, the district court approved the final settlement and adopted some of CCAF’s arguments on injunctive relief, attorneys' fees, and increased the class-member award to $15 from $10, making several million dollars more available for the class by reducing the attorneys’ fees.
Frank's wins include a 9th U.S. Circuit Court of Appeals ruling that tossed a settlement of a case against Bluetooth headset manufacturers who allegedly didn't give prominent enough warnings about hearing loss. Consumers would have gotten no cash, and plaintiffs' attorneys would have gotten $850,000.
He has already picked up some wins, including a significant ruling in August in a class action against Plantronics and the company formerly known as Motorola Inc. concerning Bluetooth headsets. The Ninth Circuit rebuffed a deal that would have paid no money to class members but would have given $100,000 to four nonprofit groups dedicated to hearing loss and $850,000 to the plaintiffs’ lawyers. The lawyers are now back in the lower court, trying to hash out a new deal.
Ted Frank, founder of the Center for Class Action Fairness, had objected to the Bluetooth settlement and argued the successful appeal. The law is clear that the Dry Max settlement should also be rejected, and his organization will appeal if it isn’t, he said.
The decision provides yet more evidence that the real problem with these settlements lies with the judges who approve them. Class-action lawyers are peddling absolution to their targets: In exchange for a settlement that includes lucrative fees, they can obtain a court decree ending the possibility of any further litigation over the same claims.
The objectors then appealed to the 9th Circuit, which reversed and vacated the settlement."We agree that the disparity between the value of the class recovery and class counsel's compensation raises at least an inference of unfairness, and that the current record does not adequately dispel the possibility that class counsel bargained away a benefit to the class in exchange for their own interests," Judge Michael Daly Hawkins wrote for the unanimous three-judge panel sitting in Pasadena.
"We got a very good ruling about the importance of these issues," Frank said. "There are a lot of settlements structured like this, and we got a very firm ruling from the Ninth Circuit that this is a problem."
We are mystified how the plaintiffs intend to justify the settlement; perhaps they will contend that the $10 discount "certificates" issued to the class are not coupons. The attorneys and class representatives are asking for $1.46 million without even an attempt to predict the redemption rate of these certificates.
The Center’s clients objected to this settlement over car rental fees wherein plaintiffs’ lawyers sought $1.5M for themselves but only coupons for the class; the court rejected the settlement.
