Academics don’t often have the opportunity to publish an article opining on the correctness of a pending appeal, but our appeal in EasySaver Rewards Litigation, challenging a settlement that pays attorneys nearly $9 million and the class only $225,000 and nearly worthless coupons, is one such case.
CCAF recently objected to the proposed class action settlement, class certification, and class attorneys' fees request in Kumar v. Salov North America Corp. on behalf of class member Ted Frank. The plaintiffs in this case alleged the defendant deceptively marketed their Filippo Berio brand olive oil as “Imported from Italy,” when many of the olives used to make the oil came from other countries.
Imagine a family dinner table where Dad is deciding how large a piece of pie each of his three children get. All three children are good and deserving. But Dad first takes a generous slice for himself—more than a third of the pie—and then gives the rest to his favorite child. The rest of the kids get nothing.
“In a class action settlement with Citigroup shareholders, lawyers tried to direct a leftover balance from the settlement fund to advocacy groups that clash with the interests of class members,” said Ted Frank. “But now, after CEI objected to that unfair outcome, class attorneys have discovered a way to send those remaining settlement dollars to class members.”
CCAF objected Thursday to an unfair settlement that leaves class members with virtually nothing, their attorneys with over half of the settlement fund - $1.35 million - and most remaining funds to an unrelated organization.
A Massachusetts federal judge credits the Center for Class Action Fairness with helping him "evolve" his thinking on a complicated and controversial class action case.
“It’s ironic, because any corporation caught telling investors something this misleading would surely face litigation from Labaton and Thornton,” Frank said after the hearing.
“The settlement was unfair because the attorneys' fees award was grossly disproportionate to the relief actually delivered to the class, Holyoak said. "Before the Center for Class Action Fairness objected, the plaintiffs’ attorneys were to receive $2.11 million, while the class members would have received $412,815 in coupons.”
“The judge is anticipating a real investigatory role for the special master. There’s $2 million in the pot – there’s no incentive to do a brief, perfunctory investigation.”
The too-common scam goes like this. Trial lawyers bring a class action against a business, alleging unfair charges or false advertising and seeking to recover a few dollars each for thousands or millions of its customers. It’s okay if the case is weak, because the defendant still finds it cheaper to settle the lawsuit for a small percentage of the total losses alleged than to fight on.
