That settlement was challenged by the Center for Class Action Fairness, a Washington nonprofit that challenges class-action settlements it views to be unfair. “When attorneys get more than the class is getting, it’s an unfair settlement,” said Ted Frank, the organization’s founder. “The class counsel owes an obligation to its clients to get a good deal for them before it gets paid.”
“We’re very pleased – we’re doing this to play traffic cop and make the law better,” Frank said. “The class attorneys have a fiduciary responsibility to their clients, but a lot of attorneys prefer to just negotiate settlements where they get all the money and their clients get imaginary relief.” Far too often, Frank said, judges rubber stamp such settlements.
On Friday (with generous pro bono work from BakerHostetler) we filed our first cert petition, and the first substantive request that the Supreme Court clarify the law of cy pres.
On Friday, Frank and lawyers from Baker Hostetler filed a petition for a writ of certiorari at the U.S. Supreme Court, asking the justices to review the 9th Circuit Court of Appeals’ approval of a $9.5 million settlement of class action allegations that Facebook’s now-dismantled “Beacon” program violated users’ privacy by revealing their online purchases.
One hopes a class member aggrieved by this lawyers-first settlement will contact a non-profit attorney willing to help them object to a settlement with such an unfair and illegal fee request.
A 2-1 decision of the Ninth Circuit agreed with us that the district court incorrectly applied the coupon-valuation provision of the Class Action Fairness Act in the HP Inkjet case.
Instead, the lower court "estimated the 'ultimate value' of the settlement to the class at roughly $1.5 million," Smith wrote, noting that it recognized "that it would be improper to award fees that outstrip the calculated class benefit."
CCAF filed an opening brief in October; after many delays in the briefing schedule, we filed our reply brief in April. Details at Point of Law.
The biggest target of Frank’s ire, however, are settlements that award what he sees as excessive legal fees to the plaintiffs attorneys. He’s currently challenging the proposed $590 million settlement of a class action brought in 2008 on behalf of Citigroup Inc. shareholders who accused the financial giant of misleading investors about the risks of its derivative business.
As a result of our objection in the Bayer class action settlement, the parties modified the settlement to increase direct payments to the class by over $5.8 million, over 25 times as much as the class would have received in the cy pres-heavy settlement had we not objected.
