Docket number: 17-md-2800-TWT (N.D. Ga.)
The Center for Class Action Fairness (CCAF) objected on behalf of two class members to the Equifax data breach class action settlement. Infamously, the settlement was touted as paying credit monitoring or a “$125 cash payment” to those who already have credit monitoring, but the relatively small cash fund ensures that claimants will only receive a small percentage of the advertised payment. The bait-and-switch has prompted hundreds of thousands of class members to sign a petition against the settlement and Elizabeth Warren called for an investigation of the FTC over the settlement. But these actions could not sway final approval of the deal, which is a class action settlement negotiated by private attorneys who hope to get paid $77.5 million from the settlement. Class members instead needed to object with the overseeing court, so CCAF did.
The plaintiffs’ attorneys have made it extraordinarily difficult to object. While a clever objection and opt-out bot tries to make it easy for consumers to file with the court, plaintiffs’ attorneys may move to strike all objections that don’t meet the settlement’s burdensome requirements. For example, objectors are supposed to offer four dates for plaintiffs’ attorneys to depose them between November 19 and December 5—a limited window over the Thanksgiving holiday. This implicit threat to harass objectors with discovery is ironic in a case where the named plaintiffs themselves undertook no discovery before reaching a weak deal with Equifax. Plaintiffs’ attorneys simply hope to shield their settlement (and fee request) from scrutiny.
As the CCAF objection reveals, the bad Equifax settlement is rooted in a fundamental failure to adequately represent the class. Objectors Theodore H. Frank (CCAF’s director of litigation) and David Watkins reside in Washington D.C. and Utah, respectively—jurisdictions where valuable statutory damages of $2000 and $1500 per class member are available. But the attorneys who settled with Equifax didn’t separately advocate for such class members, so their valuable claims are sold out by a settlement that provides all 147 million class members harmed by the breach with the same pitiful “recovery”—nearly worthless credit monitoring or the option to apply for a few bucks from the imaginary “$125 cash payment.”
Worse, plaintiffs’ attorneys have fought against the data breach victims, taking “corrective action” to second-guess cash claims. As the New York Times reported, the settlement administrator sent claimants an email “which looked so spammy the F.T.C. had to assure readers on its website that it was legitimate—said that people looking for a cash reward must verify they had credit monitoring in place by Oct. 15, 2019, or their claims would be denied.” The plaintiffs’ attorneys asked the court to approve these changes to administration during a July 30 hearing, which is entirely sealed to the public. Plaintiffs’ attorneys pretend that the “corrective action” prevents claim fraud, but there’s no evidence of widespread fraud. To the contrary, credit monitoring is widely available to consumers for free, so most already have access to it. Consumers often get it for free from referral-supported services, or as a perk to their credit card account—and millions of consumers could claim credit monitoring from numerous prior data breach class action settlements.
In support of their $77.5 million fee request, plaintiffs’ attorneys ludicrously claim that they should get credit for nearly “$6 billion” worth of credit monitoring, which they claim is worth an imaginary retail value of “$1,920 per class member.” But the revealed preference of class members proves this is false. Class members preferred to receive cash even as the FTC warned them they would get only a small fraction of $125, let alone $1,920. If the settlement is approved at all—and Objectors Frank and Watkins argue it should not be due to its fundamental flaws—fees should be based on a realistic value of what the credit monitoring is actually worth to each class member, maybe $5. This would make the settlement value perhaps $162 million, with fees of more like $16.2 million. This would return almost $60 million to claimants.
The fairness hearing was held in Atlanta on December 19, 2019 and directed plaintiffs’ counsel to draft a proposed order approving the settlement.
On January 13, 2020, the court issued a 122-page order approving the settlement. CCAF believes the order makes several errors and appealed the order.
Frank and Watkins also moved on January 15 to supplement the record by disclosing the proposed order submitted by class counsel to the district court by email. Except for the settling parties, no one has seen the draft order, which was submitted to the district court ex parte—that is, not publicly. Although class counsel did not initially oppose Frank and Watkin’s motion to supplement, it later did oppose when Frank and Watkins moved before the Eleventh Circuit Court of Appeals for the ex parte communication to be disclosed. The Eleventh Circuit denied this motion on May 7 without explanation. That same day, the district court granted the motion before it, which had been pending since January 15. The May 7 order directed that the ex parte draft orders be filed “as soon as reasonably possible.” Rather than file the ex parte draft orders, plaintiffs filed a “motion to clarify” on May 11. The motion did not identify any ambiguity in the May 7 order, but instead clarified that plaintiffs’ then opposed the motion. Nevertheless, the district court vacated its May 7 order on May 15 for the stated reason that “the Court of Appeals necessarily found that the proposed orders were not material to the appeal.” Objectors moved again before the district court and the Eleventh Circuit, but neither granted relief, and as a result the draft order that plaintiffs’ counsel drafted and sent to the court remains undisclosed. The Eleventh Circuit instructed objectors to address this issue in their briefing, which they did.
Over seven weeks after appeals were noticed, class counsel filed a motion with the Eleventh Circuit Court of Appeals to expedite the appeal, but also filed a motion with the district court to require objectors to post appeal bonds. Frank and Watkins filed oppositions to both orders, which appear calculated to deter review of the settlement and are indeed inconsistent with each other—litigation over the improper bond will slow the appeal. On May 11, district court order that Frank and Watkins deposit an appeal bond of $4,000, which they did the next day. However, briefing for the appeal was delayed because another objector had filed a a motion for leave to proceed in forma pauperis (without paying court fees), which plaintiffs opposed. On August 14, the Eleventh Circuit denied the other objectors’ motion and set an expedited (compressed) briefing schedule.
Notable privacy plaintiffs’ attorney, Jay Edelson, filed an amicus brief on behalf of Frank and Watkins September 21. The amicus notes that millions of class members live in states with valuable statutory claims, but that these claims were nevertheless extinguished by the settlement for no additional compensation.
Briefing was complete on October 9, 2020. Following a complicated oral argument with several speakers, the Eleventh Circuit largely affirmed approval of the settlement on June 3, 2021, except for for incentive awards—payments made to class representatives under the deal.
On June 24, 2021, Frank and Watkins moved for rehearing, which the Eleventh Circuit denied on June 29.
With the assistance of George Mason University’s Antonin Scalia Law School Supreme Court Clinic, Frank and Watkins submitted a petition for writ of certiorari on October 27, 2021, asking the Supreme Court to hear their case. The petition asks the Court to address the questions of (1) whether it violates due process for a district court to adopt verbatim a final opinion on discretionary matters ghostwritten entirely by a prevailing party’s lawyers and submitted to the court ex parte with no notice to opposing parties or chance for them to respond; and (2) whether the class representatives of a settlement class adequately represent class members who hold unique state-specific statutory claims when they agree to a settlement that extinguishes all state-specific claims for no additional settlement value.
As it does with the vast majority of petitions it receives, the Supreme Court declined to hear the case on January 10.
Case Documents
| Description | |
| Oct 27, 2021 | PETITION for Writ of Certiorari |
| Jun 24, 2021 | REHEARING PETITION of Frank and Watkins |
| Oct 09, 2020 | REPLY BRIEF of Frank and Watkins |
| Sep 11, 2020 | AMICUS BRIEF of Jay Edelson |
| Sep 04, 2020 | OPENING BRIEF of Frank and Watkins |
| May 19, 2020 | MOTION to reconsider denial of FRAP 10(e)(2)(C) motion |
| May 15, 2020 | ORDER reconsidering prior order and vacating May 7 order to file draft |
| May 07, 2020 | ORDER granting motion to supplement the record |
| Apr 20, 2020 | MOTION for relief under FRAP 10(e)(2)(C) to supplement the record |
| Apr 13, 2020 | OPPOSITION to plaintiffs’ motion for appeal bonds |
| Apr 13, 2020 | DECLARATION of Theodore H. Frank in opposition to appeal bonds |
| Apr 06, 2020 | OPPOSITION to plaintiffs’ motion to expedite |
| Mar 18, 2020 | AMENDED FINAL APPROVAL ORDER |
| Jan 15, 2020 | MEMORANDUM in support of Frank and Watkin’s motion to supplement the record |
| Dec 19, 2019 | MINUTE ORDER from fairness hearing |
| Nov 19, 2019 | OBJECTION of Frank and Watkins |