Brian Fitzpatrick’s new book A Conservative Case for Class Actions isn’t particularly conservative in its recommendations, and is based on a faulty premise as to the business model of the class action as currently pursued in American courts, writes Ted Frank [National Review]
- “Prices may vary” disclaimer said too small: “A Couple Is Suing Taco Bell for Overcharging Them $2.18 for Chalupas” [Jelisa Castrodale, Vice] “Bronx man sues NBC Universal over ‘unlimited’ soda refills at theme park” [Emily Saul and Natalie O’Neill, New York Post]
- An old Florida law bans the use in alcoholic beverages of grains of paradise, a spice widely available online, resulting in a class action lawsuit against makers of a well-known British gin [Baylen Linnekin]
- Post-decision Federalist Society podcast on Frank v. Gaos (Supreme Court remands on standing issue without resolving issue of cy pres adequacy) with the eponymous Ted Frank;
- “FTC’s comprehensive study finds median consumer class action claims rate is 9%” [Alison Frankel, Reuters]
- A recent Ted Frank win: “U.S. appeals court voids Google ‘cookie’ privacy settlement that paid users nothing” [Jonathan Stempel, Reuters] “Zappos data breach settlement: users get 10% store discount, lawyers get $1.6m” [Catalin Cimpanu, ZDNet] “Worse, 10% code doesn’t stack w/ existing discounts.” [@tedfrank on Twitter]
- California privacy law fuels class actions over smart speakers such as Amazon’s Alexa, Google Home and Apple’s Siri [Alicia A. Baiardo & Christine M. Mastromonaco, Class Action Countermeasures]
“U.S. District Judge Thomas Durkin of Chicago has thrown down the gauntlet: In a ruling issued [June 24], he said it’s time to end the ‘racket’ of ‘worthless’ M&A [mergers and acquisitions] shareholder litigation.” [Alison Frankel/Reuters]
“The plaintiffs in the underlying lawsuits sued Akorn and its board of directors in connection with the proposed merger, seeking additional disclosure regarding the transaction. After Akorn revised its proxy statement, plaintiffs dismissed their lawsuits in exchange for a mootness fee. Ted Frank, an Akorn shareholder, moved to intervene and object to the fee.” The fee amount in question was $322,500. [Kevin LaCroix/D&O Diary] See also Seventh Circuit review of the Subway footlong settlement (“utterly worthless,” “no better than a racket”), which likewise followed a Ted Frank objection.
- “Arkansas Passes Bill to Prevent Sale of ‘Cauliflower Rice'” [Bettina Makalintal, Vice via Anthony M. Kreis (“Carolene Products of our time”, and more on that celebrated filled-milk case]
- Ted Frank has another case raising the cy pres issues the Supreme Court just sidestepped in Frank v. Gaos [Marcia Coyle on rewards-program class action settlement in Perryman v. Romero]
- Feds recommend 12 year sentence for copyright and ADA troll Paul Hansmeier [Tim Cushing, TechDirt]
- Didn’t realize New York City still had such a substantial fur industry – much of it in the district of an elected official who’s keen to ban it [Carl Campanile, New York Post]
- “Who’s Afraid of Big Tech?” Cato conference with Matthew Feeney, Alec Stapp, Jonathan Rauch, Julian Sanchez, Peter Van Doren, and John Samples, among many others [panels one (“Big Brother in Big Tech”), two (“Is Big Tech Too Big?”), three (“Free Speech in an Age of Social Media”)]
- Looking forward to this one, due out from New York lawyer James Zirin in September: Plaintiff in Chief: A Portrait of Donald Trump in 3,500 Lawsuits [St. Martin’s Press]
“Mr. Frank [former Overlawyered blogger Ted Frank] argued his own case on Wednesday, a rarity in the Supreme Court, and he exhibited comprehensive knowledge of the law and an only occasionally halting style.” [Adam Liptak, New York Times] The transcript of oral argument, in which several Justices expressed doubt that the lower court had adequately pinned down standing issues, is here. More on Frank v. Gaos and the cy pres issues it raises: Richard Wolf/USA Today, Daniel Fisher, Jim Copland, SCOTUSBlog, Federalist Society SCOTUSBrief video; earlier here, etc.
Congratulations to Ted Frank, profiled Oct. 15 by Adam Liptak at the New York Times for arguing his own case (Frank v. Gaos, on class action settlements) before the U.S. Supreme Court. The article does not mention one of Ted’s most salient public roles, namely co-blogging for years as my most inspired recruit at Overlawyered and at Point of Law.
Frank v. Gaos is a challenge to the cy pres elements of a privacy class action against Google [Federalist Society podcast with Ted, NLJ via CEI]. Ilya Shapiro at Cato (which has filed an amicus brief) describes some of the factual background:
Attorneys’ fees of $2.125 million were awarded out of the settlement fund, amounting to 25 percent of the fund and more than double the amount estimated based on class counsel’s actual hours worked.
But no class members other than the named plaintiffs received any money! Instead, the remainder of the settlement fund was awarded to six organizations that “promote public awareness and education, and/or…support research, development, and initiatives, related to protecting privacy on the Internet.” Three of the recipients were alma maters of class counsel.
This diversion of settlement money from the victims to causes chosen by the lawyers is referred to as cy pres. “Cy pres” means “as near as possible,” and courts have typically used the cy pres doctrine to reform the terms of a charitable trust when the stated objective of the trust is impractical or unworkable. The use of cy pres in class action settlements—particularly those that enable the defendant to control the funds—is an emerging trend that violates the due process and free speech rights of class members.
James Beck at Drug and Device Law writes that the settlement in question “features just about everything we don’t like about cy pres.” Quoting:
- Excessive counsel fees – class counsel stands to walk away with fully 38% of the settlement as fees. 869 F.3d at 747.
- Lack of classwide recovery – the court declared the entire settlement “non-distributable” because, even without opposition, neither the class members nor their damages could be determined. Id. at 742.
- Excessive cy pres – nothing is more excessive than 100% ? six uninjured charities took 100% of what class counsel left behind, and the 129 million supposedly injured class members took nothing. Id. at 743.
- Rampant conflict of interest? Three of the charities were law schools – and they all had ties to counsel in the case.
Litigation industry self-perpetuation – cy pres recipients were expected solicit more lawsuits by “educat[ing]” the public and “publiciz[ing]” privacy issues. Id. at 746-47.
Oral argument before the Court will be held Oct. 31.
- A win for class action objector Ted Frank as Seventh Circuit allows him to challenge what he described as “objector blackmail” payments to other intervenors [Amanda Bronstad, National Law Journal, Pearson v. NBTY]
- City of Seattle pays $13 million to settle suit alleging negligent probation supervision of drunk driver [Jessica Lee, Seattle Times, Brian Flores, KCPQ, my 2005 take on Washington’s unique rules on sovereign immunity and more]
- “Family sues Dum Dum lollipop maker over son’s alleged choking incident” [Alexandria Hein, Fox News]
- Thanks to New York’s Scaffold Law, co-op and condo boards “can be held liable for millions of dollars in damages – even if the injured worker was drunk or failed to use safety equipment.” [Habitat mag] “Coverage for East Side Access [infrastructure project] has surpassed half a billion dollars” [Will Bredderman, Crain’s New York]
- As Brett Kavanaugh’s SeaWorld dissent shows, he’s a judge who takes assumption of risk seriously [ABA Journal, SeaWorld v. Perez]
- Twiqbal pleading standards continue to do good, this time in New York state courts [Drug & Device Law]
- Due diligence? Prosecutors say $32 million staged slip-fall ring drew on services of litigation finance firm [Matthew Goldstein and Jessica Silver-Greenberg, New York Times]
- Federalist Society podcast previews Frank v. Gaos, Ted Frank’s case on cy pres in a Google settlement;
- Will public get to look at details of $75 million class action fee that has been subject to criticism? [John O’Brien, Legal NewsLine and Max Brantley, Arkansas Times on State Street Bank and Trust settlement] Update: special master said to find attorney misconduct and recommend substantial fee refund [Chris Villani, Law360 (sub)]
- “Recent developments have let the air out of slack-fill lawsuits” [Meghana Shah, Brittany Cambre and Amber Unwala, New York Law Journal, earlier on slack fill] Theater-box candy suit: “Don’t squash our Junior Mints” [Chicago Tribune editorial]
- Tales of the Food Court: California class-action climate encourages flimsy claims against beer and bean purveyors [Greg Herbers, WLF]
- Supreme Court of Canada: commercial garage not liable for injury suffered by teen while stealing car from lot [Rankin (Rankin’s Garage & Sales) v. J.J.]
The Supreme Court has agreed to review Frank v. Gaos, a case in which Ted Frank is objecting to a Google class action settlement. [Barbara Leonard, Courthouse News; Kieren McCarthy, The Register (U.K.)] From the latter piece:
Of the $8.5m that Google has agreed to pay out, not a single cent will go to the actual users whose privacy was violated. It will instead go to the lawyers that brought the case on behalf of those users ($2.125m, no less) and a group of seven organizations that the lawyers, along with Google executives, decided should become “cy pres” recipients.
Those recipients have been controversial from the moment they were named: three of them are law schools, and just so happen to be the same law schools that the lead lawyers went to; and the remaining four are organizations that Google has repeatedly given money to, in large part because they share the same values and goals as Google itself….
His position is quite clear: the use of cy pres – pronounced, fittingly, “sigh, pray” – should be a last resort, and if used, there should be no conflict of interests or even the appearance of a conflict, for those involved in drawing up the list for who gets the money.
Dubious use of cy pres has been a regular topic here at Overlawyered, even before the years when Ted blogged here:
“When you add up all the legal fees and costs, the lawyers would come out of the settlement with more money than the class members they represented. The payout to all the lawyers involved would be about $63 million.” More details on the Anthem data breach case discussed earlier here, and Ted Frank’s role in calling it into question [Bob Dorigo Jones]
Also, for those with access, Ted has written a piece for the Wall Street Journal on the need to rein in abuse of the cy pres doctrine in disbursing lawsuit proceeds, with a suitable vehicle on the horizon:
A bipartisan coalition of 16 state attorneys general is also urging the Supreme Court to hear Frank v. Gaos. They agree that the Ninth Circuit has created a standard that will make it far too easy for attorneys to siphon millions of dollars of consumers’ money into their own slush funds. Chief Justice John Roberts has previously expressed concern about cy pres abuses. We hope the Supreme Court will protect consumers who take part in class actions from being preyed upon by their attorneys.