“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.
“A federal judge in California last week criticized two lawyers for bringing an additional 49 law firms into a data-breach case, raising to 53 the total number of firms representing the plaintiffs….’What made you think I wanted 53 firms churning on this case?’,” asked U.S. District Judge Lucy Koh, telling lawyers from Altschuler Berzon and Cohen Milstein Sellers & Toll that she was “deeply disappointed.” Koh went on to grant a request for a special master filed by Ted Frank, class action reformer with CEI and formerly a blogger in this space. [Debra Cassens Weiss, ABA Journal]
It’s a cy pres special: members of the injured class will get no part of an $8.5 million settlement Google negotiated with plaintiff’s lawyers over a data privacy lapse. “Instead, the money is to be split among the plaintiffs’ attorneys, who billed their time at $1,000 an hour, and others. The others are cy pres recipients, or organizations that are not parties in the suit: Carnegie Mellon University; World Privacy Forum; the Center for Information, Society and Policy at the Chicago-Kent College of Law; Stanford Center for Internet and Society; Harvard University’s Berkman Center; and AARP Inc.” Ted Frank’s Center for Class Action Fairness is asking the Supreme Court for a writ of certiorari after its objections were turned down by lower courts. [Dee Thompson, Legal NewsLine, earlier here and here (Beck: “cy pres abuse poster child”)]
Plus: Bank of America settlement will now yield cy pres windfall for five University of California law schools of $150,000 rather than $20 million. Easy come, easy go? [ABA Journal]
“Plaintiffs in a class action lawsuit brought over Subway’s ‘footlong’ sandwiches have decided to abandon efforts to pursue the litigation,” two months after a Seventh Circuit panel scorchingly criticized a proposed settlement (“utterly worthless… no better than a racket.”) [Jessica Karmasek, Legal NewsLine; our earlier coverage]
- “The entire panoply of extreme cy pres abuse is present”: Google privacy class action [James Beck; Ted Frank petition for rehearing]
- Settlement administrator greatly overestimated claims in TCPA suit against Rita’s Italian Ice, judge orders reallocation of money to class [P.J. D’Annunzio, Legal Intelligencer]
- “U.S. Judges Could Learn From U.K. Court’s Rejection Of MasterCard Class Action” [Daniel Fisher]
- Revisiting a failed 1978 proposal to replace class action with hybrid public/private enforcement [David Freeman Engstrom, U. Penn. L. Rev. via CL&P]
- David Marcus (Arizona), “History of the Modern Class Action, Part II” covering 1981-1994 [forthcoming Fordham L.Rev., I turn up in footnote 360 and a couple of others; Part I is here]
- Medical monitoring class actions, once seen as wave of future. have not done well [John Sullivan, Drug & Device Law]