Ted Frank reviews “A Conservative Case for Class Actions” is a post from Overlawyered - Chronicling the high cost of our legal system

Class action roundup is a post from Overlawyered - Chronicling the high cost of our legal system

“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.

Federal judge: time to end “racket” of “worthless” merger litigation is a post from Overlawyered - Chronicling the high cost of our legal system

April 3 roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Ted Frank argues at SCOTUS is a post from Overlawyered - Chronicling the high cost of our legal system

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.

Ted Frank to argue cy pres at the Supreme Court is a post from Overlawyered - Chronicling the high cost of our legal system

Liability roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Liability roundup is a post from Overlawyered - Chronicling the high cost of our legal system

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:

Supreme Court takes Ted Frank’s Google cy pres case is a post from Overlawyered - Chronicling the high cost of our legal system

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.

Anthem data breach class action, cont’d — and a cy pres opportunity is a post from Overlawyered - Chronicling the high cost of our legal system