August 22, 2007

Josh Gerstein in the New York Sun:

For as long as three years, a handful of law firms and individuals have battled against the $75 million settlement of a suit over American Express's fees for purchases its cardholders made in foreign currency.

Now the dissident group is retreating from the scene, after Amex agreed to pay it more than $3 million to drop appeals claiming that the deal shortchanged consumers.

Legal experts say the resolution highlights two potential abuses in class action litigation. Objecting lawyers can obtain legal fees by standing in the way of a settlement, whether or not their gripes about the deal have merit. And when a settlement is legally flawed, businesses can avoid having an appeals court review the matter simply by offering extra cash to those diligent enough to pursue an appeal.

The objections were also covered at an earlier stage on Overlawyered in Feb. 2005.