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McClintic v. Lithia Motors



In 2010, the Center for Class Action Fairness filed a successful objection to the Classmates.com class action settlement in Judge Richard A. Jones's court in the Western District of Washington. He's since become one of the best judges on the bench in dealing with class action settlements. In McClintic v. Lithia Motors (h/t A.S.), Jones, citing two Center Ninth Circuit victories, made a number of important points in rejecting a class action settlement at the preliminary approval stage:

  • Injunctions to follow the law are meaningless and not a benefit to the class. All too often a court is willing to rubber-stamp a settlement that does nothing but promise prospective injunctive relief. If the class has been injured, this promise to a different set of people in a consumer class action is thin gruel. As the Center notes in a recent Ninth Circuit appeal, prospective relief might not even be a benefit to that second set if the defendant raises its prices to compensate for the change in business practices.
  • Jones rejected a cy pres provision when there were undercompensated class members. That's the way it should work: class counsel's first duty is to the class, rather than to third-party charities, and money should only flow to cy pres as a last resort.
  • Rule 23(e)(3) means what it says. If there's a secret side agreement, it should be disclosed to the court.
  • "One hallmark of a reasonable settlement agreement is that it makes participation as easy as possible, whether class members wish to make a claim, opt out, or object." Huzzah.
Jones also criticized a "kicker" provision that ran afoul of Bluetooth.

All this is especially impressive because it was a small-stakes class action with only a few thousand class members where it was improbable that anyone would object at all. Jones was willing to create more work for himself to get the law right and treat absent class members fairly, instead of taking the easy way out and rubber-stamping a settlement.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.