One way class counsel can mute objections to excessive fee requests is by failing to disclose in the class notice that the attorneys will ask for more cash than the class will receive. The Center for Class Action Fairness LLC submits that this is illegal, and has objected on behalf of a class member in the Rice Krispies case we discussed earlier.
How do the attorneys get away with asking for $1.3M when the class is getting less than that? Well, defendant Kellogg will donate $2.5M of retail value in food products to charity. Several problems with that: (1) there is no reason for cy pres relief unless class members have failed to collect money due them; (2) this is a lawsuit about alleged fraud in nutritional claims, but nothing in the settlement prohibits Kellogg from donating junk food to the food banks; (3) if Kellogg donated $2.5M retail value food to charity, the IRS would not allow them to take a $2.5M deduction—so why does class counsel get to claim that this is worth $2.5M?
The settlement presents a variety of other cy pres problems, as well, and made it unreasonably and illegally burdensome to object.
Update: I will be on LaDona Live, KOGO 600 AM (San Diego), at 1:05 PM to talk about this case and other class actions.
The Center for Class Action Fairness LLC is not affiliated with the Manhattan Institute.