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Dennings v. Clearwire Corporation class action settlement

| 2 Comments


Three class actions against Internet provider Clearwire (who market their services as "Clear") allege that customers faced undisclosed throttling of Internet speeds. Under a settlement of the pending actions, the attorneys, led by Milberg, will ask for $2 million, to be divvied up among several law firms by Milberg (itself a problematic settlement provision). But Clearwire won't be systematically refunding its customers; class members have to fill out a claim form. Class members who are current customers will get credits on their account after filling out a claim form. Under some generous assumptions (say, 1.3 million current customers with a 2% claims rate and an average claim of $50 that gets entirely used, and 1 million former customers with a 0.5% claim rate and an average claim of $50), Clearwire will settle for about $3.25 million, and the attorneys will get 60% of that. It's almost certain that class recovery will not reach the $6 million figure to justify a $2 million fee under the Ninth Circuit's 25% benchmark rule. Add to that clear sailing and the "kicker," and you have all three Bluetooth elements arguing against settlement approval. Over a million dollars that should be going to class members will instead be going to attorneys.

District courts inconsistently protect class members' rights in claims-made settlements; class counsel frequently implausibly argue, much as in the bad old days of coupon settlements, that courts should value the settlement as if every single class member submitted a claim form and got paid, thus treating a claims-made settlement, where claims rates are usually in the 1% range, like one where the defendant actually takes the initiative to pay every single class member, and permitting outsized fees. Once this happens, class counsel is happy to agree to restrictions on the claims process that throttle down the number of payments that class members will receive, because their fees are based on the denominator rather than the numerator. (Especially ironic in a case like this, where the underlying allegation is that the defendant unfairly throttled service speeds.) Even if a judge were inclined to want to consider the amounts the class was actually paid, settlements usually (as this one does) schedule the end of the claims period to be weeks after the fairness hearing, thus permitting the parties to hide the ball as to what class members actually receive.

One hopes that a class member who receives the postcard or email notice retains a non-profit pro bono attorney to vindicate class members' rights in this case—and class members' rights in future claims-made settlements.

The case is Dennings v. Clearwire Corp., 2:10-cv-01859-JLR (W.D. Wash.).

2 Comments

Some class actions go beyond merely gypping the class to giving the class nothing at all ... or gypping it a second time. BofA recently settled a case involving BofA (allegedly) illegally giving private customer data to 3rd party telemarketing crooks. The crooks made a pretty penny with fraudulent credit card charges and charges against checking accounts, for a period of about 10 years. BofA split the loot with the telemarketers. At the end of the class action, the victim class, numbering in the millions, got not one single penny in settlement. Perhaps there might have been objectors, but BofA never notified its victims of the lawsuit or the proposed settlement or anything else.

Read the settlement terms, not worth the trouble to fill out claim, but did anyways so the lawyers would have to part with my miniscule share.

Simply put, Clearwire is terrible internet service, the latency times were so long I couldn't use a VPN or other security application, and internet gaming is equally useless, again dute to latency times.

Then there's the issue with Clearwire hooking a transmit/receive station up to a simple 1.5mbps T1 line and connecting hundreds of people to the one line, so that the connection slowed to fax modem speeds from the 80's...

Clearwire users pay $30.00+ per month for 5MBs speeds, I pay Charter $45.00 a month for 45MBs down, 5MBs upload speeds.

Go figure.

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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.