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Ted Frank Archives


Businessweek on class actions
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Businessweek mentions the pending CCAF Marek v. Lane Facebook cy pres certiorari petition (on the calendar for tomorrow) in a larger article about how the Supreme Court is supposedly squelching the class action by issuing rulings against abusive class-action certifications. Public Citizen got to Businessweek apparently, with the author warning that a cert grant could be bad for consumers. It's hard to see how consumers could be made worse off than a $0 settlement; such settlements hurt consumers by raising their costs without any corresponding benefit. Defense attorney John Beisner tells me of being on an American Constitution Society panel and asking the audience to identify a consumer class action where the consumers got more than the attorneys, and no one being able to name one.

One quote stands out as especially poor analysis, though:

Reliable data on class actions are in regrettably short supply because courts don't track them. The only helpful gauge over time measures just a slice of the relevant cases: federal securities fraud claims. The economic consulting firm Cornerstone Research says in the first six months of 2013, 74 securities class actions were filed in U.S. district courts. That's down 22 percent from the 16-year average from 1997 to 2012 and off 42 percent from the peak in the second half of 1998.

The problem here is that the Supreme Court has consistently ruled in favor of plaintiffs in securities cases in the last few years. If securities filings have gone down, it's because the stock market has gone up in the last four years, and securities filings go up and down in inverse correlation to the market direction—which does a lot to demonstrate that securities lawsuits tend to be less about fraud than about rent-seeking. In any event, the direction of securities class actions tells us nothing about the direction of consumer class actions.

Two podcasts
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Anyone wanting to hear my voice? I recently did two podcasts.

Law & Liberty talks to me about class actions and recent Supreme Court jurisprudence on class-action waivers.

And on Legal Talk Network, I debate trial lawyer Marc Saperstein about the recent appalling New Jersey appellate decision creating liability for third-party texters when drivers have accidents after texting. The crazy thing I learned about in this podcast: the driver who had the accident had the accident seventeen seconds after he sent a text. Unless he was in the middle of another text (and no one claims that he was to my knowledge), it's hard to see how texting (much less texting by an outside party) "caused" the accident.


Ammon Simon in NRO generously cites my MI white paper in rebutting Public Citizen's perennial attack on arbitration clauses.

I don't have a lot of patience for complaints that arbitration clauses take business away from trial lawyers. Where's Public Citizen complaining that trial lawyers impose mandatory arbitration clauses on their clients if the freedom to contract for arbitration of disputes is so awful?


So I tell ProPublica, though my empirically correct observation is somewhat buried amidst a number of Chicken Little quotes. Walter Olson goes into more detail.


A paragraph not getting enough notice in a lengthy Atlantic essay about why "Teach for America" is ineffective in an Atlanta elementary school:

Valuable minutes of classroom instruction time were lost to filling out accident reports when kids occasionally fell out of their chairs or poked each other with pencils. If two students began arguing and one child angrily vowed to "get" the other, I was always advised by fellow teachers to write up the incident on Atlanta Public Schools letterhead immediately, thereby "covering" the district if the threat materialized and parents were feeling litigious. What our students needed the most in these situations, it seemed, were conflict-management skills and character education, but unfortunately these interventions do not sufficiently "cover" the adult interests of the district. When I was once asked to fill in for an unexpectedly absent colleague, one of her second-graders chose to confide in me about his abysmal home life. He explained, with wide and trusting eyes, that his mother's boyfriend enjoyed getting drunk, abusing the family, and sometimes shooting at the kids with a BB gun for fun. I immediately reported the incident to an administrator, who reacted with what appeared to be annoyance that one more paper had to be filed at 3:00 p.m. on a Friday. This was an administrator who really does care about children and wants to improve their lives--but the all-important duty of covering the legal interests of the district can make crucial social work feel like just another rubber stamp.

Paging Philip Howard...


In The Wall Street Journal, David Rivkin and Lee Casey write about Marek v. Lane, arguing that it's time to end class-action settlements that only reward lawyers, not plaintiffs. Earlier.


FACTA—which calls for statutory damages for printing too much information on credit card receipts—is perhaps the statute with the most abusive class action settlements, because notice rarely reaches class members and thus no one objects when the attorneys rip off the class. If a district court doesn't engage in its duty to protect class members, attorneys can walk away with windfalls while accomplishing next to nothing for their putative clients.

In Albright v. Bi-State Dev. Agency, a St. Louis federal case, here's how the settlement shook out:

$742.50 in cash and face value of tickets (surely mostly all tickets) to class members
$2,500 each to two class reps
$190,000 in attorneys' fees and expenses.

And the attorneys—Armstrong Law Firm, Bock Law Firm, LLC, and Chant and Co.—had the temerity to request over $400,000 in fees before the judge reduced it to something more than 200 times the class benefit. The class representatives got nearly seven times what the class got.

The case is Albright v. Bi-State Dev. Agency, 2013 U.S. Dist. LEXIS 129579 (E.D. Mo. Sept. 11, 2013).

Dry Max Pampers Litigation update
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Procter & Gamble (but not the plaintiffs) filed an en banc petition seeking further review of the 2-1 decision striking down the ludicrous attorney-benefit-only settlement in Dry Max Pampers. CCAF filed its opposition yesterday. I'm optimistic that the petition will be denied; it relies too heavily on a dissent that simply ignored precedent and problems with the settlement and class certification. But perhaps we'll get a certiorari petition, too.


At first glance, the Korean Air Passenger Settlement looks pretty good: $50 million in cash for class members. You have to dive very deep in the papers to find out that the attorneys are going to ask for $21.5 million of that cash. They justify this by valuing coupons with face value of $36 million at $36 million, but we know from the Class Action Fairness Act and In re HP Inkjet Printer Litig. that you're not allowed to do that. Tsk, tsk. (And, of course, 25% is likely excessive even if the settlement was worth $86 million, given that the lawsuit just piggybacked on a government antitrust investigation. But, of course, the court is never going to hear that unless a class member comes forward and objects, or retains counsel (perhaps pro bono counsel?) to represent them at the fairness hearing.

The class consists of:

All persons and entities (excluding governmental entities, Defendants, and Defendants' respective predecessors, subsidiaries, and affiliates) who purchased Passenger Air Transportation on [Korean Air or Asiana Airlines], or any predecessor, subsidiary, or affiliate of the Defendants, at any time
during the time period January 1, 2000 through August 1, 2007. As used in this definition, "affiliates" means entities controlling, controlled by, or under common control with a Defendant [and does not include travel agents]. "Passenger Air Transportation" means passenger air transportation service purchased in the United States for flights originating in the United States and ending in the Republic of Korea ("Korea") or flights originating in Korea and
ending in the United States.

There is a claim form online if you want your cash and coupons; class members should get formal notice shortly.

One of the lead class counsel is Jeff Westerman, who you might remember from his Milberg days for his role in the NVIDIA settlement bait-and-switch where he hired an expert witness to testify against letting class members recover what the settlement notice told them they'd recover. So one is skeptical when one reads in the settlement that "Korean Air and Class Counsel shall set the maximum coupon redemption value per ticket by mutual agreement."

Ramseyer on product liability in Japan
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J. Mark Ramseyer, Liability for Defective Products: Comparative Hypotheses and Evidence from Japan, 61 Am. J. Comparative L. 617 (2013):

Americans file 80,000 product liability suits a year; Japanese file perhaps 100-300; and most countries more closely resemble Japan than the United States. Based on reports and articles from forty-five countries, Mathias Reimann has advanced several thoughtful and subtle hypotheses about this contrast. In this article, I apply Reimann's hypotheses to Japan and explore what they might tell us about law in the two countries. As Reimann suggested, the reason for the Japanese-American contrast does not lie in legal doctrine: on the substantive law of products liability, the United States and Japan are quite close. Instead, the reasons for the contrast seem to turn on aspects of American procedure that encourage meritless demands. Litigation rates are not lower in Japan because the law prevents victims from recovering their damages; Japanese law does not deter valid claims. Instead, the rates are higher in the United States because American law helps claimants collect amounts to which they are not legally entitled.

 

 


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.