Recently in Class Actions Category

So, the attorneys got $2.7 million; as-yet-unidentified charities will get $0.4 million; and the class will get a money-back guarantee useful only to those class members who happen to save two-year-old diaper packaging and receipts and didn't previously request refunds. (Leave aside that the money-back guarantee is indistinguishable from the marketing campaigns P&G uses to sell Swiffer and Fixodent without the requirement of an injunction.) Can such a settlement be approved as fair? Moreover, can this lawsuit brought for monetary damages it be approved as a Rule 23(b)(2) mandatory class action settlement? And can the class sweep in people who happened to purchase diapers for the first time after the objection deadline? The appellate brief filed by the Center for Class Action Fairness yesterday says "No" to all three questions.

In the Cobell v. Salazar Indian trust class action settlement, class counsel made unrealistic promises to the class about when money from that settlement would be distributed. With over four separate appeals, including one from my client, Kimberly Craven, and post-fairness-hearing motions about whether the lead representative plaintiff, Elouise Cobell, was personally entitled to another $10.5 million from the settlement fund, the money has not yet been distributed, and class members are asking questions, including why there are appeals. Class counsel could simply make the briefing publicly available, or even summarize their arguments against the appeal. Instead, they announced falsely January 20 that the appealing objectors "each believes that you are not entitled to the relief (nor the payment of your trust funds) that has been provided in the settlement agreement," and then provided the addresses and phone numbers of the appellants and invited the hundreds of thousands of class members to contact the objectors. (The allegation is especially ironic, given that it is the class counsel who has defended the settlement approval and their $99 million fee (and $2.5 million in incentive payments to the class representatives) by arguing that class members are not entitled to anything, so anything they get makes the settlement fair, notwithstanding objectors' claims of intra-class conflicts and complaints that the settlement violates Wal-Mart v. Dukes in multiple ways.)

Fortunately for the cause of justice, the appellants are not so easily silenced by such unprecedented intimidation tactics. I'm quoted in two of the stories. [Indian Country Today; AP/WaPo; Lincoln Journal-Star]

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.

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.

Martin Redish's 2009 Wholesale Justice is an attack on the constitutionality of class actions from the left. Plaintiffs' attorneys do not hesitate to act entrepreneurially and stake out aggressive positions for the expansion of liability. So, Mark Herrmann asks, where are the creative defense attorneys and corporate general counsels trying to build off of Redish to push back on class actions? [Also: Overlawyered; Lahav]

One can be highly skeptical that Redish will do much good at the district-court level. There's already a spectrum of judicial views of the class action, and the judges most likely to give a Redish argument a full airing are the judges who are already fairly applying Wal-Mart and Rule 23 to block abusive class actions. At the margin, Redish adds a lot of cost to develop a particular argument that adds little chance of success at the district court. But as I've argued before, general counsels and their defense attorneys need to be thinking more strategically about their law firms' litigation positions, focusing less on the individual battles, and more about ensuring the legal terrain is favorable. The plaintiffs' bar was able to tilt preemption doctrine in the wrong direction because their advocates were focused on coherent long-term goals, while pharmaceutical companies were hiring generalist Supreme Court advocates with impressive resumes but no history of thinking about these issues. Defendants need to play less whack-a-mole, and more chess: put in the investment at the district-court level to preserve the long-run appellate issue. There is a Supreme Court that has consistently held that the procedural efficiencies of the class action device do not permit the infringement of individual substantive rights, and, with rare exceptions, regularly slapped down lower courts that have tried to take shortcuts. Even if defendants may not have standing to raise some of Redish's arguments, there are surely public-interest organizations willing to represent absent class members who'd be willing to be the ones to float the proposition at the class-certification stage. Ahem.

Indian Country Today looks at the latest filings in the Cobell v. Salazar appeal.

It's worth noting that, notwithstanding fulminations from the plaintiffs' attorneys, the appeal hasn't yet delayed the settlement at all: even if there had been no appeal, the settlement moneys still would not be distributed, because Elouise Cobell's collateral request for reconsideration of an extra $10.5 million to be paid to her (another document absent from the indiantrust.com website) is still pending at the district-court level.

Delaware Court of Chancery Chancellor Leo Strine has a reputation for scrutinizing fee awards more closely than most. So it was a surprise when, last month, he approved a $285 million fee award—amounting to $35,000/hour for 8000 hours of work—to attorneys who successfully prosecuted a case against Grupo Mexico over the terms of a transaction with a related entity that eventually resulted in a $2 billion judgment. (The attorneys had sought $428 million; the fee award will be augmented with another $15 million in interest.) [WSJ; Reuters; WSJ Law Blog] As Bainbridge and Frankel note, the opinion seems to be sending a message to attorneys afraid of Delaware's scrutiny of fee awards: stop jurisdiction-shopping elsewhere, as we'll take care of you if you bring a legitimate case here. (Of course that promise isn't going to stop forum-shopping for the frivolous "disclosure" cases that provide no benefit to shareholders in exchange for a quick million-dollar payment to the derivative shareholder counsel.)

I'm not a Missouri lawyer, but I'm quoted in a Missouri Lawyers Media story on class action settlements, though not given a chance to rebut the ludicrous claim of the plaintiffs' lawyer that the objection to the rip-off Bachman v. A.G Edwards "proceeds from a false premise." Even the sloppy Missouri Court of Appeal decision found that the "vouchers" were "coupons"; they just refused to address the failure of the Missouri lower court to follow the law and value the coupons at something other than face value. Literally refused: it acknowledged that we had made the argument, and then did not rule on it or give any reason for rejecting it.

• Opening brief
• Plaintiffs' response brief
• Government response brief
• Appellants' reply brief
• Competitive Enterprise Institute amicus brief
• Indian Land Tenure Foundation amicus brief

Oral argument is scheduled for February 16.

I'm interviewed about the Blessing v. Sirius XM appeal. Earlier.

In a settlement of antitrust litigation against Sirius XM that paid law firms like Milberg $13 million, the class got only a promise to freeze list prices for five months. The Center for Class Action Fairness argued below that that could hardly be a benefit to the class, since a class member could instead purchase the same service at a substantial discount from list price; the class notice and relief effectively constituted a marketing program for Sirius. Indeed, if Sirius instead emailed class members a coupon for a dollar off of the service, it would be clearly a coupon settlement worth only a dollar/class member. So how can it be worth $180 million, as the court found, when Sirius wasn't even offering the $1 discount coupon? CCAF's objection also addressed the race-based class certification order of the type previously criticized on this site by Professor Michael Krauss. Nevertheless, the district court approved the settlement.

Wednesday, CCAF filed its opening brief on behalf of Nicolas Martin in the appeal of the court's decision approving the settlement.